Cappello & Anor v Scrivener & Anor - [2020] NSWSC 1748 - NSWSC 2020 case summary — Zoe

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Cappello & Anor v Scrivener & Anor

[2020] NSWSC 1748

Supreme Court of NSW|2020-11-12|Before: Stevenson J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2020-11-12

Before

Stevenson J

Catchwords

[2001] NSWCA 61 Briginshaw v Briginshaw (1938) 60 CLR 336
[1938] HCA 34 Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603

Source

Original judgment source is linked above.

Catchwords

[2001] NSWCA 61 Briginshaw v Briginshaw (1938) 60 CLR 336[1938] HCA 34 Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603

Judgment (48 paragraphs)

[1]

Solicitors: RJI Legal (Plaintiffs) Marsden Law Group (Defendants) File Number(s): 2018/129029

[2]

Judgment Decision Hearing conducted on Microsoft Teams Credit Mr Cappello's steps to secure the site The critical conversation was on 20 August 2013 Mr Cappello's affidavit account of the conversation Mr Scrivener's affidavit account of the conversation Generally as to the conversation Mr Cappello's evidence before me about the conversation Mr Scrivener's evidence before me about the conversation Post contractual conduct Events following 20 August 2013 The meeting at the El Phoenician Restaurant The Bannermans agree to enter a Due Diligence Deed All three sites secured Mr Scrivener tells Oracle Mr Cappello is "involved in the purchase" Mr Scrivener's negotiations with Oracle "My joint venture partners" The Verve Café Meeting Further negotiations with Mrs Boon and government authorities Further draft agreement between Tuscany and Oracle The 88 Rouse Road Put and Call Option Deed Events in January 2014 Possible sale to Sunland group - the Information Memorandum "Our vendors" "How it works" Events in February 2014 25 February 2014 conversation 26 February 2014 conversation Mr Scrivener's 27 February 2014 email to Mr Aboud The Sunset Date - 28 February 2014 Events following the Sunset Date The events of 14 March 2014 April 2014 30 April 2014 meeting with Mr Stanley Lei 6 to 9 May 2014 - final attempt to sell to Sunland The meeting with Mr Edgerton Contribution to costs June and July 2014 The 6 August 2014 Development Management Agreement Events thereafter Was the agreement subject to the Sunset Condition? The result

[3]

Judgment

The first plaintiff, Mr John Cappello, is a licensed real estate agent and property developer based in north western Sydney. He is the sole director and shareholder of the second plaintiff, Shaka Holdings Pty Ltd.
The first defendant, Mr John Scrivener, is a property developer based in Queensland. He is the sole director and shareholder of the second defendant, Tuscany Corporation Pty Ltd.
On 20 August 2013 Mr Cappello and Mr Scrivener made an oral agreement to share the profits arising from securing control of and on-selling or developing three 5-acre contiguous parcels of land at Rouse Hill.
Those parcels of land are depicted in the attached plan (Annexure A (1227665, pdf)) and were then known as: 1. 88 Rouse Road (originally owned by Mrs Valerie Boon); 2. 104 Rouse Road (originally owned by Mr David and Mrs Margaret Bannerman); and 3. 96 Cudgegong Road (originally owned by Mrs Kim Votano).
Neither Mr Cappello nor Mr Scrivener made a note of their conversation. Neither confirmed to the other their understanding of the agreement by way of letter, email or at all.
The controversy between Mr Cappello and Mr Scrivener is purely factual. The dispute between the two men is as to whether: 1. as Mr Cappello contends, he and Mr Scrivener agreed to form a partnership or joint venture in relation to the three sites and agreed to share equally the expenses and profits arising from securing, on-selling or developing the sites; or 2. as Mr Scrivener contends, the agreement was subject to a condition that Mr Cappello find a purchaser for the combined sites "prior to the expiry of the [due diligence] period"; that is, in the events that happened, by 28 February 2014. I will call this alleged condition the "Sunset Condition" and 28 February 2014 the "Sunset Date".
By 15 November 2013, Tuscany had entered into "Due Diligence Deeds" (in effect, options to purchase) with the owners of the three properties and thereby secured control of the three sites.
By 14 March 2014, Tuscany in one case, and two companies incorporated by Mr Scrivener for the purpose in the two other cases, had entered into Put and Call Option Deeds with the owners of the three properties. The Put and Call Options entitled the grantee to acquire the properties for a total of $12.65 million.
Mr Scrivener secured financial assistance from a third party, Oracle Estates Pty Ltd.
By April 2015 a company jointly owned by Oracle and Tuscany exercised the call options and became the registered proprietor of the three sites upon payment to the vendors of the $12.65 million. At around this time Mr Scrivener had procured a Development Consent for the consolidated sites.
On about 17 July 2015, the Oracle/Tuscany jointly owned company sold the three sites to a Chinese developer, Tian Tong (Australia) Pty Ltd, for $37 million.
After payment to Oracle of the amount due pursuant to those arrangements, Tuscany received profits in the order of $9.26 million.
Mr Cappello claims to be entitled to, in effect, half of that profit.

[6]

Credit

The credit of Mr Cappello and Mr Scrivener looms large in these proceedings. Both Mr Pritchard SC, who appeared with Mr Rayment [1] for Mr Cappello, and Mr Studdy SC, who appeared with Mr Chapman [2] for Mr Scrivener, made lengthy and detailed submissions on the subject.
There is a great deal of evidence as to what transpired between Mr Cappello and Mr Scrivener following their agreement on 20 August 2013, much of which is relevant to the probabilities of the true nature of their agreement, and much of which casts light on the reliability of their recollection.
Both Mr Pritchard and Mr Studdy referred to the familiar observations of McLelland CJ in Equity in Watson v Foxman [3] : "[H]uman memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience."
I have kept his Honour's memorable words in mind when considering the evidence in this case, particularly as: 1. neither Mr Cappello nor Mr Scrivener made a note of their understanding of the 20 August 2013 meeting; 2. between August 2013 and May 2015 (by which time it was clear to Mr Cappello that Mr Scrivener did not propose to share profit with him) neither Mr Cappello nor Mr Scrivener wrote or said anything to each other about what they contended the terms of their agreement to be; 3. it was not until June 2015 that Mr Cappello made a statement, to officers of Oracle, of his contention as to the terms of that agreement; [4] and 4. it was not until he swore his affidavit of 5 March 2019, five and a half years after 20 August 2013, that Mr Scrivener made a written record of the agreement as he recalled it.
I see no alternative but to set out, in detail, the evidence of what occurred in relation to the Rouse Hill properties and to deal with the parties' submissions as to credit as part of that process.
I will then analyse the evidence that thereby emerges and explain why I have concluded that, more probably than not, Mr Cappello's recollection of the 20 August 2013 is to be preferred.

[7]

Mr Cappello's steps to secure the site

Mr Cappello said that in 2011 during the course of working as a real estate agent "in the Hills area" Mrs Bannerman, one of the owners of 104 Rouse Road, contacted him with a view to him acting for her and her husband as a selling agent of that property.
Mr Cappello said he inspected the property and gave Mrs Bannerman an appraisal figure. Mr Cappello said that Mrs Bannerman did not give him a listing for the property but told him that her neighbour, Mrs Boon at 88 Rouse Road, was thinking of selling that property.
Mr Cappello said he first dealt with Mrs Boon by September 2012 when he attempted to obtain a listing from her for 88 Rouse Road. Ultimately, Mrs Boon appointed Mrs Sue Lobsey, another real estate agent in the area, as selling agent, as did Mrs Votano in relation to 96 Cudgegong Road. Mrs Lobsey was also in discussions with Mrs Bannerman about being appointed agent for the sale of 104 Rouse Road.
Mr Cappello said that by late February 2013, he had decided to attempt to "secure" 96 Cudgegong Road from Mrs Votano and 88 Rouse Road from Mrs Boon.
On 8 March 2013, Mrs Lobsey wrote to Mr Cappello: "…I just spoke with Dominic Votano, he said he [sic; the property was owned by Mrs Votano] will happily do an option (2 years) but will not sell [96 Cudgegong Road] unless he gets $4.1"
On 19 March 2013 Mr Cappello wrote to Mrs Lobsey asking her to "submit the following offers to your vendors".
The offers were: 1. an offer to enter an option to purchase 96 Cudgegong Road from Mrs Votano for $4 million with a non-refundable option fee of 1%, the option over 24 months; and 2. an offer to enter an option to purchase 88 Rouse Road from Mrs Boon for $4 million with a non-refundable option fee of 1%, the option over 18 months.
At around this time, Mr Cappello contacted Mr Michael Edgerton, who he described as "a business associate and a solicitor" because he thought Mr Edgerton "could assist me in procuring finance to secure the sites of 88 Rouse Road and 96 Cudgegong Road". Evidently nothing came of that. As I describe below, Mr Edgerton played a later role in relevant events [5] .
In that context, Mr Cappello said in cross-examination that "at this time, I was the purchaser", by which he meant that he was considering buying the property himself.
On 20 March 2013 Mrs Lobsey told Mr Cappello that Mrs Boon "wouldn't sell under $4.1" in response to which Mr Cappello asked Mrs Lobsey to submit his "final offer" to Mrs Boon of an 18 month option to purchase 88 Rouse Road for $4.15 million.
On 31 July 2013 Mr Cappello told Mrs Lobsey that he was prepared to pay "1/2% for the extra 6 months" for 88 Rouse Road. Mrs Lobsey told Mr Cappello that Mrs Boon said "she is going to think about it".
On 13 August 2013 Mr Cappello wrote to Mrs Lobsey with an offer to purchase, outright, 88 Rouse Road for $4.3 million with a proposed exchange date of 20 December 2013, a 12 month settlement, a due diligence period of 4 months and a due diligence fee of $5,000.
On 13 August 2013 Mrs Lobsey told Mr Cappello that Mrs Boon "would say yes today if it was a 90 day due diligence and a 10 month settlement" but that she wanted extra time to think about it and would let Mrs Lobsey know the answer on 15 August 2013.
It appears that Mrs Boon did accept Mr Cappello's offer. There is no direct evidence of this but, on 16 August 2013, Mrs Lobsey sent an email to Mr Cappello: "…spoke with [Mrs Boon] told her I will have all the information to her solicitors Monday and she will meet the clients Tuesday [20 August 2013]. She said Tuesday afternoon will suit her. She was very happy with that."
Evidently, the "clients" to whom Mrs Lobsey was referring where Mr Cappello and Mr Scrivener.
Thus, Mrs Boon met Mrs Lobsey and Mr Scrivener on 20 August 2013 [6] .
Mr Cappello said that in late July or early August he discussed the Rouse Hill opportunity with Mr Scrivener [7] . It may be that Mr Scrivener's name had then been mentioned to Mrs Lobsey and Mrs Boon.
On 17 August 2013 Mrs Lobsey told Mr Cappello that Mrs Votano "will take $4.1" for the sale of 96 Cudgegong Road.
On the same day, Mrs Lobsey told Mr Cappello she had been named as the selling agent for Mr and Mrs Bannerman's property at 104 Rouse Road.
Thus, as Mr Pritchard put in closing submissions: "Accordingly, by 17 August 2013, Mr Cappello had reached agreement with Valerie Boon as for a 4-month due diligence period, price and settlement date for 88 Rouse Road, and also knew that Mrs Votano would accept $4.1 for 96 Cudgegong Road."
Apart from the reference in Mrs Lobsey's 16 August 2013 email to Mrs Boon meeting the clients on 20 August 2013 there is no suggestion in the correspondence between Mr Cappello and Mrs Lobsey that Mr Scrivener played any role in these negotiations.
The position of Mr and Mrs Bannerman, however, was not yet clear.
What then followed was the critical meeting between Mr Cappello and Mr Scrivener on 20 August 2013.

[8]

The critical conversation was on 20 August 2013

Mr Cappello was not clear in his evidence that the meeting did take place on 20 August 2013 and, in cross-examination, said the meeting could have taken place on 18, 19 or 20 August 2013.
The meeting clearly did not take place on 18 August 2013, a Sunday, as on that date Mr Scrivener was in Brisbane and Mr Cappello sent Mr Scrivener an SMS asking him "What time are you flying down on Tuesday?"
Further, on Monday 19 August 2013, Mr Cappello sent a message to Mrs Lobsey stating: "My partner in the acquisition of 88 Rouse Road Rouse Hill won't be available until any time after 2pm tomorrow. Is that ok with [Mrs Boon]? Does she still want to meet?"
Mr Cappello agreed that it was not accurate for him then to describe Mr Scrivener as his "partner".
Mr Cappello was firm in his evidence that he had had some discussion with Mr Scrivener on the telephone prior to this time and that Mr Scrivener had expressed some interest in the Rouse Hill possibility.
The fact that Mr Scrivener flew down from Queensland on 20 August 2013 is consistent with this, although Mr Scrivener did have other business dealings to attend to in Sydney on that occasion.
On 19 August 2013 Mr Cappello sent a message to Mrs Lobsey confirming a meeting for 3pm on 20 August 2013 and stating: "You will be meeting John Scrivener from Tuscany Corporation - Solicitor will be Marsden Lawyers."
There is no dispute that Mr Scrivener and Mrs Lobsey met Mrs Boon at around 3pm on 20 August 2013 at Mrs Boon's property at 88 Rouse Road and that, after that meeting, Mr Scrivener and Mrs Lobsey returned to Mr Cappello's office.
Mr Cappello did not accompany Mr Scrivener and Mrs Lobsey to the meeting with Mrs Boon because, he said, he thought that the fact that Mrs Boon knew he was a local real estate agent might cause Mrs Boon to wonder whether her agreement with him was the best deal she could get.
It is clear from these matters that the critical conversation took place on 20 August 2013.

[11]

Generally as to the conversation

A number of observations can immediately be made about the competing recollections of Mr Cappello and Mr Scrivener of their conversation of 20 August 2013.
The first is that the agreement was made in a brief, relatively informal conversation.
The second is that neither Mr Cappello nor Mr Scrivener suggest they had earlier discussed coming to any agreement about the Rouse Hill properties.
The third is that they agree that they did make a legally binding agreement on 20 August 2013.
There is no suggestion in the proceedings that consideration did not pass between them, nor that the agreement is imprecise or uncertain. Neither party suggests the agreement is void for uncertainty or otherwise liable to be impugned.
What is clear from the accounts Mr Cappello and Mr Scrivener give of their conversation is that they agreed: 1. to endeavour to secure the three Rouse Hill sites; 2. sell the combined site at a profit; 3. pay equally "expenses" or "costs"; and 4. share equally any profit.
On neither Mr Cappello's nor Mr Scrivener's account of what was said between them was there any reference to the sharing of losses.
Mr Cappello's recollection was that he said: "I propose a 50:50 partnership between us. We share all of the expenses 50:50 and whatever we end up making from the properties we share equally."
Mr Scrivener's recollection is that Mr Cappello said: "…how about I pay half of all your costs and we can split the profit".
Mr Cappello gave this evidence in cross-examination: "Q. You had no discussion as to sharing the losses 50/50 or otherwise if the proposal was unsuccessful. Correct? A. We - we discussed a 50/50 - it was - it - it was discussed 50/50 in relation to expenses and profit. Q. But nothing was said about what would happen if the venture was loss making. Correct? A. Correct."
However, in re-examination, Mr Cappello gave this evidence: "Q. You were asked a question … in relation to the option deed and if it had been exercised, it was all at Tuscany's risk. Do you remember that? A. Yes. Q. And you said, "Not all the risk." Do you remember giving that answer? A. Yes. Q. What did you mean by that answer, "Not all the risk," in answer to that question? A. Well, I always had 50% of the risk as per my agreement with John Scrivener and Tuscany. Q. And to your mind, at least, how did that risk concern the exercise of the option by Tuscany? A. Well, I was always going to be liable for - for anything apart - anything that - that Tuscany was liable for."
My attention was not drawn to anything Mr Scrivener said about this.
I think the correct conclusion is that neither party addressed, in terms, what would happen if there was a loss but that it was implicit in their agreement that any losses be shared equally.
I have set out what each of Mr Cappello and Mr Scrivener said about their meeting in their affidavits.
Understandably, both Mr Pritchard and Mr Studdy devoted a considerable portion of their cross-examination of Mr Scrivener and Mr Cappello respectively to their recollection of the meeting.
I will deal with Mr Cappello and Mr Scrivener separately.

[12]

Mr Cappello's evidence before me about the conversation

In closing submissions, Mr Studdy submitted that Mr Cappello's recollection of the details of the meeting was "woeful" and that the answers that Mr Cappello gave in cross-examination showed that, in truth, he had no recollection of what was said at all.
Assessment of that submission requires a careful examination of the relevant passages of cross-examination.
In his affidavit, Mr Cappello expressed uncertainty as to when the critical meeting took place. He said: "As best I can work out from available messages and emails, Scrivener and I have one or more meetings between 19 and 22 August 2013 during one of Scrivener's regular trips to Sydney."
In cross-examination Mr Cappello expressed uncertainty as to when, precisely, the meeting took place.
This exchange occurred: "Q. And Tuesday was 20 August. Do you recall? A. Yes. Q. That's when you had a discussion with Mr Scrivener about he potentially being involved in the acquisition of at least Mrs Boon's property. Correct? A. That's not - not correct, sir. Q. Why do you say that's not correct, Mr Cappello? A. Because I - I recall - and I - I - I do not recall exactly which day - but I recall that John said he was flying - he was getting in before Tuesday. I can't - I can't remember if he got in on the Monday. But I don't believe - I believe that he - he and I met on the Monday [19 August]. Q. Now, I suggest to you that you did not meet with Mr Scrivener until Tuesday the 20th. You disagree with that, do you, or you're just not sure? A. I'm just not sure. Q. And you can't point to any piece of paper which indicates that you and Mr Scrivener met on 19 August, can you? A. No. Q. You accept that you had no agreement with Mr Scrivener regarding the properties the subject of this litigation prior to you meeting on 20 August, don't you? A. No, I don't accept that. Q. You say, do you, that prior to 20 August 2013, you and Mr Scrivener had reached agreement in relation to the properties the subject of this litigation, do you? A. No. Q. Well, I put to you that you had not reached any agreement with Mr Scrivener about he being involved in the acquisition of these properties prior to your meeting on 20 August. A. Well, I - I disagree, sir. That's - I disagree. Q. You had not reached any agreement with Mr Scrivener prior to the meeting on 20 August about him being your partner in acquiring 88 Rouse Road. Correct? A. Sir, I'm - I'm - I'm saying the meeting occurred on 19 August, so you're talking about 20 August. Q. No, let's just be clear on this. I thought you accepted a few minutes ago that you can't say that there was a meeting on 19 August. Correct? A. I cannot confirm, correct. Q. And what I've also put to you is that you couldn't point to any piece of paper that referred to any meeting occurring on 19 August, and you accepted that, didn't you? A. Yes. Q. What I'm suggesting to you is that the meeting took place on 20 August and not 19 August. Do you now accept that? A. No, I - I can't be certain. Q. You can't be certain, but you cannot give any answer to his Honour about any meeting occurring prior to 20 August other than to say you're not certain. That's right? A. That's correct." and later: "Q. Your evidence is you're not sure whether you met him on the 19th or the 20th, but you certainly do recall having a conversation at your office on one of those days when he'd come down to Sydney, correct? A. Yes." and a short time later: "Q. So you'd accept that the conversation that you had with Mr Scrivener actually took place on Tuesday the 20th? A. I can't confirm. It could be on the 19th or the 20th."
Mr Studdy then took Mr Cappello to his meeting with Mr Scrivener following Mr Scrivener's and Mrs Lobsey's meeting with Mrs Boon on the afternoon of 20 August 2013: "Q. And you met with Mr Scrivener on 20 August 2013 when he returned from his meeting with Val Boon, didn't you? Can't recall that one? A. I - I - I would think that he would come back to the office, yes. Q. Well, you're a bit unclear about this, by the sounds of it, Mr Cappello. You're thinking he would have come back to the office? Your recollection is not too clear about seven and a bit years. Is that right? A. Yeah, yes, I think he would come - have come back to the office. Q. You say you think he would come back to the office. Do you recall him coming back to the office and having a discussion with you? A. I - I do not - I do not - I do not recall. Q. And I suggest to you that Mr Scrivener and you had a conversation after he'd met with Val Boon, and he reported on his meeting with Val Boon. Do you recall that or not? A. I don't recall a meeting. Q. Do you recall any discussion or not? A. I don't recall - I don't recall a discussion."
Mr Studdy then put to Mr Cappello statements that Mr Scrivener had deposed were said at the 20 August 2013 meeting. Mr Cappello did not accept that those matters had been discussed.
This led to this final question and answer: "Q. It's fair to say you don't recall having a conversation with Mr Scrivener on 20 August at your offices. A. I don't recall."
I think a fair reading of this evidence is that Mr Cappello was continuing to express uncertainty as to the date on which the critical meeting took place and not as to whether the conversation took place. The critical answers upon which Mr Studdy relied to make the submission that Mr Cappello did not have a recollection of what was said at his meeting with Mr Scrivener were directed to the date of the meeting rather than its content.
In particular, I read Mr Cappello's answers, referred to at [83] above that "I don't recall a meeting" and "I don't recall a discussion" as being directed to his recollection of a meeting taking place on 20 August 2013; Mr Cappello repeatedly saying he thought the meeting took place on 19 August 2013.
Similarly, I read Mr Cappello's answers that "I don't recall" having a conversation with Mr Scrivener on 20 August 2013 as set out at [85] above as seeking to convey that he did not have a recollection of the conversation being on 20 August, as opposed to on 19 August.
Mr Studdy did not put to Mr Cappello that the account he gave of the 20 August 2013 conversation in his affidavit was not correct or that he had no present recollection of what was said. Overall, I am not satisfied that Mr Studdy's cross-examination showed that Mr Cappello had no actual recollection of what was said on 20 August 2013.
Mr Cappello gave differing, although consistent descriptions of what his agreement with Mr Scrivener was. At first he said it was a "50-50 joint venture partnership" and later a "50-50 partnership" and then, although he was "not sure of the exact words", it was "clear to the point" that it was "50-50 in relation to any profits and expenses".
Mr Cappello was clear ("absolutely not") that he did not tell Mr Scrivener that he "had buyers" at that stage for the combined site. There is no suggestion that Mr Cappello did have buyers for the combined site at that stage. Nor is there any suggestion in dealings between Mr Cappello and Mr Scrivener in the next few months that Mr Scrivener asserted to Mr Cappello that Mr Cappello had made any such statement. As I describe below, Mr Cappello did pursue negotiations with prospective buyers but that was the following year; 2014.

[13]

Mr Scrivener's evidence before me about the conversation

On the other hand, there are some difficulties with Mr Scrivener's account of what happened.
In his affidavit, he said that the first thing he said to Mr Cappello upon his return from the meeting with Mrs Boon was that the meeting with Mrs Boon went well and: " … we're going to enter into a heads of agreement with Mrs Boon that allows for a 3 month due diligence period and a further 12 month settlement".
Mr Scrivener said that Mr Cappello replied that he was surprised "that you got her to agree to anything" that Mr Scrivener said "you couldn't have gotten that deal done".
But the fact is, as the email correspondence to which I referred shows, Mr Cappello had reached an agreement with Mrs Boon to the effect of that Mr Scrivener says he described to Mr Cappello [10] . In those circumstances I think it unlikely that Mr Cappello reacted as Mr Scrivener asserted to Mr Scrivener's statement that, in effect, he had reached the same deal with Mrs Boon.
In cross-examination, Mr Scrivener said that "I discussed trying to move forward to try and amalgamate the three sites" as a "joint endeavour".
In cross-examination this exchange occurred: "PRITCHARD Q. … You say, you had an agreement with Mr Cappello; correct? At this meeting on - you formed an agreement with Mr Cappello on the 20th; correct? A. Yes. Q. And the agreement was, effectively, ultimately - and you say other terms - but to share the profit; correct? A. If the profit was achieved, possibly, yes. Q. Yes. Sorry, sir; I interrupt. A. In the event that he sold the property, yes. … Q. … So you agreed that you would have this profit share arrangement with Mr Cappello. A. In loose terms, yes. Q. Yes. And the terms were, in effect, you'd - you'd together look for the - on your case - together look for a purchaser for the land, or a developer? A. No. Q. Well, what was it? A. He would supply one of his buyers, if I could amalgamate it."
The luncheon adjournment then ensued.
Immediately after the luncheon adjournment, this exchange occurred: "Q. Just asking you about the substance of the agreements you and Mr - you agree you and Mr Cappello say you reached on 20 August. Just so there's no doubt about it, what agreement do you say you reached with Mr Cappello? A. The agreement was that I would try to amalgamate the sites. He would on sell the sites. I would secure the - by DD I would secure the three properties. I would do the necessary due diligence that is required under those DD's and he would sell it and after all expenses if there was a profit to be shared then our mutual accountant gets to work it out, taking into account expense and time and all that sort of thing. Q. That's - you've had a chance to think about it? That's what you say the deal was, right? A. Sorry? Q. You had a chance to think about it and that's what you say your deal was, correct? A. I believe that is the deal."
Shortly after this evidence, Mr Scrivener had said that he had refreshed his recollection of what he said in his affidavit about the agreement "yesterday".
What is striking about Mr Scrivener's answer to the open question put to him ("What agreement do you say you reached with Mr Cappello?"), is Mr Scrivener made no mention of any element of the agreement to the effect of the Sunset Condition.
Thus the cross-examination continued: "Q. I asked you in an open-ended way to say what you understood to be the agreement was, remember? A. Yes. Q. You did not include in that description of the agreement anything about having to do a deal prior to the expiry of the DD period, do you agree with that? A. That was the deal. Q. You agreed a few minutes ago when I asked you in an open-ended manner about what the deal was, you did not include as an element of the deal that the sale had to be prior to the expiry of the DD period? A. I didn't say it. Q. That was never mentioned on 20 August, correct? A. Sorry, you're breaking up. Are you moving or? Q. No, I'm not really moving. I'm putting to you, sir, when I asked you in an open-ended manner what you say the agreement was, you did not say that an element of it was that the on sale had to take place prior to the expiry of the DD period, correct? A. I said it had to be sold as part of that deal. Q. But not by the DD period, correct? A. I may have left those words out but that is the intention of the agreement. Q. You left the words out, sir, because you couldn't remember that part of, what you say in this case, is the agreement, correct? A. That was the agreement. Q. Sir, I need - this idea of a sale before the expiry of the DD period is just made up by you in this court case? A. No, I disagree."
Mr Scrivener swore the affidavit in which he gives his account of the 20 August 2013 conversation on 5 March 2019; some five and a half years after the conversation.
I think it likely that the first time Mr Scrivener came to reflect on, and record his recollection of what was said to Mr Cappello on 20 August 2013 was in the course of preparing that affidavit.
Thus Mr Scrivener gave this evidence in cross-examination: "Q. And that's just so we, the Court understands, your recollection is contained in your affidavit of 5 March 2019, correct? A. Yes. Q. Now, it's correct, isn't it, that 5 March 2019 is the first time you came to record your recollection, came to set it down in writing, correct? A. Am I able to look at that reference? Q. No. Can you please answer the question? Is it true that the first time you came to record your recollection about what happened in 2013 was when you prepared your affidavit of 5 March 2019? A. No. Q. So when, prior to 5 March 2019 did you set down your recollection of the events of 2013? A. I recall the sequence of events from the time of the discussion, so the time of my meeting with Mrs Lobsey and meeting with Mrs Boon. Q. I'm asking you when you set down, that is, recorded in writing your recollection of those events. I'm sorry if there's some uncertainty in my question. A. Honestly, no. I'd have to check my diary to see if there's only, any other notes in there. Q. Well, presumably someone asked you for the purpose of this case to check your diary for the purpose of your affidavit, didn't they? A. Sorry? Q. Presumably someone asked you to check your diary for the purpose of swearing your affidavit in this case, didn't they? A. Yes, I believe so. Q. So you don't really think there are any other relevant documents in your diary that might assist the Court in determining what happened, do you? A. I'm not sure. Q. Well, sir, you're on oath here. Do you think there might be diary notes that aren't in your affidavit that will assist the Court? A. I don't believe so. Q. So in other words, you believe you've searched everywhere you can and put before the Court in your affidavit or affidavits everything you have set out the relevant events. Is that right? A. Yes. Q. Now, turn to my question. You got nothing in writing before 20 August when you attended Sydney, I think, to assist your recollection of events, do you? A. I don't have notes on a specific conversation, no. Q. Well, you don't have anything else, either, do you? A. No."
Ultimately, Mr Scrivener produced an appointment diary for 20 August 2013 which showed no more than the name "Cappello" in the entry for 2pm.
As I have said, Mr Cappello also made no note of the meeting at the time although, as I set out below he gave an account of his recollection of the agreement to representatives of Oracle in June 2015. [11]
Ultimately, my conclusion is that I must be cautious about the recollections of both Mr Cappello and Mr Scrivener as to the detail of what was said on 20 August 2013. What is clear is that they agreed to proceed with a venture involving the securing of the three sites, and their possible on sale or development, and agreed to share expenses and profits of that venture.
The vital matter that divides them is whether their arrangement was subject to the Sunset Condition.

[14]

Post contractual conduct

Post contractual conduct is admissible to show: 1. whether a contract was formed; [12] and 2. what the terms of the contract were, especially in the case of an oral contract. [13]
The conduct of the parties after 20 August 2013, to which I make detailed reference below, makes a number of matters clear concerning the terms agreed on 20 August 2013.
One is that Mr Cappello and Mr Scrivener agreed that the means by which they would seek to secure the properties was by way of Due Diligence Deed. On Mr Cappello's account of the conversation, he said he thought he could get "an exclusive 3 months due diligence period" for each of 88 Rouse Road and 96 Cudgegong Road. On Mr Scrivener's account of the conversation he had actually negotiated a "3 month DD" with Mrs Boon, Mr Cappello had proposed "flicking on" the combined site "before the due diligence period is up" and Mr Scrivener had expressed the Sunset Condition in terms of "the expiry of the DD period". Those matters, taken with the fact that, very shortly after 20 August 2013, Mr Scrivener caused Tuscany to enter Due Diligence Deeds with Mrs Votano in relation to 96 Cudgegong Road and Mrs Boon in relation to 88 Rouse Road [14] , point to the probability that this was the means discussed on 20 August 2013 to secure the properties.
Another is that Mr Cappello and Mr Scrivener agreed to use Tuscany as the corporate vehicle for the project. Mr Cappello said that he said "it might be a good idea to leave my name off things at this stage" and that Mr Scrivener suggested using Tuscany "as the company for our partnership". Mr Scrivener denies these words were said but, almost immediately after 20 August 2013, caused Tuscany to enter the Due Diligence Deeds with Mrs Boon and Mrs Votano.
Another is that Mr Cappello was to have primary responsibility for finding a buyer for the project. There is, of course, a dispute as to whether, as Mr Scrivener contends, the whole agreement was subject to Mr Cappello doing so "prior to expiry of the DD period": the Sunset Condition. But, as I describe below [15] it was Mr Cappello, rather than Mr Scrivener who located Sunland Group as a potential purchaser in January 2014 and prepared an Information Memorandum for that purpose. There is no evidence of any other communication between Mr Cappello and Mr Scrivener on this topic between 20 August 2013 and January 2014. I infer from this that, on 20 August 2013, it was either agreed or understood between the two men that Mr Cappello was to endeavour to find a buyer.
The critical dispute is as to whether the agreement was subject to the Sunset Condition.
The conduct of the parties after 20 August 2013 persuades me that the agreement was not subject to the Sunset Condition. To understand my reasons for coming to that conclusion, it is necessary to examine, at some length, the course of dealings between Mr Cappello and Mr Scrivener from 20 August 2013.

[15]

Events following 20 August 2013

On 21 August 2013 Mrs Lobsey sent Mr Scrivener's solicitor, Mr Jim Marsden, Sales Advices for the 88 Rouse Road and 96 Cudgegong Road properties. Those Sales Advice showed sales prices of $4.3 million and $4.15 million respectively, and identified Mrs Boon and Mrs Votano as the respective vendors, and Tuscany as the purchaser.
On 22 August 2013 Mr Marsden notified Mr Scrivener of his receipt of those sales advices and also sent him copies of the letters that Marsdens had sent to the purchasers' solicitors confirming the sale agreement.
Mr Scrivener forwarded that email to Mr Cappello with the note "fyi".
This was the first of numerous occasions on which Mr Scrivener forwarded to Mr Cappello email correspondence he had received concerning the transaction.
Mr Marsden prepared proposed "Due Diligence Deeds" in respect of the two properties.
On 28 August 2013 Mr Scrivener sent Mr Cappello the proposed Due Diligence Deed for the 88 Rouse Road property with a note: "I am happy with this. Please let me know your thoughts."
Mr Scrivener said he did this simply "out of courtesy". However, the email appears to me to bespeak Mr Scrivener's state of mind that he should consult Mr Cappello about the form of the document.
Mrs Votano executed the Due Diligence Deed concerning 96 Cudgegong Road on 2 September 2013 and Mrs Boon executed the corresponding document in respect of 88 Rouse Road on 6 September 2013.
Mr Scrivener sent copies of emails he received from Mr Ben Wong, an associate at Marsdens, reporting on these matters to Mr Cappello "fyi". Mr Cappello replied: "Thanks buddy, hopefully will be done tomorrow".
Each of the 96 Cudgegong Road and 88 Rouse Road Due Diligence Deeds called for non-refundable fee of $5,000. Tuscany paid those fees.
The 96 Cudgegong Road Due Diligence Deed expired on 16 December 2013 although on 11 December 2013 it was extended to 16 March 2014.
The 88 Rouse Road Due Diligence Deed had an expiry date of 20 December 2013 which was not extended.
In relation to each of those properties, Put and Call Option Deeds were ultimately entered into with the jointly owned Oracle/Tuscany Company exercising the call options and becoming registered proprietors.
A helpful schedule setting up the key dates, that Mr Pritchard handed up during his opening submissions, follows to assist understanding later events. (Annexure B (213519, pdf))
At this stage Mr and Mrs Bannerman had not yet committed to selling 104 Rouse Road.
Thus, on 23 September 2013 Mrs Lobsey wrote to Mr Scrivener and Mr Cappello: "On Friday [20 September] when I spoke to you both, John S[crivener] you were going to speak to John C[appello] about how we should approach the Bannermans. When you have both discussed it, and worked out are [sic: our] plan of attack, can you let me know".
Mr Cappello replied: "John [Scrivener] and I have decided not to do anything in regards to the purchase of the Bannermans' property. We are focusing on 96 [Cudgegong Road] & 88 [Rouse Road] at this stage. Proceed to sell the property [ie 104 Rouse Road] to any other purchaser you may have."
Mr Cappello said that prior to sending this email he had a discussion with Mr Scrivener in which he said: "It will be difficult for us to get the Bannermans' property … They will be too difficult to deal with and too unrealistic. The strategy now should be to say we are not interested and focus on the two sites we have secured. We can revisit the Bannermans, as their best option to sell their property, when we have determined the development potential of our two sites."
Mr Cappello said that Mr Scrivener had responded by saying that he agreed.
Mr Scrivener did not refer to this conversation in his affidavit and in cross-examination denied the conversation had taken place.
Thus, he gave this evidence: "Q. You don't dispute, those words were said to you at about this time by Mr Cappello, do you? A. Yes, I do. Q. Well, are you aware, you don't dispute that paragraph in your affidavit sworn 9 March 2019? A. Well, I don't think it's in my affidavit, no. Q. No. In your affidavit of 9 March 2019, you went through in considerable detail, and responded at some length to Mr Cappello's affidavit, the one I'm showing you; correct? A. To the relevant parts of it, I believe, yes. Q. You did not respond to, deny or otherwise deal with this paragraph and the conversation alleged in paragraph 112, correct? A. I think in the draft I just - I just denied it. That - that did not take place. Q. In the draft, do you mean your sworn affidavit or something else? A. No, in the - in the draft that I did to produce my affidavit. Q. Will you accept from me for the purpose of the question anyway that there is no denial, response or other response in your affidavit to this paragraph 112. Will you just accept that from me for the question at least? A. It's not in the affidavit but I deny the statement. Q. I'm just asking you why you haven't denied it in your affidavit? A. I don't believe that that was relevant at that particular point in time because I just - I just denied it immediately when I went through this whole something 100 pages of this affidavit. And it clearly wasn't put in my - my affidavit. Q. Are you saying, so I understand, are you trying to tell this court during your draft affidavit you denied it but for some reason, you don't know, that denial has come out of the affidavit that's sworn? Is that what you're trying to tell the court? A. Well, no - what I don't know is that it's not in my affidavit but I definitely denied the statement. Q. What I'm putting to you, sir, is you're desperate - I withdraw that - what I'm putting to you, sir, is you're prepared to deny things in the witness box when I'm putting things to you in cross-examination that you weren't concerned about when you read them in the affidavit. You understand what I'm putting to you? A. I agree it's not in the affidavit but I've denied it from day one. Q. You've denied it from day one as far as the world's aware when you said it in the witness box - I withdraw that - as far as anyone but your own solicitors are aware, sir, do you agree that the first time anyone knew you denied paragraph 112 is when I asked you about it in the witness box five minutes ago? A. That's not in my affidavit, I agree with that. Q. The reason it's not in your affidavit, I want to put to you, is when you swore your affidavit you agreed with the contents of that paragraph? A. No, I don't. Q. I put it to you, sir, you are now saying things, that is denying things, because you think that that will assist your case? A. I disagree. Q. Just so the court has it, what is your best explanation for why there is no denial of paragraph 112 in your affidavit sworn in these proceedings? A. I don't have an explanation why it's not in there."
In any event, Mr Scrivener agreed that: "And my strategy was, from day one, to secure the first two properties, and then to then start discussing the Bannerman property."
Mr Scrivener then gave these answers to questions from me and from Mr Pritchard. "Q. Mr Cappello seems to be implementing the strategy I think that you just explained to me that you had about the Bannerman property? A. Yeah, he's telling Sue that, yes. Q. Pretend you're not interested and see if they come begging to you later? A. Yes. As I understood the history of these projects, Sue Lobsey had a long time involvement with Mr Bannerman so I understood exactly what the process needed to be. Q. It looks here as if Mr Cappello's implementing the strategy you described to me re the Bannerman property? A. Yes sir. PRITCHARD Q. So you're acting together in this process of trying to secure the third DD, correct? This strategy? A. He's advising Sue of my strategy, that's what that email says."
I think it likely, in these circumstances, that the reason there is nothing in Mr Scrivener's affidavit responding to Mr Cappello's account of his discussion with Mr Scrivener concerning the Bannermans' property is that when he came to swear his affidavit, he did not disagree with it.
I think it likely that the true position is, as Mr Pritchard put to Mr Scrivener, that he and Mr Cappello at this stage were acting together to develop a strategy with the aim of, ultimately, obtaining an option to purchase the Bannermans' property with a view to consolidating all three sites.
This shows that at this stage Mr Scrivener and Mr Cappello were working together to promote their joint interest achieving control of the three properties.
It also suggests an inclination on Mr Scrivener's part to deny, in cross-examination, matters hitherto undisputed that he saw as being unhelpful to his case.

[16]

The meeting at the El Phoenician Restaurant

In October or November 2013 Mr Cappello and Mr Scrivener had a lunch meeting with their mutual accountant, Mr Aboud, at the El Phoenician restaurant in Parramatta.
Both Mr Cappello and Mr Aboud gave evidence that Mr Cappello said, in Mr Scrivener's presence, that he and Mr Scrivener had "formed a joint venture partnership" in respect of the Rouse Hill site.
Mr Cappello's account of the conversation was that words were said to the following effect: Cappello: Vince, you are aware that John and I have formed a joint venture partnership over some sites at Rouse Hill. Aboud: Yes I am. Cappello: John Scrivener wants to continue to represent both of us with the guys at Oracle without me being on any paperwork for my share. What are your thoughts? Aboud: I have no problem with that. I think the less people and personalities at the corporate table during negotiations to form a deal the better. John Scrivener already has the relationship with the guys at Oracle. Cappello: OK Vince, if you are OK with it, so am I. We can add me, or my company, later.
Mr Aboud gave a similar account of the conversation: "Cappello: I have formed a joint venture partnership with John over some development sites at Rouse Hill. Aboud: Yes. Cappello: We are looking for investment funds from Oracle. John will represent both of us with without my name being on any paperwork for my share. What do you think. Aboud: I think the less people involved in negotiations the better. John already has a relationship with Oracle."
Although in closing submissions, Mr Studdy submitted that I should be "hesitant" to accept Mr Aboud's evidence, I see no reason to doubt the accuracy of Mr Aboud's recollection. In any event, his account of what Mr Cappello said in Mr Scrivener's presence at this meeting was not challenged by Mr Studdy in cross-examination.
In his affidavit, Mr Scrivener denied Mr Cappello's account of the conversation. He said: "There was no reference to a 'joint venture' taking place with Cappello. Also, as I have stated, Cappello would often call me 'partner' and/or 'buddy'. Though I considered this presumptuous on his part, not having been offered anything other than the opportunity to market the site and split the profits if we were able to 'flick' it on prior to the expiry of the [Due Diligence] period, I just assumed he was embellishing his position to impress Aboud."
But during his cross-examination, Mr Scrivener gave this answer in response to a question from me: "Q. Just returning to your paragraph 62, Mr Scrivener, I do see that you said, you assumed that Mr Cappello was trying to impress Mr Aboud. So, on reflection, that does suggest that you were meaning to say here, doesn't it, that he called you his partner at the El Phoenician restaurant, in Mr Aboud's presence? A. He might have said 'a joint venture', something like that, something along those lines. Yes, 'joint venture', I think."
Thus, although my question was directed to the question of whether, consistently with Mr Cappello's practice as Mr Scrivener had described it, Mr Cappello called Mr Scrivener his "partner", Mr Scrivener offered that Mr Cappello "might have said a 'joint venture'". This was the very matter that Mr Scrivener had in his affidavit emphatically denied.
Mr Pritchard took the matter up as follows: "Q. Can you give some explanation to this court on your oath why you say words like joint venture were in fact said when in this affidavit sworn in March 2019 you said they weren't? A. I think, in retrospect, I think he may have said joint venture partner so that could be 100 per cent right. I could be wrong. Q. It's certainly possible he said in the presence of Mr Aboud that you were his joint venture partner, correct? A. Certainly possible, yes. Q. It's equally possible, isn't it sir, that he said to Mr Aboud that you, Mr Scrivener, and he, Mr Cappello, had formed a joint venture partnership over some sites in Rouse Hill, correct? A. He may have used those words."
Mr Scrivener also agreed that Mr Cappello had said he did not want his name on the documentation and that it was possible that Mr Aboud had said that he thought the less people and personalities at the corporate table during negotiations, the better. This passage of the evidence causes me to doubt the reliability of Mr Scrivener's recollection. It would also suggest to me that Mr Scrivener was in his affidavit prepared to deny matters he knew to be true if those matters were inconsistent with his understanding of the case he should seek to establish.
This evidence also shows that Mr Scrivener was by this time dealing with Oracle.

[22]

The Verve Café Meeting

Mr Cappello and Mr Scrivener agree that they met at the Verve Café in Cherrybrook. They also agree that, on that occasion, Mr Cappello asked to have their arrangement reduced to writing and that Mr Scrivener reacted angrily. However, Mr Cappello and Mr Scrivener do not agree when that meeting took place and give a different account as to a number of other matters that were said.
Mr Scrivener said the meeting took place on 11 December 2013. Mr Cappello said it took place on 16 May 2014. Both were adamant that their recollection was correct.
Mr Scrivener said in his affidavit: "During that meeting Cappello was especially 'pushy' and said: 'I want an agreement in my wife's name to document my share.' I took from that comment that Cappello was implying that he did not trust me to pay him his share if he managed to sell the Rouse Hill Site prior to the expiry of the due diligence period on 88 Rouse Hill [sic] Road. I was angry and offended by that comment. I was the one who had put hundreds of hours into this project and now he was impugning my integrity. I said to him: 'John, let's be very clear about this, as I have been from the beginning, this journey for you is over if the site is not sold before the DD period expires on 88 Rouse Road and Tuscany has to go unconditional. That's it for you.' I left immediately after that."
Consistently with Mr Scrivener's account, he made an entry in his appointment diary note 11 December 2013 reading "Verve".
Further, on 17 December 2013, Mr Cappello sent an email to Mr Aboud, attaching the draft "Partnering Heads of Agreement" between Tuscany and Oracle and stating: "Please find attached copy of the initial Partnering Heads of Agreement (which I wasn't happy about as John Cappello is nowhere to be found on the document)."
Mr Cappello gave this account of what happened at the meeting in his affidavit: "We had the following discussion: [Cappello]: John it's time to get something down on paper about our deal. Scrivener reacted by jumping up suddenly and the conversation continued with him raising his voice and very angry: Scrivener: Don't you trust me? [Cappello]: John I do trust you. I've put over $125,000 into your bank account and reimbursed large amounts of shared expenses in cash. I've gone this far with you because I do trust you. But if something happens to you overseas, where does that leave me? Scrivener eventually calmed down. The discussion continued: Scrivener: First, I expect you to cry at my funeral. Second, my son, Trent, will be looking after things while I'm away. He's aware of our deal. [Cappello]: All right, send me Trent's contact details."
Mr Cappello's reference to something happening to Mr Scrivener overseas is consistent with the fact that, as at 16 May 2014, Mr Scrivener was about to travel overseas.
It is also consistent with Mr Cappello's account that he sent an SMS message to Mr Scrivener on 15 May 2014 in which he said: "Hi John, can we meet at 8.15am tomorrow at Cherrybrook?"
There is also an entry in Mr Scrivener's appointment diary at 8.00am on 16 May 2014 reading "Cappello".
If Mr Scrivener's recollection is correct, and the meeting took place in December 2013, Mr Cappello's recollection of there being a reference to Mr Scrivener's forthcoming overseas trip cannot be right as there is no suggestion that Mr Cappello knew of any such trip in December 2013.
Conversely, if Mr Cappello's recollection is accurate, then Mr Scrivener's recollection of what he said cannot be right. Mr Scrivener's case is that the "journey" was "over" for Mr Cappello if Mr Cappello could not find a buyer "before the DD period expires": that is, in the event that happened on 28 February 2014. That period had passed by May 2014.
I am not able to come to any confident conclusion about when this meeting took place.
I am inclined to conclude that Mr Scrivener's recollection on this issue is to be preferred as it is consistent with Mr Cappello's email, a few days later, complaining to Mr Aboud about a lack of reference to Mr Cappello in the documents.
However, if, as Mr Scrivener states, he told Mr Cappello on 11 December 2013 that the "journey" was "over" for him if the site was not sold "before the DD period expires" it is strange that Mr Cappello did not mention that in his email to Mr Aboud; and that this vital question was not mentioned in any email correspondence before or after what Mr Scrivener contends to be the critical date: 28 February 2014, the Sunset Date.

[24]

Further draft agreement between Tuscany and Oracle

On 18 December 2013 "Version 3" of a "Partnering Heads of Agreement" between Tuscany and Oracle was created. "Version 2" is not in evidence.
Like the 25 November 2013 draft Partnering Heads of Agreement "Version 3" referred to "three projects" being the Rouse Hill project and two unrelated projects at Kellyville and proposed a 50:50 profit share if the Rouse Hill property proceeded only to Stage 1.
However, this document also provided for an "acquisition fee" of 2% in relation to the Rouse Hill Project (and not the other projects) and also provided that: "The parties agree to give Zarzar [Mr Cappello's real estate agency company]/Tuscany opportunity to sell stock (as applicable)."
When Mr Scrivener received a copy of "Version 3" on 18 December 2013 he forwarded a copy to Mr Cappello "fyi".
In relation to this, Mr Scrivener gave this evidence in cross-examination: "Q. You agree that if this proposal in December 2013 had gone ahead, that Mr Cappello would have been entitled to half of the acquisition fee of 2 per cent in respect to the Rouse Hill properties? A. No. Q. Why were you sending it to him then, sir? A. I was - he was printing a lot of information for me. I - at that particular time he was providing secretarial services. There was so many things he printed. I'm not sure that if he printed - he probably printed this for me. He'd have a record of it for sure. Q. Sir, let's understand, so you now want to say that these emails I've been showing you - is this the case - where you forward them on to Mr Cappello were for the purposes only of him providing a secretarial service of printing them out? Is that what you-- A. No, what I'm saying is - what I'm saying is I don't recall exactly which documents were sent for that purpose but there were many that were. Q. Sir, I have to put to you, you are just making that up as you go along in the witness box? A. I am not, I'm sorry."
I do not accept that Mr Scrivener forwarded Mr Kucic's 18 December 2013 email, and the attached copy of Version 3, to Mr Cappello in order that Mr Cappello could provide "secretarial services" of printing for Mr Scrivener a copy of Version 3.
That response did appear to me, as Mr Pritchard put to Mr Scrivener, to be one that came to Mr Scrivener for the first time when pressed on the subject. There was no dispute that Mr Cappello would share equally in the Acquisition Fee to be paid by Oracle to Tuscany.

[25]

The 88 Rouse Road Put and Call Option Deed

Tuscany's option to purchase 88 Rouse Road under the 6 September 2013 Due Diligence Deed expired on 20 December 2013.
On that date, Tuscany entered into a Put and Call Option with Mrs Boon for 88 Rouse Road. The Put and Call Option Deed provided for an option fee of $250,000 and for a purchase price, were either option to be exercised, of $4.3 million.
Mr Cappello and Tuscany shared equally the payment of the $250,000 option fee. Mr Cappello did not himself have $125,000 to contribute and borrowed this amount from a number of sources.
There was some delay on Mr Cappello's part in remitting his share of $125,000 to Mr Marsden's trust account.
This led Mr Scrivener to send an email to Mr Marsden on 20 December 2013: "I lodged my 50% of deposit. My J/V partner apparently stuffed up. Cleared Funds currently being transferred to your trust a/c…" (Emphasis added.)
Mr Scrivener forwarded a copy of this email to Mr Cappello "fyi".
He was thus evidently content to let Mr Cappello know that he had described Mr Cappello to Mr Marsden as his joint venture partner, suggesting, strongly in my opinion, that this was in fact Mr Scrivener's state of mind.
The 20 December 2013 Put and Call Option Deed was subject to a "Condition Precedent" as follows: "This deed is subject to and conditional upon [Tuscany] being satisfied of the drainage issues in relation to the development of the property in its absolute discretion by 28 February 2014 (Sunset Date)."
The effect of this Condition Precedent was that if Tuscany was not, in its absolute discretion, satisfied about the (undefined) "drainage issues" it could rescind the Put and Call Option and be refunded the $250,000 option fee.
If Tuscany did not so rescind the Put and Call Option Deed by 28 February 2014, Tuscany's obligations under that document became "unconditional".
Thus, 28 February 2014 - the Sunset Date - was, on Mr Scrivener's account of the 20 August 2013 agreement, the date by which "there will need to be a deal in place". To adopt the language Mr Scrivener says he used at the Verve Café meeting on 11 December 2013, that was the date by which "this journey" would be "over" for Mr Cappello unless he had by then secured a buyer for the sites.

[27]

Possible sale to Sunland group - the Information Memorandum

Mr Cappello was at this stage seeking to negotiate a sale of the property to Sunland Group Ltd.
My attention was not drawn to evidence showing how Sunland came to be on the scene as a prospective purchaser, although it seems Mr Cappello and Mr Scrivener had had earlier involvement with Sunland in relation to a different project.
Mr Cappello agreed that during January 2014 Mr Scrivener asked him how he was getting on finding a buyer for the site and that Mr Cappello said that Sunland had expressed an interest in the site and that he was preparing an information memorandum.
Mr Cappello was seeking to interest Sunland in purchasing the three Rouse Hill sites for $16.5 million.
To that end, he arranged with a graphic artist to prepare a coloured Information Memorandum entitled "Corner Rouse and Cudgegong Roads, Rouse Hill".
On 16 January 2014 Mr Cappello sent Mr Scrivener the "First Draft" of that document. The front cover of the document was headed "Rouse Hill Development Site for Sale" and stated: "Area - 15 acres - Zoning - Predominantly R3 - Regular shaped corner site - Strong North West Sydney Market - Large strategic development opportunity - Close to Rouse Hill Town Centre - Close to the proposed Cudgegong retail centre - Close to the proposed Cudgegong station - Delayed settlement Price - $16,500,000"
The final page of the document was headed "The Opportunity" and read: "Tuscany Corporation currently has control of the site via Due Diligence and Put and Call Option Deeds. Directors of Tuscany Corporation are John Scrivener and Gail Scrivener. Shaka Holdings is a joint venture partner in the site with Tuscany Corporation. Sole director of Shaka Holdings is John Cappello. Asking Price - $16,500,000 Upon offer & acceptance with Tuscany Corporation, a nomination will be granted for the new purchaser to fill Tuscany Corporations position. Upon nomination all monies above the negotiated contract price will be payable via a bank cheque. Discussions between legal representatives will take place at this time to finalise details. Timeframe Circumstances only allow this opportunity to take effect by January 31st, 2014. Contact: John Cappello 041X XXX XXX" (Emphasis added.)
In the passage I have emphasised, this document stated that Shaka Holdings, the second plaintiff, was Tuscany's "joint venture partner in the site".
Within about 30 minutes Mr Scrivener replied suggesting several changes to the draft but without making any comment on the statement concerning Shaka Holdings being Tuscany's "joint venture partner".
Mr Scrivener concluded: "Please send me next draft".
The graphic artist prepared a further draft which Mr Cappello sent to Mr Scrivener the following day, 17 January 2014. The second draft incorporated Mr Scrivener's 16 January 2014 suggestions. It continued to contain the statement that Shaka Holdings was Tuscany's "joint venture partner".
Mr Scrivener replied suggesting some further changes but, again, not making any comment about the "joint venture partner" reference.
Finally, on 17 January 2014, Mr Scrivener concluded by saying "Great job mate".
Although Mr Scrivener in cross-examination spoke somewhat dismissively of the Information Memorandum as a "marketing document", it clearly stated that Mr Cappello's company, Shaka Holdings, was Tuscany's "joint venture partner". Mr Scrivener's responses to the Information Memorandum show that he paid it careful attention. He must have seen the reference to Shaka Holdings being Tuscany's "joint venture partner". The fact the he made no comment about it in his communications with Mr Cappello about the Information Memorandum suggests to me that he agreed the description was accurate.

[31]

25 February 2014 conversation

As I have mentioned, under the 20 December 2013 Put and Call option between Tuscany and Mrs Boon, if Tuscany did not elect to rescind the Put and Call Option by the Sunset Date (which it could on the basis of the "drainage" condition), its obligations under the Put and Call Option would become unconditional. Further, the option fee of $250,000 would then be payable to Mrs Boon.
Mr Cappello accepted in cross-examination that he understood this and that, were the Put and Call Option to become unconditional, Mrs Boon would have recourse only to Tuscany and not to him for her entitlements under the document.
In that context, Mr Scrivener deposed that on 25 February 2014 he met with Mr Cappello and that they had this conversation: "[Scrivener]: John, Tuscany has to go unconditional on 88 Rouse Road or walk away. You have 3 days to get a deal done or that's it for our deal. There is no way Val Boon or her daughter will agree to a further extension. Val is ringing me directly and she is very nervous. Cappello: We should go unconditional. In the worst case we can develop that site on its own. Kellyville is picking up. There are plenty of buyers out there. [Scrivener]: John, you don't understand do you - that's okay for you to say as Tuscany bears all of the risk. You can't develop just one lot; it has to be all three. I told you from the start that this is not what I wanted to do. This was only ever to flip the property. I gave you the chance to find a buyer and nothing has happened, and it seems clear now that Sunland has gone cold. I will talk to Jim but unless you have that buyer you promised, this is over for you."
Mr Cappello agreed that he said the words Mr Scrivener attributed to him.
He also agreed that Mr Scrivener said Tuscany had to go "unconditional" or walk away, that Mrs Boon would not grant any further extension and that Mrs Boon was calling Mr Scrivener and appeared to be nervous.
However, Mr Cappello denied that Mr Scrivener said anything to the effect that he had "3 days to get a deal done" failing which "that's it for our deal".

[33]

Mr Scrivener's 27 February 2014 email to Mr Aboud

On 27 February 2014, Mr Scrivener sent Mr Aboud an email in these terms: "I have reached heads of agreement with Oracle to partner on this project as discussed. Jim believes documentation will take most of next week. I will send first draft to you when I receive it. Basic structure is 2% of the purchase price to be paid as acquisition fee to Tuscany/John [Cappello] on signing of documents All costs to date to be refunded including deposits and Due Diligence fees Oracle to provide all funding and responsibility for settlement of purchase $12.7m Tuscany/Zarzar [Mr Cappello's real estate agency company] to have marketing rights and Tuscany will provide Project Director role for DA Design and Development. After all costs profit is to be shared 50/50 As you are aware Tuscany has to go unconditional on the first of the purchases tomorrow [$4.3m] I am extremely anxious about this without having documentation in place but I am sure if we all work together we should resolve this in the next couple of weeks."
At this stage, Tuscany had only entered into a Put and Call Option Deed in respect of the 88 Rouse Road property. Tuscany had not, at that stage, entered into a Put and Call Option Deed in respect of the 96 Cudgegong Road or 104 Rouse Road properties.
Evidently, Mr Scrivener had decided that Tuscany would not exercise its right to rescind the 88 Rouse Road Put and Call Option Deed which is why he said to Mr Aboud in the third last line of his email: "As you are aware, Tuscany has to go unconditional on the first of the purchases tomorrow".
Mr Scrivener expressed anxiety to Mr Aboud, "without having documentation in place" by which he meant finalised "Heads of Agreement with Oracle" but stated that: "I am sure if we all work together we should resolve this in the next couple of weeks."
At the time Mr Scrivener sent this email to Mr Aboud, Mr Cappello had not introduced a purchaser for the property. And yet, although Mr Scrivener expressed anxiety about going "unconditional", and despite what Mr Scrivener claims he said to Mr Cappello two days earlier, there is no reference in the email to the Sunset Condition or the "journey" being "over" for Mr Cappello.
Mr Scrivener did not send this email to Mr Cappello. He said this was because he had already had the 25 February 2014 discussion to which I have referred.

[35]

Events following the Sunset Date

I turn now to events following the Sunset Date, bearing in mind that Mr Scrivener's case is that from this point, Mr Cappello's "journey" was "over".
On 7 March 2014 Mr Wong, from Marsdens, sent Mr Scrivener the "Votano execution documents" being the Put and Call Option Deed due for execution on 14 March 2014.
Mr Scrivener forwarded that email to Mr Cappello. He said the reason he did this was to keep Mr Cappello informed as he was "still an investor in one of the properties" in that he had paid half the option fee in relation to the 88 Rouse Road property.
Similarly, on 11 March 2014 Mr Scrivener forwarded to Mr Cappello an email that Mr Wong had sent Mr Kucic from Oracle, attaching a copy of the proposed Put and Call Option Deed for 104 Rouse Road and stating: "Ideally, the proposed entity arising from the JV should enter into the Option Deeds directly with the Vendors to avoid any unnecessary novation/assignment of the Option Deeds later on."
Mr Scrivener's email to Mr Cappello said: "Fyi Moving in the right direction so far".
Mr Scrivener gave this evidence about this communication in response to questions from Mr Pritchard and then from me: "Q. So you are reporting to Mr Cappello on 11 March, 'For your information, moving in the right direction so far' but you're not part of the deal any more. Is that what you want to say? A. No. Q. See, sir, I just need to put to you, when you're telling the Court that you had some discussion with Mr Cappello to the effect, 'You're out of the deal' on 28 February, that is, before 28 February, this is not true? A. Yes, it is. Q. And the reason you kept communicating in these terms with Mr Cappello after 28 February was you believed him to be still in the deal the same way he'd always been? A. No, that's not correct. HIS HONOUR Q. So, Mr Scrivener, just help me. If it was over for Mr Cappello as at 11 March 2014 otherwise than as an investor in relation to the Boon property, why would you be sending Mr Cappello emails like the one [referred to in the preceding paragraph]? A. There was a meeting on the 26th with Oracle, where I had a discussion with them that they agreed to move forward on - on the three properties that I was dealing with, including one of these. I had a subsequent conversation with Mr Cappello, which he agreed with, that there was a possibility of Oracle coming back into the - into the proposition, and that if - and I believe this was the day after, maybe the 27th or something like that - I believe it was then or shortly after, I'm not sure - that I would refund him his $125,000 plus pay him half the acquisition fee if I was successful in securing an agreement with Oracle, which occurred on August the 6th, 2014."
Mr Scrivener's reference to 6 August 2014, a date some five months after the email in question, was to the fact that on that date Tuscany and other companies associated with Mr Scrivener, entered into a Development Management Agreement with Oracle. I return to this below at [392].
I read Mr Scrivener's response to my question to be that he was saying that his reason for keeping Mr Cappello informed of his progress with the project, as illustrated by his email of 11 March 2014, was that if a deal was eventually done with Oracle, Mr Cappello would be paid half of the acquisition fee to be paid by Oracle and would be repaid the $125,000 he had contributed to the 88 Rouse Road option fee; that is, that Mr Cappello's ongoing interest in the project was as an investor.
As I set out below, to Mr Scrivener's knowledge, Mr Cappello's ongoing role was more than this.

[36]

The events of 14 March 2014

On 14 March 2014 three important documents were executed.
First, companies owned and controlled by Mr Scrivener entered into Put and Call Option Deeds in respect of 96 Cudgegong Road and 104 Rouse Road. Those companies were 96 Cudgegong Land Pty Ltd and 104 Rouse Land Pty Ltd.
Thus, Mr Scrivener, through companies he controlled, now had the right to call for the transfer of all three properties for a total of $12.65 million. Of course, the corollary was that Mr Scrivener's companies faced the prospect of the owners of the three properties exercising their option to put the properties to Mr Scrivener's companies for the same figure.
Also on 14 March 2014, Mr Scrivener's companies, 96 Cudgegong Land Pty Ltd and 104 Rouse Land Pty Ltd, entered into a Loan Agreement with Oracle pursuant to which Oracle agreed to lend those companies a total of $417,500 being the option fees under the Put and Call Option Deeds in respect of 96 Cudgegong Road and 104 Rouse Road ($207,500 and $210,000 respectively). Mr Scrivener and Tuscany guaranteed the loans.
The repayment date for those loans was "60 days prior to written notice from the lender".
The Loan Agreement also contained the following special condition: "[Oracle] has a 30-day period under which it has exclusivity with the Borrower [19] and Guarantor [20] to negotiate an equity investment by it or one or more of its related entities in relation to each of [the three Rouse Hill properties]."
After those documents were executed, Mr Scrivener sent Mr Cappello an SMS: "Congratulations we own a site".
To which Mr Cappello sent the following jocular reply: "Get some rest John. Study the form for tomorrow and pick a winner for a change!"
In relation to that SMS, Mr Scrivener gave this evidence: "Q. What you are telling him was well, we together have now secured this commercial opportunity, correct? A. No. I was telling him as an investor - he was still currently invested in one of the properties - that I'd actually managed to exercise the options meaning that I now had control of the three different sites."
And a short time later: "Q. What I need to put to you, sir, is that in fact when you are saying, 'Congratulations we own a site', was that you were putting to Mr Cappello, look well done to us, we now have this together, this commercial opportunity available for sale? A. No, that's not correct. HIS HONOUR Q. Who is the we in the SMS? A. I'm sorry, sir? Q. To whom are you referring when you use the word we? A. We meant Tuscany and he as an investor in a minor part of it. PRITCHARD Q. So there's no doubt we includes Mr Cappello? A. Well, yes that meant Tuscany. I often say we when I'm talking about Tuscany and yes it did mean Mr Cappello as an investor was involved in the site. I was just letting him know that I'd actually managed to secure it rather than walk away from the opportunity."
In my opinion, the proper inference is that Mr Scrivener was, by this SMS, seeking to do more than let Mr Cappello know that he, Mr Scrivener, had managed to secure the site. I conclude that Mr Scrivener's use of the first person plural, "we", was intended by Mr Scrivener to convey to a person he still regarded as his joint venture partner that they, as joint venturers, had secured the site.

[37]

April 2014

On 2 April 2014, Mr Graeme Spender, an architect from Davis Sommerville Pty Ltd, sent Mr Scrivener a plan of the combined Rouse Hill site showing "Proposed Medium Density & Small Lot Housing".
Mr Scrivener forwarded that document to Mr Cappello on 3 April 2014 with the message: "Please print A3 - for discussion."
The fact that Mr Scrivener wished to discuss Mr Spender's plan suggests that Mr Scrivener regarded Mr Cappello as more than a "minor" investor.
Between 3 and 8 April 2014, Mr Scrivener forwarded to Mr Cappello copies of invoices Mr Scrivener had received from Marsdens for legal work done in respect of the Put and Call Options.
On 12 April 2014 Mr Scrivener sent Mr Cappello aerial images of the site and a covering email: "Think we are back on track - meeting went well. Catch you first thing Monday."
Mr Cappello replied: "Excellent news John. See you Monday."
On 16 April 2014 Mr Kucic from Oracle wrote to Mr Scrivener stating he had discussed "proposal with the boys last night" and that: "Basically the deal has not changed from what we tabled in December. [21] - Oracle agrees to come into the site for 50% at agreed land price [of] $15m. - This translates to net equity in the land of $1.25m being $625k Tuscany and $625k Oracle… - Oracle to fund all project costs to settlement including Tuscany carried equity at 20% coupon - same as Withers. - Oracle to pay acquisition fee of 2% and $75k project management fee to Tuscany. (On this item we are happy for Tuscany to leave this in the deal as carried equity if it likes, as opposed to pay out - increasing its equity stake). However, as discussed we would like that Tuscany leave in its deposit on 88 Rouse Road. - If we choose to develop the site and or are required to settle the land Tuscany's carried equity will carry forward and its share of the project moving forward will be $625k/total project equity required."
Mr Kucic was thus anticipating that Oracle's involvement would progress beyond lending to Mr Scrivener's companies the amount of the options fees for the 96 Cudgegong Road and 104 Rouse Road sites to, potentially, developing the site.
Mr Kucic's reference to Tuscany leaving "in its deposit on 88 Rouse Road" was evidently reference to the $250,000 option fee for 88 Rouse Road that Mr Cappello and Tuscany had jointly paid. Oracle had advanced to Mr Scrivener's companies the funds needed for the 96 Cudgegong Road and 104 Rouse Road option fees.
Mr Scrivener forwarded Mr Kucic's email to Mr Cappello stating: "FYI Too complicated and leaving deposit in an issue".
Mr Scrivener referred to the proposed Development Management Agreement with Oracle and said that he could "modify" a like agreement that one or other of Mr Scrivener's companies had with Oracle "to suit".
Mr Scrivener was thus letting Mr Cappello know his views about the merits of Oracle's current proposal suggesting, again in my opinion, that he saw Mr Cappello as being more than a minor investor.
Similarly, on 23 April 2014 Mr Scrivener gave Mr Cappello a document called "Property Development Feasibility Study" which set out such details as projected income, costs, profit margin and peak debt levels in relation to the proposed development of the Rouse Hill sites. Again, this suggests Mr Scrivener saw Mr Cappello as more than a minor investor.
There is, however, no dispute that it was Mr Scrivener, and not Mr Cappello who was progressing negotiations with Oracle and that these negotiations, potentially, leading to a result very much more profitable than that contemplated by Mr Scrivener and Mr Cappello in August 2013; securing the three sites and on-selling them for a profit.

[38]

30 April 2014 meeting with Mr Stanley Lei

On 30 April 2014, Mr Scrivener sent an SMS to Mr Cappello: "901/100 william street Woolloomooloo at 5.00."
Mr Scrivener sent the text for the purpose of Mr Scrivener and Mr Cappello meeting Mr Steven Chen, a real estate agent then engaged as a consultant with McGrath Estate Agents and his client, Mr Stanley Lei, of Anteus Group. Anteus Group was a Chinese developer company.
I would infer, from the fact that Mr Scrivener gave Mr Cappello the address and time of the meeting, that Mr Scrivener had arranged the meeting.
Mr Chen said that another agent in his office requested him to make contact with Mr Scrivener. He said he had never met nor heard of Mr Cappello.
Mr Cappello did not suggest that he attended the meeting with Mr Lei. Rather, he said this in his second affidavit, in a passage to which objection was not taken: "This was Scrivener inviting me to a meeting that, on his version of events, would have done me out of my right to earn a commission on the project because any buyer introduced by Chen would not have passed Scrivener's asserted test of me having to introduce a purchaser myself before the expiry of the first due diligence period."
Mr Chen said: "What I do recall as a result of [his colleague's] referral is meeting with John Scrivener on site. I told him that he should meet with a potential client who may be interested. That can only have been Mr Stanley Lei of Anteus Group."
As Mr Pritchard said in final submissions: "The date and fact of the meeting with Stanley Lei is significant because, on Mr Scrivener's version of the agreement, Mr Cappello had ceased to be interested in the venture two months earlier. Similarly, Mr Scrivener does not explain why he invited Mr Cappello to this meeting if he was no longer participating in the venture and was a mere investor. If Mr Scrivener's version of the agreement were accepted, it is completely unclear why Mr Cappello would have attended this meeting."
The inference I would draw from this is that Mr Scrivener still regarded Mr Cappello's involvement in the project as warranting Mr Cappello's presence at a meeting with a potential purchaser of the site.
Evidently, nothing came of the meeting with Mr Lei.

[39]

6 to 9 May 2014 - final attempt to sell to Sunland

Between 6 and 9 May 2014 Mr Cappello and Mr Scrivener made a final effort to achieve sale of the Rouse Hill sites to Sunland.
On 6 May 2014 Mr Ivor Dacic, the State Director of Sunland Group, sent a message that he had received from his solicitor concerning documents the solicitor needed to see in relation to the subject "Rouse Hill purchases".
Mr Cappello sent a copy of that email to Mr Scrivener and, a short time later, replied to Mr Dacic saying that Marsdens would respond to Sunland Group's solicitor's enquiries the next day.
On 7 May 2014, Mr Wong from Marsdens wrote to Mr Scrivener asking him to check some figures, including the "balance payable by purchaser on settlement". Mr Scrivener emailed Mr Wong to say that his figures were correct and forwarded a copy of that email to Mr Cappello. A short time later Mr Cappello confirmed to Mr Scrivener and Mr Wong that Mr Scrivener was correct to confirm Mr Wong's figures and, finally, Mr Scrivener sent an email to Mr Cappello, copied to Mr Wong, saying that the "figures are right".
Later, on 7 May 2014, Mr Wong wrote to Sunland's solicitor: "I act for Tuscany Corporation Pty Ltd, 104 Rouse Land Pty Ltd and 96 Cudgegong Land Pty Ltd (all of which have a common director). I understand that you act for Sunland Group Limited. I am instructed that an agreement has been reached in principle for the sale of the nomination of several options relating to properties at Rouse Hill. My client has provided me with a copy of your email to your client requesting certain documentation."
Mr Wong attached to his email the Put and Call Option Deeds in relation to the three Rouse Hill properties. Mr Wong continued: "I am instructed that the parties have agreed to an exchange taking place no later than 3 pm Thursday 8 May 2014 at our Campbelltown office. Please confirm that your client will be in a position to exchange as scheduled… If an exchange does not take place by the above time frame, then the offer is to be automatically withdrawn."
Mr Scrivener sent Mr Cappello a copy of Mr Wong's letter with an email: "Mate Have taken off attachments - files too big. [Sunland's solicitor] has everything - again. Modified letter as discussed."
Evidently Mr Scrivener's reference to the "modified letter" was a reference to Mr Wong's email to Sunland's solicitor.
As to the discussion to which Mr Scrivener referred ("as discussed") Mr Scrivener's phone records reveal that he spoke to Mr Cappello twice on 7 May 2014, first for over four minutes and then again for a little over three minutes.
Later on 7 May 2014, Sunland's solicitor sent an email to Mr Wong. Mr Dacic forwarded a copy of that email to Mr Cappello and Mr Cappello forwarded that email to Mr Scrivener.
A short time later, still on 7 May 2014, Mr Wong forwarded the same letter, from Sunland's solicitor, to Mr Scrivener. In his email, Mr Wong gave advice on the matters raised by Sunland's solicitor and also noticed that Sunland's solicitor referred to "further administrative matters to be raised" and about which he suggested to Mr Scrivener that "you may want to get John Cappello to try and find out". A short time later Mr Scrivener forwarded Mr Wong's email to Mr Cappello.
Later on 7 May 2014, by now the early evening, Mr Wong emailed Sunland's solicitor, copying both Mr Scrivener and Mr Cappello, answering the points that had been raised. Mr Cappello then forwarded the email to Sunland's solicitor, Mr Dacic, with a copy to Mr Scrivener.
Still later on the evening of 7 May 2014, Sunland's solicitor responded to Mr Wong's email and, a minute later, Mr Dacic forwarded a reply to Mr Cappello which Mr Cappello immediately forwarded to Mr Scrivener.
Following all of those email exchanges, an hour later in the evening of 7 May 2014, Mr Scrivener and Mr Cappello had the following SMS exchange: "Cappello: Hi John, I think we should take $15.25m. Let Soheil have his win and we can move on. Talk in the morning. John Scrivener: Don't think there is a chance in hell of getting terms agreed with lawyers think we are wasting our time John Cappello: I hear you. I will support your decision either way. I just think explore one more phone call from Jim [Marsden] to [Sunland's solicitor] at $15.25m. there is still $2.5m in it for us. Ivor [Dacic] will be a hero & Soheil [Abedian] will feed his ego. Let's sleep on it" (Emphasis added.)
Here, both Mr Cappello and Mr Scrivener are using the first person plural, "we", to describe their dealings with Sunland.
The following day, 8 May 2014, Mr Scrivener sent an email to Mr Wong, a copy of which he forwarded to Mr Cappello, saying: "Just go quiet mate. Nothing can be done until I am back on deck. [22] Let them chase us. If they want it, they will come back." (Emphasis added.)
Again, Mr Scrivener used the first person, plural.
Thus, on 9 May 2014, Mr Cappello sent an email to Mr Wong: "Thanks for all your efforts re Sunland but it appears dead and buried."
Evidently, that is where the matter rested so far as concerned a possible sale to Sunland. The sale to Sunland did not proceed.
The degree of involvement of Mr Cappello, well after the Sunset Date, in what appears to be the parties' last effort to sell the sites to Sunland, is inconsistent with Mr Cappello being, at that stage, a mere investor. It is also inconsistent with, indeed impossible to reconcile with Mr Cappello's "journey" being "over" by reason of not having introduced a purchaser by the Sunset Date. Mr Cappello's involvement appears to be that which would ordinarily be expected of a motivated joint venture partner.

[40]

The meeting with Mr Edgerton

In the same email in which Mr Cappello told Mr Wong that the proposed sale to Sunland appeared to be "dead and buried" Mr Cappello told Mr Wong that: "I am talking to another prospective purchaser over the weekend."
The "prospective purchaser" was Mr Michael Edgerton, then a non-practising solicitor who invested "in business and real estate opportunities, individually and with others". [23]
Mr Edgerton had had earlier dealings with Mr Cappello.
In his affidavit, Mr Edgerton described those dealings as follows: "I first met John Cappello about 10 years ago when he was recommended to me, as a real estate agent, for advice in regard to a property in Baulkham Hills that I was proposing to sell. He subsequently encouraged me to invest in various properties for residential development in the Rouse Hill and Kellyville areas… I have also, in the past, loaned money to Cappello and his associated entity. In all cases they were commercial transactions in the loans, which have since been repaid, and were secured by registered first mortgages."
Mr Cappello had also had some communication with Mr Edgerton concerning the Rouse Hill properties early in 2013. [24]
On 13 May 2014, Mr Cappello sent Mr Edgerton an email in relation to the "Rouse Hill site" which stated: "Please find attached a copy of the Put and Call Option Deeds [25] in place for the Rouse Hill site. I will forward further details of the site in preparation for our meeting Thursday morning."
It is common ground that Mr Scrivener and Mr Cappello met Mr Edgerton at his home in Drummoyne and that this was the only occasion when Mr Scrivener met Mr Edgerton.
In his affidavit sworn on 14 December 2017, Mr Edgerton placed the meeting on 24 July 2014. It is common ground that this cannot be correct and that the meeting took place in May 2014.
Mr Cappello's email referred to "our meeting Thursday morning"; which would have been 15 May 2014.
Mr Scrivener's appointment diary showed a meeting "12.30 Drummoyne Mr Edgerton" on 16 May 2014.
In his affidavit, Mr Edgerton said that Mr Cappello introduced Mr Scrivener by saying words to the effect: "Michael, this is John Scrivener, my partner in the Rouse Hill sites I mentioned to you". and that Mr Scrivener neither affirmed or refuted Cappello's status as "partner".
Mr Edgerton said he looked at the Put and Call Option Deeds that Mr Cappello had sent and said: "I have concerns about the documents. I want to talk to my lawyers about some of the things in them."
Mr Edgerton said that in the course of the discussion he asked why Mr Cappello's name was not "on any of the documents" and that Mr Cappello said in Mr Scrivener's presence, words to the effect: "We set this up on a verbal agreement between myself and John. I trust him."
Mr Edgerton said the discussion proceeded for a number of hours and that during that time Mr Cappello said in Mr Scrivener's presence, words to the effect: "If Oracle commit to the deal, we'll be paid a $250,000 acquisition fee that we will split 50:50." and, "We will also split the profit from the acquisition of the sites 50:50."
Mr Edgerton said that, after a number of hours of discussion, he said: "The best deal I could offer you, subject to further investigation of the documentation, is that I pay cash to buy 88 Rouse Road at the contract price of $4.3 million. You and John can then borrow the funds you need, to settle 96 Cudgegong and 104 Rouse Road using my 88 Rouse Road as additional collateral security."
Mr Edgerton concluded his affidavit by saying that "that offer was not taken up, either at the meeting, or later".
During cross-examination of Mr Cappello about this meeting with Mr Edgerton, Mr Studdy suggested that Mr Cappello had not made a note of the meeting. Mr Cappello replied that "I did not but Michael Edgerton did".
That caused Mr Cappello's solicitors to make an enquiry of Mr Edgerton, the result of which was Mr Edgerton produced a 5 page manuscript note that he said he created during his meeting with Mr Scrivener and Mr Cappello.
That note is dated "15.4.15". Much time during the hearing was spent debating the significance of that date. It is obviously a mistake as it is clear on the evidence, and common ground, that the meeting took place in May 2014. The original of Mr Edgerton's diary note is in evidence and the date "15-4-15" does appear to be in a slightly lighter pen than the balance of the note. It may be that Mr Edgerton filled the date in at a different time than when he made his contemporaneous note of the meeting and, evidently, has inadvertently transposed the figures.
Although Mr Studdy put to Mr Edgerton, and submitted, that Mr Edgerton's note was of a meeting with Mr Cappello alone in 2015, it is obvious that it was not.
As Mr Studdy ultimately accepted, there are a number of references in the note which make clear it was created in May 2014. For example, at one point Mr Edgerton recorded: "Used the $417K & released for the 5% deposits. 3 or 4 weeks ago went back to Sunland. They said no."
Those notes are obviously a reference to what Mr Edgerton was told about the amount advanced by Oracle to Mr Scrivener's companies pursuant to the 14 March 2014 Loan Agreement and to the attempts made by Mr Scrivener and Mr Cappello earlier that month to interest Sunland in the site.
There was also a reference to "now doing a deal with Oracle" and to when they needed "to exit Oracle", each of which references is consistent only with the diary note being made in May 2014.
The parties devoted a considerable amount of time parsing and analysing Mr Edgerton's note.
I do not find it necessary to deal with the detail of those matters.
The critical aspect of the note is what is obviously Mr Edgerton's summary of what he was told concerning the events leading to the negotiations with Sunland failing and where the following appears after the words "fell over" (obviously a reference to the unsuccessful discussions with Sunland): "Now doing a deal with Oracle. 1) x 125k back to JC 2) x 2.2% acquisition fee = 250K for JS/JC x Super lot it to de risk it 3) x 50% to JS & JC (Tuscany) if not have to settle and x if have to settle. 4) All splits are less 20% interest to Bruce (Oracle) on any loans Accountancy M'ent fee for funds JS Project M'ment fee DA costs" (Emphasis added.)
This note is consistent with what Mr Edgerton said in his affidavit he recalled Mr Cappello saying, as I have set out at [346] above.
This persuades me that it is probable, as Mr Edgerton (and Mr Cappello) said, that at this meeting Mr Cappello said, in Mr Scrivener's presence, and without demur from Mr Scrivener, that their arrangement was to share equally in the "profit from the acquisition of the [Rouse Hill] sites".
There was no reason for Mr Edgerton to record these matters inaccurately. Mr Edgerton said he had no idea what the arrangements between Mr Cappello and Mr Scrivener were, other than what was discussed at the meeting and that, after the meeting, he had no further discussions with Mr Cappello about the matter.
I find this impossible to reconcile with Mr Scrivener's contention that the Sunset Condition was an element of the 20 August 2013 agreement and Mr Scrivener's concomitant contention that Mr Cappello's entitlement to share equally in any profit from the venture ceased on the Sunset Date by reason of Mr Cappello not having then secured a purchaser.
Mr Scrivener's note does not record Mr Cappello as introducing Mr Scrivener as "my partner" but, in cross-examination, Mr Scrivener agreed that it was possible that Mr Cappello introduced him to Mr Edgerton this way.
In relation to Mr Edgerton's affidavit evidence that he had enquired why Mr Cappello's name was not on any of the documents, Mr Scrivener had said in his affidavit evidence that he could "not recall" whether those words were said. However, in cross-examination, he denied that Mr Edgerton asked this question. He explained the inconsistency between that evidence and what he had said in his affidavit by saying: "I believe they were definitely not said and I definitely believe that at the time of my affidavit I couldn't recall any of those words being said."
That response suggested to me that Mr Scrivener was endeavouring to deal with the cross-examination by saying whatever he thought might assist his case.

[41]

Contribution to costs

On 26 May 2014 Mr Scrivener sent to Mr Cappello three emails concerning the costs incurred, and to be incurred in relation to the venture.
First, Mr Scrivener forwarded Mr Cappello a tax invoice from Marsdens dated 31 December 2013 for $2,810.50 and set out in the email what "we" still owe compared to what "I" have already paid.
The email bespeaks an expectation by Mr Scrivener that Mr Cappello would make a contribution to the amount that "we still owe" as well as to the amount that "I have already paid".
It is hard to see why Mr Scrivener would have this expectation if Mr Cappello was, as Mr Scrivener contends, "out of the deal" by this time.
Second, a minute later, Mr Scrivener sent Mr Cappello an email that Mr Scrivener had received from Mr Wong which attached a schedule of costs incurred to date and an estimate of future costs.
If Mr Cappello was now no more than a "minor investor" whose only interest in the ongoing venture was a refund of his contribution to the 88 Rouse Road option fee and a share of the proposed Oracle acquisition fee, there would be no point telling Mr Cappello of these matters.
Third, in the afternoon of 26 May 2014 Mr Scrivener forwarded to Mr Cappello "fyi" an email Mr Scrivener had sent to Mr Aboud concerning "Tuscany invoice" which was an attached draft invoice from Tuscany to Oracle for an acquisition fee of $280,060 and which stated: "hi Vince invoice attached reimbursement costs = $31789.67 less costs paid by JS = $12088.60 balance $19071.07 john C $9850.54 + $140030.00 = $149880.54"
The "balance" figure ($19,071.07) should in fact be $19,701.07, being the difference between the "reimbursement costs" of $31,789.67 and the "less costs paid by JS" of $12,088.60.
The figure of $9,850.54 adjacent to the words "john C" is half of that (corrected) figure of $19,701.07.
In this email Mr Scrivener is calculating, for Mr Aboud's reference, the amount to which Mr Cappello is entitled.
One element of that amount is $140,030, which was half of the amount proposed to be invoiced by Tuscany to Oracle for the acquisition fee.
The other "credit" to Mr Cappello is $9,850.54 which, as I have said, is half of the "balance" of $19,701.07 representing the difference between the "reimbursement costs" and the "costs paid by JS".
It is thus obvious that the "reimbursement costs" represented costs already paid, jointly, by Mr Scrivener and Mr Cappello leading to the figure of $9,850.54 that Mr Scrivener suggested be added to the amount due to Mr Cappello.
In cross-examination, Mr Scrivener initially admitted that the figure of $31,789.67 was in relation to expenses already paid. He then sought to retreat from that position and assert that that figure was "the total amount of reimbursement costs that would be applicable by Oracle in relation to the acquisition" and that the $19,701.07 was an amount yet to be paid. But this cannot be right.
Mr Cappello gave evidence, concerning the payment of expenses, that: "Scrivener's usual practice with our shared expenses was to forward either invoices, like those from Marsdens, or receipts for payments made by him, to me and obtain reimbursement from me in cash on one of his subsequent visits to Sydney. I did not keep a record of precisely what I reimbursed or when, relying instead on Scrivener to keep the accounting between us accurate."
Mr Scrivener's email to Mr Cappello of 26 May 2014 appears to be an example of the practice to which Mr Cappello referred. If, as Mr Scrivener contends, Mr Cappello was now "out of the deal" and was only a "minor investor" there is no reason why Mr Scrivener would be communicating with Mr Cappello in this way. These communications suggest that Mr Scrivener understood that his business relationship with Mr Cappello was ongoing and that there needed to be a reconciliation of the manner in which they had shared expenses to date. These exchanges also show that, as both Mr Cappello and Mr Scrivener accept they agreed on 20 August 2013, expenses were to be, and were being, shared equally.
Mr Scrivener said in his affidavit that about this time he said to Mr Cappello: "John this is too stressful. I am over it. You had more than a fair chance to secure one of these buyers that you told me about and nothing has come of the sale but I am left with a huge legal bill. It's a disaster. I had to secure a loan from Oracle for 96 [Cudgegong Road] and 104 [Rouse Road] and if an agreement is not reached then Tuscany faces a $12.7m liability".
I find this evidence impossible to reconcile with all that had passed between Mr Scrivener and Mr Cappello in the preceding months and in particular with the email exchange to which I have just referred.

[44]

Events thereafter

On 11 August 2014, Mr Cappello sent an email to Mr Scrivener: "Oracle deal is great for us anyway. Thanks for everything you have done so far!"
Mr Scrivener did not suggest that it was inaccurate of Mr Cappello to opine that the "Oracle deal" was great for "us" as opposed to only Mr Scrivener.
In accordance with the terms of the Development Management Agreement, Oracle paid a 2% acquisition fee to Tuscany in the sum of $280,060.
On 19 August 2014, Tuscany paid half of that amount, $140,030, at Mr Cappello's direction. [26]
On the same day, Mr Scrivener paid $125,000 to Mr Cappello from his own funds representing repayment to Mr Cappello of the $125,000 he had paid on account of the Option Fee under the Put and Call Option Deed with Mrs Boon concerning the 88 Rouse Road property.
Mr Cappello travelled to Europe on holidays between late August and late September 2014.
He said that when he returned he spoke to Mr Scrivener who said: "We are working through all the issues and are planning the site. I need you to look after [another site at Kellyville] as a priority and I will look after Rouse Hill. The Oracle guys have a relationship with a builder from Melbourne called Creation Homes. They want in on our deal. Our percentages might change but we will have a smaller share of a much bigger pie. Oracle want to keep going with more sites. This relationship is going to be great for us."
Mr Scrivener denied having that conversation, although he did not refer to it in his affidavit evidence.
In November 2014 Mr Scrivener gave Mr Cappello a set of the plans about to be submitted to Blacktown City Council to seek development approval for a proposed subdivision of the Rouse Hill properties.
On 19 January 2015 Mr Scrivener caused to be sent to Mr Cappello's employee further architectural drawings relating to the proposed development application.
Mr Scrivener said that the only reason he was forwarding these documents to Mr Cappello was to prepare for the marketing of the development.
On 20 January 2015 Mr Scrivener forwarded to Mr Cappello's office an email he'd received from Mr Wong which said that: "The option has been exercised and Contracts are dated 19 January 2015. Settlement will be 27 February 2015."
Mr Scrivener said in cross-examination that the settlement referred to in this email was settlement of the transaction whereby 88 Rouse Land Pty Ltd became the registered proprietor of the three properties as a result of Tuscany, 96 Cudgegong Land Pty Ltd and 104 Rouse Land Pty Ltd having exercised their options under the Put and Call Option Deeds of 20 December 2013 and 14 March 2014 to call for the three Rouse Hill properties.
In April 2015 Mr Cappello learned from Mr Kucic at Oracle that the Rouse Hill site was to be sold to a Chinese developer.
Mr Cappello said in one of his affidavits: "I became concerned because Scrivener had not told me about that sale. I did not call Scrivener immediately about the sale to the Chines buyer. I was confused by the news because I had not been told about that development by Scrivener and so I waited before discussing that development with Scrivener."
Mr Cappello said that on 11 May 2015 he had this discussion with Mr Scrivener: "Scrivener: Rouse Hill will be sold to the Chinese. Cappello: Why didn't you tell me? Scrivener: Oracle won't honour its written agreement with Tuscany and I have been trying to keep this out of the Supreme Court."
On 11 May 2015 Mr Cappello created what appears to be the only diary note he made about this transaction. The note read: "John Scrivener called to advise Oracle will not honour written agreement. Will be sold to Chinese."
Mr Scrivener denied saying anything to this effect to Mr Cappello.
However, Mr Studdy did not challenge Mr Cappello in relation to his diary entry. I see no reason to doubt the accuracy of the note and conclude that Mr Scrivener did say something to Mr Cappello to the effect that Mr Cappello has recorded.
There is no suggestion in the evidence that anyone from Oracle said that Oracle would not "honour" its "written agreement". Indeed, Mr Scrivener agreed that it would not have been true to say that Oracle would not honour its written agreement. That suggests, as Mr Pritchard submitted, that Mr Scrivener was prepared to tell Mr Cappello things that were not true to dissuade him from asserting an interest in the project.
Mr Cappello said that on 21 May 2015 he received a telephone call from Mr Scrivener which he took on speaker phone in the presence of his brother, Mr William Cappello. Mr Cappello said the conversation was in these terms: "Scrivener: Hi John [Cappello]: Mate when are we meeting to talk about Rouse Hill? Scrivener: What for? [Cappello]: To talk about my share. Scrivener: I'm sorry I don't understand what you mean. What do you mean? [Cappello]: I am entitled to 50% of the Tuscany share. Scrivener: You are not entitled to anything. You made a quarter of a million dollars. You got paid by Sue Lobsey. [Cappello]: I haven't taken one dollar from Sue Lobsey."
Mr Scrivener did not refer to this conversation in his affidavit but denied in cross-examination that it took place.
However, Mr William Cappello has sworn an affidavit in which he said: "I was present, along with John's assistant at that time, Lyn Batson, in John's office when John took a call from John Scrivener. That would have been around the middle of 2015. When the call came in, John put it on speaker phone and signalled to both Lyn and myself to listen. As a result, I gave attention to the phone call. After almost 5 years I cannot recall the precise words used, but the gist of the discussion was words in or to the effect of the following: [Cappello]: When can we meet to talk about my share of the profit from Rouse Hill? Scrivener: What do you mean? [Cappello] I am entitled to 50% of what Tuscany made. Scrivener: No you are not, you made $250,000 in commission from Sue Lobsey. [Cappello]: I've taken nothing from Sue Lobsey. What I'm entitled to is half of what Tuscany made. Scrivener: You've got nothing in writing. [Cappello]: That doesn't matter. Scrivener: Good luck if you want to try and get anything in court."
Although in cross-examination Mr Scrivener said that "I totally deny that conversation" Mr Studdy did not cross-examine Mr William Cappello on his affidavit. In those circumstances, I accept that Mr William Cappello's recollection is accurate. Thus Mr Scrivener's response to Mr Cappello's assertion that he was entitled to "half of what Tuscany made" was not to assert, consistently with his account of the 20 August 2013 agreement, that Mr Cappello's entitlements were subject to him securing a purchaser by 28 February 2014, but, rather to say "You've got nothing in writing".
Although my attention was not drawn to a document recording this fact, I was informed from the bar table that in May 2015, 88 Rouse Land Pty Ltd obtained approval from Blacktown City Council to develop the consolidated site as a medium density development.
On 10 June 2015 the parties to the 6 August 2015 Heads of Agreement signed the Agreement - Acknowledgement to which I referred at [395] above which provided, in effect, that the "Project Proceeds" will be divided: "45.52% to Tuscany and 54.48% to Oracle (by way of background, being approximately 50:50 on one property and 2/3:1/3 on two properties".
The following day, 11 June 2015, Mr Cappello visited Oracle's offices and met with Mr Kucic, and another officer of Oracle, Mr Nic Kennedy.
Mr Kennedy's note of that meeting is as follows: "John Cappello requested a meeting with [Nic Kennedy] and [Mr Kucic] at Oracle on Wednesday morning 11th June at 10.30am. He came and said he did not have good news however expressed that he had no concerns with Oracle and valued our working relationship. [Mr Cappello] then explained that he had a problem with John Scrivener. [Mr Cappello] said that [Mr Scrivener] and he were partners on the Rouse Hill deal and that he was a silent partner with [Mr Scrivener]. He had provided funding for the initial deposit which had been repaid and he had been paid part of the acquisition fee from [Mr Scrivener]. [Mr Cappello] said that he had a verbal contract with [Mr Scrivener] and supporting documentation the he and [Mr Scrivener] are 50/50 partners on Rouse Hill project. [Mr Cappello [27] ] confirmed that it is 50% of what [Mr Scrivener] earns, and does not impact Oracle. [Mr Cappello] said he did not want to impact Oracle and hoped that it would not get to a point where the project would be implemented, but did not say that it would not be implemented. [Mr Cappello] explained he wants to continue on sales on Withers Rise project, however he does not want to deal with [Mr Scrivener] again, at all. [Mr Cappello] said he tried to meet with [Mr Scrivener] to sort this issue out but [Mr Scrivener] would not meet him. [Mr Cappello] said he did not act as an agent on Rouse Hill, and did not take any commission from Sue Lobsey the agent. [Mr Cappello] reiterated that he did not want to implement [sic: implicate] Oracle or had any issues with Oracle and stated he likes working with Oracle and said the issue with [Mr Scrivener] is his issue. [Mr Cappello] said he has legal advice and will be commencing action early next week, by sending a letter to Marsden's lawyers. Oracle stated that we do not want to be involved and any issue with [Mr Scrivener] should not include Oracle or its projects. Oracle did mention that if our projects are [implicated] in any proceedings in any negative way then we would have no choice but to commence legal proceedings. [Mr Cappello] said he would keep us aware of events moving forward."
I see no reason to doubt that Mr Kennedy accurately recorded what Mr Cappello said at this meeting [28] .
Nor do I see any reason to doubt that Mr Cappello was giving Mr Kucic and Mr Kennedy as accurate an account as he could of his agreement with Mr Scrivener. This account was given less than two years after 20 August 2013. As I have said, Mr Scrivener first turned his mind to recording his recollection of the agreement shortly before he swore his affidavit in these proceedings in March 2019: five years after the agreement was made.
On about 20 July 2015 88 Rouse Land Pty Ltd sold the three sites to Tian Tong.
Tuscany received $9,141,937.95 for the venture as follows: Item Amount 1 Cheque to Tuscany at Tian Tong completion $8,500.000 2 Paid to Tuscany from the half deposit release $550,000 3 Interest on Boon option fee since $92,245 Total $9,142,245

[46]

Was the agreement subject to the Sunset Condition?

Mr Studdy submitted that it was inherently improbable that Mr Scrivener would have entered an agreement with Mr Cappello that was not conditional on Mr Cappello finding a buyer for the combined site within a reasonable time.
Thus, Mr Studdy described the agreement for which Mr Cappello contends as "highly problematic", a "commercial absurdity only to the advantage of Mr Cappello and to the disadvantage of Mr Scrivener" not "entirely implausible", and "simply too far-fetched to possibly believe".
Mr Studdy submitted that it was "plainly inconceivable" that Mr Scrivener would have entered an unconditional agreement because: 1. Mr Scrivener and Tuscany, and not Mr Cappello "would have to and did undertake the bulk of the effort putting together the project while [Mr Cappello] contributed virtually nothing towards that effort"; 2. Mr Scrivener and Tuscany, and not Mr Cappello were "'on the hook' financially without [Mr Cappello] being exposed to any liability under the agreement"; and 3. the "commercial documents" into which Tuscany and Mr Scrivener's other companies entered and the "stark disparity in the relative contributions" of Mr Scrivener and Mr Cappello to the venture showed that "it is understandable that the agreement was subject to the conditions that [Mr Scrivener] imposed".
Mr Studdy submitted that "a consequence of [Mr Cappello's] failure" to secure a buyer was that Mr Scrivener and Tuscany "were required to go 'unconditional' on the project (when that was never the intention) and were required to seek the assistance of Oracle to do so".
These submissions do not take account of the fact that, on any view of the matter, it was Mr Cappello who introduced Mr Scrivener to the project and thus made available to Mr Scrivener and Tuscany the opportunity from which they have now profited.
Nor do they take into account that the undisputed evidence that in December 2013, on Mr Scrivener's account of it, [29] Mr Cappello asked that the arrangement between them be documented, the result of which would have been that Mr Cappello, or his wife, would have also been "on the hook" financially.
The submissions also overlook the relatively simple project that was in contemplation as at 20 August 2013. As at that date, the project involved following up on the negotiations Mr Cappello had had with Mrs Boon concerning 88 Rouse Road and with Mrs Votano concerning 96 Cudgegong Road, and endeavouring also to secure the third property from Mr and Mrs Bannerman at 104 Rouse Road.
The plan was to negotiate options to purchase with the three site owners [30] , with a contemplated option fee of $5,000 for each property and, according to Mr Scrivener's recollection of what Mr Cappello was proposing, to speedily on-sell the consolidated properties at a profit. [31]
As things turned out, the project evolved into one far more ambitious than that contemplated on 20 August 2013. Mr Scrivener procured the active and substantial involvement of Oracle. The Put and Call Options were entered, and the vehicle for the Tuscany/Oracle joint venture [32] exercised the call options and acquired the sites. Development Approval was obtained and the combined site sold to Tian Tong to the significant profit of Oracle and Tuscany.
In the meantime, as Mr Studdy submitted, once Mrs Boon's Put and Call option became "unconditional" on 28 February 2014, and once Mr Scrivener's companies entered the Put and Call Options with Mrs Votano and Mr and Mrs Bannerman on 14 March 2014, Mr Scrivener, through his companies, was exposed to the potential liability of being required to purchase the properties for the total price of $12.65 million, as well as to the various obligations arising from the arrangements with Oracle.
It is also true that, as things turned out, Mr Scrivener ended up putting many more hours work into the venture than did Mr Cappello.
But I see no basis upon which I could find that these developments were in the contemplation of Mr Cappello and Mr Scrivener when they made their agreement. Neither of them made any such suggestion in their evidence. Accordingly, I do not see how they can be used, retrospectively, to assess the probabilities of what was agreed on 20 August 2013; at a time when a far more modest project was in prospect.
I also accept that there were some aspects of the 20 August 2013 arrangement that would have made it reasonable for Mr Scrivener to impose a condition of the kind for which he contends.
For example, Mr Scrivener claims that Mr Cappello said on 20 August 2013 that "I already have buyers for a combined site". Mr Cappello denied saying that. But there is no evidence that Mr Cappello did have buyers as at 20 August 2013. In those circumstances it may well have been understandable for Mr Scrivener to impose a condition along the lines of the Sunset Condition.
Similarly, Mr Cappello's initial insistence "to leave my name off things" [33] meant that only Mr Scrivener's name was to be "on things" such that only Mr Scrivener would, as things stood on 20 August 2013, be exposed to any liability under the venture. Again, in those circumstances it may well have been understandable for Mr Scrivener to impose a condition along the lines of the Sunset Condition.
But the question is: did he?
The following features of Mr Scrivener's conduct after 20 August 2013 persuades me that, probably, he did not: 1. Mr Scrivener's 28 August 2013 enquiry of Mr Cappello as to his "thoughts" concerning the proposed Due Diligence Deed for 88 Rouse Road; [34] 2. Mr Cappello's involvement with Mr Scrivener in the strategy concerning Mr and Mrs Bannerman's property in September 2013; [35] 3. Mr Scrivener's ultimate acceptance that, at the meeting at the El Phoenician restaurant in October or November 2013 that, without demur from Mr Scrivener, Mr Cappello described Mr Scrivener to Mr Aboud as his joint venture partner; [36] 4. Mr Scrivener's 16 November 2013 "fish and chips are on the stove" email to Mr Cappello where Mr Scrivener said to Mr Cappello that he "now got 17 months to make sure I make it all happen"; [37] 5. Mr Scrivener's 18 November 2013 email to Mr Kucic, copied to Mr Cappello, in which Mr Scrivener said that Mr Cappello could not get a "conjunction or referral" because "he is involved in [the] purchase"; [38] 6. Mr Scrivener's 9 December 2013 email to Mr Marsden in which he referred to his "joint venture partners"; [39] 7. Mr Scrivener's 20 December 2013 email to Mr Marsden referring to Mr Cappello as "my J/V partner" (in the context of Mr Cappello having "stuffed up" finding funds to provide the option fee for Mrs Boon's Put and Call Option Deed); [40] 8. Mr Scrivener's 6 January 2014 email to Mr Cappello referring to "our site"; [41] 9. Mr Scrivener's evident acceptance of the accuracy of the statement in the January 2014 Information Memorandum prepared by Mr Cappello in relation to the proposed sale to Sunland Group of Shaka Holdings as being "a joint venture partner in the site with Tuscany Corporation"; [42] 10. Mr Scrivener's 21 January 2014 email to Mr Cappello saying that "we" should update all of "our" vendors; [43] 11. Mr Scrivener's 4 February 2014 email to Mr Cappello explaining "how it works"; [44] 12. Mr Scrivener's failure to assert, in his critical email of 27 February 2014 to Mr Aboud, the existence of any Sunset Condition despite expressing anxiety about Tuscany having "to go unconditional" the next day; [45] 13. Mr Scrivener's failure to assert the existence of the Sunset Condition on the Sunset Date itself in his email to Mr Cappello that day in which he said "Bannermans all sorted" and "thank you for your help"; [46] 14. Mr Scrivener's failure at any time after the Sunset Date of 28 February 2014 to assert the existence of the Sunset Condition; 15. Mr Scrivener's 11 March 2014 statement to Mr Cappello that they were "moving in the right direction so far" despite the passing of the Sunset Date; [47] 16. Mr Scrivener's 14 March 2014 SMS to Mr Cappello, sent on the day that Mr Scrivener's companies entered into the Put and Call Option Deeds in respect of 96 Cudgegong Road and 104 Rouse Road and on which Tuscany entered into the Loan Agreement with Oracle, "congratulations we own a site"; [48] 17. Mr Scrivener's emails to Mr Cappello keeping him informed of developments throughout April 2014; [49] 18. Mr Scrivener's suggestion that Mr Cappello meet the prospective purchaser, Mr Stanley Lei, from Anteus Group; [50] 19. Mr Cappello's involvement, to Mr Scrivener's knowledge, in negotiations in May 2014 to interest Sunland in purchasing the sites leading to the 7 May 2014 email exchange in which Mr Cappello suggests that "we can move on" and Mr Scrivener replied that "we are wasting our time"; [51] 20. Mr Scrivener's acceptance of Mr Cappello's statement in Mr Edgerton's presence that if Oracle committed to the deal "we will split 50:50" and that "we'll also split the profit from the acquisition of the sites 50:50", which evidence finds objective confirmation in Mr Edgerton's file note showing "50% to JS and JC (Tuscany)"; [52] 21. the 26 May 2014 email exchange between Mr Scrivener and Mr Cappello concerning contributions to costs; [53] 22. the provision by Mr Scrivener to Mr Cappello in July 2014 of his handwritten note concerning the likely gross realisations of the developed site; [54] 23. Mr Scrivener's evident acceptance of Mr Cappello's 11 August 2014 statement that "Oracle deal is great for us anyway"; [55] 24. Mr Scrivener's disingenuous response to Mr Cappello's challenge concerning what Mr Cappello had heard about the sale of the development to a Chinese developer; [56] 25. Mr Scrivener's 21 May 2015 response to Mr Cappello's assertion of an entitlement to "50% of the Tuscany share" which was not to assert the existence of the Sunset Condition and the lack of satisfaction of it but rather to say "you've got nothing in writing" and (ironically) "good luck if you want to try and get anything in court"; [57] 26. finally, Mr Cappello's account of his agreement with Mr Scrivener to the officers of Oracle on 11 June 2015. [58]
The cumulative effect of these matters leads me to have an actual persuasion of the mind [59] that Mr Scrivener did not, as he claims, refer to the Sunset Condition in the discussion with Mr Cappello on 20 August 2013 and that, accordingly, the Sunset Condition was not a term of the agreement between Mr Cappello and him.
The evidence that I have set out shows that, consistently between 20 August 2013 and the Sunset Date, Mr Scrivener referred to Mr Cappello as his joint venturer or joint venture partner.
Further, and critically, after the Sunset Date, and when on Mr Scrivener's account of it Mr Cappello was no longer his joint venture partner and that the "journey" for Mr Cappello was "over", [60] Mr Scrivener behaved in a manner that cannot be reconciled with him truly believing that the Sunset Condition was part of their agreement.
As I have set out, Mr Scrivener was adamant that the Sunset Condition was a part of his agreement with Mr Cappello and gave evidence that he made this clear to Mr Cappello on a number of occasions, including at the Verve Café on 11 December 2013 [61] and again in the conversations on 25 and 26 February 2014. [62]
Mr Scrivener was either giving evidence he knew to be false or else, perhaps more likely, he has now come to believe that what he said was true because, litigation has intervened and that the processes of Mr Scrivener's memories have become overlaid, perhaps subconsciously, "by perceptions of self interest as well as conscious consideration of what should have been said or could have been said". [63]
However that may be, I have an actual persuasion of mind that Mr Scrivener's recollection cannot be correct.
I have made references above to occasions when I was concerned as to the reliability of Mr Scrivener's evidence and his recollection of events.
Those matters have informed my conclusion as to the probabilities of what occurred on 20 August 2013.
Overall, the evidence that I found to be most informative of what was likely to be the true nature of the agreement between Mr Cappello and Mr Scrivener's own conduct, both by omission and commission.

[47]

The result

In closing written submissions, Mr Studdy said in conclusion: " … Mr Scrivener contends that in truth this relationship was an agreement that was subject to the performance of two conditions, which were not performed by Mr Cappello. Having failed to perform both conditions (noting that a failure to perform even one would have entitled Mr Scrivener to terminate) Mr Scrivener terminated, and that the termination was reasonable having regard to the circumstances prevailing at the time (not the least of which included that by Mr Cappello's failure to find a purchaser, he effectively forced Tuscany to go unconditional which in turn required Mr Scrivener to take the action that he did (in approaching Oracle) to salvage the project … On the evidence the only reasonable and available conclusion is that the agreement was subject to the performance by [Mr Cappello] of the two conditions. When [Mr Cappello] failed to perform the conditions, the agreement was terminated and [Mr Cappello] was repaid in excess of the entitlements that he was owed".
There are a number observations to be made about this passage.
First, Mr Studdy referred to Mr Scrivener having "terminated" the arrangement with Mr Cappello, and of Mr Cappello then being "repaid in excess of the entitlements that the was owed". My attention was not directed to evidence that Mr Scrivener ever "terminated" the arrangement with Mr Cappello. I infer that the reference to Mr Cappello being paid his "entitlements" is a reference to the payments made to Mr Cappello on 19 August 2014. [64]
Second, it is not correct to say that Tuscany approached Oracle "to salvage the project" by reason of a buyer not being located (by the Sunset Date). As I have set out above [65] Mr Scrivener spoke of having approached Oracle as early as October 2013; well before the Sunset Date.
Third, and most important, Mr Studdy referred to Mr Scrivener imposing "two conditions" to the agreement with Mr Cappello.
One was of course the Sunset Condition, and I have explained why I do not accept Mr Scrivener's case about that matter.
The second condition was, as Mr Studdy had put earlier in the written closing submissions, that Mr Cappello contribute equally to costs and expenses. Mr Cappello did not dispute this. As I have set out above, Mr Cappello accepted, indeed asserted that his arrangement with Mr Scrivener included an agreement that expenses be shared equally. Mr Studdy barely developed a submission that Mr Cappello did not comply with that condition. The email exchange on 26 May 2014 [66] shows that he did.
As I am persuaded that the first of Mr Scrivener's asserted conditions was not a part of the 20 August 2013 agreement, and as I find there was no breach by Mr Cappello of the other condition relied on Mr Scrivener, I find that there was a partnership between Mr Cappello and Mr Scrivener of the kind for which Mr Cappello contends.
In any event, I think Mr Pritchard was correct to submit: "The facts established in this case make are sufficient to establish a fiduciary relationship, even if there is no partnership. Similarly, there is no dispute that the particular terms of the agreement are paramount. However, one of the key issues is the extent to which the parties are or are not vulnerable under the terms of the relevant agreement. Courts are reluctant to impose fiduciary obligations in a commercial setting when the agreement has been fully documented and sets out all of the parties' rights and obligations because the consequences for breach are covered by the contract. As stated by McDougall J in Management Service Australia Pty Ltd v PM Works Pty Ltd [2017] NSWSC 1743 at [186]: 'Where … parties have entered into a commercial contract and have negotiated and documented in full detail all of their rights and obligations, it would ordinarily be inappropriate to impose a fiduciary duty upon one of those parties. However, this is not because the contract is 'commercial' but, rather, because mere vulnerability to breach, where the consequences of breach are adequately covered by the contract, does not give rise to the need for the intervention of equity.' There was of course no fully documented and carefully drafted commercial agreement in place between Mr Cappello and Mr Scrivener. The agreement was oral and, in any event, Mr Cappello was entirely vulnerable to Mr Scrivener and Tuscany abusing the trust he placed in them with respect to his share in the rights to control the Development Sites. … This was not a case where the parties chose to conduct their business through a corporate vehicle. Mr Cappello was not a director or shareholder of Tuscany and there was never any suggestion he would be. Mr Scrivener had sole control of Tuscany and the commercial opportunities which arose from the agreement of the parties that the partnership be conducted on the basis that Tuscany held the partnership assets and Tuscany be the party entering into relevant due diligence deeds, option deeds and project management agreements, always in the context of 50% of the expenses and Boon option fee being paid by Mr Cappello as a partner."
I propose to make a declaration to the effect of that sought by Mr Cappello, namely, that there was a partnership between themselves and/or their corporate nominees (Tuscany in the case of Mr Scrivener and a company later to be nominated by Mr Cappello) "which acquired the rights to control and sell the three contiguous properties situated at 88 Rouse Road, 104 Rouse Road, and 96 Cudgegong Road, Rouse Hill".
In his Summons, Mr Cappello sought an order that an account be taken of the profits made by the defendants from the defendants' use of the funds received by Tuscany.
In the alternative, Mr Cappello sought equitable compensation.
During closing submissions, Mr Pritchard informed me that Mr Cappello elected to receive equitable compensation.
I will list the matter for directions on a day convenient to counsel and hear submissions as to what, if any, further steps are needed to resolve the dispute between the parties.

[48]

Endnotes

For convenience and without disrespect to Mr Rayment, I will hereafter refer only to Mr Pritchard.
And, as with Mr Pritchard and Mr Rayment, I will from now on, and without disrespect to Mr Chapman, refer only to Mr Studdy.
(1995) 49 NSWLR 315 at 319.
See Mr Kennedy's note of 11 June 2015 referred to at [423] below.
See [333] to [365] below
See [51] below
See [48] below
Mr Vincent Aboud, accountant of both Mr Cappello and Mr Scrivener.
Mr Scrivener's solicitor.
See [34]-[38] above.
See [423] below.
Eg Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 at [25] (Heydon JA); as I have said, there is no dispute about this.
Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407 at [325] (Campbell JA) and the cases there cited; Lym International Pty Ltd v Marcolongo [2011] NSWCA 303 [136]-[149] (Campbell JA; Basten JA and Sackar J agreeing); and generally P Herzfeld and T Prince, Interpretation (2nd ed, 2020, Thomson Reuters) at [29.160].
See [117] to [128] below
See [219]-[232].
On 11 December 2013 extended to 16 March 2014.
On 13 February 2014 extended to 15 March 2014.
See [255] above.
96 Cudgegong Land Pty Ltd and 104 Rouse Land Pty Ltd.
Mr Scrivener and Tuscany.
Evidently a reference to the 18 December 2013 Version 3 Partnering Heads of Agreement referred to at [198] above.
Mr Scrivener was about to leave for overseas.
To adopt the words in his affidavit.
See [32] above.
That Mr Cappello had asked Mr Wong to send Mr Edgerton in his 9 May 2014 email.
Rather than the figure of $149,880.54 referred to in Mr Scrivener's email to Mr Aboud of 26 May 2014 referred to at [372] above.
Mr Kennedy attributed this, and later references in the note, to "JS" but it clearly should be "JC": Mr Cappello.
Subject to the matters referred to in the preceding footnote.
Mr Cappello said this occurred in May 2014, but for the reasons I have set out above at [193], I have concluded it probably occurred when Mr Scrivener says.
Ultimately, the Due Diligence Deeds.
"We can flick it on before the due diligence period is up": see [61] above.
88 Rouse Road.
See [60] above.
See [122] and [123] above.
See [131]-[143] above.
See [144]-[154] above.
See [162]-[167] above.
See [168]-[172] above.
See [179]-[180] above.
See [205]-[215] above.
See [216]-[218] above.
See [219]-[232] above.
See [233]-[235] above.
See [236]-[241] above.
See [259]-[264].
See [265]-[269] above.
See [273]-[274] above.
See [279]-[289] above.
See [290]-[303] above.
See [304]-[312] above.
See [313]-[332] above.
See [333]-[365] above.
See [366]-[383] above.
See [388]-[391] above.
See [396]-[397] above.
See [411] to [415] above
See [416] to [419] above
See [422]-[423] above.
Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 at 360-362, per Dixon J.
The words Mr Scrivener claims he used at the Verve Café meeting on 11 December 2013.
See [183] above.
See [25] and [255] above.
To repeat McLelland CJ in Eq's words from Watson v Foxman.
See [399] and [400] above.
See [146] and [147] (the El Phoenician restaurant conversation) and [173] to [178] above.
See [366]-[383] above. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 December 2020

Cappello & Anor v Scrivener & Anor

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