D Capital 2 Pty Ltd v Western

HIS HONOUR: The proceedings involve various claims by the plaintiff (DC2) including a claim for specific performance against 10 defendants including nine vendors (vendors), which vendors agreed to sell their unit (units) in a strata title block in Terrigal (block) pursuant to contracts for sale dated 26 February 2021 (contracts).

The contracts had been the subject of a number of notices to complete, but relevantly notices to complete issued on 12 July 2021 (second notices to complete) nominating a date for completion being 27 July 2021 (specified completion date).

In the events which occurred, completion did not take place on the specified completion date and all 10 contracts were purportedly terminated pursuant to notices of termination dated 2 August 2021 (notices of termination).

Subsequently, the vendors sold the units to another developer Blue Sox Investments No 4 Pty Ltd (Blue Sox) pursuant to further contracts which were exchanged on 9 September 2021 (Blue Sox contracts) and to be settled on 22 September 2022.

Numerous issues were pleaded and contested, principally on the claims of DC2 for specific performance of the contracts and relating to the validity of the notices to complete, issues of whether the vendors had waived essentiality of time or elected to affirm the contracts and issues going to the validity of termination of the contracts.

A particular issue arose regarding the effect of s 49 Property and Stock Agents Act 2002 (NSW) (PSA Act) on the contracts.

DC2 was incorporated on 22 September 2020, and Wayne Danckert (Mr Danckert) is the sole director and shareholder of DC2.

Mr Danckert is a real estate agent and also a sole director and shareholder of D Capital Pty Ltd (DC) the registered proprietor of a 9 industrial units at Walker Street South Windsor: CB 68–69[10] (Windsor Property)

DC2 and Mr Danckert are represented by Mr Kelly SC and Mr Stapleton instructed by HFW Australia.

The first defendant (Ms Western) is a licensed conveyancer and the director and 50% shareholder of the tenth defendant, Step by Step Conveyancing Pty Ltd (SBS). Ms Western is the registered proprietor of units 1 and 10 at the block.

The second to ninth defendants are respectively the owners of units 2 to 9 at the block (other vendors). The other vendors are essentially represented in two groups.

The first group is the eighth defendant (Mr O'Connell) who with Ms Western (first group) are represented by Mr Allen instructed by Avondale Lawyers.

The second group are the second to seventh and ninth defendants being respectively Mr Parker, Mr Hew, Mr Young, Ms Hopwood, MALK Property Pty Ltd (MALK), Mr Szepes and Mr Tayyar (second group) represented by Mr Pesman SC and Mr Crossland instructed by Watson Law Pty Ltd.

SBS is represented by Mr Gooley instructed by Maccallum Lawyers.

In the result I have found against DC2 in respect of the issues arising out of its claim for specific performance and in particular I determine that:

Certain other claims by DC2 against Ms Western and SBS have been abandoned. In light of the findings that I have made, as I understand it, it is agreed that other claims by DC2 against Ms Western and SBS fall away and the balance of claims by the other vendors against Ms Western, SBS, DC2 and Mr Danckert fall away.

However, in the event that I am mistaken about that, in the process of the parties bringing in short minutes of order to give effect to my reasons for judgment, they should alert me to any claims that they say still need to be determined. In that event, I reserve consideration of any such claims.

The parties provided written submissions both prior to the hearing and on the final day of hearing as well as their counsel addressing orally on the final day of the hearing.

I will make reference to the oral submissions by transcript page reference. For convenience, I will refer to the various written submission documents as follows:

The proceedings were commenced by a statement of claim filed on 9 September 2021.

There have been a number of amendments to the pleadings. The hearing commenced with the then current form of pleading by DC2 being a further amended statement of claim filed on 3 June 2022.

There was dispute on the opening days of the hearing arising from the fact that DC2 whilst pleading against both Ms Western and SBS claims of various duties, breaches of such duties and alleged loss suffered, had only sought damages or equitable compensation against Ms Western and not against SBS.

The dispute was ultimately resolved by my granting leave to DC2 to file a second further amended statement of claim (main claim) on the day the hearing, 13 July 2021 to which SBS sought to raise a number of fresh defences essentially indicating that DC2 was disabled from making claims for damages on the basis that it would be contrary to public policy to permit DC2 to sue on a retainer agreement made in breach (allegedly) of s 18 of the Australian Consumer Law (NSW) (ACL) or ss 249B and 249F Crimes Act 1900 (NSW) and further or alternatively that DC2 was not entitled to equitable compensation as a consequence of the application of the doctrine of unclean hands.

The amended defence to the main claim was filed on 14 July 2021 and DC2 filed a reply to that amended defence on the same day.

The relief sought by DC2 on the main claim included claims for:

The various claims for relief were based upon pleaded matters which comprise approximately 25 pages of pleadings.

Essentially the pleaded matters were in respect of: the contracts, the second notices to complete and the notices of termination; allegations against Ms Western in respect of breach of an alleged collateral contract entered into on or about 25 February 2021 (collateral contract), breach of a fiduciary duty and a duty of care, breach of fiduciary duties and the duty of care said to be owed by SBS, allegations of alleged misleading and deceptive conduct by the vendors, claims of estoppel against the vendors and claims that they were not ready, willing or able to complete their contracts.

The main claim included a claim that the retainer with Coventry Conveyancing Services (CCS) was a sham and that Ms Western had made representation to Mr Danckert that she or the vendors would permit an extension of time for DC2 to complete the contracts if it was unable to obtain the necessary finance by the time of completion (extension of time for finance representation).

DC2 in its final written submissions expressly abandoned the claims in [38], [39]–[41], [47], [93]–[110] and [102]–[114] of the main claim: PCS [112]. The abandoned claims include claims based on:

I note that the allegation in [38A] is said to be based on the allegation in [38] which is now abandoned. The allegations in [38A] being that Ms Western was the agent of the other vendors and was aware that Mr Danckert was a shareholder and director of DC2 and had actual or ostensible authority to give the informed consent to Mr Danckert obtaining an interest in the units through DC2 and did give such consent.

It seems to me that the allegation in [38A] is also impliedly abandoned.

DC2 expressly accepts that the evidence of Ms Western and Ms Pocknall in cross examination is sufficient to prove that the retainer of CCS was beset with personal difficulties on the part of Ms Pocknall, but it was not a sham: PCS [112].

The first group, second group and SBS filed separate defences to the main claim.

The first group’s defences: disputed various allegations of fact; asserted that the scope and terms of the alleged agency of Ms Western was not materially pleaded; disputed that Ms Western owed any fiduciary duty in light of the alleged pleading that SBS was a fiduciary; asserted that DC2 knew the intent and purpose of the second notices to complete; claimed that the asserted waiver of time of the essence was a fallacy and in any event was not applicable; disputed entitlement to relief against forfeiture; disputed that the collateral contract arose; denied breaches of duties; denied that DC2 was misled; denied the allegations of estoppel; and asserted that the vendors were ready and willing to complete the contracts.

In summary the first group alleged (CB 66.30 [59]) that DC2: (a) never held unconditional funding funds or any other means of completing the contracts, (b) failed to provide the draft settlement figures to the vendors, (c) did not sign in or accept the invitation to the Property Exchange Australia (PEXA) settlement and (d) failed to complete the contracts.

The first group further alleged (CB 66.30 [59]) that Mr Danckert was conflicted in acting as agent for the vendors whilst being the sole director and shareholder of DC2 and that he and DC2 were engaged in obtaining a beneficial interest in the block for DC2 contrary to the PSA Act.

The second group’s defences disputed various allegations of fact and pleaded that Mr Danckert had breached s 49(1) PSA Act with the consequence that the contracts (and a number of prior documents arising out of Put and Call Option Deeds (Option Deeds see below)) were or are void for each illegality and that DC2 is not entitled to relief under the contracts or any relief arising from the breach or purported breach of the contracts.

SBS’s defences disputed various allegations of fact and pleaded that: representations alleged to have been made by Ms Western (if found to be made) were limited and did not extend time for completion beyond the specified completion date; if it is found that SBS had breached the alleged duty of care that the claims were apportionable claims within the meaning of Pt 4 of the Civil Liability Act 2002 (NSW) (Civil Liability Act) and consequently were limited to an amount reflecting SBS’s responsibility for the damage; DC2 was a concurrent wrongdoer, and DC2 had engaged in contributory negligence and that any damage should be reduced having regard to SBS’s share responsibility for the damage pursuant to s 9 Law Reform (Miscellaneous Provision) Act 1965 (NSW). SBS also disputed causation (relying upon ss 5D and 5O Civil Liability Act) and claimed that DC2 had failed to take reasonable steps to mitigate its loss.

In light of the abandonment of the representations, this part of SBS’s defences does not need to be considered.

I will refer to the particular issues arising on the pleadings below.

The second group filed a cross-claim on 21 November 2021.

The current form of cross-claim is a further amended cross-claim filed on 26 May 2022 (cross-claim).

Ms Western, SBS, Mr Danckert and DC2 are respectively the first to fourth cross-defendants to the cross-claim.

The cross-claim seeks various relief against:

Other ancillary relief (interest and costs) is sought against all the cross-defendants.

The various claims for relief were based upon pleaded events which comprise approximately 15 pages of pleadings.

Essentially the pleaded matters were in respect of: the contracts, and a number of prior documents arising out of the Option Deeds; duties said to be owed by SBS or Ms Western; failure by SBS or Ms Western to issue a notice to complete on 23 April 2021; alleged misleading and deceptive conduct on the part of Ms Western representing that she had issued a notice to complete; withdrawal by Ms Western or SBS of notices to complete dated 3 June 2021 (first notices to complete); the second notices to complete in the event that the claims of DC2 were upheld; alleged breach by Ms Western and SBS of fiduciary obligations; alleged liability of Mr Danckert to reimburse fees; alleged misleading and deceptive conduct by all the cross-defendants arising from failure to disclose that Mr Danckert was the sole director and shareholder of DC2 (relevant ownership knowledge); alleged breaches of fiduciary duty owed by Mr Danckert to the second group as their agent in respect of the contracts.

At a pre-trial directions hearing I directed that the parties prepare an agreed statement of facts and issues.

At the request of the parties I was asked to consider dealing separately with questions regarding quantification of any loss or damage and or equitable compensation and account of profits arising from the Court’s determination of liability. On 17 June 2022, I make an order for separate determination in the following terms:

The agreed statement of facts and issues was prepared and provided on 28 June 2022 setting out 13 agreed facts.

More particularly the agreed statement of issues and facts specified 79 issues for determination.

I noted at the commencement of the hearing that the list of (79) issues was somewhat “daunting” and I gave encouragement to the parties to prepare a revised list of issues.

On the final day of the hearing the parties provided to me a revised list of issues being an “Agreed Statement of Issues”. There are 43 listed issues. I annex this document to these reasons for judgment as Annexure A.

The Agreed Statement of Issues (agreed issues) characterises the issues in the proceedings by reference to the following categories:

As will appear below it became obvious that if the issues arising out of the claim for specific performance did not succeed many of the other issues fall away.

In the outcome of the matter, having regard to my findings on the facts, the principal issues that arise for determination are the issues which I have summarised below but should be understood by reference to the wording in the agreed issues:

The framing of issue 7 by the parties was in the following form:

Part of the difficulty with the above framing of the issue in that way and the submissions is that there are at least two general principles regarding illegality that may preclude relief.

One principle is that a contract which is entered into with the object of committing an illegal act is unenforceable (Illegality – intent to commit an illegal act). A second principle is that the court will not enforce a contract which is expressly or impliedly prohibited by statute (Illegality – effect of statute): see e.g. St John Shipping Corporation v Joseph Rank Shipping Ltd [1957] 1 QB 267 per Devlin J at 283.

The types of illegality in this respect are concisely distinguished by Devlin J in St John Shipping Corporation at 283:

The second form of illegality, “Illegality – effect of the statute”, was clearly the subject of submissions. It is less clear to me that “Illegality – intent to commit an illegal act” was directly engaged with as between the second group and DC2.

Issue 8 seemingly in its terms sought to extend the illegality question under issue 7 to the Nomination Deeds and Calls. Issue 9 (despite its wording), when regard is had to the submissions, raised the defence of unclean hands. Issue 10 raised other equitable discretionary considerations as defences to specific performance, but principally the question of the effects of delay.

The G2CS submissions of Mr Pesman SC (G2CS [20], [46]-[47], [51]) that Mr Danckert breached s 49 on exchange of the contracts on 26 February 2021 and that that breach renders the contracts unenforceable in the case of DC2 arguably raised the issue of “Illegality – intent to commit an illegal act”.

I say ‘arguably’ because one of the ways that Mr Pesman SC says enforcement of the contracts is affected is by reference to the third category of cases mentioned by Gibbs ACJ in Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410 at 413, namely that a contract even if lawful on its face, may be unenforceable if it was made in order to effect a purpose which the statute renders unlawful: G2CS [20], [46]-[47].

Mr Kelly SC did in submissions mention the question of intent or “mens rea”: PCS [93]. However, on reviewing the submissions further, it is not clear to me that DC2 actually engaged on the issue of whether the contract is illegal because DC2 or Mr Danckert intended to commit an illegal act.

Because “Illegality – effect of the statute” was clearly raised and argued I will deal with that issue.

Lest a party considers that “Illegality – intent to commit an illegal act” was not adequately raised or that inadequate opportunity was given to address it, I will give the parties an opportunity to firstly address the question of whether this form of illegality is actually raised on the pleadings or as part of agreed issue 7 and potentially to provide further submissions on the point should they wish to do so. However, it may be that in light of my findings that there is no need to pursue this matter.

DC2 read affidavits from Mr Danckert (CB tab 10 and tab 13) and Giuseppina Mammoliti (referred to in some of the evidence as Pina) (Ms Mammoliti): CB tabs 11 and 12.

The second group read affidavits from each of the second to fifth defendants, the seventh and ninth defendants and in the case of the sixth defendant an affidavit by Kevin Lee (Dr Lee): CB tabs 14–20.

The first group read affidavits from each of Ms Western and Mr O'Connell and Ashley Tracy Oakes (Ms Oakes), a licensed conveyancer: CB tabs 21–23.

SBS read an affidavit from Lianne Pocknall (Ms Pocknall): CB tab 24.

The affidavit of Mr Danckert sworn on 25 May 2022, although in its terms in paragraph 3 is said to be a response to the affidavit of Ms Western dated 4 March 2022, was in fact a response to an affidavit of Ms Western which was at that stage unsworn but had been served. The affidavit of Ms Western was eventually sworn on 26 May 2022. Accordingly whilst there is a seeming disconnect between Mr Danckert’s reply affidavit of 25 May 2022 to the affidavit of Ms Western sworn 26 May 2022, it is explained by what I have just indicated above, following a clarifying discussion with Mr Stapleton of counsel for Mr Danckert: T 75, 77.

The following facts, drawn from the affidavit, documentary and narrative evidence are, except as I otherwise indicate, either uncontested or not seriously in dispute.

From about 2015, Mr Danckert traded as a real estate agent with his wife under the business name "Express Property": CB 69[11].

From about 2016, Mr Danckert formed a business relationship with Ms Western introducing multiple vendors of properties he had to her: CB 69[13].

Ms Western says she first met Mr Danckert when he delivered an exchanged contract to her office on or about 20 November 2017 for one of her clients who sold a property through his agency: CB 172[4].

In or around November 2017, discussions were had between the first group and second group owners regarding a collective sale of the units comprising the block: CB 174[16]. At that stage a collective purchase price of $4.1 million with a $100,000 option fee for a 12-month put and call option was discussed: CB 174[16].

Ms Western indicates that in or about December 2017 or early January 2018, she had discussions with Mr Danckert regarding the units in the block asking him if he knew anyone who was interested in purchasing the development site to which he says he responded he was sure that he could find someone and would ask around: CB 174[17].

In January 2018, there were communications by text or email as between Mr Danckert and Ms Western from her to the other vendors regarding potential purchase of the block for $4.5 million: CB 174[18]–[21].

During February to May 2018, there were further communications regarding potential offers to purchase: CB 175[22]–[28].

In or about March 2018 or early April agency agreements were signed between each of the vendors and Mr Danckert as agent nominating SBS as the conveyancer (agency agreements): CB 239–260.

The agency agreements for Ms Hopwood, Mr Szepes and Mr Tayyar appear to have been signed on 14 March 2018, and for Ms Western on 30 March 2018. Mr Pesman SC says the vendors each signed between 13 March and 9 April 2018. Nothing of substance turns on the actual date of signing.

The agency agreements were in a standard form as produced by Estate Agents Co-operative Ltd (EAC).

The appointment under the agency agreements were in the following terms:

The remuneration provisions contained in section C of part 2 of the agency agreement for Ms Western for unit 1 is as follows:

The remuneration provisions contained in section C of part 2 of the agency agreements for Ms Western for unit 10 (CB 256) and for the other vendors (Mr Hew CB 243, 266, 280; Mr Young CB 245, 271; MALK CB 249, 274; Mr Tayyar CB 254, 260; Ms Hopwood CB 263; Mr Parker CB 277) is as follows:

The detail for Ms Szepes’ agency agreement is illegible: CB 258.

Part 3 of the agency agreements set out a number of terms and conditions, including provisions regarding remuneration as follows:

On 9 April 2018 Jogat Pty Ltd was incorporated. Gameli Tamakloe (Mr Tamakloe) is a director and one of two shareholders of Jogat, the other shareholder being John Obeya: CB 2456–2458.

On 10 April 2018 ten contracts for sale (Terrigal JRB contracts) were issued to Regency Lawyers with Terrigal JRB Pty Ltd atf Terrlgal JRB Trust (Terrigal JRB) noted as the Purchaser for a sale price or $450,000.00 per unit: CB 175[25].

On or about 10 and 11 April 2018, Ms Western prepared and sent to the other vendors a package of documents (see, for example, CB 320-332) being: (a) an introductory letter; (b) a property questionnaire; (c) an inclusions list; (d) an initial tax invoice; (e) an estimated account; and (f) a document headed “Client Service Agreement” (client service agreements): G2OS [24(c)].

Mr Parker (CB 307-310), Mr Hew (CB 316-319), Mr Young (CB 329-332), MALK (CB 298-301) and Mr Szepes (CB 281-284) did not sign and return the client service agreements to Ms Western, such signature and return being a condition of acceptance of the offer constituted by the transmission to the cross-claimants of those documents (p 3 of each Agreement). Mr Tayyar (CB 285-288), Ms Hopwood (CB 289-292) signed the client service agreement: G2OS [24(i)].

Numerous communications took place between SBS, Regency Lawyers and Mr Danckert in relation to amendments required to the Terrigal JRB contracts, arranging access to the units for Terrigal JRB to view and chasing for exchange of contracts to take place: CB 175[26].

In around mid to late May 2018, negotiations with Terrigal JRB broke down and the Terrigal JRB contracts were not exchanged: CB 175[27].

In approximately May 2018 Ms Mammoliti was engaged by Mr Danckert to assist with respect to finance for purchase of his personal property: CB 89[7].

On or after 22 May 2018, Mr Danckert made Ms Western aware that Jogat Pty Ltd as trustee for the Jogat Investment Trust (Jogat): CB 175[29].

In about June 2018, Mr Danckert caused Express Property Sales Pty Ltd (EPS) to be incorporated, for the purpose of his trading as a real estate agent: CB 69[12]. Nonetheless, Mr Danckert holds an individual real estate license: CB 69[12], 226.

On 11 July 2018, Jogat’s solicitor Phil Weldon from SCA Legal prepared draft Put and Call Option Deeds: CB 176[30].

There were negotiations regarding the deeds.

In or about August 2018 Mr Danckert says he became aware from conversations with Ms Western that she was negotiating on behalf of herself and the other owners of the properties (i.e. the vendors) to sell the 10 units in "one-line" to a developer: CB 69[14].

He says at that time he had discussions with Mr Tamakloe regarding development opportunities: CB 69[15]–[17].

He then shortly after had discussions with Ms Western who he says called her to indicate that the vendors had agreed to a price of $4.5 million: CB 70[18]–[19].

Shortly after that Mr Tamakloe instructed Mr Weldon: CB 70[19], 176[30].

On 21 August 2018, Put and Call Option Deeds were entered into between each of the owners in the first and second group and Jogat (the Option Deeds noted above) whereby the vendors (described as owners) each agreed to grant to Jogat a call option to require the owner to sell the block on certain terms and conditions and Jogat agreed to grant to the owners a put option to require it to purchase the block from the owner on certain terms and conditions: CB 176[32], 335–432.

The Option Deeds contained provisions regarding interdependence of the documents in cl 8.3 as follows:

There were provisions in relation to the owners’ conveyancer’s authority to act in cl 9, as follows:

Further, there were provisions addressing dealings by owners in cl 11, as follows:

Under the Option Deeds "Contract" was defined to mean "the contract for sale of the Property contained in Annexure A, subject to any variation required or permitted by this Deed": cl 16.1(i): CB 527.

Each Contract for the units in Annexure A were in the standard form of contract for the sale and purchase of land, Law Society and Real Estate Institute 2017 edition (2017 edition): CB 538.

On 22 August 2018, a call option fee and security fee was paid by Ms Western to the trust account of EPS: CB 176[32]. The exercise of the option was to occur by 3 October 2019. However, a development consent relating to the block was delayed and a further extension was allowable under the deed for a year to 3 October 2020: CB 176[32].

On 22 August 2018 Mr Danckert paid his commission of $13,500 (for her two units) back to Ms Western by deposit to her daughter's bank account: CB 71[26], 433.

Between 22 and 24 August 2018 Jogat deposited $450,000 into the EPS Trust Account (being a 10% deposit due under the deed of $45,000 per unit) and Mr Danckert dispersed the deposits under instructions from Ms Western less a commission payable to Mr Danckert of 1.5% of the price being $6,750.00 including GST: CB 70[23].

Further, on or about 22–24 August 2018 Mr Danckert says he had a conversation with Ms Western in words to the following effect:

In or about December 2019 Jogat applied to the Central Coast Council for approval to demolish the properties and construct 13 new apartments on the land (DA application): CB 71[27].

On or about 8 May 2020, Ms Western was engaged by Mr Danckert to act on his behalf as director of DC and for DC in relation to the purchase of the Windsor Property which contracts were exchanged and settlement was due to take place on 15 October 2020: CB 172[5]. Ms Western states that settlement was delayed due to DC having issues in obtaining the necessary finance to complete the purchase and a Notice to Complete was issued on 28 October 2020 requiring completion by 16 November 2020: CB 172[5].

By about September 2020 DC had acquired the Windsor Property. The purchase of which settled on 30 November 2020 and Ms Western acted as conveyancer for DC: CB 71[28]. Mr Danckert incorporated DC2 to buy another property in Windsor: CB 71[30].

By October 2020 the DA application had not been approved and Jogat was not in a position to exercise its option under the Option Deeds: CB 71[31].

On (it seems) 8 October 2020 (CB 478) variation deeds for the Option Deeds (Variation Deeds) (CB 442-491) were entered into extending the option period for each of the Option Deeds to 28 February 2021 on the basis that an additional $20,000 was paid for each unit: CB 71[32], 176[33]. Mr Weldon was at this stage still representing Jogat although now practising with a firm Norwest Family Law: CB 176[33].

In November 2020 Ms Mammoliti assisted Mr Danckert to purchase the Windsor Property: CB 89-90[8]-[9].

Eventually settlement in respect of the Windsor Property took place on 30 November 2020: CB 173[6].

In late November 2020 Mr Danckert had a conversation with Mr Tamakloe. He says Mr Tamakloe informed him that he would not be able to raise funds to complete the purchase of the block and at this stage Mr Danckert decided to use DC2 to buy the block: CB 72[35]–[38].

On or about 15 December 2020, a development application in respect of the block was obtained: CB 176[34].

In or around "November/January 2020" [sic] or "maybe later but before the plaintiff exchanged contracts" Mr Danckert says he had a conversation with Ms Western in words to the following effect:

In early February 2021 at around the time he was discussing with Ms Western how to arrange for DC2 to exchange contracts, Mr Danckert says he had a conversation with her in words to the following effect:

Mr Danckert states that in relation to his conversations with Ms Western (CB 110–111[6]-[7]) he did not take the issue further with her in circumstances where he was aware that she was representing the vendors and she consented to DC2 becoming the purchaser and understood that he was the sole director of DC2. He states that "So far as I was concerned, Ms Western had consented to the transaction on behalf of her clients": CB 111[8].

Mr Danckert states that after his conversation with Ms Western (CB 110[6]) "as requested by Ms Western as the owners' conveyancer I did not solicit any communication with the other owners until 28 July and 4 August 2021": CB 111[9]. However, Mr Danckert accepts that from time to time he did take telephone calls from Mr Young: CB 111[9].

In early January 2021, Mr Danckert spoke with Ms Western. She states that he advised her that "he was considering taking over the Option as the Directors of Jogat were hopeless and were not going to be able to get the finance approval to be able to complete": CB 176[35].

She states that he asked him:

Ms Western states that she advised Mr Danckert that she was unable to act on Mr Danckert’s behalf as she was already acting for all the vendors, and she suggested that Mr Danckert use and nominate CCS as "we had previously worked well with the business": CB 176[36].

Whilst there is some dispute about exact timing (as to whether it was mid-January or early February), more likely in or around mid January 2021 Mr Danckert instructed Ms Mammoliti of First Step Financial Solutions Pty Ltd (FSFS) to seek finance to complete the purchase of the properties: CB 74-75[54]; CB 89–90[8].

Ms Mammoliti was called by Mr Danckert, and they had a conversation to the following effect:

Ms Mammoliti then contacted a number of lenders to ascertain their interest in lending in respect of the properties, and following her preliminary investigations (CB 91[15]–[16]) contacted Mr Danckert in or around mid-January 2021 and had a conversation to the following effect:

On 3 February 2021 Ms Mammoliti made contact with a potential lender Arch Finance Pty Ltd (Arch Finance) to obtain finance of approximately $4.5 million to purchase the block: CB 92[17].

Between 3 February 2021 and early April 2021, Mr Danckert exchanged various emails with Ms Mammoliti regarding offers from various lenders: CB 75[57].

In early February 2021, Ms Pocknall was asked by Ms Western if she could act for Mr Danckert in relation to the purchase of the block: CB 220[2].

On 11 February 2021 Mr Danckert had forwarded to Ms Western an email setting out the rental value for each of the units: CB 93[24], 666–667.

During late January and February 2021 right up until 25 February 2021, Mr Danckert negotiated a nomination agreement with Mr Tamakloe and negotiated the purchase of the block with Ms Western: CB 72[40].

On 25 February 2021, Jogat, DC2 and a number of other parties entered into a Nomination Deed (Nomination Deed). Jogat nominated DC2 be the nominee under the Option Deeds for the purchase of the units and to assign its right in the DA consent and plans on terms set out in the Nomination Deed (amongst other matters): CB 72[42], CB 177 [38], 697–716.

The Nomination Deed precluded the nominee from encumbering the ‘Strata Lots’ (defined as being lots 1-10: clause 1.1x: CB 700-701; i.e. the units) other than by way of a registered first mortgage where the secured sum did not exceed 65% of the valuation amount until the "second sum" is paid in full: cl 4.1a (CB 703).

The "Second Sum" was defined to mean the sum of $900,000 pursuant to cl 1.1w: CB 700.

Seemingly also on 25 February 2021 (I say “seemingly” because the documents are actually undated) DC2 pursuant to the Option Deeds made the Calls requiring the vendors to sell the units to DC2: CB 72[41], CB 176 [37], 679–696.

Mr Danckert says that by this time Ms Western had acted for him in relation to the number of matters, and he had a very high level of trust for her: CB 73[44].

Towards the very end of the negotiations about the purchase of the block Mr Danckert says he had a conversation with Ms Western at her office in words to the following effect:

At about the same time Mr Danckert says Ms Western arranged for her to meet Ms Pocknall at Ms Western's offices which they did: CB 73[46].

At the meeting (which Mr Danckert says took place on 26 February 2021) his version of the conversation is as follows:

Mr Danckert says that immediately after the conversation but whilst he was still at her office Ms Western put all the contracts in front of him and said he should sign them and had a conversation with words to the following effect:

Mr Danckert says that by that time he and Ms Western had worked together on multiple property transactions worth millions of dollars and that he trusted her completely: CB 74[47].

Mr Danckert states that based on that background, and Ms Western's reassurance, he signed the contracts and gave them back to Ms Western who told him that she would date the contracts and do the exchanges “later on”: CB 74[47].

Mr Danckert states that at the time he signed the contracts the "vacant possession" and "subject to existing tenancies" boxes were not ticked: CB 74[48].

On 26 February 2021, the contracts were exchanged. Mr Danckert asserts that Ms Western ticked the "subject to existing tenancies" box on each contract but had not told him that she would do so and did not tell him that she had: CB 74[49].

Mr Danckert states that although he was aware there were existing tenancies including one for approximately another six months he did not agree to the contracts been subject to existing tenancies referring to the fact that this was different to the contracts under the Option Deeds which were specified to be “vacant possession”: CB 74[50]-[51].

Mr Danckert states that in the process of working through the final form of the contracts and exchanging contract he did not meet any of the vendors apart from Ms Western and only dealt with her. He says he only spoke with Ms Pocknall once and did not appoint any other solicitor or conveyancer to act for DC2. He further states that Ms Western did not say anything to him about needing to ensure that the DC2 would have to have its finance ready to complete the contracts by 9 April 2021 and that Ms Western retained copies of the executed contracts and did not provide him with a copy of any of them: CB 75[53]

Following exchange Ms Western contacted Ms Pocknall to inform her of exchange and to arrange a meeting for her to collect the contracts: CB 220[3].

On 4 March 2021, Ms Pocknall collected the contracts and states she commenced acting for DC2 in relation to the purchase of the block: CB 220[4].

In or around March 2021 Ms Mammoliti had a conversation with Mr Danckert to the following effect:

It became clear that Arch Finance required the Windsor Property to be registered for strata and in light of that Ms Mammoliti attempted a different strategy to obtain the necessary finance for the block purchase: CB 93[28].

In early March 2021 (according to Mr Danckert) or on or about 10 March 2021 (according to Ms Western) DC2 engaged Ms Western to prepare off the plan contracts for the potential sale of the new Terrigal units, which she did: CB 75[58], 173[8].

On or about 8 March 2021, Ms Western became aware that MALK had entered into a new residential lease on 2 December 2020 for a period of six months, with an expiry date of 18 June 2021: CB 177[45].

In mid-March 2021, Ms Pocknall asked Ms Western to assist with obtaining stamp duty assessment notices as she was a registered user on E Duties: CB 221[7].

Ms Western arranged to obtain a land tax clearance certificate for unit 9, Mr Tayyar’s unit.

On 24 March 2021 a clearance certificate was issued by Revenue New South Wales and Ms Western sent a copy of the certificate to CCS: CB 218.3[4], 5 and 218.7–218.9.

On 24 March 2021 (1:58 PM) Ms Western sent Ms Pocknall an email requesting whether she was available at 10:30 AM the following morning to meet Mr Danckert at Ms Western's office: CB 111[12], 833.

On 25 March 2021 Ms Western states that Ms Pocknall arrived prior to Mr Danckert and had a conversation during which Ms Western gave Ms Pocknall a copy of the letter and the land tax certificate for unit 9 and observed Ms Pocknall write something on the certificate. She indicates that she said to Ms Pocknall "There will be some land tax that will be payable. My client’s informed me that they will be paying it on settlement". Ms Pocknall said, "That's fine. No problems. Can I borrow a pen?": CB 218.4[7]–[8].

On 25 March 2021, Ms Pocknall states that she met with Mr Danckert at Ms Western's office and carried out an identification check: CB 220[5].

At that meeting, Ms Pocknall says the conversation was to the following effect:

There is a file note from Ms Pocknall dated 25 March 2021 which states:

On 7 April 2021 Ms Mammoliti sent an email to a financier “Nik” (relevantly) to the following effect:

On 8 April 2021 Ms Mammoliti made contact with Axius Partners Pty Ltd (Axius) with a view to obtaining a loan for the block purchase on the current value in order to avoid having to rely upon the registration of the strata plan for the Windsor Property: CB 93–94[28]–[29]. Axius could not confirm timing on when the loan would be approved, so Ms Mammoliti continued to look for other lenders: CB 94[30].

Although the date for completion of the purchase of the properties was 9 April 2021 settlement did not take place at that time. The reason for that is not entirely clear.

On 13 April 2021, Ms Western sent a number of emails to the property managers for MALK putting them on notice that MALK was in breach of the contract due to the new lease being entered into and requesting them to try and arrange to have the tenant vacated as soon as possible: CB178[50], 929, 930, 932.

Between 16-19 April 2021 Mr Danckert explored funding from Assetline Development Finance (ADF): CB 76[60]–[67].

On 16 April 2021 Ms Mammoliti received an email from ADF attaching two letters of offer signed by Mr Danckert: CB 94[31], 690–985.

The ADF offers were conditional upon DC2 obtaining a valuation of the properties: CB 94[35].

On 20 April 2021 (2:38 PM) Ms Western sent an email to the other vendors noting that all discharging mortgagees were now ready to settle and “I will now issue a Notice to Complete to the Purchaser for each and every unit tomorrow and penalty interest will also be imposed from tomorrow until settlement takes place”: CB 1013.

On 20 April 2021, (3:51 PM) Ms Mammoliti sent Ms Western an email noting that the "valuation is almost resolved" and indicating the lender was asking questions regarding whether the leases had been finalised and to provide a list of eviction notices: CB 1014.

On 21 April 2021 Ms Western sent an email to Ms Mammoliti asking some details in respect of the (proposed) lender and providing details regarding the leases and attaching lease termination notices in respect of units 3, 4, 6, 7 and 9: CB 76[68], 95[38], 1016. The email was to the following effect:

On 22 April 2021, a valuation obtained by ADF valued the properties at $4.7 million excluding GST on an "as is" basis and a developed basis of 13 units "as if complete" substantially higher, in the order of approximately $19 million: CB 76[69], 1075.

On 22 and 23 April 2021 a number of tenants (Mr Hew and Mr Young) corresponded with Ms Western checking that a notice to complete had been issued: CB 1118, 1119. On 23 April 2021 Mr Parker requested the issue of a notice to complete: CB 1125.

In late April 2021 Ms Western assisted DC2 with its liability to pay stamp duty arising from the contracts and the Nomination Deed: CB 77[75].

In very early May 2021 Mr Danckert says he had a conversation with Ms Western regarding getting a strata registration done for the Windsor Property so that he could get some funds to top up the purchase of the block: CB 77–78[76].

Between 5 and 7 May 2021 Ms Mammoliti had contact with another financier, Gov Corp Finance Pty Ltd (Gov Corp), regarding lending for DC2 to both purchase the block and for construction to develop it. However, Mr Danckert did not wish to proceed with that offer: CB 95–96[41]–[48].

On 7 May 2021 Ms Western sent Mr Danckert an email stating "Unfortunately I am going to have to start charging penalty interest from today otherwise the owners are going to come after me big time": CB 1285.

Mr Danckert says he had a telephone conversation with Ms Western following the email in which he states she told him that she was having trouble with her husband and needed money: CB 78[77]. He states that at that stage Ms Western did not say anything to him about the need to complete the contracts: CB 78[78].

On or about 19 May 2021 Ms Western corresponded with various conveyancers/solicitors who acted for prospective purchasers of four of the new units (numbers 7, 8, 10 & 11): CB 78[80].

On 20 and 21 May 2021 Ms Mammoliti received an email from another potential lender, HomeSec Business Finance Pty Ltd attaching a conditional approval for an amount of $5,117,000. Mr Danckert signed the offer but that offer also did not proceed: CB 96-97[50]–[54].

On or about 25 May 2021, Mr Danckert requested Ms Western assist in arranging the registration of the plan of subdivision for the Windsor Property: CB 173[9].

She states that simultaneously Mr Danckert was attempting to arrange capital for the purchase of the block, and they had a conversation to the following effect:

In the context of her work for DC and DC2, Ms Western states she had numerous telephone conversations with Mr Danckert and Ms Mammoliti: CB 173[11].

On 27 May 2021 Ms Mammoliti had a conversation with Ms Western in which she states that Ms Western said (amongst other things):

On 30 May 2021 Ms Western forwarded Mr Danckert an email confirming that SBS had issued a contract for sale to the prospective purchaser for new unit number 6 and also issued a tax invoice which DC2 paid the following day: CB 79[85]–[87], 1391–1393.

On 2 June 2021 Ms Mammoliti received an email from Ms Western attaching a copy of confirmation from the NSW Land Registry showing that the strata plan had been lodged for registration with respect to the Windsor Property: CB 98[61], 1395–1396.

That day Mr Danckert informed Ms Mammoliti that Ms Western had told him it would take two weeks for the strata plan to be registered: CB 98–99[62].

On 3 June 2021 SBS sent the first notices to complete to CCS referring to the exchange of the contracts and noting that "our clients will also be relying upon special condition 9 of the contract for sale": CB 79[88], 179 [57], 1397–1414.

Special condition 9 relates to “Completion” of the contracts, and inter alia permitted charging of interest for delay in completing, if the vendors were not in default: CB 781.22.

Mr Danckert says this was sent without warning (CB 79[88]), although states that Ms Western forwarded the email to him immediately afterwards and that Ms Pocknall did not send him a copy of the email: CB 80[89].

The first notices to complete were in a form common to all the vendors and omitting formal parts the content of the notice to complete as follows:

On 3 June 2021 immediately after receiving the email Mr Danckert called Ms Western and had a conversation, he says, in words to the following effect:

He says Ms Western then hung up the phone on him: CB 80[90].

In early June 2021, Ms Pocknall’s father became terminally ill, and she states she was under stress: CB 221[8].

On about 7 June 2021 Mr Danckert says he instructed John Boxsell to act for DC2: CB 80[92]. Mr Boxsell is a partner or member of the firm Williams Boxsell Georgas (WBG).

On 16 June 2021, Mr Danckert emailed Ms Pocknall and ended her services, at which point she ceased to act for DC2: CB 180[58], 221[9].

The reason Mr Danckert says he sent the 16 June 2021 email to Ms Pocknall was he says because he knew the name of her practice was on the front page of the contracts: CB 113[22].

On 16 June 2021, Ms Western received an email from Mr Boxsell indicating that he acted for DC2: CB180[59], 1453–1454.

Between 11 and 18 June 2021 Ms Mammoliti explored offers with a number of other potential lenders including Marshall Investments Pty Ltd, eCap Australia Pty Ltd and Balanced Securities Ltd. The offers were conditional upon valuations of the block. The offers did not proceed: CB 99-100[63]–[71].

On 23 June 2021, Mr Danckert sent an email to Ms Western (11:00 AM) in which he said:

On 23 June 2021 Ms Western, more specifically SBS, issued a tax invoice to DC2 for acting on its behalf: CB 81[100]. The description of the work is as follows:

The invoice was for $11,400.42 (being $9,900 of fees and the balance disbursements): CB 1489. On 28 June 2021 DC2 paid the SBS invoice: CB 81[102], 1599.

Between 16 and 18 June 2021 there was email correspondence as between Mr Boxsell and Ms Western: CB 80–81[97].

On 17 June 2021 Mr Boxsell sent Ms Western an email including the following:

Mr Boxsell in an email dated 18 June 2021 set out a number of contentions regarding the contracts being those which arose by virtue of the exercise of the call option as set out in cl 4.1 of the Option Deeds and relevantly disputed that the first notices to complete were valid: CB 1477.

Of significance is that Mr Boxsell’s email to Ms Western reflected his view that the (disputed) first notices to complete could only be valid if there was an “entitlement” to terminate the contracts and he contemplated there would or might be an “attempt” to terminate the contracts at the expiry of the notices. Part of the email was to the following effect:

Ms Western replied at 3:27 PM on 18 June 2021 by email: CB 1479.

Ms Western asserted that the contracts were different from the ones attached to the Option Deeds because of a request from the purchaser to have them varied from vacant possession to subject to existing tenancies.

The email went on to dispute that the first notices to complete were invalid, although noted that we (SBS) "have received instructions from our clients and they will agree to withdraw the notices to complete but reserve their rights to issue a further notice to complete in due course pursuant to the terms of the contract for sale…".

The email also relevantly stated as follows:

On 18 June 2021 Ms Pocknall’s father died: CB 221[10].

On 18 June 2021 Ms Western received an email from Mr Boxsell indicating amongst other things, that service of any documents pertaining to the contract would be accepted by his firm: CB 180[60],1476–1478.

On 18 June 2021 the first notices to complete were withdrawn: CB 180[61].

On 22 June 2021 Ms Western received an email from Mr Szepes confirming that the tenant in his unit was vacating on that date: CB 181[64].

On about 23 June 2021 Ms Western exchanged emails with Mr Boxsell regarding the collection of the contracts the sale of land she was holding on behalf of CCS: CB 180[63].

On 23 June 2021 Mr Boxsell asserted to Ms Western that Mr Danckert would pay Ms Western’s invoice: CB 1502. Yet Ms Western on 25 June texted Mr Danckert to follow up regarding payment: CB 1598.

On 24 June 2021 Ms Mammoliti received an email from Egan National Valuers (Egan) attaching a valuation of the block for what she describes as a project related site value of $5.4 million and a market value (as if complete) for approximately $19 million: CB 100[72], 1508–1597.

Further, on or about 28 June 2021, Mr Danckert's son collected the contracts from Ms Western's home office and delivered them to Mr Boxsell: CB 81[103].

On or about 30 June 2021 Ms Mammoliti informed Mr Danckert of a number of potential finance offers: CB 81[104]–[106]. Mr Danckert says that at about this time Ms Western and he were communicating on almost a daily basis by email about other properties with mutual clients and asserts that at no point did she tell him anything about the need to complete the contracts for the properties within a specified time: CB 82[108].

On 30 June 2021 Ms Mammoliti received an offer from CC Capital Investment Fund Pty Ltd (CC Capital) attaching an offer for $12.7 million to DC2 being a loan amount for both purchase and construction to develop the properties: CB 100[73]. However CC Capital would not settle unless a construction certificate had been obtained: CB 101[77].

There was still a simmering issue regarding the fact that there was a tenant in unit 6.

On 6 July 2021 the Windsor Property was registered as a strata scheme: CB 101[78].

On 7 July 2021 Ms Mammoliti had a conversation with Mr Danckert to the following effect:

On 12 July 2021, Ms Western received confirmation from Dr Lee by telephone call that the tenant of unit 6 had vacated on 11 July 2021: CB 181[66].

On 12 July 2021 SBS sent letters to WBG by email from Ms Western to Mr Boxsell enclosing the second notices to complete in respect of each of the units: CB 82[111], 1659–1688.

The form of the second notices to complete (omitting formal parts) are as follows:

The second notices to complete were forwarded to Mr Danckert almost immediately by Mr Boxsell: CB 82[112].

On 12 July 2021 at 3:22 PM Ms Mammoliti received an email from Egan attaching the Windsor Property valuation for a market value of $4.29 million: CB 101[81], 1690.

On 14 July 2021 Ms Mammoliti sent Lucas Meaney of Impresta Group a copy of the Egan valution: CB 1794.

On 15 July 2021 Mr Meaney responded by email to Ms Mammoliti. Of some note is the statement in the email that he understood:

On 15 July 2021 Ms Mammoliti sent Ms Western an email noting that she had been working hard to achieve a settlement date by the end of the following week and requesting:

On 15 July 2021 Ms Western responded to the email in the following terms:

On 19 July 2021 (6:06 PM) Ms Mammoliti received an email from Strategic Corp Investments attaching an indicative letter of offer from Blackbird First Mortgage Corporation Pty Ltd (Blackbird) offering loan facility amount of $995,959.37: CB 83[114], 102[86], 1800–1808, 1809–1818. The actual loan amount was $900,000: CB 1805

On 20 July 2021 Direct Capital Investments Pty Ltd (Direct Capital) provided an offer to DC2 for a facility of $3.9 million: CB 102[86], 1819–1825.

Leaving aside fees and other charges, the Blackbird offer provided available funds of $900,000 and the Direct Capital offer funds of $3,580,671 constituting total available funds of $4,480,671 (which Ms Mammoliti describes as being the total purchase price for the properties): CB 102[87].

Blackbird did not require an acceptance fee to be paid (CB 83[116]).

On 26 July 2021 Mr Danckert signed on behalf of DC2 the Direct Capital offer and paid a commitment fee: CB 83[117]–[118], 1841. The same day, Ms Mammoliti received a remittance from Mr Danckert indicating he had paid Direct Capital's acceptance fee of $5,500: CB 103[93].

On 26 July 2022 Ms Western received a letter from Revenue New South Wales stating that an amount of $16,898.69 will be payable on settlement for unit 9: CB 218.5[13], 218.10.

On 27 July 2021 there was extensive communications between the parties including email correspondence between Mr Boxsell and Ms Western: CB 83[119]–[120].

At 11:32 PM Mr Boxsell sent an email to Ms Western in respect of the Hopwood sale requesting if vacant possession had been obtained: CB 1951.

The email contained the following bearing upon Mr Boxsell's assertion of his instructions:

At 11:42 AM, Ms Western sent an email to Mr Boxsell relating to the Parker sale, and stating:

The settlement adjustment sheet attached contained a provision for default interest from 12 July 2021 to 27 July 2021 in the sum of $1,746.58: CB 1947.

At 11:50 AM Ms Pocknall emailed to Mr Boxsell a settlement sheet which included an adjustment for the land tax on unit 9 in respect of Mr Tayyar: CB 218.5[14], 218.11–218.13, 1948–1950.

At 1:43 PM Mr Boxsell sent Ms Western a without prejudice email (titled in relation to "HOPWOOD AND ORS"). The content of the email was as follows:

At 3:06 PM Ms Western sent Mr Boxsell an email marked "high" importance and indicating as follows:

On 27 July 2021 Ms Mammoliti received a phone call from Mr Danckert who told her (CB 105[99]):

On 27 July 2021 Ms Mammoliti received a phone call from Ms Western which included a discussion to the following effect:

Ms Mammoliti says she did not inform Mr Danckert of the conversation with Ms Western as she had been asked by Ms Western not to do so.

However Ms Mammoliti did have a conversation with Mr Danckert to the following effect (CB 104[95]):

At 3:31 PM Ms Western sent Mr Boxsell a further email in the following terms:

At 3:45 PM Ms Western sent an email to each of the other vendors (except perhaps Dr Lee): CB 1958.

On 28 July 2021 Ms Mammoliti had a conversation with Mr Danckert to the following effect (CB 104[96]):

On 28 July 2021 Direct Capital sent a letter to WBG care of Mr Boxsell relevantly including the following:

On 28 July 2021, Mr Danckert says that he wanted to contact the different vendors (apart from Ms Western) to demonstrate that DC2 was able to settle the contracts by 6 August 2021: CB 113[27].

He says on that day he printed a copy of the Direct Capital letter dated 28 July 2021 attached to Mr Boxsell's email to Ms Western (10:46 AM) that day (CB 1960–1961) and took a copy of the letter to the address of MALK in Gladesville and spoke with a female informing her that he was the purchaser, took a copy of the letter to Mr Hew and spoke with him in words to the following effect: (CB 113–114):

He says he further took a copy of the letter to the addresses of each of Mr Hopwood, Mr Young and Mr Tayyar leaving respectively copies of his business card: with a lady at the address of Ms Hopwood; under the door of Mr Young and with a neighbour in the case of Mr Tayyar: CB 114[28].

On 28 July 2021 at 8:42 PM Mr Szepes sent Ms Western an email stating:

On 28 July 2021 at 9:49 PM Mr Hew sent an email to Ms Western stating:

On 29 July 2021 there were further communications.

At 9:39 AM Mr O'Connell sent an email to Mr Hew and Ms Western copied to the other purchasers stating inter alia:

At 10:46 AM Mr Boxsell sent an email to Ms Western marked without prejudice in the following terms:

At 3:09 PM Ms Hopwood sent Ms Western an email:

At 4:06 PM Mr Parker sent Ms Western an email (CB 1968) copied to the other parties as follows:

At 5:01 PM Ms Western sent an email marked with high importance to Mr Parker, Ms Hopwood, Mr Young, Mr O'Connell, Mr Szepes, Dr Lee, Mr Hew and Mr Taylor as follows:

On 30 July 2021 from 11:40 AM to 5:40 PM Mr Danckert exchanged text messages with Ms Western: CB 84[123], 1975–1979.

The text messages (CB 1975–1979) were relevantly as follows:

On 2 August 2021 at 7:30 PM, Ms Western scheduled a meeting with the other eight vendors, and after receiving confirmation from all unit owners, notices of termination were issued: CB 182[79].

On 2 August 2021 (9:41 PM), Ms Western sent an email to Mr Boxsell attaching letters from SBS directed to the attention of DC2 and enclosing by way of service notices of termination in respect of each of the vendors.

Omitting formal parts the notices of termination were as follows:

The emails, letters and notices were all essentially in a common form: CB 84[124], 2005–2024.

On 3 and 4 August 2021, there was email correspondence between Mr Boxsell and Ms Western: CB 84[125]–[129].

On 3 August 2021 (10:55 AM) Mr Boxsell in an email to Ms Western noted the termination notices and indicated that DC2 denied the validity of the notices and asserted that the issue of the termination notices were acts of repudiation by the vendors which entitled inter alia DC2 to claim damages: CB 2025–2026.

The email further asserted that: (a) the invitations on PEXA to settle the matter had not been withdrawn, indicating the vendors wished to proceed to settlement; (b) DC2 had accepted the PEXA invitation; (b) DC2 had provided evidence of finance approval, and (d) the vendors "having requested settlement to proceed after the expiry date of your second batch of notices to complete, has waived any entitlement to terminate the contracts pursuant to the notices to complete dated 12 July 2021": CB 2026.

Ms Western for her part, disputed that the termination notices were invalid and that they were a repudiation by the vendors (email 4:35 PM): CB 2028.

On or around 4 August 2021, Mr Danckert says he contacted Mr Parker, Mr Young and Mr Szepes but could not reach them and left a message on their phones for them to return his call, but says that he did not receive calls back from any of them: CB 114–115[30].

On 4 August 2021 (7:02 PM), Ms Western emailed Mr Boxsell stating:

On 5 August 2021, Mr Danckert instructed HFW Lawyers to act for DC2: CB 84[133].

On 6 August 2021, Mr Danckert received an email from Ms Mammoliti (CB 115[32], 2052–2053) as follows:

On 9 August 2021, Mr Danckert caused HFW to lodge caveats on the title of units, 1 and 10 of the properties and on 18 August 2021 he caused HFW to lodge caveats on the title of units 2 to 9 of the properties: CB 84[134], 2054–2057 and CB 85[138], 2099–2114.

On 9 September 2021, these proceedings were commenced by Statement of Claim and HFW received lapsing notice in in respect of units 2, 3, 4, 6 and 7 (CB 85[146], 2340–2349) and the vendors exchanged contracts to sell the units to a new purchaser Blue Sox for a price of $690,000 each ($220,000 more for each unit): CB 86[148]; T 5.

The contracts for sale for the block were in the standard form of contract for the sale and purchase of land, Law Society and Real Estate Institute, 2019 edition (2019 edition).

The contracts contained standard terms and conditions (standard conditions) and special terms and conditions (special conditions). The nominated date for completion was the 42nd day after the contract date (CB 781.1) being 9 April 2021.

The contracts contain provision on the front page for the sales to be either by vacant possession or subject to existing tenancies: CB 781.1.

Specifically the contracts provided that the transactions were to be "Electronic transactions" to be performed by the "Nominated Electronic Lodgement Network (ELN)" being PEXA: CB 781.2.

The electronic transaction provisions were set out in cl 30 of the standard conditions: CB 781.17–781.19.

I will refer to a number of the standard conditions and special conditions below.

However, it is appropriate to refer to some of the provisions regarding notice and essentiality of time.

Clause 9 of the standard conditions provides:

Clause 6 of the special conditions provides as follows:

The Conveyancers Licensing Act 2003 (NSW) (CL Act) regulates conveyancing in New South Wales.

Under the CL Act "conveyancing work" is defined as legal work carried out in connection with any transaction that creates, varies, transfers or extinguishes a legal or equitable interest in any real or personal property, such as (for example) any of the following transactions: (a) a sale or lease of land, (b) the sale of a business (including the sale of goodwill and stock-in-trade), whether or not a sale or lease of land or any other transaction involving land is involved, (c) the grant of a mortgage or other charge: s 4(1) CL Act.

The CL Act provides that "legal work" means work that, if done for fee or reward by a person who is not an Australian legal practitioner, would give rise to an offence under Part 2.1 of the Legal Profession Uniform Law (NSW): s 4(4) CL Act.

Without limiting the above definition "conveyancing work" includes: (a) legal work involved in preparing any document (such as an agreement, conveyance, transfer, lease or mortgage) that is necessary to give effect to any such transaction, and (b) legal work (such as the giving of advice or the preparation, perusal, exchange or registration of documents) that is consequential or ancillary to any such transaction, and (c) any other legal work that is prescribed by the regulations as constituting conveyancing work for the purposes of the CL Act: s 4(2).

There are various exclusions from "conveyancing work": s 4(3) CL Act.

There is some commentary in caselaw regarding what is the nature, or more precisely content, of a duty of care owed by a conveyancer in a conveyancing matter to a client or clients and whether the duty is the same as that of a solicitor.

In Benson v MacLachlan t/as Sterling Conveyancers [2001] NSWCA 263 (a case dealing with the prior legislation), Meagher JA suggested it is the same: at [20]; Handley JA disagreed at [23]-[26], citing Philips v William Whiteley Ltd [1938] 1 All ER 566 at 569 per Goddard J (comparing jewellers and surgeons for the task of piercing ears to enable a plaintiff to wear ear-rings); and Heydon JA at [28] found it unnecessary to answer the question.

In Perpetual Trustee Company Ltd v Ishak [2012] NSWSC 697 at [178] Brereton J observed that the scope of duty of a conveyancer is narrower than that of a solicitor, and would not ordinarily include financial and commercial advice. That would appear to be correct having regard to the exclusions from the “conveyancing work” of establishing a corporation or varying the memorandum or articles of association of a corporation (s 4(3)(c)) and the giving of investment or financial advice: s 4(3)(f) CL Act.

There are cases in other States which comment on the duties of conveyancers in the context the statutory regimes prevailing in those jurisdictions: see e.g. Auzora Pty Ltd v Commissioner of Office of Business and Consumer Affairs (2009) 105 SASR 378; [2009] SASC 344; Trani v Trani (No 2) (2019) 59 VR 362; [2019] VSC 723.

In light of my findings in the matter it is not necessary to embark upon consideration of the duty of care owed by Ms Western to the other vendors.

However, a conveyancer is an agent and in light of the provisions regarding trust funds in the CL Act will have certain statutory duties and also prima facie fiduciary obligations.

If time is not “of the essence” for completion, then it must be made so by a notice to complete as a necessary prelude to termination for a party’s failure to complete. The only relevant exception is where a party has repudiated his or her obligations under the contract; the other party can accept the repudiation and terminate the contract without the need first to make time of the essence: see Peter Butt, The Standard Contract for Sale of Land in New South Wales (2nd ed, 1998, LBC Information Services) (Butt) pp 634–635.

A notice to complete makes essential the time for performance of the obligation to complete, where before the time was non-essential. Another (and perhaps preferable) way of describing the effect of a notice to complete is that it provides evidence of the recipient’s repudiation of an obligation if the recipient fails to complete within the time required by the notice: see Butt at 637–638.

The basic requirements for a valid notice to complete are as follows (Butt at 638):

Butt (now Emeritus Professor Butt) at 658 in referring to the requirements regarding the form and content of a notice to complete referred to the decision of Sir Frederick Jordan in O’Brien v Dawson (1941) 41 SR (NSW) 295 at 304, noting three requirements:

In relation to the consequences of non-compliance Butt at 659 states:

The parties’ counsel provided submissions regarding principles in respect of notices to complete. With some adaption of those submissions and supplementation I set out the following principles which emerge in the texts and authorities:

Whilst ultimately it is a question of construction in each case, the parties made reference to a number of cases as indicating the nature of the information required.

In Balog v Crestani (1975) 132 CLR 289; [1975] HCA 16, the words in the notice to complete used were (at 292):

Gibbs J stated (at 299-300):

His Honour then held (at 300) that:

In Taylor v Raglan Developments Pty Ltd at 132-133 Powell J approved though qualified Gibbs J’s observations in Balog v Crestani at 296-297 (quoted above) in the following terms, which suggest that a notice to complete is sufficient if it draws attention to the possibility of termination:

In Wilde v Anstee (1999) 48 NSWLR 387; [1999] NSWSC 612 at [62], Austin J held:

Butt states that it is clear from Balog v Crestani, as indeed from other cases, (citing Morgan v Beeby [1968] 2 NSWR 609 at 616, 624 (CA)) that the surrounding circumstances (including the correspondence between the parties) can be looked at to clarify ambiguous terms in a notice to complete, and in particular to imply from the terms of the notice a sufficient intimation that non-compliance may lead to termination: at 660.

Butt then comments on the extent of recourse to surrounding circumstances (at 660):

Time stipulations are viewed differently at common law and in equity: Butt at 389-390.

At common law in the case of the sale of land, time was of the essence of the contract when a date for completion was named in the contract. The Equity Courts on the other hand treated failure to complete on the appointed day as a failure in a collateral matter analogous to failure to pay off a mortgage upon the due date. At common law consequences may be strict. However, in equity specific performance may be available to a party who had not been ready to complete on the appointed day unless it appears to the Court that it would be unjust not to allow the defendant to take advantage of the plaintiff’s failure: Canning v Temby (1905) 3 CLR 419 at 425; [1905] HCA 45 per Griffith CJ.

Thus viewed, the doctrine that time is not of the essence of the contract is a doctrine applied in relief of a party who is himself technically, but not substantially, in default so as to allow him to claim specific performance in a proper case, although at law he could not maintain an action: Canning v Temby at 426.

More particularly, time stipulations may be affected by statutory provisions.

In New South Wales the Conveyancing Act 1919 (NSW) provides that stipulations in contracts, as to time or otherwise, which would not before the commencement of the Act have been deemed to be or to have become of the essence of such contracts in a court of equity, shall receive in all courts the same construction and effect as they would have previously received in such court: s 13.

For some time at least until the early 1980s there was some element of uncertainty affecting the operation of s 13, which uncertainty arose from controversy as to the true principle underlying equity’s attitude to time stipulations: Louinder v Leis per Mason J at 524.

Equity and common law differed not so much in the construction of the contract, rather as to the consequences which they assigned to a breach of it: Louinder v Leis per Mason J at 524.

Essentially, s 13 has been regarded as extending the equitable doctrine to proceedings at law except where equity still would have regarded time as of the essence: see A E V, “Contracts for the Sale of Land — Stipulations as to Time” (1965) 39 ALJ 63-64 referring to Canning v Temby at 426.

In summary and without purporting to be precise, equity would regard time as of the essence where: (a) it is an express term of the contract; (b) such a term can be implied because of the nature or structure of the contract; (c) one party has delayed unreasonably and the other gives him notice requiring performance at a reasonable future date, and (d) a term of the contract is that some act be done by a defined date, or within a reasonable time: Conveyancing Service New South Wales (LexisNexis) at [30335.5].

Equity rather than the common law has shaped the requirements for a valid notice: Wilde v Anstee per Austin J at [59] citing Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623; [1989] HCA 23 (Laurinda) per Deane and Dawson JJ at 652. The impact of equity relates not merely to timing but also, and perhaps primarily, to availability of equitable remedies: Wilde v Anstee at [59].

To the extent that equitable relief is sought, notices to complete and their effects must be viewed through the operation of equitable principles.

As noted above, it is often said that the effect of a notice to complete is that it provides evidence of the recipient’s repudiation of an obligation in failing to complete within the time required by the notice: see Butt at 637–638; Cromarty per Meagher JA at [50]-[52] (Bell P at [1] and Payne JA at [88]) agreeing) citing Louinder v Leis at 533 (Brennan J); United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904 (United Scientific Holdings) at 946 (Lord Simon).

Lord Simon commented the giver of the notice is really saying, ‘Unless you perform by such-and-such a date, I shall treat your failure as a repudiation of the contract.’: United Scientific Holdings at 946.

These comments whilst referring to contractual obligations, are to be viewed in the context of the approach of equity to contractual obligations when a party seeks equitable relief.

The notion that the notice must specify termination is not supported by the authorities. It is not hard in the authorities to find forceful remarks regarding this: e.g. Vandyke v Vandyke (1976) 12 ALR 621 per Hutley JA at 633.

While it is sufficient for the giver to convey an intention to terminate, as Austin J has observed it is reasonably clear from modern authorities that it is not necessary for the giver to do so. A notice is adequate to warn the defaulter if it conveys that the giver will be entitled in the event of non-compliance, or will regard himself as entitled, to rescind: Wilde v Anstee at [60] citing Deane and Dawson JJ in Laurinda at 654.

The whole point of equity’s intervention in relation to stipulations as to time is that, in the absence of an express or implied contractual provision to the contrary, it regarded it as inequitable or unconscionable for a party to a contract to rescind for breach of the time stipulation without having given reasonable warning to the party in default: Deane and Dawson JJ in Laurinda at 654.

Viewed in the above equitable approach, it is not necessary that the notice should use any particular form of words; it is the substance of what it conveys that matters (Taylor v Raglan Developments at 133) in light of the surrounding circumstances.

In a traditional paper settlement, the buyer is usually required by the terms of the contract to pay the purchase price in exchange for the title and transfer documents from the seller: Sharon Christensen and W D Duncan, “To tender or not to tender: When is a party ready, willing and able for electronic settlement?” (2016) 25 APLJ 22 (Christensen and Duncan) at 22.

The obligation of the buyer to pay the price of the obligation of the seller to deliver the title (settlement obligations) are usually dependent and concurrent obligations: Christensen and Duncan at 22, 23.

This has several consequences.

One consequence is that a party is only able to terminate for the failure by the other party to perform a settlement obligation if the terminating party is ready, willing and able to perform. This will require tender of performance in accordance with the contract unless the requirement to tender is excused: Christensen and Duncan at 22-23 citing Mahoney v Lindsay (1980) 33 ALR 601.

What is required for a valid tender ultimately depends upon the terms of the particular contract. However generally speaking the minimum requirements are for the buyer to attend at the place of settlement and to tender the amount due under the contract and for the seller in exchange to deliver good title in accordance with the contract: Christensen and Duncan at 23.

In the case of the buyer, the balance of the purchase price to be tendered as calculated and adjusted in accordance with the contract: Christensen and Duncan at 24.

The obligation to tender performance can be dispensed with if one party intimates before the time of settlement the performance of the obligation will be futile or useless. That intimation of non-performance may occur either expressly (by words or writing) or impliedly by conduct: Christensen and Duncan at 24-25.

Clause 30 of the standard conditions sets out a detailed regime regarding what is expected and required of parties in settlement of an electronic conveyancing transaction. I refer to this more specifically below.

Christensen and Duncan make some comments in relation to tender of performance in a digital or electronic environment. However, it is stated that the essential obligations of the parties in an electronic settlement are the same as in a ‘paper settlement’. The main differences are said to be that in an electronic settlement (a) there is a focus on the pre-settlement obligations of both parties to prepare and sign electronic documents and verify funds and (b) there is no physical meeting to conduct an exchange: at 27.

Instead, the exchange of the title and transfer documents for the purchase price takes place electronically through a number of steps that are facilitated by the relevant ELN such as the PEXA workplace transaction system: see Christensen and Duncan at 27.

Ms Oakes who has practised in conveyancing for over 10 years gave evidence regarding the operation of PEXA.

People who are members of PEXA and users of PEXA, by reason of that membership, are generally described as subscribers: T301. Ms Oakes is not personally a member of PEXA although the firm for whom she works (Avondale Lawyers) is a member of PEXA: T301. Ms Oakes operates the conveyancing practice of that firm when it comes to utilising the electronic workspace provided by PEXA: T302.

Ms Oakes’ expertise is in the field of actually operating the PEXA system, as distinct from expertise in respect of the rules that govern the system: T301.

Ms Oakes’ evidence as to the operation of the system was uncontroversial and is relevantly as follows (CB 188[4]-191[19]):

Ms Oakes indicated that the split between “READY/READY” is a split between readiness for the financial statement and readiness for lodgement: T296.

The details from the settlement statement are inserted into the PEXA financial settlement schedule (FS schedule) as per cl 30.9 of the contracts: see also T305.

Each of the contracts (for example see CB 781.18) provides, pursuant to cl 30.9.1 that the purchaser must provide the vendor with adjustment figures at least two business days before the date for completion:

Ms Oakes agreed that there would be communication of figures between the solicitors or conveyancers concerned beforehand and agreement on adjustments and the normal practice is that once those figures are communicated and the parties endeavour to agree, they proceed to insert agreed figures manually into the system to get it ready for settlement: T300, 308, 309.

The provision of figures in this way beforehand between the conveyancers prior to settlement is in order to allow a reasonable time for each party to agree: T309.

Ms Oakes indicates that the normal practice is that it is the purchaser rather than the vendors who provides the first draft of the adjustment figures and [is also] the person who sends the first hard copy draft of the adjustment figures: T311.

Some figures may be typed in at an earlier point and then the party inserting the figures can come back and finish it off later: T308.

Figures would need to be inserted on behalf of the relevant purchaser and both parties need to agree on a final figure for settlement: T299.

Mr Kelly referred to the PEXA Subscribers Participation Agreement (PSPA) and the New South Wales Participation Rules for Electronic Conveyancing (Participation Rules): T300-301.

Mr Kelly asserted that there is a difference between Participation Rules and the PSPA under which subscriber settlement terms and conditions for electronic settlements and payments are put into effect: T301.

Ms Oakes had familiarised herself with the PSPA: T302.

Mr Kelly referred (T302) to rule 14.4(b) PSPA

Ms Oakes accepted that, in relation to ensuring accuracy and correctness of information, although the subscriber can put in whatever figure the subscriber wanted, one cannot have incorrect amounts at the time of signing off: T302.

Ms Oakes agreed that it was a rule of operation of the system that the parties (subscribing members) using the system co-operate: T310.

If a purchaser requires finance in order to complete the purchase, the incoming mortgagee providing the finance is invited by the purchaser. The incoming mortgagee will then need to accept the invitation and upload the source funds into the source funds tab: T310.

The outgoing mortgagee puts in a number and signs off on the financial statement in respect of the money it says it needs to be paid in order to discharge its mortgage: T303-304.

Ultimately all charges and adjustments require agreement. That would include a claim made by the vendor for default interest: T309.

Once there is agreement by the parties, there is a facility for the system to indicate that both parties have agreed on the figure and then “all parties can sign off”: T299.

Once the parties are ready to settle, they will usually sign off and verify the source funds, then it is ready to settle: T310. However, the sale will not complete if the incoming mortgagee has not accepted an invitation into the PEXA workspace, because the incoming mortgagee is the only one who can upload the source funds and verify those funds: T310-311.

Ms Oakes indicated that if the purchaser has not joined the PEXA workspace the parties can partially co-operate, but settlement cannot be completed because they have not joined the workspace and they will need to enter in their own payment directions, which the vendor cannot do on the purchaser’s behalf, and agree to a final figure and sign off: T310.

Christensen and Duncan commented upon the NSW standard contract (prevailing in 2016). They noted that the contract does not purport to alter the fundamental obligations of the buyer and seller and that cl 30.10 requires the buyer and seller to ensure all electronic documents are signed and all other steps have been taken to enable the transaction to complete on the settlement date and that the usual obligations of the seller and buyer under cl 16 to deliver title and pay the purchase price remain the same: at 29-30.

As a general proposition those comments seem still relevant in relation to the 2019 edition.

Ms Oakes was not a participant of the PEXA workspace in this case. Rather she was given a list of names and dates and descriptions of events and organised them in chronological order from the history she was provided with: T297.

To take as an example the case of Mr Tayyar (unit 9) Ms Oakes exhibited a copy of the PEXA exchange history for the period from 9-30 July 2021: T296.

There are a series of entries disclosed in relation to the workspace as follows (CB 211):

Thereafter there were half hour increments (approximately) up to and including 5:00 PM when settlement failed on that day due to the expiry of the 5:00 PM cut-off time (CB 211-212):

Ms Oakes indicated that the line item “xvii” is the final figure provided by the vendor prior to settlement: T298.

In order to get the “vendor’s funds” (which are the proceeds from settlement to be paid to the vendor) one needs to know the other fees including professional fees. Ms Oakes indicated that Ms Western had already put in the professional fees which she agreed would need to have been taken from a settlement sheet: T298.

In the case of Mr Tayyar the form of settlement sheet which appears at CB 1949-1950 contains figures for settlement as asserted by Ms Western on behalf of Mr Tayyar as vendor. All that detail is inserted into the PEXA workspace financial statement: T305.

If the system had correctly worked the destination line item “Vendors Funds” (CB 211) at “xvii” would have been the figure of $191,281.90 (in accordance with the settlement sheet at CB 1950): T305.

The figure of $191,281.90 is simply the vendor’s assertion of what the vendor should end up with after all the figures have been put in: T306.

There are PEXA settlement sheets for each of the vendors, although it became apparent during cross-examination of Ms Oakes that the copies of them in each of the electronic and hard copy court books were an incomplete reproduction of the material captured on the electronic pages, because the screenshots facility is unable to capture the entire settlement sheet page: T305-307. That was resolved by the production of a A3 size reproduction, relevantly as an example, in the case of Mr Tayyar: see Ex D1,8-1.

Ms Oakes rejected the notion that her assertion that the parties did not agree on a final figure for settlement suggested that neither party got to the point of finally signing off on the settlement schedule (CB 212 [42r]). She indicated that that part did not relate to “signing off”, but rather to the parties agreeing on a settlement figure. She stated that prior to signing off both parties have to click “agree”: T303. Only the purchaser and vendor can click “agree”: T303. There would never be situation in which there was a complete signing off unless they both agreed: T304.

Because it is relevant to a number of the issues in the matter it is appropriate to make some observations at this point regarding co-operation regarding conveyancing transactions within the electronic conveyancing environment.

DC2 referred to the provisions of cl 26.9 of the PSPA.

Those provisions (CB 2563) provide that:

Mr Allen submitted (G1CS [40]) that:

I agree.

Even under the general law there is a general obligation for parties to co-operate with one another to give effect to a contract: Commonwealth Bank of Australia v Barker (2014) 253 CLR 169; [2014] HCA 32 at [37] per French CJ, Bell and Keane JJ.

In relation to Mr Parker, Ms Oakes reviewed the material in respect of the PEXA workspace ID and history and noted the following in respect of each of the vendors (CB 193[21] – Mr Parker; 196[24] – Mr Hew; 199[27] – Mr Young; 202[30] – Ms Hopwood; 205[33] – MALK; 207[36] – Szepes; 209[39] – Mr O’Connell; 211[42] – Mr Tayyar; 214–215[45] – Ms Western (unit 10); 216–217[47] – Ms Western (unit 1)):

Based on the review of the relevant PEXA online workspaces Ms Oakes gave evidence that:

Ms Oakes concluded that if the Purchaser completed the following tasks prior to 5:00 PM on 27 July 2021, the PEXA workspaces would have proceeded to a READY/READY status. However the following tasks were not performed by the Purchaser prior to 5:00pm. on 27 July 2021 (CB 218[52]):

From Ms Oakes’ review and analysis of the material provided, DC2 did not take the necessary steps to advance the PEXA workspace to READY/READY on or before 5:00 PM on 27 July 2021: CB 218[53].

In respect of each of the vendors, Ms Oakes noted that the incoming proprietor (also known as the Purchaser) only joined the PEXA Workspace:

Mr Danckert, as noted, was an agent for the vendors in respect of the sale of the block.

It was admitted on the pleadings by Ms Western that Ms Western and SBS were expressly or impliedly agents of the vendors in light of the background to the contracts including negotiations with Jogat in 2018: CB 66.6A[26]; CB 66.42[6].

Duties of agents may arise in different ways including by contract, in equity and by a statutory provision.

Where an agency is created by contract, self-evidently the precise duties owed by the agent to the principal will depend upon the terms of the contract. Nonetheless, implied into every contract of agency are terms requiring the agent to act in accordance with the instructions contained in express authority or given subsequently by the principal, to act honestly and in good faith and to act for the benefit of the principal. G E Dal Pont, Law of Agency, (4th ed, 2020, LexisNexis) (Dal Pont) at 202. To this end the agent must inform the principal of all matters material to the agency: Dal Pont at 201-202.

Fiduciary duties in Australian law have a proscriptive rather than prescriptive nature: e.g. Dal Pont at 205, 222, citing Breen v Williams (1996) 186 CLR 71 at 113; [1996] HCA 57.

There are various proscriptive duties. These include that (a) the agent not place himself in a position where there is or may be a conflict between the duty owed as fiduciary and his or her own interest or duty to a third party (no-conflict duty) and (b) the agent must not make a profit out of a fiduciary relationship except with the informed consent of the principal (no-profit duty): Dal Pont at 204.

The duty to disclose is properly seen as an adjunct to the proscriptive fiduciary duties rather than an independent prescriptive duty: Dal Pont at 205. Fiduciary duties aim to preclude the fiduciary from being swayed by considerations of personal interest and from accordingly misusing the fiduciary position for personal advantage: Dal Pont at 204 citing Warman International Ltd v Dwyer (1985) 182 CLR 544 at 557-558; [1995] HCA 18.

Nonetheless, in the above context of the purposes of fiduciary obligations, proscriptive duties may in given circumstances take on a positive character in relation to a duty to disclose: Dal Pont at 205.

Where it applies, the duty to disclose (or perhaps more accurately communicate) relates to all material information the agent possesses that pertains to the agency relationship. What is “material” is regarded as a matter of judgment in each case, though if an agent is unsure of the materiality of information, it is said that disclosure should be made: Dal Pont at 222.

It is said that the agency of a real estate agent for a vendor-principal illustrates the duty of an agent to communicate information material to the agency such that the agent must disclose to the principal “everything known to him respecting the subject matter of the contract which would be likely to influence the conduct of his principal”. The test is an objective one, determined by what a reasonable person in the agent’s position would consider, in the circumstances, is likely to influence the principal’s conduct: Dal Pont at 224.

An estate agent’s duties include ensuring the principal remains appraised of any changes in market conditions at any time preceeding entry into a binding contract: Dal Pont at 227.

The agent’s duty to communicate material information continues at least until the time of the transaction the agent is engaged to facilitate, or until the principal’s instructions have been withdrawn: Dal Pont at 227.

Each of the second group of vendors gave evidence in the proceedings.

Each of them indicated they were not aware until after the contracts were terminated that Mr Danckert was a shareholder or director of DC2, or aware of the fact that Ms Western acted in relation to the sale of units or in respect of the on-selling of units: CB 120 (Parker), 126 and 122 (Lee), 132 (Szepes), 139 (Hopwood), 144 (Young), 150–151 (Hew) and 158–159 (Tayyar).

Evidence of what a witness or party would have done if been made aware of certain facts or advice had been given is essentially opinion evidence as to what the witness or party would have done in a hypothetical situation. The admissibility of such evidence has been described as entrenched although the caselaw gives judges great caution as to the weight to be given to any such evidence: Roach v Page (No.37) [2004] NSWSC 1048 (Roach) per Sperling J at [276].

Sperling J in Roach commented at [275]-[277] as follows:

Essentially the weight of the “would have done evidence” is to be assessed by reference to context and the surrounding circumstances, probability and other objective evidence: see Roach per Sperling J at [276]; Stealth Enterprises Pty Ltd t/as The Gentlemen’s Club v Calliden Insurance Limited [2017] NSWCA 71 per Sackville JA at [87]-[97], Meagher JA at [59]; Ward JA at [76]; Rosenberg v Percival (2001) 205 CLR 434; [2001] HCA 18 at [14]-[16] (Gleeson CJ); [26]-[47] (McHugh J).

The evidence was essentially as follows:

Ms Hopwood when questioned by Mr Allen if she had known about the SBS retainer agreement with DC2 said she would have “taken a breath to get other advice”: T315. She was selling her unit because “it was falling to wrack and ruin” and “[i]t was becoming dilapidated, and I couldn’t live there”. She would have sold the unit but on the proviso that she could have bought back in: T316.

When she was asked whether in February 2021 she wanted her apartment sold to a developer so that the Terrigal block could be redeveloped, she stated “I was told that was the only option”: T316. It seems to me she was receiving limited advice.

The tenor of Mr Kelly SC’s cross-examination was to challenge the vendors thinking that they had options (i.e. choices) by questioning them regarding the Option Deeds. The questioning in a sense proceeded on the premise that they became bound to abide by Ms Western’s decision-making, because of cl 9 Option Deeds and to exchange contracts once DC2 had become nominated and made the Calls: e.g. cross examination at T317-318 (Ms Hopwood), 339 (Dr Lee), 349 (Mr Young), 354-355 (Mr Tayyar), T365 (Mr Szepes).

Ms Hopwood indicated that she expected that “my real estate guy would’ve also been quite active in looking after my interests for that too”: T317.

There was some urgency to her position. She wanted to be able to live in Terrigal but had been three years out of Terrigal waiting for settlement and became desperate to have the matters solved: T318-319.

Had she been informed as at 25 February 2021 that Mr Danckert was a director and shareholder of DC2 she would have said “stop, I’m not going ahead with this, because I don’t believe that your real estate guy can also be your purchaser”: T320. She disputed that she would not have gone ahead and terminated the contract. She would have rather held onto her unit and reassessed and got advice: T320.

Mr Hew gave evidence that if he had known that there was a conflict for Ms Western he probably would have found different conveyancer or solicitor to assist him: T332.

Dr Lee was concerned about the legality of Mr Danckert’s conduct (T335-337) and if it were illegal he would not have gone ahead and would have found a way to try to get out of it: T337. Even when asked to put the illegality to one side and was put to him that he wanted the contracts exchanged on completion, he accepted that that was the position but stated “I would have liked it moved on and completed with a legal entity that would have purchased it”: T339.

Even when it was put to Dr Lee that he appreciated that the Option Deeds were interdependent with all the others he stated that he would have obtained a secondary legal advice to see what his options were: T342.

Mr Young denied that he was relieved that DC2 emerged as a purchaser who was prepared to exchange contracts before the expiration of the option period, because he believed that the prices were locked in from 2018 and the market had moved significantly since then: T347-348.

Mr Tayyar, like Dr Lee, was also concerned about the legality of the matter. He denied that he was indifferent to the mere fact that Mr Danckert was a director and shareholder of DC2 and indicated that what concerned him was that his agent to whom he had paid commission up front “bought my property without my permission and acted illegally” and “without my consent”: T354.

Mr Parker was concerned about the fact that the agent became buyer for the unit: T362-363. When it was suggested to him that he would not have taken steps to terminate the Option Deeds had it been brought to his attention that the nominee was a company owned by Mr Danckert, Mr Parker indicated that he would have taken advice from another solicitor and taken steps to act on that advice: T363.

When it was suggested to him that Mr Danckert got the price for him back in 2018 and that there was no further task left to him when it came to getting a price for Mr Parker in 2021, Mr Parker disagreed asserting “real estate agents have a role to make sure that the transaction is complete and that includes settlement” and also “Mr Danckert had an obligation to tell me that he was going to buy the property. It doesn’t matter whether it was through him personally or his company. He has an obligation to tell me that he was getting a beneficial interest”: T363-364.

Whilst Mr Szepes agreed that the last thing he wanted to happen in February 2021 was for the sale not to go ahead, he disagreed with the proposition that the identity of the director and shareholder of DC2 made no difference to him at all “[b]ecause the director of D Capital 2 was our real estate agent”: T368.

Although he agreed that the rules regulating the conduct of real estate agents was brought to his attention for the purpose of these proceedings, he denied he was seeking with the benefit of hindsight to construct a way out of the contract with DC2 because of the rising market: T370.

Mr Pesman SC submitted, and I agree, that most of the important issues in these proceedings are capable of resolution by reference to the documents and do not require credit findings.

That said, Mr Pesman SC did identify a limited number of issues in which the parties’ credit requires consideration, in particular:

A summary of the principles in relation to credit and making findings where facts are disputed was very helpfully collected and summarised by Kunc J in Saravinovksa v Saravinovski (No 6) [2016] NSWSC 964 at [464]-[473]. I respectfully agree with and adopt his Honour’s summary.

In the proceedings, the deponents of all the affidavits were cross-examined.

Mr Pesman SC was particularly scathing of the credit of Mr Danckert and submitted that the Court would not accept any of his evidence unless supported by documents or contrary to DC2’s interests. Indeed, Mr Pesman SC went further and submitted that the Court would be well justified in finding that multiple aspects of Mr Danckert’s evidence were deliberately dishonest, providing a schedule of examples: G2CS [5]-[6].

A degree of Mr Danckert’s evidence was straightforward including instances where he accepted obvious or uncontroversial facts.

I deal below with a number of aspects of Mr Danckert’s evidence.

It suffices to note at this stage that I make findings below on various disputed matters and I do not accept Mr Danckert’s evidence that:

Mr Danckert’s evidence regarding DC2’s ability to complete on 27 July 2021 was (as I note below) unsatisfactory.

Mr Danckert was cross-examined about the deposit of $450,000 paid into his trust account: T157. He agreed that he had received fees of $67,500 and returned $13,500 to Ms Western: T157. He agreed that he did not play any part in the negotiation of the Option Deeds (T158) and that neither he nor DC2 were parties to the Variation Deeds: T158.

There was a particular aspect of Mr Danckert’s evidence which I found unsatisfactory. This related to assertions that were made by Ms Mammoliti to a financier (Nik Vujasin of Gov Corp Finance: see CB 1145) by email on 5 May 2021 (CB 1277) to the effect that Mr Danckert had paid a total of $450,000 to exchange and paid for all the DA, plans and costs for the DA and the other partners did not assist in funding. His cross-examination in respect of this demonstrated that the communications with the financier in this respect were patently false and misleading.

Mr Danckert gave evidence that he approved the email to be sent to the financier. From the exchange which I set out below Mr Danckert was not only willing for Ms Mammoliti (unwittingly on her part) to mislead the financier but also when he had direct contact with the financier, Mr Danckert knowingly refrained from correcting the financier’s understanding about what financing Mr Danckert had provided, which Mr Danckert knew was not correct.

The cross-examination by Mr Pesman SC was as follows (T197-200):

Mr Pesman SC made other criticisms of Mr Danckert’s credibility.

One of the criticisms of Mr Pesman SC was that there was a shift in Mr Danckert’s approach to his role in relation to the vendors.

I refer below to Mr Danckert’s non-disclosure of his interest in DC2 to the other vendors.

However, Mr Danckert’s affidavit evidence, in particular his affidavit of 25 May 2022 (CB 109[6]-[7]), referred to discussions with Ms Western regarding whether he should make a disclosure that he was “behind the purchases” and that “I am the buyer”. He asserted that Ms Western had told him not to tell the vendors that and not to tell Mr Young anything.

The conversations he said to have taken place in “November/January 2020” and “early February 2021” appear premised on the basis that he felt some obligation (whether moral or legal) to make a disclosure.

Nonetheless, as Mr Pesman SC submits, and I accept, at some point after swearing the affidavit and being cross-examined Mr Danckert became aware that it might be advantageous for him to assert that the vendors were no longer his clients after 2018, asserting in cross-examination regarding discussions with Mr Young in early February 2021 “Well, at this stage they weren’t my clients”: G2CS page 22; T173.

In particular Mr Danckert was cross-examined regarding discussions with Ms Western.

Initially he denied that the vendors’ consent (for him to obtain a beneficial interest in their properties) was required. Eventually he accepted that consent was required and prevaricated asserting that he had not lied and was confused. The evidence was as follows (T174-175):

Mr Danckert’s answer that he thought that Ms Western had made the disclosure really makes a mockery of the evidence I have referred to above in his affidavit of 25 May 2022: CB 110-111[6]-[7].

I formed the impression that on matters Mr Danckert perceived were critical to the success of DC2 in the proceedings he was on occasion, including in the instance I have just mentioned, not prepared to give fully frank evidence. He attempted to shift to Ms Western the responsibility for informing the vendors of his association with DC2.

Ms Mammoliti was cross-examined over audio visual link (Day 3 commencing T212).

I had no reason to doubt her evidence.

It became evident that she had not been provided with the Nomination Deed by Mr Danckert and accordingly was unaware of the provisions of cl 4.1a (CB 703) by which DC2 had promised Jogat, not to give a mortgage over the units with an LVR greater than 65%: T215-216.

Accordingly, she had not provided potential financiers with that information.

Nonetheless, I regarded that as reflecting on Mr Danckert’s credibility in failing to provide her with what was clearly a relevant document or constraint upon the obtaining funding.

Ms Western was cross-examined by Mr Kelly SC (Day 4 commencing T224). Apart from several matters to which I will refer, Ms Western impressed me as a witness whose evidence was in Court both credible and reliable.

Mr Pesman SC did not dispute Ms Western was dishonest in her evidence. He submits, and I accept, that much of what she said in her affidavit and under cross-examination was plausible, supported by the documents and should be accepted: G2CS [10].

First, there was a potentially unsatisfactory aspect regarding Ms Western’s conduct in relation to a notice to complete said to have been issued in April 2021.

On 22 and 23 April 2021 a number of tenants (Mr Hew and Mr Young) corresponded with Ms Western checking that notices to complete had been issued: CB 1118, 1119. On 23 April 2021 Mr Parker requested the issue of a notice to complete: CB 1125.

On 26 April 2021 Ms Western sent an email to the vendors noting she had received advice by the purchaser that they were currently aiming for settlement on 30 April and indicating (CB 1126):

The second group pleaded that no notice to complete had been issued as instructed: CB 10-11[28]-[32]. Ms Western denied that, asserting Mr Parker had no entitlement to issue a notice to complete in any event: CB 66.42[8].

Each of Mr Parker, Mr Young and Mr Hew gave evidence to the effect that had he known that a notice to complete had not in fact been sent he would have instructed Ms Western that one be sent or given instructions to a new conveyancer or solicitor: CB 121[16]; CB 145[16]; CB 152[32].

On 3 May 2021 Mr Hew sent Ms Western an email seeking an update on what was happening and stated (CB 1143):

There does not appear to have been any response to that email.

There is no evidence that any such notices to complete had in fact been issued. However, the matter was not actively pursued in the hearing and I say nothing further about, and do not make any specific finding in respect of it.

Secondly, and more importantly, it is clear from Ms Western’s affidavit evidence that she was aware of the relevant ownership knowledge.

Prior to cross-examination there might have been some dispute as to exactly when Ms Western became aware of the relevant ownership knowledge. She indicates that she was asked by Mr Danckert to act on behalf of “one of his other Company’s” [sic], DC2, in September 2020: CB 173[7].

Ms Western in her affidavit suggested that by the time that Mr Danckert raised with her taking over the “options”, while she was aware of DC2, she was not familiar with the ownership structure (CB 176[35]-[39]):

However, in cross-examination it became crystal clear that Ms Western knew that, as at 24 September 2020, Mr Danckert had companies known as DC and DC2 (DC2 being then very recently incorporated) and understood that he was a director and shareholder of both companies: T224.50-225.6.

Related to this issue is the evidence of Mr Tayyar (whose evidence I accept) in respect of a conversation he had with Ms Western on or about 4 August 2021 (CB 162[43]):

Ms Western in her affidavit sworn 11 July 2022 specifically dealt with the issue regarding the land tax clearance certificate in respect of unit 9 for Mr Tayyar. Whilst that affidavit was specific to that issue, she did not take the opportunity to respond to Mr Tayyar’s evidence as above.

Mr Tayyar was not cross-examined on this conversation by Ms Western’s counsel, but was briefly cross-examined on the matter by Mr Kelly SC. His evidence was as follows (T355):

I unequivocally accept his evidence as to what he was told by Ms Western.

However, neither was Ms Western cross-examined on the conversation. The conversation raises the prospect that Ms Western was prepared to lie to Mr Tayyar, or at least not be fully frank with him regarding her awareness of Mr Danckert’s association with DC2. However, in light of the fact that she was not challenged on the matter, I am not prepared to make a specific finding in respect of it.

Whilst there was a faint objection to the reading of Ms Oakes’ affidavit on the basis that that she was not independent (Ms Oakes being employed by the lawyers for the first group) and was not qualified as an expert to give opinion evidence (T92), I rejected those submissions and permitted her affidavit to be read.

Ms Oakes was cross-examined by Mr Kelly SC (Day 5 commencing T295). She impressed me as someone who was well qualified by her experience to give the evidence she gave and I accept her evidence in the proceedings.

Ms Pocknall was cross-examined by Mr Kelly SC (Day 5 commencing T356).

Ms Pocknall was asked briefly about meeting Mr Danckert (T356-357), to which I will refer.

Ms Pocknall impressed me as an honest witness.

She was cross-examined about the work that she performed for DC2 and in particular her contact with Mr Danckert and what she did and did not do.

She was asked whether she had ever seen the tax invoice that had been rendered by SBS to DC2 (CB 1940) and she indicated that she had not. She was asked whether she ever discussed with Ms Western the question of whether Ms Western should pay her for any work done for DC2, to which she indicated “No”: T358. She poignantly explained that she had not rendered a memorandum of fees to DC2 (T358), “Because my father was dying, and it was the last thing on my mind”: T359.

Each of the eight other vendors, in addition to Ms Western, gave evidence in the proceedings. Ms Hopwood, Mr Hew and Dr Lee gave evidence in Court and the other vendors gave evidence by audio-visual link.

Each of them impressed me as honest witnesses. I have no doubt about their credibility.

Mr Pesman SC noted, as might be expected, that their evidence was not uniform, not least because of their different motivations. He gave as examples the fact that Ms Hopwood appears to have been principally motivated by a desire for the project to be completed so that she could buy back into the new development because she likes living in Terrigal, whereas Mr Parker wanted the possibility of a higher price: G2CS [12].

Mr Pesman SC noted that their credit could only be relevant to whether the Court accepts their evidence as to what they would have done had they been aware of Mr Danckert’s interest in DC2. He submitted that:

Mr Danckert gave evidence that he thought the other vendors (apart from Ms Western) "should know that the new purchaser would be a company that I owned": CB 110[6].

Between February 2021 and July 2021 Mr Young called Mr Danckert a number of times. Mr Danckert indicates that when he did the conversation would generally be in words to the following effect (CB 112[14]):

Mr Danckert says that during the conversations with Mr Young he did not disclose his interest in DC2 because of his conversation with Ms Western at CB 110[6]: CB 112[16].

On 27 July 2021 Mr Young called Mr Danckert and asked him "Is it going to settle today?" to which Mr Danckert says he replied "You need to speak to Elisa [Western]": CB 112[17].

Mr Danckert was cross-examined regarding his non-disclosure of certain matters to the other vendors.

He accepted that as at November 2020 he knew that Jogat was not going to exercise the option and that his perception (at that time) was that there was an opportunity for him or one of his companies to make a substantial profit from the development and he had decided to investigate that before he spoke to Ms Western: T169.

It was put to him that he had made a deliberate decision not to tell the other vendors any of those matters to which he said, "Well, I had no contact with the vendors": T169. It was put to Mr Danckert that in light of his efforts on 28 July 2021 to go and contact the vendors, he had every opportunity in November and at any time up to February 2021 to contact them, which he denied: T170.

The cross-examination proceeded as follows:

The cross-examination continued:

I do not accept Mr Danckert’s evidence that he did not make a deliberate choice not to tell the vendors about his involvement with the purchaser.

He clearly had conversations with Mr Young prior to exchange of contracts and could have told him. He was the agent for the vendors at least up until the time of exercise of the options (25 February 2021) or exchange of contracts (26 February 2021).

I address below the effect of Mr Danckert’s non-disclosure.

DC2 had pleaded in the main claim that Ms Western agreed with DC2 for the contracts to be subject to existing tenancies rather than be subject to vacant possession: CB 66.9[[41]]. That was denied by the vendors. The pleadings were odd in light of Mr Danckert’s evidence disputing that the contracts were subject to existing tenancies. That part of the main claim was ultimately not pressed: PSC [112]. In any event it was a live issue as to whether Mr Danckert had or had not instructed that the contracts be subject to existing tenancies.

Ms Western had a discussion with Mr Danckert at the time of exchange to the following effect (CB 177[42]-[43]):

Mr Danckert denies he had the conversation with Ms Western in which he told her that he was happy for the purchase to be "subject to existing tenancies" or in which he said any existing tenants could continue after settlement of the contracts: CB 111[11].

Mr Danckert was cross-examined in relation to this. The effect of the conversation was to put to Mr Danckert that he had (on 11 February 2021) some two weeks prior to the exchange of contracts forwarded to Ms Western an email setting out the rental value of each of the properties and that he wanted the properties rented to demonstrate to a financier that the properties would have the benefit of rental income.

In particular, he was questioned by Mr Allen regarding the email sent by Ms Mammoliti on 7 April 2021 to FSFS to the effect that Ms Mammoliti was saying to the financier that in looking at the application, it should consider the fact that after completion DC2 would have the benefits of income of $10,000 per month because of existing tenancies. He denied that and indicated that it was referring to the fact that if he did not refinance the block they could rent them out and they wanted to know the rental incomes: T132. He further disputed that the email represented to the financier that the ten units were then currently rented out indicating his understanding was that they were asking "could they be rented out": T132.

Specifically, he disagreed with the proposition that he asked Ms Western to make the contract subject to existing tenancies in order to assist DC2 to obtain finance: T132.

On 10 May 2021 Ms Western sent an email to CCS copied to Mr Danckert relating to unit 6 (MALK). The email is to the following effect:

Mr Danckert says he does not have any recollection of the conversations that Ms Western refers to having with him in that email: CB 112[19].

However, Mr Danckert was copied into that email which clearly indicates that there were tenancy issues and raised no complaint to Ms Western that the units the subject of the contracts were required to be sold on the basis of vacant possession rather than subject to existing tenancies.

Further, Mr Danckert asserts having a conversation at around the time of that email with Ms Western saying he was "aware that the tenant was facing difficult personal circumstances and was using the unit as a safe haven" and says he asked Ms Western if she would like him to talk to the tenant, to which he says Ms Western said "No": CB 113[20].

Mr Danckert says that, after receiving the notices to complete (first notices to complete) and speaking to Mr Boxsell, he first noticed that the contracts stated "subject to existing tenancies" and he instructed Mr Boxsell to convey to Ms Western that the properties had to be sold with vacant possession: CB 80[93]-[94].

Ms Western indicated that she was asked “for the properties to be subject to tenancies if the tenants were in existence” and “Mr Danckert asked me to mark them ‘subject to existing tenancies’ because he needed the tenants’ rental income”: T285.

Ms Western said (T285):

Ms Western indicated that she sought specific instructions from the other vendors as to whether or not there was a tenant actually in possession and wherever the box, “subject to existing tenancies,” is marked, that meant that there had to be a tenant there: T287.

She denied that at the time that she saw Mr Danckert signed them that the “vacant possession” and “subject to existing tenancies” boxes were not ticked and that she marked the boxes after they were given back to her without any agreement by Mr Danckert: T285-286. I accept her evidence.

I do not accept Mr Danckert’s evidence that he did not instruct that contracts would be subject to existing tenancies.

It seems to me that he was interested in demonstrating that the contracts were subject to existing tenancies in order to assist DC2 to obtain finance and I find he instructed Ms Western accordingly on 26 February 2021.

There is an issue as to when Mr Danckert and Ms Pocknall met.

They are both seemingly agreed that they met once. However, they had disputed as to the date of the meeting. Mr Danckert says that they met only once, namely on 26 February 2021 and never met with her again and did not meet with her on 25 March 2021: CB 73[46], 110[12].

Ms Pocknall states that they met only on 25 March 2021: CB 220–221.

Mr Danckert says despite denying he met with Ms Pocknall on 25 March 2021 that he did attend Ms Western's office on that date to sign a document: CB 113[24].

I have referred to the fact that Ms Pocknall made a file note on 25 March 2021. It was not suggested to her that the file note was incorrect. On the face of it, it is a contemporaneous record suggesting that she spoke with Mr Danckert on that date.

Further in her evidence Ms Pocknall indicates that she collected the contract for sale on 4 March 2021: CB 220[4]. It seems unlikely that she would have done so at that point if she had been present on 26 February 2021 on exchange, as the contracts could have been given to her at that point in time.

Ms Pocknall was asked briefly about meeting Mr Danckert as follows (T356-357):

As I have indicated above I regarded Ms Pocknall as an honest and credible witness and I accept her evidence.

Ms Western was cross-examined about when she personally introduced Ms Pocknall to Mr Danckert and indicated that she did so on 25 March 2021, and that that was the only personal or face-to-face meeting between Ms Pocknall and Mr Danckert: T290-291, 292. She denied that there was a meeting between them at or about the time of exchange: T291, 292.

Mr Kelly sought to test Ms Western’s evidence by putting to her that it was unlikely that Mr Danckert gave her instructions to insert CCS into all of these contracts, even though she had not even yet introduced them. However, Ms Western stated that (T291):

I accept her evidence.

Ms Western accepted that Mr Danckert said to her: "You're acting for the vendors. I should be getting a solicitor to act for me on this" but denied that she said "Don't worry, I will act for you, but I will introduce you to Lianne who is a friend of mine who's a conveyancer" and "I am acting for you" and "I will do all the work". Rather she stated that she said “I have a conveyancing friend that could assist you.": T291.

It seems to me that Mr Danckert is mistaken and unreliable in his evidence in this regard and I find that his meeting with Ms Pocknall took place on 25 March 2021.

The claims in respect of the alleged representations, as noted above, have been abandoned.

Mr Danckert agreed that he had read the contracts prior to signing them before Ms Western on 26 February 2021: T127.

Mr Danckert denied that Ms Western told him that he had to complete the contracts on 9 April 2021 (T127) and denied that he told Ms Western that DC2 could complete the contracts on 9 April and hoped to settle the contracts earlier than 9 April 2021 and that it had finance in place: T128.

I reject those denials.

Ms Western prepared all 10 contracts at once, it appears, either on 25 February 2021 or the date of exchange, 26 February 2021: T284.

Mr Kelly SC cross-examined Ms Western on the basis that the contracts attached to the Option Deeds were all (T288):

Whilst Ms Western agreed to those propositions (T288) they are not entirely self-evident from the forms of the Option Deeds, as I indicate below.

The Option Deeds appear in the Court Book initially at CB 335. There is a complete version of the Option Deed in the case of Mr Tayyar (CB 355-422) and in the case of Mr Parker (commencing at CB 515 – albeit with some anomalies: see below) and copies of the front pages of the Option Deeds for the other vendors: CB 423 – 432.

The Option Deed for Mr Tayyar (CB 335) contains a 2017 form of contract. The date for completion is stated to be 35 days from the date of the contract: CB 359. The contract is marked vacant possession: CB 359. The contract was marked to be a proposed electronic transaction: CB 360.

The Option Deed for Mr Parker (CB 515) contains a 2017 form of contract. However, the contract annexed to that form of Option Deed is the contract for Ms Western’s unit being unit 1: CB 538. The date for completion (29 March 2018: CB 538) in fact predates the date of the Option Deed being 21 August 2018: CB 515. Neither the “VACANT POSSESSION” nor “subject to existing tenancies” boxes are marked: CB 538. (This would mean that the choice in block capitals applies: cl 20.15 (CB 549).) The contract was marked to be a proposed electronic transaction: CB 539.

The contract provides that “[n]ormally” vendors must give the purchaser vacant possession of the property on completion: cl 17.1 (CB 369, 548). “[N]ormally” is defined as meaning “subject to any other provision of this contract”: cl 1 (CB 364). The vendor or does not have to give vacant possession if the contract says the sale is subject to existing tenancies: cl 17.2.1: CB 369, 548.

I have already addressed the evidence regarding Mr Danckert’s instructions to Ms Western. I accept her evidence that he instructed her to mark the contracts “subject to existing tenancies” and I reject Mr Danckert’s evidence to the contrary.

On the counterpart of the contract for Ms Western for unit 1 she handwrote in the contract date 26 February 2021 and marked the box “subject to existing tenancy”: T284; CB 2583.46. Ms Western was cross-examined as to why the counterpart of the contract for unit 10 (CB 2583.888) has the original marking for the box “subject to existing tenancy” crossed out and the box “VACANT POSSESSION” marked. She indicated that the reason for that was that her tenant had given notice and vacated the unit and she made this alteration at the time of exchange: T284-285.

Ms Western cannot recall whether she got instructions from the other vendors to change “vacant possession” to “subject to existing tenancies” (in context from the form of contracts attached to the Option Deeds): T288, 290.

Ms Western could not recall whether she got any instructions from any of the other and vendors about changing 35 days for completion to 42 days: T288, 290. Ms Western indicates that the reason she decided to change the date for completion from 35 days to 42 was “at a request from Mr Danckert. He wanted extra time”: T288. Ms Western states that he asked for that extension at the same time that he asked for the contracts to be marked “subject to existing tenancies”: T289. I accept her evidence.

Ms Western denied that Mr Danckert said to you that "I'm going to need time to arrange the finance. If I need an extension of time, you're going to have to organise it for me": T289. I accept her evidence.

From 1 July 2019, all conveyances had to be done electronically: CB 186[5].

Mr Allen submitted that the 2017 edition is a form used pre-PEXA and was ill-adapted for conveyances to take place electronically, whereas the 2019 edition was: G1CS [2]. I pause to note that that is not entirely self-evident from the form of 2017 edition in evidence. The 2017 edition contains provision for a choice of proposed electronic transaction (CB 360, 539) and contains detailed provisions in cl 34 in electronic transaction: CB 374-376, 553-555.

Ms Western was cross-examined on the form of the contracts and indicates that she did not get specific instructions from the vendors about the change of form of contract to the 2019 edition: T289.

Apart from the cross examination, there was no serious attempt by DC2 to suggest that there was any material matter impugning the contracts, second notices to complete or the notices of termination arising from the use of the 2019 edition.

The whole case of DC2 in relation to the second notices to complete has proceeded on the basis that the contracts in the 2019 form required completion in an electronic workspace.

Mr Allen submitted that prayer 1 of the Second Further Amended Statement of Claim defines the contracts sued upon as the 26 February 2021 contracts and if DC2 did not agree to the change to the 2019 form (which he submits it did) it has affirmed the contracts by calling for their performance (citing Galafassi v Kelly (2014) 87 NSWLR 119; [2014] NSWCA 190 at [84] per Gleeson JA, Bathurst CJ and Ward JA agreeing, James v Hill [2004] NSWCA 301 at [65] per Tobias JA, Sheller and Hodgson JJA agreeing).

Mr Pesman SC submitted that the Option Deeds did not require the contracts to be precisely in the form of the contract annexed but was expressly “subject to any variation required or permitted by this Deed” (CB 347). Indeed, the parties could have signed any contract they both agreed to in performance of the option even without that clause.

Mr Danckert it seems to me must have been well aware of the fact that the contracts were in the 2019 edition. He made no complaint regarding that at the time of exchange.

I do not accept that the use of the 2019 form of contract has any material outcome on the issues to be determined in these proceedings.

DC2 advanced particular submissions in respect of issue 8, which raise questions of the duration of Mr Danckert’s agency and fiduciary obligations, the intention of Mr Danckert, the knowledge of Ms Western and duties of disclosure.

Whilst the submissions were raised under a heading dealing with issue 8, they bear some relevance to several of the issues in the proceedings specifically: (a) whether some form of consent or knowledge imparted to the vendors in a way to conceivably engage s 49(3) PSA Act or in any event somehow obviate any impugning reach of s 49 to the contracts; (b) the unclean hands ‘defence’ and (c) discretionary considerations regarding whether specific performance ought to be granted.

It is appropriate to address the contentions prior to formally addressing the agreed issues.

DC2 submitted that s 49(1) PSA Act does not create an offence of strict liability and accordingly required proving mens rea: PCS [93].

DC2 submitted that there was no dishonest intention, referring to the following:

DC2 then submitted that if the making of the contracts (on 26 February 2021) caused Mr Danckert to obtain a beneficial interest in property in contravention of s 49(1) of the PSA Act, the failure of Ms Western to pass on her relevant ownership knowledge to her clients before exchange of contracts and to eschew any conflicts in that regard was the pivotal event which caused any loss (if any) to flow: PCS [99].

DC2 submitted that the reliance by the other vendors on hypotheticals to construct a case based on s 49 is essentially the product of hindsight and should not be given any weight, because all of the vendors:

The submission proceeded that Mr Danckert did not have a duty to disclose information that the appointed representative of the vendors (Ms Western) already knew, and as an “Owner” herself, she had a legal obligation to “ensure” that “all communications” with the vendors took place through SBS, not through Mr Danckert: PCS [101].

The submission continued to the effect that on the true construction of the agency agreements, the period of agency and (supposedly) the extent of the fiduciary obligation does not depend on the words “commencing on the expiration of the Exclusive Agency Period and terminating upon the sale of the Property or termination by seven days prior written notice”. Rather the agency agreements came to an end by performance and no selling task remained, as at 26 February 2021, as that work had been done in 2018. DC2 argued that even if it is allowed that some scoped down agency relationship with no selling function remained as at that date, it does not follow that any fiduciary obligation remained because there was nothing left for Mr Danckert to do: PCS [102].

The submission concluded that the contracts made by DC2 are not illegal and unenforceable, rather all they do is expose Mr Danckert to a risk of disciplinary action, and there is no basis upon which to find that exchange would not have gone ahead on 26 February 2021 in any event: PCS [103].

Mr Pesman SC submitted in summary that: (a) between 13 March and 9 April 2018 each of the vendors signed an agency agreement with Mr Danckert personally; (b) the agreements included standard terms (legibly reproduced at CB 2724.206); (c) one of the standard terms was that after an exclusive agency period a non-exclusive agency period commenced the expiration of that period and terminating on the sale of the property or upon termination in writing; (d) the agreements had not been terminated; (e) “sale of the property” means the date of completion because there is an obligation on the agent to hold a deposit between exchange and settlement but in any event even if it means the date of exchange the agency persisted until the time of entry of the contracts: G2CS (pages 9-10).

Mr Pesman SC submitted that Mr Danckert knew the obligation in s 49 (if not the actual section number) at least since 2015 (T154.29-41), knew that a form was required (though not necessarily its format) (T154.43-155.6) and that no form of any type was signed by any of the vendors, including Ms Western (T155.8-10).

As to obtaining a beneficial interest, it seems to me clear that as an agent Mr Danckert was within the meaning of the deeming provision in s 49(4)(b) arguably in breach because he was a member of DC2 being a corporation having not less than 100 members.

Mr Pesman SC addressed the effect of the so-called authority to act pursuant to cl 9 of the Option Deeds in response to the submission that Ms Western’s exchange of contracts executed by the other vendors was sufficient to comply with the requirements of s 49 or that in some way her knowledge of Mr Danckert’s involvement could be consent by the vendors. He argued that the person requiring consent was Mr Danckert not DC2, that Mr Danckert was not a party to the Option Deeds nor the contracts and in any event consent is required by the statutory provision, not the Deed.

Mr Pesman SC further disputed any contention that Ms Western had ostensible authority to provide the owners’ informed consent.

I have already addressed above the duties of agents regarding disclosure in the context of fiduciary obligations: see Dal Pont at 204-205, 222-223. The agency agreements did not relevantly exclude or modify the fiduciary obligations of no-conflict or no-profit.

By the Option Deeds (August 2018) the vendors (described as Owners) agreed to grant to Jogat a call option to require the owner to sell the units on certain terms and conditions and Jogat had agreed to grant to the owners a put option to require it to purchase the units from the owner on certain terms and conditions: CB 176[32], 335–432.

Between 22 and 24 August 2018 Jogat deposited $450,000 into the Express Property Trust Account (being a 10% deposit due under the deed of $45,000 per unit) and Mr Danckert dispersed the deposits under instructions from Ms Western less a commission payable to Mr Danckert of 1.5% of the price being $6,750.00 including GST: CB 70[23].

The exercise of the option was to occur by 3 October 2019. However, a development consent relating to the block was delayed and a further extension was allowable under the Option Deeds for a year to 3 October 2020: CB 176[32].

On 2 October 2020, by the Variation Deeds, the option period was extended to 28 February 2021: CB 444.

DC2 exercised the call option requiring the vendors to sell the properties to DC2: CB 72[41], CB 176[37], 679–696

DC2’s argument as noted above is as follows:

It does not seem to me that DC2’s submission adequately addresses the terms of the Option Deeds and the agency agreements.

Clause 4.1 of the Option Deeds provided that:

Under the terms of the agency appointment the exclusive agency of Mr Danckert ended at midnight on 30 April 2018 thereafter the agency became a non-exclusive agency.

The agency appointment as Mr Pesman SC points out is relevantly, in the following terms:

The entitlement to remuneration of Mr Danckert under the agency agreements, for the non-exclusive agency period, was dealt with in cl 3.1(c) of the agreements:

Notwithstanding an entitlement to remuneration arose, it only became payable upon completion of the sale of the units under cl 3.2:

Having regard to the above matters, in the circumstances it seems to me clear that the contracts became binding upon actual exercise of the Options, when DC2 made the Calls being, as I have noted earlier, seemingly 25 February 2021 and the contracts were actually exchanged the following day.

A number of consequences flow from that analysis.

First, the time for the options to be exercised by any of the parties to the Option Deeds had been extended to 28 February 2021. At least until there was an exercise of an option, there was still a relationship of agency and Mr Danckert was not entitled to remuneration under the agency agreements.

Secondly, at any time prior to the exercise of the Options by any party to the Option Deeds, until the contracts became binding upon actual exercise of the Options when DC2 made the Calls, it seems to me clear that Mr Danckert was under the agency agreements the agent for the vendors up to and including at least 25 February 2021 (if not when the contracts were actually exchanged the following day).

Thirdly, Mr Danckert as a fiduciary ought to have disclosed to the vendors his connection with DC2 as the nominee and purchaser of the properties.

Fourthly, leaving aside some niceties of the question of whether there was any “introduction” to the Principals, Mr Danckert’s entitlement to remuneration during a non-exclusive agency period only arose upon once “such a person” i.e. purchaser enters into a contract (which includes by way of exercise of an option) to purchase the units. That only occurred on 25 and/or 26 February 2021. It is not obvious to me that Mr Danckert had any entitlement to commission prior to that time.

I reject DC2’s submission that no fiduciary obligation existed or remained under the agency agreements as at 26 February 2021 because the agency agreements came to an end by performance in 2018 and no selling task remained as at 26 February 2021 “because there was nothing left for Mr Danckert to do”. The time for exercise of the options had been extended to 28 February 2021 and until the Calls were made on 26 February 2021 the very distinct prospect remained that if no call was made by any party under the Option Deeds the agency agreements remained on foot with clear work for Mr Danckert to do.

Mr Danckert had at least until the entry into the contracts on 26 February 2021 a duty to not place himself in a position where there is or may be a conflict between the duty owed as fiduciary and his own interest.

Mr Danckert made a deliberate choice not to tell the vendors about his involvement with DC2 prior to the exchange of contracts. He breached the no-conflict duty. Further, an agent must not make a profit out of a fiduciary relationship except with the informed consent of the principal. Mr Danckert breached the no-profit duty.

Apart from the fiduciary duty there are specific provisions under s 49 PSA Act regarding obtaining informed consent where an agent has obtained or been concerned in obtaining a beneficial interest.

Mr Kelly SC on behalf of DC2 advanced a number of reasons as to why the second notices to complete were invalid by reason of their terms.

The principal matters advanced were:

There were a number of other matters which were raised either by the submission documents or orally during the hearing being:

DC2 submitted that the express words of reservation of a right to direct completion at another place made the second notices to complete invalid from inception: PCS [11].

DC2 submitted that the contracts were each agreed to be an electronic transaction, with PEXA as the Nominated Electronic Lodgement Network (e.g. CB 2583.47). Clause 30.4.3 (at CB 2583.62) stipulated that the “parties must conduct the electronic transaction … in accordance with the participation rules and the ECNL; and using the nominated ELN, unless the parties otherwise agree”: PCS [5].

In support of its submission that the notice was invalid by reason of requiring settlement at a place that could not be lawfully imposed, DC2 referred to the decision in Wright v Featherstone in which DC2 said it was held that the notice was invalid from its inception: PCS [6].

In Wright v Featherstone the notice to complete specified a requirement of settlement at the office of solicitors. However there was a provision in the Property Law Act 1974-1982 (Qld) which provided that unless otherwise agreed by the parties, their solicitors or conveyancers, settlement of the contract shall take place at the office of the Registrar of Titles. In the result it was held that the requirement to settle at the office of the vendor’s solicitors could not be lawfully imposed and that the notice to complete was accordingly invalid from its inception: at 56,719.

Clause 30.1 of the standard conditions of the contract provides (CB 781.17):

Each of the contracts had provided for the contracts to be electronic transactions (CB 781.2).

Clause 30.4.1 (CB 781.17) provides that:

DC2 submitted that Ms Western, by her choice of words at the point of issue, makes it clear that she sought to keep the vendors’ options open to direct that settlement take place at some other place (referring to her evidence at T261.36-262.33).

The evidence was relevantly as follows (T261-262):

Whilst I accept that in the evidence referred to Ms Western subjectively intended to keep her options open in relation to the place of settlement, I do not regard that as being fatal or necessarily determinative as to the issue of whether the notice was defective by reason of asserting a right to settle inconsistent with the terms of the contracts.

Mr Pesman SC submitted that G2CS (page 5):

Mr Allen suggested (T414) that the provisions of cl 16.12 of the standard conditions of the contracts (CB 781.12) may be applicable:

In this case the notice to complete did appoint the electronic workspace. That was in accordance with the contract.

Mr Allen also submitted that the additional words “or at such other place as the vendor may direct” were surplusage: T396.15.

Whilst minds may differ in respect of the issue, it does not seem to me that the additional words were of such moment as to amount to an impermissible assertion of reservation of a right to direct completion at another place.

Clause 16.12 admits of the possibility that another place might be specified. The exact interaction between the various provisions of cl 30 and cl 16.2 was not fully explored during the hearing. However, it is not clear to me that cl 16.12 in its operation would necessarily always be inconsistent with the provisions of cl 30.

Ultimately no other place was specified.

It seems to me that Wright v Featherstone is distinguishable on the facts.

I reject the submission that the additional words “or at such other place as the vendor may direct” invalidated the notice to complete.

DC2 sought to distinguish this case from the notice in Balog v Crestani submitting that in Balog v Crestani words in the notice were ignored. On the other hand it was claimed that in the present case, on a fair reading the claim of entitlement to exercise innominate rights in the event of non-compliance, the second notices to complete were invalid from inception: PCS [11].

DC2 referred to the evidence of Ms Western asserting that it is clear that, by her choice of words, at the point of drafting and issue of the notices, she sought to sought to keep open her choice of remedy, including specific performance: PCS [7] referring to T 260.46-261.35.

Mr Danckert was cross-examined on the notice to complete: T 117.

Mr Boxsell emailed it to him and on reading it he formed the view that the vendors wanted DC2 to complete the purchase of the properties on before 27 July 2021: T 118.

Mr Allen submitted that:

Mr Allen submitted that the above indicates that Mr Danckert actually understood the second notices to complete to convey the necessary message; and a reasonable person in Mr Danckert’s position would have understood that if DC2 did not complete on or before 27 July 2021, the contracts would be terminated: G1CS [13].

Mr Pesman SC likewise drew attention to the evidence of Mr Danckert to the effect that he knew at the time the notices were served the purpose of the notice was to make time of the essence, that if time was of the essence he knew or was aware that if the other party did not complete then, if the other party is not in default of the contract, they could terminate the contract by relying upon the notice: G2CS (page 4); T130, 136 and 138.

There is no requirement that a notice to complete convey an intention to terminate. As noted above:

The surrounding circumstances included that:

Apart from those surrounding circumstances, Mr Danckert accepted that he knew after reading the notices that it was on the cards that if DC2 did not complete the contracts on or before 27 July 2021, the vendors would terminate the contracts: T141.4.

Whilst I accept that there is an argument that the notices failed to intimate what is discussed in some authorities as being the possibility of termination for non-compliance (Taylor v Raglan Developments Pty Ltd at 133E-F per Powell J), I am nonetheless persuaded that the notices in all circumstances was effective to convey to a reasonable person in DC2’s position that if DC2 did not complete on or before 27 July 2021 the vendors would be entitled in the event of non-compliance, or would regard themselves as entitled, to rescind or terminate the contracts.

It is not entirely clear to me whether DC2 ultimately persisted with the subsidiary complaints I have referred to above.

However to the extent that they were persisted with I note the following.

The term “serve” is a defined term under the contracts meaning “serve in writing on the other party” (cl 1: CB 781.7).

Clause 20.6.3 provides that a document under or relating to the contract is “served” if it is served on the party’s solicitor: CB 781.13.

There is a provision for service of notices in special condition 7 of the contracts for deeming the timing of service of inter alia notices where they are served by security post, delivery post or by Document Exchange: CB 781.21.

There is a further provision in special condition 8 of the contracts which permits service by facsimile transmission “in addition to the provisions contained in Clause 20.6 hereof”.

In light of Mr Boxsell saying to Ms Western that he would accept service of any notice or demand under the contracts (CB 1477) and clearly engaging in email communications with Ms Western, I reject the submission to the effect that email service of the second notices to complete gave rise to a basis to invalidate the notices.

The fact that the second notices to complete in paragraph 3 did not specify a date in the electronic workspace, whilst technically an error, was not seriously contended by Mr Kelly SC to be fatal.

Indeed Mr Kelly SC in prefacing his cross-examination of Ms Western in relation to the more contentious issue of nomination of an alternative place of completion, intimated it was merely a slip (T261):

In any event, when read in light of the notice as a whole and in particular paragraph 2 which required completion on or before 27 July 2021 I do not regard it as a matter which invalidated the notices.

DC2 advanced a number of reasons as to why it was said that the vendors were not ready, willing and able to complete the contracts at 3 PM on 27 July 2021, or at any other time up to and including the service of the notices of termination: POS [41], [113]; PCS [12].

DC2 also made a number of submissions (PCS [37]-[43]) to the effect that the vendors were not ready, willing and able to complete the contracts after 3 PM on 27 July 2021 and at any other time up to and including the service of the notices of termination: POS [41], [113]; PCS [12]. Although the issue raised by issue 2 of the agreed issues focused on 27 July 2021 I will address separately at the end of this section (dealing with issue 2) the submissions in this regard.

DC2 submitted that because completion of one contract was interdependent with the others, if one could not complete, neither could the others: POS [114].

DC2 advanced a number of reasons as to why it was said that the vendors were not ready, willing and able to complete the contracts at 3 PM on 27 July 2021, or at any other time up to and including the service of the notices of termination: POS [41].

The principal matters advanced were:

A number of the submissions above involve some consideration of the practical working out of settlement as between the representatives (whether they be conveyancers or solicitors) of the parties.

I have addressed these above.

DC2 submitted that (POS [58], [61]):

The PEXA Transfer Guidelines V3-2021 stipulate in Section 1 that at Stage 1 the relevant party “Creates the workspace with the settlement date and time, creates/edits the party (or parties) details, and invites the other parties as applicable.”: CB 2585; POS [55].

On 25 June 2021 Mr Boxsell was sent an invitation to enter the PEXA workspace: CB 2583.952; T35.

Ms Western also repeated the invitation at 3.06PM on 27 June 2022 (CB 1955), which she was under no obligation to do, and still received no response from Mr Boxsell: G2CS (page 5).

Ms Western gave evidence that upon receipt of the 27 July 2021 invitation into PEXA (CB 1955) the steps required for Mr Boxsell to accept the invitation were to enter the PEXA workspace and accept the invitation and enter the purchaser’s details. That would have taken “two minutes”: T293-294. Further, it would have taken “another one or two minutes” for Mr Boxsell to invite the incoming mortgagee is to the PEXA workspace on 27 July 2021: T294.

It is only in the afternoon of 30 July 2021 that Mr Boxsell added the incoming proprietor:

Mr Pesman SC submitted that Mr Boxsell did not at any time prior to 27 July 2021 invite DC2’s incoming mortgagee into the PEXA workspace, nor provide Ms Western with adjustment figures (or, indeed, anything at all), with the consequence that DC2’s failure to take those steps, put it in breach of its obligations under cll 30.7.1-4 and 30.9.1 of the contracts: G2CS (pages 5-6).

Those failures, in my view, did put DC2 in breach of the contracts.

DC2 submits that, contrary to the time of 3 PM stipulated for completion of the contracts in the second notices to complete, Ms Western made 12:30 PM the time for settlement: CB 1926 & 1928.

I reject this submission.

Where a notice to complete nominates a particular hour of the day for completion, that hour is construed, prima facie, as a matter of convenience only. The hour is not “essential”. The notice giver cannot terminate the contract immediately after that time has passed, but rather must give the recipient the whole day in which to complete: Butt at 666-667 citing inter alia ex parte Robertson [1983] 1 Qd R 526; Wright v Featherstone (supra) and Paclyn v Harris Real Estate Pty Ltd (1988) NSW ConvR 55-418.

There was no suggestion that the provisions of electronic conveyancing on PEXA were different.

In fact there was evidence that if settlement does not occur at a particular time the operation of the PEXA program is to in effect “rollover” the settlement time by increments of 30 minutes until the 5 PM deadline is reached.

DC2 submitted that Ms Western and/or SBS were responsible for the accuracy and correctness of all information contained in an electronic workspace at the time an electronic workspace document or Settlement Schedule is signed: cl 14.4(b) PSPA (CB 2551) and that in order to achieve that, they are also responsible for doing anything and for ensuring that any other relevant person (Mr Boxsell for DC2) will do anything necessary to give full effect to the transactions contemplated by the PSPA: cl 26.9 (CB 2563): PCS [24].

DC2 submitted that the net effect of the provisions of the PSPA is that Ms Western was obliged to work with Mr Boxsell to agree the settlement adjustment figures so the Settlement Schedule could be signed: PCS [25].

In the case of Mr Tayyar, DC2 submitted that it was only at 11.09.17 AM on 27 July 2021 that Ms Western completed the “Destination Line Item: Vendors’ Funds” within PEXA (CB 1928); being when she finalised the settlement adjustment figures in PEXA and included the default interest claims. Ms Western then sent a written Settlement Adjustment Sheet to Mr Boxsell by email at 11.50 AM on 27 July 2021 (CB 1948-1950): PCS [27].

DC2 submitted that:

I reject those submissions.

I have earlier in the reasons for judgment referred to provisions under the PEXA system and the contracts in respect of co-operation between the parties.

Although Ms Oakes accepted that she had not specifically seen the settlement sheet or the PEXA financial statement or the actual numbers on the PEXA workspace destination line items (T298, 299, 305), it cannot be really doubted that a process of inserting fees from the settlement statement into PEXA had occurred. That was resolved by the A3 size reproduction of the entire screenshot as an example in the case of Mr Tayyar: see Ex D1,8-1.

When one looks at the form of settlement statement for Mr Tayyar which Ms Western emailed to Mr Boxsell on 27 July 2021 (CB 1490-1491) and compares that to the PEXA FS schedule (CB 2724.999) it is evident that the details are the same.

The example of Mr Tayyar’s sale shows that Westpac as the outgoing mortgagee asserted the amount it should be paid to it and the amounts which Ms Western asserted should be paid out to herself (for professional fees) and to Mr Tayyar on settlement were inserted: T298-299.

Thus, on the vendors part Ms Western on their behalf had done what was required to be done in order to proceed with the settlement on 27 July 2021. In the case of Mr Tayyar, there is no precise indicator from the partial screenshot at CB 2724.199 of what time the various settlement figure details were put into the system (T308) although Ms Oakes disagreed with the proposition that it would have been done at the same time as the cheque directions and indicated that they usually are done prior to the cheque directions “because once you’ve done that, you can work out what are the vendor’s funds, and then from the vendor’s funds, you can put your cheque directions as vendor”: T308.

Ms Oakes indicated that of the eight cheque disbursement line-item amounts, the figures for four of them (council rates, water rates, owners corporation and Revenue NSW) are (normally) put in by the purchaser. The PEXA fee is an automatic charge that comes into the system for both the purchaser and the vendors. The line-item amounts for the conveyancer’s fees and the payment due to the vendor are put in by the conveyancer: T309. The line-item for the outgoing mortgagee (Westpac) is (as noted earlier) inserted by the mortgagee.

Ms Western’s assertion of the final amount to be dispersed to Mr Tayyar was inserted at 11:09 AM on 27 July 2021, together with the details of the other set of cheque directions: T308.

As best I can gauge on the evidence, DC2 does not assert that figures for the vendors were provided on the PEXA workspace any later than 11:09 AM which was the case for Mr Tayyar in respect of the contract for unit 9.

As noted above, the nomination of 12:30 PM is a time for convenience and the entire day up to 5 PM is available to effect a settlement.

The evidence is that Mr Boxsell had been previously invited by SBS to the workspace on 25 June 2021 at least in the cases of Mr Szepes, Ms Hopwood, MALK, Mr Young and Mr Hew: CB 2583.952 – 2583.

Mr Boxsell did not accept the invitation into PEXA on 27 July 2021.

Some degree of co-operation might have been expected in the circumstances.

Mr Allen submitted (G1CS [40]) that

I agree.

Mr Boxsell was not called to give evidence in the proceedings.

In my assessment, the provision of the figures by 11:09 AM on the PEXA workspace or even by 11:50 AM by email to Mr Boxsell in each case by Ms Western was sufficient timing for provision of the figures in circumstances in which Mr Boxsell had not provided any adjustment figures at least two business days before 27 July 2021 (see cl 30.9.1).

In any event, in Mahoney v Lindsay Gibbs J at 603 noted:

I reject the submission that the alleged late provision of the figures meant that the vendors were not ready, willing and able to complete settlement.

DCS in the closing submissions argued apparently based on evidence of Ms Oakes that settlement adjustment figures are to be entered into PEXA and that the parties will require a hard copy for their records: T311.33. The submission was to the effect that Ms Western only provided the written form of settlement adjustment figures for Units 7, 4, 3, 2, 5 and 9: CB 1946ff and CB 2592ff: PCS [27].

Such matter was not pleaded.

There is evidence that a FS schedule was created for each of the 10 vendors: CB 2724.191-2724.200.

The evidence of Ms Oakes was as follows:

I did not understand Ms Oakes’ evidence to indicate that it was a mandatory requirement that written forms of settlement adjustment sheet be provided. I understood her to be indicating that as a matter of prudence a conveyancer would ordinarily keep a written form of settlement adjustment sheet for the records.

In any event, in my view, the fact that Ms Western provided (or populated) the FS schedules in PEXA with details for each of the vendors was sufficient compliance with the vendors’ obligations under the contracts.

Special condition 9 of the contracts provides as follows (CB 781.22):

DC2 submitted that on the proper construction of cl 9 of the special conditions of the contracts, if completion did not occur by the Completion Date of 9 April 2021 other than by reason of the vendor’s default or delay (i.e. because of the fault of the purchaser), interest at 10% per annum would accrue from 9 April 2021: PCS [14], [34].

On 20 April 2021 (2:38 PM), as noted above, Ms Western sent an email to the other vendors stating “I will now issue a Notice to Complete to the Purchaser for each and every unit tomorrow and penalty interest will also be imposed from tomorrow until settlement takes place”: CB 1013. Whilst there was follow-up from a number of the vendors regarding the notices to complete there does not appear to have been any query or dispute from the vendors regarding the penalty interest.

DC2 stated that contrary to special condition 9, Ms Western charged interest on behalf of each vendor from 12 July 2021 as if the date for completion were 12 July 2021 instead of 9 April 2021: PCS [15].

The notion that there could be complaint that interest was charged from a later date, in effect waiving an entitlement to more interest, as being something that could demonstrate the vendors were not ready, willing and able to complete is curious.

In any event, DC2 indicated that its arguments regarding the alleged default interest claim depend upon the premise that the contracts required vacant possession, in effect asserting that the cause of DC2’s failure to complete by 9 April 2021 was the vendors’ default or delay: PCS [16]-[22].

Ms Western accepted that the fact that there was a tenant permitted into unit 6 (MALK’s property) on or about 2 December 2020 was a breach of the Option Deeds: T292.

However, I have found that Mr Danckert instructed Ms Western that the contracts were to be “subject to existing tenancies”.

The significance of that fact, as submitted by Mr Pesman SC, is that Ms Western’s concerns about MALK inadvertently signing a new tenancy agreement in December 2020 were incorrect.

Even assuming that agreement was a breach of the Option Deed, such breach merged or was waived on execution of a contract subject to that tenancy.

On that basis I do not accept that the vendors and in particular MALK were in breach of the contracts (as distinct from the Option Deeds) so as to impugn any entitlement to charge interest. A notice to complete could have been issued in April 2021 and there would have been entitlement to charge interest from the completion date on 9 April 2021.

Mr Allen submitted that Ms Western actually undercharged interest: T417-418.

Mr Kelly SC stated (T418) that:

However, that submission is predicated on the basis that the contract required vacant possession which I do not accept.

Ms Western in her affidavit sworn 11 July 2022 specifically dealt with the issue regarding the land tax clearance certificate in respect of unit 9 for Mr Tayyar: CB 218.1–218.13.

Ms Western in the course of acting on the conveyance requested the land tax clearance certificate for unit 9 which was issued on 24 March 2021 indicating that there was an amount of land tax outstanding.

Ms Western had a conversation with Mr Tayyar which reflected that he would pay a debt settlement and she indicated to him that it would be deducted from his proceeds at settlement.

Specifically a copy of that certificate was provided by Ms Western to Ms Pocknall on 25 March 2021 and she had a conversation with Ms Pocknall which I have earlier referred to but materially she said to Ms Pocknall "There will be some land tax that will be payable. My clients informed me that they will be paying it on settlement". Ms Pocknall said, "That's fine. No problems. Can I borrow a pen?": CB 218.4[7]–[8].

Mr Tayyar gave evidence regarding the land tax issue as follows (CB 162):

Mr Tayyar was not effectively challenged on that evidence.

Ms Western included an adjustment on the settlement sheet prepared for the sale of unit 9 which included land tax: CB 218.5[13]-[15], 218.11-218.13.

Mr Allen made submissions in respect of this as follows (G1CS [44]-[48]:

I accept Mr Allen’s submissions.

Mr Allen also submitted that DC2 is estopped from relying on the point as Ms Pocknall agreed to payment during the completion process and Ms Western relied on this representation to have the land tax paid during completion: G1CS [49]. It does seem to me that DC2 is bound by Ms Pocknall’s comment which was self-evidently acted upon by Ms Western.

Standard condition 39.1 of the contracts provides:

Mr Allen submitted that if DC2 had not provided adjustment figures, then the FS schedule could not be completed, or, to use the words of cl 30.9.2 more correctly “confirmed” by the Vendors: G1CS [41]; see also G2CS (page 6).

Mr Allen noted that to be ready and willing, “all the vendors had to do was to join the PEXA workspace and to invite its outgoing mortgagees. This was as good as substantial performance, being the performance required (Mehmet v Benson (1965) 113 CLR 295), of their obligations because any further work towards completion required D Capital 2 to join the workspace and to give draft adjustment figures: Peter Turnbull & Co Pty Ltd v Mundus Trading Company (Australasia) Pty Ltd (1954) 90 CLR 235”: G1CS [43].

I reject the submission that the vendors were not ready, willing and able to complete because there was a failure to “sign” the FS schedule.

Ms Western on behalf of the vendors had completed the details of the schedule which is noted above were effectively the vendors’ assertions of the figures for settlement.

The simple fact of the matter is that at no point on 27 July 2021 did Mr Boxsell enter the PEXA workspace.

There was in a very real practical sense nothing more the vendors or Ms Western could do.

The opening submissions on behalf of DC2 as noted above assert that the vendors were not ready and willing because of a preference to sell elsewhere.

This is really tied to a related submission which I address immediately below to the effect that the vendors were not ready, willing and able to complete up to and including 2 August 2021.

I reject this ground as a basis for asserting that the vendors were not willing to complete the contracts.

DC2 submits that the vendors are required to show they were ready and willing and able to complete at the time of termination of the Contracts, on 2 August 2021 citing Foran v Wright (1989) 168 CLR 385; [1989] HCA 51: PCS [37].

In particular Mr Kelly SC referred to the decision of Gaudron J in Foran v Wight at 457-458:

DC2 made a number of submissions (PCS [37]-[43]) to the effect that the vendors were not ready, willing and able to complete (PCS [37]-[38]) that:

The basis for the compulsion is unstated but I take it that DC2 relies upon cl 26.9 in light of its earlier submissions.

DC2 submitted that there were steps afoot which the vendors were not willing to settle prior to the actual termination on 2 August 2018.

The notion regarding the alleged lack of willingness of the vendors to complete was raised in opening submissions on the first day of the hearing.

Mr Kelly SC submitted in opening the matter that one general topic was in substance (un)conscientious exercise for legal rights in the sense that some of the vendors had taken steps to find another buyer and that there were steps afoot to onsell the units: T17.

That led to some discussion about the significance of the word “willing” in the phrase “ready, willing and able”.

Specifically, DC2 referred to the following matters (rearranged chronologically).

First, it was submitted that the part of a conversation between Ms Western and Ms Mammoliti on 27 July 2021 as follows (CB 103-104) was an intimation that the vendors were not willing to settle with DC2.

Secondly, discussions between Mr Parker and an agent from McGrath Terrigal commencing at 1:02 PM on 29 July 2021 and going through to referring to a “buyer” which DC2 assert was Blue Sox (which appears a fair inference having regard to the embedded icon “Blue Sox Group P…” in the “not delivered” text message at CB 2663) going through to 2 August 2021 and indeed after that up to and including 9 September 2021: CB 2673.

Thirdly, an email from Mr Tayyar seems to Ms Western on 31 July 2021 at 11:41 AM (CB 2653.1) as follows:

Fourthly, DC2 submits that the vendors ceased to be willing prior to termination “as they had agreed at 9.13pm that evening to terminate the Contracts to take advantage of an opportunity to sell their units for $220,000 more each than they were compelled to sell them for under the Contracts: see CB.V4.2004”.

The reference to 9:13PM is to an email of Ms Western as follows:

I do not accept the submissions.

On the whole, I do not regard the material relied upon by DC2 as excluding or shutting out a willingness on the part of the vendors to settle. Rather, I regard it as being a not unnatural exploration of other possibilities in the context of a very lengthy history of events dating back to 2018 and a degree of delay.

It was put to Ms Mammoliti that the 27 July 2021 conversation did not occur. She denied that: T219.

Ms Western was not cross-examined on the email.

However, even accepting Ms Mammoliti’s version, it seems to me that Ms Western was, by use of the words “If the settlement doesn't happen we're proceeding with the offer” doing no more than intimating the practical reality that in light of DC2’s doubtful funding, the vendors would consider that and keep alive the option to sell their units elsewhere.

The text messages between Mr Parker and the Terrigal agent included messaging at 9:32 PM on 2 August 2021 as follows:

Further, DC2 asserted that Ms Western’s representation in the second paragraph of her letter dated 31 August 2021 to the solicitor for Blue Sox at CB 2678[7(a)] that “D Capital 2 Pty Ltd failed to provide us with evidence that they had their finances in place to complete” was not true.

Whilst there may be some debate about what degree of evidence was required, sufficient to make an assertion in a letter, it seems to me that objectively it was true that DC2 did not have in place the necessary finance to be able to settle either on 27 July 2021 or up to and including the time of termination on 2 August 2021.

Mr Allen submitted that the factual premise cannot be made good as it was not put to the vendors that they were not going to complete, and thereby breach the contracts, because they wanted to sell to Blue Sox at a higher price: G1CS [50]. That is true. However, what I have noted above suffices to dispose of the issue.

DC2 claimed that the email sent by Ms Western at 3:06 PM on 27 July 2021 elected to firm the contracts and/or waived the time essentiality stipulation: POS [37].

DC2 made a number of submissions in support of the proposition that there was an affirming of the contracts or waving of the essentiality of time: POS [66]-[76]; PCS [44]-[66].

Specifically, the submissions focused upon several events on the afternoon of 29 July 2021.

DC2 submit that:

DC2 referred to the decision of Gaudron J in Foran v Wright at 457 and continued as follows:

The concept of "waiver" has multiple meanings and gives rise to "uncertainties and difficulties": see Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; [2008] HCA 57 per Gummow, Hayne and Kiefel JJ at [54] and [84].

Mr Allen submitted that the plurality, Gummow, Hayne and Kiefel JJ, Heydon J agreeing, endorsed what was said by Brennan J in Commonwealth v Verwayen (1990) 170 CLR 394; [1990] HCA 39 that a party cannot make an election before time, they can only foreshadow what their election will be: G1CS [33].

Their Honours stated at [61]:

Mr Allen referred to In Tropical Traders Ltd v Goonan (1964) 111 CLR 41; [1964] HCA 20.

Kitto J stated at 52:

His Honour noted at 53:

On the facts Kitto J stated (at 55):

Taylor J (at 58) and Menzies J (at 60) agreed. Menzies J at 60-61 added:

Election is this regard has been said not to be a matter of intention. It is an effect which the law annexes to conduct which would be justifiable only if an election had been made one way or the other: Kitto J citing Scarf v Jardine (1882) 7 App Cas 345, at 361 and Craine v Colonial Mutual Fire Insurance Co. Ltd (1920) 28 CLR 305 at 325; [1920] HCA 64.

Mr Allen also cited Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444 at 459; [1976] HCA 21, where Gibbs, Mason and Jacobs JJ stated:

Mr Allen also referred to Manufacturers House Pty Ltd v Ashington No 147 Pty Ltd [2005] NSWSC 767; (2005) 12 BPR 23,913, a notice to complete case in which various extensions of time were given over a period of from 7 March 2005 to 31 May 2005. Smart AJ stated at [45]:

Mr Allen submitted that:

Mr Pesman SC referred to Mahoney v Lindsay per Gibbs J at 602 for the proposition that the fact of negotiations between parties after service of a ‘notice to complete’ (including, it is submitted, negotiations about when completion can occur) does not alter the legal rights and obligations created by the notice.

I accept that proposition, though Gibbs J put the matter in more colourful terms by reference to the actual correspondence that had taken place, namely (at 602):

It seems to me that the email of 3:06 PM on 27 July 2021 is to be more properly construed as being a granting of some indulgence but without obviating the essentiality of time.

The reference in the email inviting an “urgent response” tends to fortify the conclusion.

DC2 submits that the notices of termination (each expressed to be based on “default” under the “the notice to complete dated 12 July, 2021 making time of the essence for completion of the contract”) were invalid because the second notices to complete were invalid, observing that “It is not an effectual termination: see Heydon on Contract [24.380] and Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444 at 453 where invalid termination of a contract is recognised to be a ‘very common form of repudiation’”: PCS [67]-[68]; see also POS [65].

The reasons given above I reject the argument that the second notices to complete were invalid and that the vendors had waived essentiality of the time condition.

The consequence is that the notices of termination were not invalid by reason of the claims of DC2 on issues 1 to 3.

On 2 August 2021 at 7:30 PM Ms Western had a Zoom meeting with the eight other owners and received confirmation from them to issue a notice of termination: CB 182[79].

Ms Western was not cross-examined to the effect that no such instructions had been received. If there is any issue about it I accept that Ms Western did on 2 August 2021 receive instructions to terminate the contracts by notices of termination.

DC2 did not in its final written submissions appear to specifically address this issue (there being no separate submissions between the submissions on issue 4 in the submissions on issue 6: see PCS [1(d)]-[1(e)], [67]-[69]).

As far as I can ascertain there was no specific argument put to the effect that the terms of the notices of termination were themselves invalid in their terms.

Mr Allen submitted (G1CS [51]) that:

The matters referred to in c-e above are made out on the evidence and compelling.

Further, in this regard in particular I deal with Mr Danckert’s evidence about the ability of DC2 to complete the contracts under issue 6. Having regard to those matters, it is clear beyond doubt that DC2 did not have any unconditional financing prior to 2 August 2021. It did not provide any clear proof of any such unconditional financing.

Mr Allen submitted that DC2 had showed that it was unwilling and unable to complete within a reasonable time and instead would complete only when it suited DC2. DC2 was factually unable to settle within any reasonable period, as the finance from Direct Capital was insufficient and would not be available within a reasonable time because DC2 could not provide a first registered mortgage.

It was not until the second day for hearing that DC2 entered into a deed of settlement to address the issue: see Deed of Settlement of 12 July 2022 (CB 2724.156).

Mr Allen also referred to Mr Danckert’s evidence (T126) as follows:

I note that the evidence continued as follows (T126):

Mr Allen submitted, in my view correctly, that the upshot is that Mr Danckert would not have gone ahead with the finance from Direct Finance until after the hearing had commenced, when he had obtained a release from Jogat from the prohibition of granting a first registered mortgage of over an LVR of 65%. Accordingly, DC2 could not complete the contracts when the contracts were terminated.

There was some gap in time between the date specified in the second notices to complete (27 July 2021) and the service of the notices of termination on 2 August 2021.

The essential question is whether by its continuing conduct, DC2 had repudiated the contract by evincing an unwillingness or an inability to render substantial performance of the contract: see e.g. Cromarty at [53].

The second notices to complete made time of the essence. The failure of DC2 to complete on 27 July 2021 and the matters I have referred to above in my view amounted to a repudiation of the contracts entitling the vendors to terminate the contract.

Some delay, of itself, in terminating after the date to complete specified in the notice to complete does not preclude effective termination. As at 27 July 2021 the vendors had an accrued right to terminate by reason of the repudiation of the contract. The act of terminating on 2 August 2021 relies on the existing breach repudiating the contract: see e.g. Carringville Pty Ltd v Gatto Group Pty Ltd [2003] NSWSC 123; (2003) 11 BPR 21,069 at [37] per Young CJ in Eq.

I find that the contracts were validly terminated by the notices of termination served on 2 August 2021.

DC2 opened the case on the basis that the purported termination of the contracts by the vendors, by the termination notices, was unconscionable in the circumstances which obtained.

As noted above, the claims for relief against forfeiture based on unconscionability have been abandoned.

Mr Danckert initially disputed that DC2 did not have the money to complete the purchases on 27 July 2021: T 118.

When asked why DC2 did not complete the purchases he asserted that although it did have the money “organised” and “available” (T118) and the loan had been approved (T119) it did not complete because “there was a process with the bank” (T118) and “[i]t was just the process of getting my bank to settle it”: 119.

I do not regard Mr Danckert’s evidence in this respect as being frank or satisfactory. As the following details demonstrate, there were more fundamental problems with what amount could be borrowed which precluded DC2 having the necessary finance by 27 July 2021 than the “process with the bank”.

Mr Danckert initially identified the bank as being relevantly Avari Capital: T118. Avari Capital being a mortgage management fund: T121. Subsequently Mr Danckert made it clear that the actual funding was coming from Direct Capital and Avari Capital was not providing any separate funds: T122; CB 1955

Mr Danckert accepted that on 28 July 2021 he gave instructions to Mr Boxsell to send the letter from Direct Capital to Ms Western as the best proof available that DC2 had finance available on 28 July 2021, and was the only document provided to Ms Western on that date to prove that DC2 had finance: T120.

He further accepted that there was no mention of financing from Blackbird in the email from Mr Boxsell to Ms Western: T121. He disputed that the Direct Capital document was not an unconditional approval for finance: T120. He accepted that in order to complete the contracts DC2 required finance from financiers other than Direct Capital: T120. The total funding being provided by Direct Capital was $3.9M and the net amount was $3.58M, after lending fees and other fees associated with obtaining the loan: T121.

Mr Danckert accepted that $3.4M was an insufficient amount of money for DC2 to complete the purchases: T122-123. He understood that an amount of approximately $4.55M was required. He on behalf of DC2 tried to obtain (the balance of) the funding from Blackbird: T123.

Mr Danckert disputed that DC2 did not have the money to complete the purchase of the properties as at the commencement of the proceedings (9 September 2021): T123. It was put to Mr Danckert that Direct Capital never gave DC2 loan documents which were unconditional approval for funding in the period from 28 July 2021 to 10 September 2021.

He asserted that the “funding was available but the documents weren’t signed”: T123-124. Mr Danckert accepted that he had not given Direct Capital a copy of the Nomination Deed (CB 697): T124. The finance to be provided by Direct Capital required an LVR of 75% (that would only lend 75% of the value of the properties) and according to Direct Capital 75% of the value of the properties was $3.9M: T124-125. Further, Direct Capital wanted a first mortgage to protect its interests having lent to 75% of the value of the properties: T125.

Mr Danckert agreed that cl 4.1 of the Nomination Deed imposed an obligation on DC2 not to provide a first registered mortgage to a third party, which secured a sum exceeding an LVR of 65% and that as at 27 July 2021 DC2 could not give a first registered mortgage to Direct Capital securing an LVR of 75% without being in breach of the Nomination Deed: T126.

Further he agreed that there was no way he was going to breach the Nomination Deed at 27 July 2021 by giving Direct Capital a first registered mortgage over the properties upon completion: T126.

Despite Mr Danckert’s assertion that he was full and frank in his application for finance with Direct Capital (T125) it is hard to see how that is the case in circumstances in which he did not provide them with a copy of the Nomination Deed which provided for in LVR of 65%.

The Nomination Deed required DC2 to pay $900,000 (the “Second Sum”: CB 700) to Chrysilla Badics as trustee for the Badics Family Trust (Ms Badics being one of the parties associated with Jogat: T125) not later than a date 6 months after the date of the Deed (Second Sum Due Date) and, in this respect, time was of the essence: cl 3.3c (CB 702-703).

The Second Sum Due Date was thus 25 August 2021. Mr Danckert agreed that he nor DC2 had paid the $900,000 by 27 July 2021 nor September 2021: T125-126.

Whilst the questions put by Mr Allen in this regard referred to the $900,000 being paid to Jogat or parties associated with Jogat (T125-126), I understood the answers to indicate that whoever the sum was payable to (which under the deed is to Ms Badics) the answers were similarly applicable, namely that the $900,000 had not been paid and that by September 2021 DC2 had no intention of paying that sum and that it was still not paid.

In light of the above evidence, in my view it is clear that DC2 was not able to complete either as at 27 July 2021 being the date nominated for completion nor at 2 August 2021 being the date of the notices for termination.

The events of 27 and 28 July 2021 which I have set out above all clearly demonstrate that despite DC2, Mr Danckert and Mr Boxsell’s hoping to persuade Ms Western and the other vendors that DC2 would be ready to settle by 6 August 2021, the objective reality was that no sufficient funding was then available or likely to be available.

The letter from Direct Capital to WBG dated 28 July 2021 (CB 1959) indicating a loan had been approved and could settle by about 6 August 2021 was not evidence of substantial performance. It was based on misrepresentations by non-disclosure of Mr Danckert to Direct Capital.

As Mr Allen demonstrated, the reality is that the requirements of Direct Capital were not met, and were not able to be met by DC2 at that time.

The reality is that even until after the hearing commenced DC2 was unable to complete and provide the necessary funds for completion.

In order to support the submission that DC2 was ready, willing and able to complete the contracts as the date of the trial, DC2 marshalled and relied upon the following evidence.

First, reference is made (PCS [71]) to Mr Danckert’s affidavit sworn 25 May 2022 at [41] (CB 116), which reads:

I also note Mr Danckert’s evidence at [42] (CB 117) as follows:

Secondly, DC2 referred to the following evidence (PCS [72]-[81]):

The table referred to in PCS [78] is as follows:

DC2 submits that the defendants’ attacks on DC2’s alleged financial position through cross-examination of Mr Danckert did not prove anything but rather submitted that “The opposite is true”: PCS [71].

Finally it was submitted that, “From the summary of the evidence above, the Court can safely infer that DC2 has the funds available to it to settle in its own right and by way of Mr Danckert having the capacity to cause funds to be advanced to it by D Capital if necessary”: PCS [82].

Mr Pesman SC submitted that there were at least three significant reasons why the Court could not find that DC2 is now ready, willing and able to complete the contracts (G2CS, pages 8-9)):

The reference to a “Fer[r]com inference” is a reference to what was said by Handley JA in Commercial Union Insurance Company of Australia Limited v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418E, applying the principles in Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 to the situation where a party fails to ask questions of a witness in chief: see Stambolziovski v Nestorovic and Camanaro Prestige Properties Pty Ltd t/as Sydneyhome Real Estate [2015] NSWCA 332 per Ward JA at [51].

Mr Allen tendered title searches in respect of the Windsor Property, and the associated copies of the caveats and mortgage, which became Ex D1,8‑2.

Mr Allen submitted that the relevance goes to the ability of DC2 to perform the Deed of Settlement with Jogat and the question of ability to complete, because a mortgage exceeding $2 million encumbers the lots: T377-378.

However, the above table does not factor in monies from the sale of the proceeds of the Windsor Property.

I accept, as Mr Pesman SC submits, that there may be interest pursuant to the Duties Act 1997 (NSW) to be paid that has not been factored in. However, with some reservation, I am prepared to accept that it is arguable that DC2 may be able to complete the contracts if specific performance is now ordered.

Section 49 PSA Act provides as follows:

Section 3(1) includes definitions of “agent” and “real estate agent” as follows:

Section 3A(1) relevantly provides that:

The form referred to in s 49(3)(a) is published by the Secretary on the Fair Trading website and a copy was handed up during the hearing and incorporated into the Court Book (CB 2724.209). There is no suggestion, nor evidence, that Mr Danckert or anyone else provided any such form to any of the vendors. Nor is there any suggestion or evidence that any of the vendors signed such a form.

As indicated above (at [66]), I will address the matter of whether the contracts were illegal by dint of the effect of the statute.

Mr Pesman SC submitted that Mr Danckert breached s 49 on exchange of the contracts on 26 February 2021 and that that breach renders the contracts unenforceable in the case of DC2 and voidable at the suit of the vendors: G2CS [20].

Mr Pesman SC put specific submissions to the effect that Mr Danckert was an agent at the time of the contract: G2CS (pages 9-10). I will refer in more detail to his submissions below.

Mr Kelly SC assumed for the purpose of analysis of the construction question that Mr Danckert was a “real estate agent who is retained by a person … as an agent for the sale of property” and that he obtained or was in any way concerned in obtaining “a beneficial interest in the property” when DC2 entered into the Nomination Deeds, made the Calls and exchanged the contracts, in contravention of s 49(1) PSA Act: PCS [84].

It seems to me that Mr Pesman SC’s submissions (see below) and Mr Kelly SC’s assumptions are prima facie correct.

Accordingly, I proceed on the basis that s 49 is engaged on the facts of this case and that there is a beach of s 49. I hasten to add that whilst Mr Kelly SC raised the prospect that a breach of s 49 might expose Mr Danckert to a risk of disciplinary action (PCS [103]), I am not determining and have not been asked to determine whether any disciplinary consequence arises.

Mr Kelly SC put that the question to be addressed is whether any and if so which of those instruments is illegal, void and of no legal effect or may otherwise be rendered unenforceable by the operation of the PSA Act.

Mr Pesman SC accepted (as he must) that the PSA Act does not expressly provide for a consequence that a transaction is voidable at the suit of the vendors and accordingly accepts that that will only occur if the contract was “impliedly prohibited” or made for a purpose rendered unlawful by statute.

The starting point for DC2’s submissions is the principles outlined by the High Court in Gnych v Polish Club Ltd (2015) 255 CLR 414; [2015] HCA 23 (Gynch) at [36] per French CJ, Kiefel, Keane and Nettle JJ.

That case involved the proper construction of the provisions of s 92(1) of the Liquor Act 2007 (NSW) (Liquor Act).

The respondent (Club) leased part of its licensed premises to the appellants. Relations between the parties deteriorated and the Club excluded the appellants from the subject premises. The appellants commenced proceedings seeking a declaration that held a leasehold interest in the premises.

Section 92(1)(d) of the Liquor Act prohibited the holder of a club licence, being the Club, from leasing or subleasing licensed premises except with the approval of the Independent Liquor and Gaming Authority (Authority). Because the lease had not been approved by the Authority, there was a contravention of s 92(1)(d).

On one view the Club sought to take advantage of its own contravention and argued that s 92(1)(d) of the Liquor Act rendered the lease void and unenforceable. The argument was rejected.

The plurality referred to the decision in Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498; [2012] HCA 7 at [23] per French CJ, Crennan and Kiefel JJ explaining that an agreement may be unenforceable for statutory illegality in three categories of case, where: (a) the making of the agreement or the doing of an act essential to its formation is expressly prohibited absolutely or conditionally by the statute; (b) the making of the agreement is impliedly prohibited by statute; and (c) the agreement is not expressly or impliedly prohibited by a statute but is treated by the courts as unenforceable because it is a “contract associated with or in the furtherance of illegal purposes”: [35].

Their Honours noted that there was some issue is to what category the matter fell within although ultimately little turned on that point because the consequence of illegality was a matter of statutory construction whatever category of illegality is involved: [36]

Their Honours at [37]-[38] referred to Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd (2007) 232 CLR 1; [2007] HCA 38 at [46] per Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ which observed that the question of statutory construction and the issue of whether a contract is void depends upon the mischief which the statute is designed to prevent, its language, scope and purpose, the consequences for the innocent party, and any other relevant consideration (approved by Gummow A-CJ, Kirby, Hayne, Crennan and Kiefel JJ in Master Education Services Pty Ltd v Ketchell (2008) 236 CLR 101; [2008] HCA 38 at [11]).

Mr Pesman SC relied on the comments of Gibbs ACJ in Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410 at 413; [1978] HCA 42 as follows:

However, the decision of Gaegler J in Gnych at [64] highlights some degree of nuance in approach since Yango Pastoral:

The possibility that statute might render a contract not void but might have some less stringent outcome (e.g. the contract being merely voidable) was raised by Gaegler J at [65]:

Gaegler J at [68] referred to the types of considerations that ought to be taken into account in the process of construction which would ensure consistency of approach and, in turn, to maximising the predictability of the judgment that must be made in a novel statutory context:

Gaegler J observed that the last of those considerations is often decisive, and is of particular importance in relation to a prohibition imposed as part of a complex statutory scheme: [69].

In Gnych Gaegler J at [82]-[83] referred in particular to two specific considerations which tended against a voiding outcome of the lease, namely:

In REW08 Projects Pty Ltd v PNC Lifestyle Investments Pty Ltd (2017) 95 NSWLR 458; [2017] NSWCA 269 (REW08 Projects) Macfarlan JA (with whom Beazley P and Gleeson JA agreed) noted the following in respect of illegality

The distinction between illegality and the operation of the doctrine of clean hands is commented upon by the learned authors of J D Heydon and M J Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis) (Jacobs’).

Illegality destroys the legal and equitable rights of a plaintiff, whereas the maxim of clean hands merely deprives a plaintiff of the right to equitable relief. If the doctrine of illegality operates, there is no occasion to apply the maxim as to clean hands. Equity in such cases simply follows the law: Jacobs’ at [9-03] page 99; see also In the matters of Earth Civil Australia Pty Ltd, RCG CBD Pty Ltd, Bluemine Pty Ltd, Diamondwish Pty Ltd and Rackforce Pty Ltd (all in liq) [2021] NSWSC 966 per Ward CJ in Eq at [2641].

Hamilton J in Lewis v Nortex Pty Ltd (In Liq) [2004] NSWSC 1143; (2004) ALR 634 at [135] (Lewis v Nortex) made the same distinction in the following terms:

Ultimately as the legal principles above indicate there must be a consideration of the particular provisions of the legislation in question.

During oral submissions I was taken by Mr Kelly SC to specific provisions in the PSA Act including the following provisions that give rise to penalties for breach with the maximum penalties being specified in the various sections, namely:

Other sanctions provided for in the legislation include the fact that the agent is not entitled to bring any proceedings to recover any commission etc unless licensed (s 8(2)(a)) or unless there is a written agency agreement: s 55.

The Secretary is enabled to issue and notify to licensees guidelines as to what constitutes the proper supervision of the business of the licensee and a failure to comply with the guidelines similarly results in a specified maximum penalty: s 32(4).

Mr Kelly SC noted that Pt 3 Div 4 of the Act (within which s 49 sits) deals specifically with managing of conflicts of interest, each of which contains maximum penalty provisions as a consequence for breach provisions, namely that:

In the case of the licensee who has repeatedly engaged in unjust conduct there are consequences where, on the application of the Secretary, the Civil and Administrative Tribunal, may order the licensee to refrain from the conduct: s 53D.

Lastly, my attention was drawn to the provisions of Pt 12 in the PSA Act including provisions which set out grounds for disciplinary action (s 191) and specifies the nature of disciplinary action (s 192).

Mr Pesman SC submitted that s 49 is plainly an important consumer protection provision and referred me to what was said by Minister Aquilina on 9 May 2002 in the Second Reading Speech:

Mr Pesman SC submitted this revealed that (a) there was public pressure to address agents’ conflicts which the legislature took seriously; it is (and was to the legislature) obvious that vendors expect their agents to get the best possible result for that vendor which is wholly inconsistent with their own interests if they are the purchaser; and (c) the legislature intended (apart from the penalty imposed) that the agent not retain any benefit from a transaction not the subject of consent: G2CS[38].

Mr Pesman SC referred to REW08 Projects v PNC Lifestyle Investments and Liu v Liu [2022] NSWCA 67 as examples of cases in which the court is concerned to avoid injustice: G2CS [48]-[51], and noted that the present case for unenforceability is overwhelming based on the following matters:

DC2 then made specific submissions in relation to s 49 as follows (at PCS [89]):

DC2 submitted that the intention of s 49(1) is to impose a monetary and/or custodial penalty on the real estate agent who is the person who contravenes the Act, not to render contracts or other arrangements unenforceable and in the circumstances contemplated by s 49(4)(a)-(f), a wide range of third parties may be affected and there is nothing in the PSA Act to suggest an intention that their contracts should be rendered voidable at the option of a third person: PCS [90]-[91].

It is necessary to have regard to the purpose or object underlying the provision so as to adopt a construction which would promote that purpose or object rather than a construction which would not: Interpretation Act 1987 (NSW), s 33 (Interpretation Act).

The purpose or object will often be derived from the terms of the provision, read in context, but may be assisted by having regard to extrinsic material, including the second reading speech of the Minister: s 34(2)(f) Interpretation Act: see Stanley v Director of Public Prosecutions (NSW) [2021] NSWCA 337; (2021) 398 ALR 355 at [105].

Mr Kelly SC was not so bold to submit that I could not look at the second reading speech, but he did indicate that I did not need to because there is no ambiguity, doubt or difficulty: T417 (Day 6).

By s 34(1) Interpretation Act consideration may be given to second reading speeches if they are capable of assisting in the ascertainment of the meaning of the provision, to (relevantly in the case of provision of an Act):

In determining whether consideration should be given to second reading speech, or in considering the weight to be given to it, regard shall be had, in addition to any other relevant matters, to (a) the desirability of persons being able to rely on the ordinary meaning conveyed by the text of the provision (taking into account its context in the Act and the purpose or object underlying the Act or statutory rule), and (b) the need to avoid prolonging legal or other proceedings without compensating advantage: s 34(3).

It seems to me that it is highly desirable for persons to be able to know whether the ordinary meaning conveyed by s 49 is limited to a penalty provision or extends to the invalidating contracts and these proceedings would not be unduly prolonged by undertaking that consideration.

In the circumstances it seems to me that I can look at the second reading speech to confirm whether the breach of s 49 is limited to a penalty impost for breach or whether it extends to invalidating contracts.

I accept Mr Pesman SC’s submission that I may have regard to the second reading speech and that at least one mischief which the statute is designed to acheive is consumer protection.

The Long Title to the PSA Act describes it as “An Act to provide for the regulation of property and stock agents; to repeal the Property, Stock and Business Agents Act 1941; and for other purposes”.

The submissions of Mr Pesman SC not unnaturally focus upon the conduct of Mr Danckert. A reason for that may be that his intent in such submissions was to address the separate issue of whether the contracts were entered into by DC2 with the object of committing an illegal act (see [59] above).

However, focusing for the moment on the question of whether the effect of the PSA is to render contracts unenforceable, I accept that the considerations advanced by Mr Kelly SC are the sort of considerations which the High Court has indicated needs to be addressed.

There might arise situations in which agents might suffer some penalty, but could arrange to get beneficial interests in multi-million dollar properties, and earn or receive millions of dollars of benefit, simply by interposing a company (a hypothetical situation I put during the hearing in order to test the submissions): T386. In this circumstance, it is likely that the agent will be strictly liable to account for any profits made: see, eg, Naumburger v Berger [2021] NSWSC 903 at [164]-[165], [167] per Rees J.

However, ultimately I am driven by the detailed structure of the language and provisions of the PSA Act to conclude that no voiding or voidable consequence is intended by the provisions.

First, the legislative regime for the regulation of agents does not expressly render an agreement made for the purpose of avoiding duty unenforceable. The PSA Act provides for the imposition of a penalties for breaches of its provisions.

Other than s 49, only a few specific sections of the PSA Act provide for imprisonment penalties, in particular: Pt 8 Div 3 dealing with freezing of accounts (ss 119, 120); Pt 13 dealing with enforcement and in particular obstruction of authorised officers (s 207); Pt 14 which specifically creates certain offences (ss 211 and 212) and Pt 15 which prohibits disclosure of certain information (s 219). Section 49 contains an imprisonment consequence as a penalty for the contravening conduct.

It seems to me that the detailed structure of the legislation which at many steps of the way creates a detailed regime for penalty provisions and the particular regime for disciplinary action count against the notion that s 49 intended to render void or even voidable contracts in which an agent might be said to have obtained the beneficial interest without consent.

Secondly, of particular significance are the provisions of s 52 (which contains prohibitions in respect of certain statements, representations and promises) and s 53 which indicates specific legislative attention to the consequences for misrepresentation or concealment:

That the Parliament specifically addressed the consequence for misrepresentation or concealment by an agent by reference to its impact upon an agreement for sale of land without expressly providing that such an agreement would be void or voidable is to my mind a very powerful consideration against the construction contended for by the vendors.

In the circumstances, I find that the contracts are not per se illegal void or even voidable by reason of Mr Danckert’s prima facie or assumed breach of s 49.

In light of my finding that the contracts are not per se illegal void or even voidable by reason of Mr Danckert’s prima facie or assumed breach of s 49, it is not apparent to me that any different outcome would apply in respect of the Nomination Deeds and the Calls.

Despite the wording of this issue, essentially, as I understood the parties’ submissions, this issue is intended by the parties to raise the question of whether specific performance would be precluded by what was said to be a lack of clean hands on the part of DC2.

The law in relation to a clean hands defence is conveniently summarised by Hamilton J in Lewis v Nortex at [137]-[150]. His Honour drew deeply upon the analysis in the judgment of Campbell J in Black Uhlans Incorporated v New South Wales Crime Commission [2002] NSWSC 1060 (Black Uhlans).

Hamilton J at [138] distilled from the authorities the following relevant propositions:

The notion that the impropriety to be relevant it must have “an immediate and necessary relation to the equity sued for” was emphasised in REW08 Projects v PNC Lifestyle Investments per Macfarlan JA at [37] citing Dewhirst v Edwards [1983] 1 NSWLR 34 at 51, and recently also Parker J in Meng v Wang [2022] NSWSC 833 at [80].

Hodgson JA has observed that the requirement that the bad conduct in question have “an immediate and necessary relation to the equity sued for” is not a requirement that the relation be of the nature of contributing to or constituting the equity sued for. Further, since this requirement is not a rule of law but merely an aspect of principles guiding the exercise of discretion, it should not be given a narrow or technical construction: Kation Pty Ltd v Lamru Pty Ltd [2009] NSWCA 145; (2009) 257 ALR 336 at [28], Allsop P agreeing at [1].

Making a determination in respect of the requirement that the nature of conduct the conduct must have an immediate and necessary relation to the equity sued for appears to be something over which minds may reasonably differ. Hamilton J whilst considering the principles regarding a defence of unclean hands in the context of considering an application for amendment of a defence, in Lewis v Nortex Pty Ltd (In Liq) [2003] NSWSC 354 at [19], pointed to the example of the High Court decision in Nelson v Nelson (1995) 184 CLR 538; [1995] HCA 25 and observed:

Conceptually there may be cases in which a breach of a fiduciary duty by real estate agent may give rise to a successful denial of relief in a specific performance suit.

In Raso v Dionigi (1993) 100 DLR (4th) 459 the Ontario Court of Appeal denied purchasers of a property relief by way of specific performance because of their unclean hands consequent upon a breach of fiduciary duty by a real estate agent who acted for both the vendors and purchasers on the sale of real property.

The appellant vendors owned property in Toronto. A real estate agent pursued vendors to obtain a listing of the property. The agent arranged for the vendors to sign a listing agreement with his agency and presented the vendors with an offer by his brother and sister-in-law. However the offer was framed “R. Raso in trust”, using the sister-in-law’s maiden name (Raso), which was a deliberate stratagem to conceal from the vendors the fact that the purchasers were related to the agent. After some negotiations the vendors accepted the offer. However a few days later they discovered the family connection and refused to complete the transaction. The purchasers brought a claim for specific performance in the agent and his firm sued for commission on the sale: at 461-462.

The trial judge (see 462-463):

Dubin CJ who delivered the judgment of the Court of Appeal (Dubin CJ, Tarnopolsky and Krever JJA) agreed the trial judge was correct in holding that the agent had breached his fiduciary duty in failing to disclose the relationship of the agent to the purchasers. However, Dubin CJ held that the trial judge erred in holding that that the agent was under no duty to disclose to the vendors all material facts known to him, and that the agent, while acting for both parties, was merely a middleman or conduit: at 464f.

Dubin CJ referred to Canadian authority and principles regarding fiduciary obligations noting that an agent must not let his own or another’s interests come into actual or apparent conflict with the interests of the principal. His Honour referred to an exception in circumstances where there had been full and timely disclosure to the principals: at 464-465.

His Honour considered that the narrow consent exception to the general rule is accurately stated by W F Foster in "Dual Agency: Its Implications for the Real Estate Brokerage Industry", Meredith Memorial Lectures, Current Problems in Real Estate (1989), at p. 76, namely that mere full disclosure in itself was insufficient discharge of the obligation, rather the dual agent must by clear and affirmative proof also establish that the parties to the transaction were “at arm’s length” and that after receiving information the principal has “agreed to adopt what was done” by the agent or what the agent proposed to do: at 465f.

His Honour made reference to the judgment of Wallace JA in Ocean City Realty Ltd v A & M Holdings Ltd (1987) 36 DLR (4th) 94 at 98; 44 RPR 312 (BCCA) to the effect that the obligation of the agent to make full disclosure included an obligation to disclose “everything known to him respecting the subject matter of the contract which would be likely to influence the conduct of his principal” or “likely to operate upon the principal’s judgment”. In such a case the agent’s failure to inform the principal would be material nondisclosure: at 465-466.

Critically, the Court held that a fiduciary who breaches the duty of nondisclosure of material facts is not entitled to prove that the transaction would have concluded had the disclosure being made and held that the trial judge erred in embarking upon that enquiry: at 466.

In relation to the consequence of the agent’s breach of fiduciary duty, Dubin CJ (at 466) referred to some Canadian authority but also English authority and in particular the judgment of Sir W.M. James, LJ in Parker v Mckenna (1874) LR 10 Ch App 96 at 124-125:

Dubin CJ (at 466) also referred to other authority citing Lord Thankerton in Brickenden v London Loan & Savings Co [1934] 3 DLR 465; [1934] 2 WWR 545 (PC) as follows:

Dubin CJ (at 467) considered that the judgment of Lord Thankerton did not permit an inquiry as to what would have transpired if full disclosure had been made:

His Honour (at 468) considered it “axiomatic that where an agent has breached a fiduciary duty in the manner disclosed in this case, the agent is precluded from claiming any commission”.

Under Australian law, it is clear that a plaintiff who has been guilty of unclean hands need not be permanently debarred from equitable relief. There is the notion that one may “wash one’s hands” by showing that one’s misconduct ceased well before the suit, or that it occurred by accident and will not recur: J D Heydon, M J Leeming and P G Turner, Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (5th ed, 2014, LexisNexis) (MGL) at 83. It is said that the process of “washing” may be achieved by the imposition of terms on the plaintiff: MGL at 83 citing Rhodes v Badenach [2000] TASSC 160.

Mr Pesman SC submitted that were the Court to conclude, despite the submissions above, that Mr Danckert’s conduct was illegal but that the contracts were in any event enforceable, the Court would still exercise it discretion to withhold relief. Mr Pesman SC qualified by that submission by stating that the vendors accept that if the Court finds no breach of s 49 at all then this issue does not arise: G2CS [52].

I accept that there is a breach of s 49 PSA Act.

Mr Pesman SC submitted that although equity “does not demand that its suitors shall have led blameless lives” (citing Brandeis J in Loughran v Loughran 292 US 216 at 219 (1934) quoted at [3.330] in Peter Young, Clyde Croft and Megan Smith, On Equity (2009, Lawbook Co)), equity will not intervene where there is an immediate or necessary connection between the relief claimed and the conduct complained of (see Meyers v Casey (1916) 17 CLR 90 at 124; [1913] HCA 50). He submitted that “[t]hat connection plainly exists in the present case”: G2CS [53]-[54].

Mr Gooley referred to the conduct of DC2 regarding his discussions with Ms Western in respect of Ms Pocknall acting (CB 73[45]-[46]) and his discussions with Ms Western regarding whether he should disclose that he was the purchaser to the vendors: CB 110-111[6]-[7]. I have referred to in Mr Danckert’s evidence in respect of the last matter above.

The submissions of DC2 on the unclean hands matter were partly premised on the basis that Mr Danckert informed Ms Western of his involvement with DC2: PC2 [93]-[107].

The submissions were also made on the basis that Mr Danckert had ceased to be an agent in 2018 and that in any event Ms Western as the person nominated under cl 9.1 of the Option Deeds and as conveyancer for the vendors had whatever responsibility there was to inform the other vendors.

I have dealt with the first part of DC2’s submission earlier in the judgment under the heading of the duration of Mr Danckert’s agency. I reject DC2’s submission that no fiduciary obligation existed or remained under the agency agreements as at 26 February 2021 because the agency agreements came to an end by performance in 2018 and no selling task remained as at 26 February 2021 “because there was nothing left for Mr Danckert to do”.

The argument of DC2 is essentially that the vendors by entering into the Option Deed and the Deeds of Variation essentially became bound to exchange contracts once DC2 had become nominated and to abide by Ms Western’s decision-making, because of cl 9 Option Deeds.

The provisions of cl 9 (CB 341), I am prepared to accept, were to provide a single point of contact as between the vendors as collective owners and the buyer for the purposes of the Option Deeds.

However, the notion that the conveyancer has “full authority to act on behalf of the owner in relation to the Deed and the Contract” might bind the vendors in their position with the buyer, does not to my mind settle the position as between the vendors and Ms Western as the conveyancer.

I do not accept that cll 9.1 and or 9.2 of the Option Deeds were a ceding by the vendors of unfettered decision-making power to Ms Western irrespective of the wishes of the other vendors.

I consider that, at least under agency principles, Ms Western ought to have informed the other vendors, as her clients, of her relevant ownership knowledge, particularly so because apart from her acting as agent in a conveyancing capacity, she was personally interested in the contract transactions and, because of the interdependent nature of the contracts, her choices and actions directly impacted upon the other vendors.

In light of my findings in the matter it is not at least in this judgment necessary to consider the duty of care owed by Ms Western to the other vendors.

However, whatever obligation Ms Western had, it does not seem to me that that absolved Mr Danckert of any responsibility to make the disclosure.

Mr Danckert’s acts were DC2’s acts and his intention and state of mind were DC2’s intention and state of mind: Kation Pty Ltd v Lamru Pty Ltd e.g. per Basten JA at [116]—[118] citing Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2017) 230 CLR 89; [2007] HCA 22; Barnes v Addy (1874) LR 9 Ch App 244.

If it is correct that Mr Danckert remained the agent of the vendors up to and including the time of exchange and had a duty of disclosure up to that time, it seems to me that his failure as agent (as distinct from being the director and shareholder of DC2) to inform the vendors that DC2 was obtaining a beneficial interest in the block and his breach of s 49 was critical for the purposes of an unclean hands defence.

Mr Danckert made a deliberate choice not to tell the vendors about his involvement with DC2 prior to the exchange of contracts. He breached the no-conflict duty and the no-profit duty.

His failure as agent to inform the vendors that DC2 was obtaining a beneficial interest in the block and his breach of s 49 was within the analysis referred to above by Hamilton J in Lewis v Nortex at [137]:

Mr Kelly SC on behalf of DC2 attacked the other vendors’ hypothetical musings as to the choices they would have made.

On one view, the decision in Raso v Dionigi suggests that the hypothetical musings are irrelevant.

Assuming that it is relevant to look at what the other vendors would have done, I am mindful of the caution in the caselaw that responses to hypothetical questions with the benefit of hindsight should be carefully scrutinised and assessed against other objective material.

However, I am prepared to accept their evidence that at the very least they would have explored either with Ms Western or with independent legal advice ways of terminating the contract.

Even if the vendors were bound to enter into the contracts once the Calls were made, that does not seem to me to be the end of the matter.

There is no certainty that the contracts would be completed.

The non-disclosure deprived the vendors of opportunities to seek other conveyancing and legal advice in relation to the performance of the contracts.

Even in early April, Mr Hew (CB 1118) and Mr Young (CB 1119) and Mr Parker (CB 1125) were concerned about delay and about the issue of notices to complete.

In the result, it seems to me that there is sufficient basis to decline specific performance on the basis of unclean hands.

DC2 submitted that the appropriate order is an order for specific performance of the each of the contracts, which requires completion within a reasonable time, on terms that a copy of the judgment be provided to the Secretary. It will then be a matter for the Secretary to take whatever disciplinary action is deemed necessary. That way, the policy of the PSA Act will be served: PCS [109].

If I am incorrect in declining specific performance on the basis of unclean hands, I would not flatly refuse relief but impose the terms proffered by DC2 that a copy of the judgment be provided to the Secretary.

Issue 10, as I understood it, raises the question as to whether, separately from the matter of unclean hands, there were other discretionary considerations which might lead the court to decline to order specific performance of the contracts.

DC2 did not in its submissions refer to any very specific discretionary consideration other than to indicate that for the same reasons as it had advanced in relation to the unclean hands issue, the Court should not decline to exercise is discretion to refuse specific performance in this case. DC2 submitted that the PSA Act does not disclose an intention to render contractual rights unenforceable and a serious and proportional sanction is directed at the person concerned: PCS [108].

Mr Allen submitted that as a matter of discretion, the following militates against ordering specific performance (G1CS [56]):

Quite apart from the discretionary consideration of unclean hands, specific performance may be denied because of delay: e.g. Lamshed v Lamshed (1963) 109 CLR 440 at 452–6; [1963] HCA 60 per Kitto J.

The degree of promptness required depends upon the nature of the case and all its circumstances. Thus, Kitto J indicated there is little point in citing cases for the purpose of comparing the period of delay in the case before the court with delay which is being considered fatal to claims for specific performance in circumstances in other cases: at 453.

It is clear that the bare fact of delay is not enough: at 453.

His Honour said that equity will not allow the possibility of its making such a degree to be held unfairly long over the head of the party who denies the existence of the contract and asserts a right to deal with property as his own. This is tied back to being a particular application of the general principle of laches: at 453.

In the context of matters which may preclude relief of specific performance Spry refers to delay in the context of laches. It is said that laches is established when two conditions are fulfilled. First, there must be unreasonable delay in the commencement or prosecution of proceedings for specific performance. Secondly, in all the circumstances the consequences of the delay must render the grant of relief unjust: I C F Spry, The Principles of Equitable Remedies (9th ed, Lawbook Co, 2014) at 233.

Here there is no delay in the commencement of proceedings.

Spry specifically deals with the concept of prejudice to the parties opposing the specific performance or third parties.

There is not really in the authorities any satisfactory comprehensive description of the combinations of circumstances which will enable a Court to precisely determine whether gross delay or laches ought preclude equitable relief. In Orr v Ford (1989) 167 CLR 316 at 340-341; [1989] HCA 4 Deane J expressed this sentiment as follows:

Deane J continued at 341:

In my assessment there is considerable force in the submission made by Mr Allen.

The particular concern that I have regarding the question of whether relief should be precluded by delay is the concern raised by Mr Allen effectively that the only reason specific performance is even tenable is because of the delay in bringing these proceedings to hearing.

DC2 has benefited from that delay in the sense that the delay has enabled it time in order to get its “house in order” to attempt to demonstrate it has financing to complete the purchases.

I have not readily been able to find authority in which, in the context of specific performance, delay in bringing an action has improved the circumstances of the plaintiff and a court has declined relief.

Certainly, in the context of family provision proceedings, there is authority to the effect that the Court is reluctant to grant an extension of time which may have the effect of improving the applicant’s position in comparison with that in which he or she would have stood had the application proceeded in a timely way: Durham v Durham (2011) 80 NSWLR 335; [2011] NSWCA 62 per Tobias JA at [37]-[42] discussing and approving the approach of Bryson J in Davison v Staley (Supreme Court (NSW), 21 August 1986, unrep) (Campbell JA at [56] and Young JA at [87] agreeing).

Whilst I have anxiously considered the matter, on balance, I am not ultimately persuaded that I ought to decline as a matter of discretion to order specific performance of the contracts on the basis of delay.

First, whilst Durham v Durham is an interesting decision, the approach of the Court was in the context in which there was a statutory period within which to bring the family provision claim and the applicant was at first instance requiring a grant of leave to bring the application out of time and on appeal challenging the refusal to bring the claim out of time.

That circumstance does not pertain to this case.

Secondly, whilst DC2 has benefited from the delay in between the proceedings being commenced and coming on for hearing, in the sense that the delay has enabled it time in order to arguably get its “house in order”, it does not seem to me that DC2 has delayed in either commencing or prosecuting the proceedings.

As noted above DC2 submitted that the appropriate order is an order for specific performance of the each of the contracts, which requires completion within a reasonable time, on terms that a copy of the judgment be provided to the Secretary.

Whether the proffer of terms is regarded as being simply a discretionary consideration or part of what is described above in respect of the clean hands principles as being a process of “washing” of DC2’s hands was not explained. I do not consider there is need to go deeply into it.

In the event that I am incorrect in flatly refusing specific performance, I would impose the terms proffered by DC2 that a copy of the judgment be provided to the Secretary.

The claims against Ms Western and SBS for breach of fiduciary duty and other duties are predicated on the basis that Ms Western acted for DC2.

Those claims have been abandoned.

The other claims against Ms Western have been abandoned: see page 4 agreed issues.

It was agreed that the issues 21-31 on the cross-claim against SBS are only relevant in the event that DC2 succeeds: see page 4 agreed issues.

It was agreed that the issues 32 and 33 on the cross-claim against Ms Western are only relevant in the event that DC2 succeeds: see page 6 agreed issues.

It was agreed that the issues 21-31 on the cross-claim against SBS are only relevant in the event that DC2 succeeds: see page 4 agreed issues.

Part of the second group’s cross-claim is a cross claim against Mr Danckert alone, and the issue raised is whether the terms of the agency agreements between Mr Danckert and the vendors obliged Mr Danckert to repay commission to the other vendors in the event that the contracts between DC2 and the other vendors are not completed.

Mr Kelly SC accepted that the agency agreement entered into between the vendors and Mr Danckert incorporates the terms and conditions that appear on on the reverse of the second page standard agency agreement: T312.

Clause 3.2(d) of the standard form provides that remuneration is due and payable “Upon the termination of the contract by the Principal [vendors] as a result of a default of the Purchaser [DC2] and the Remuneration is the same or less than the amount of the deposit which is forfeited to the Principal.” (Which it is, the latter sum being $47,500): G2CS [84].

Mr Pesman SC submitted that contrary to the provisions of the contract, Mr Danckert received the commission sum ($6,750) from the deposits ([17] of the main claim and the defence) and in circumstances where the sales were not completed because of the default of DC2, the other vendors seek an order that the commission or remuneration of $6,750 be repaid to each of them: G2CS [85].

In light of my findings regarding the contracts it seems to me that there should be an order for repayment of the commission.

There are a group of issues arising on the second group’s cross-claim against Mr Danckert and DC2.

These issues raise questions in respect of the whether the relevant ownership knowledge ought to be imputed to the other vendors and whether Mr Danckert or DC2 had a duty to disclose the relevant ownership to the other vendors notwithstanding that Ms Western and/or SBS had such knowledge.

I have dealt with the second aspect of this. In light of my findings it is not necessary to address the question of whether the relevant ownership knowledge of Ms Western ought to be imputed to the other vendors. In any event, in the way the issues were framed, the issue only ultimately became necessary to decide in the event that an order for specific performance was made.

DC2 in the POS submitted that if all claims fail it claims the repayment of the deposits under s 55(2A) Conveyancing Act: POS[42].

The only submission put by DC2 was the following in its opening written submissions (POS[120]):

No further submission was made in DC2’s final submissions.

This issue does not appear expressly in the list of agreed issues. It also arguably may not have been pressed.

However, in case there is any lingering doubt about it I briefly note the following.

The relevant principles regarding s 55(2A) Conveyancing Act were recently summarised by Darke J in Culjak v Akrawe [2022] NSWSC 949 at [83]-[87].

I am entirely unpersuaded that there is an unjust and inequitable consequence of forfeiture of a deposit having regard to my findings in this matter.

I have outlined my findings at the commencement of the reasons for judgment.

I direct the parties to bring in short minutes of order to give effect to my reasons for judgment.

I have raised the question regarding the framing of the illegality issue and possibly there may be need for that to be further addressed.

I have understood that the issues on a number of the claims have now been abandoned, or in the case of issues 35-43 arising out of the second group’s cross-claim, that they do not arise or need to be determined. However in the event that I am mistaken about that, in the process of the parties bringing in short minutes of order to give effect to my reasons for judgment, they should alert me to any claims that they say still need to be determined and in that respect I reserve further consideration of any such claims.

In the result, DC2’s claims are dismissed. The parties are to bring in Short Minutes of Order on the main claim and the cross-claim and in respect of costs.

To the extent that the is debate about the appropriate costs orders the parties are to notify my Associate that that is the case and the matter may be listed to address disputed costs issues or determined on the papers.

The orders of the Court are: