"that when documents are actually contemporaneous, that is, two deeds executed at the same moment, a very common case, or within so short an interval that having regard to the nature of the transaction the Court comes to the conclusion that the series of deeds represents a single transaction between the same parties, it is then that they are all treated as one deed; and, of course, one deed between the same parties may be read to show the meaning of the sentence, and be equally read, although not contained in one deed, but in several parchments, if all the parchments together in the view of the Court make up one document for this purpose."

The rule applies whether the documents are executed contemporaneously or at different times: see Norton on Deeds 2nd ed (1928) at p 87-89 and the cases there cited. The reason for the rule is that when a series of documents is necessary to give effect to a single transaction each is executed on the faith of the others being executed and each is intended to operate only as part of that transaction and therefore, as a matter of substance, they should be regarded as one: Manks v Whiteley [1912] UKLawRpCh 46; [1912] 1 Ch 735 at 754. [27]

1. The applicant submitted this was not a single transaction case because the contract of sale dealt with matters agreed between the parties up to and including the time of settlement; whereas the deed governed matters occurring after settlement. It submitted that the purpose of the deed was to provide a means for the respondent to recover damages or an indemnity from the other parties to the deed, in the event that the applicant mortgaged the property otherwise than in accordance with cls 1.3 and 2.2.1 and thereby diminished the applicant's equity in the property to a point where it was not sufficient to secure the amount of the deferred payment. Thus, the applicant submitted that:

... the purpose of the deed was to establish a means whereby any of the parties to the deed could be called upon to compensate the vendor in the event of some loss arising from a breach along the way.

1. In support of its submission that cl 2.2.1 of the deed only had application once settlement of the contract of sale had occurred, the applicant referred to recital B of the deed, which it said showed that the deed was concerned only with recovering damages for breach, and noted that each of the other operative terms of the deed (cls 2.2.2 to 2.2.7), by their terms, only applied after settlement occurred. The applicant's argument was that, as cls 2.2.2 to 2.2.7 applied only to post-settlement matters, cl 2.2.1 should be similarly confined. In further support of this argument, the applicant noted that special conditions 13 and 14 (dealing with first, second and third mortgages) were contained in the contract of sale - indicating the objective intention of the parties that pre-settlement matters be dealt with in the contract of sale and post-settlement matters be dealt with in the deed.
2. For the reasons which follow, the applicant's submissions must be rejected.
3. First, as recital A of the deed provided, the respondent agreed to enter into the contract of sale in consideration of the parties executing the deed. Recital B recorded that 'the vendor has insisted on the other parties entering into this deed'. The deed and the contract of sale were entered into at the same time. The contract of sale provided that the deferred payment would be secured by a mortgage over the property. The deed addressed a concern on the respondent's part about the applicant borrowing money against the property to such an extent that the applicant would not have sufficient equity in the property to permit the respondent to recover the deferred payment when it became due 12 months after settlement. Looked at objectively, the contract of sale and the deed were in effect one agreement between the applicant and the respondent. Notwithstanding the presence of the entire agreement clause in cl 4 of the deed and the additional parties to the deed, properly construed the agreement the applicant and the respondent entered into concerning the sale and purchase of the property was contained in both documents: with each document dealing with pre and post-settlement rights and obligations.
4. Second, notwithstanding that recital B provided that the vendor (respondent) had insisted on the parties to the deed entering into the deed because of a concern that a breach of the deed or the contract of sale might diminish 'the value of the property' (properly understood in context as the purchaser's equity in the property) or that the respondent 'wish[ed] to establish a method of recovering the diminished value', no operative term of the deed gave the respondent the right to claim compensation from the parties to the deed in the event of some loss arising from any breach of the deed. The only term of the deed that gave the respondent an entitlement to damages was cl 2.1.3 which required Mr Gulabovski to provide certain information which, if inaccurate or misleading, made Mr Gulabovski personally liable for any loss suffered by the respondent to the maximum value of the respondent's mortgage.
5. Third, notwithstanding that some or all of the other operative provisions of the deed might only have had operation post-settlement, there is no basis for limiting the operation of cl 2.2.1 to post-settlement events. The terms of cl 2.2.1 do not contain any temporal limit on their operation. The more sensible and likely construction of cl 2.2.1 is that it operated both pre-settlement and post-settlement. In its pre-settlement operation, it permitted the respondent to make enquiries to ensure that the applicant had not mortgaged the property beyond the maximum amount and at higher interest rates than permitted by the deed, so that the respondent (in the event that the applicant had mortgaged the property in breach of cl 2.2.1) could choose whether or not to settle the sale of the property in those circumstances. Such a construction accords with the likely - indeed obvious - commercial purpose of the obligation to provide proof of the interest rates payable under the mortgages.
6. Fourth, while the applicant accepted that the deed did not actually provide for the respondent to be indemnified in respect of any loss suffered as a result of any breach of cl 2.2.1 of the deed, it contended that cl 2.2.1 should be construed on the basis that the purpose of the deed was to provide such an indemnity. By that means, it submitted that cl 2.2.1 of the deed only had operation post-settlement when any loss suffered by the respondent as a result of any breach by the applicant of the term could be assessed. As we have said, the difficulty with this argument is: first, the deed (and in particular its operative provisions) do not provide for any such indemnity; secondly, there is nothing in the deed that suggests that cl 2.2.1 should be limited to the period after settlement; and thirdly, the more obvious and likely construction is that cl 2.2.1 is the means by which the prohibition upon the applicant borrowing at rates greater than those specified in the deed could be prevented by the respondent.

1. We have already dealt in part with the proper construction of cl 2.2.1. What remains is to give meaning to the words 'provide proof' in the second sentence of the clause which provides that the applicant 'will provide proof the mortgage(s) do not exceed [5% per annum as an acceptable rate and ... 6.5% per annum as a higher rate in the event of default]'. The meaning of these words must be understood in the context of the commercial purpose identified above.
2. The applicant sought to distinguish between a case where a party was required to prove a matter, and a case where that party was required to provide proof of that matter. It observed that cl 2.2.1 did not require it to prove that the interest rates did not exceed those set out in the clause, but merely to provide some proof that the interest rates were no more than those specified.
3. The words in cl 2.2.1 are ordinary English words which should be given their natural and ordinary meaning. In our view, little is to be gained from contrasting the words used with different words which could have been (but were not) used. The obligation to provide proof contained in cl 2.2.1 involved no more and no less than the applicant providing the respondent with material which a reasonable party in the position of the respondent would accept as being proof that the interest rates on any mortgage taken out by the applicant did not exceed the rates set out in the clause. In the circumstances where mortgages had actually been entered into by the acceptance of letters of offer, provision of proof within the meaning of cl 2.2.1 involved, at a minimum, the provision of complete copies of the executed letters of offer.
4. Contrary to the applicant's submissions, we do not accept that the applicant's obligation to provide proof in the circumstances we have described could be met by the provision of incomplete or edited copies of the letters of offer: the provision of such copies left open the possibility that, upon the proper construction of the whole of the document, some particular statement or assertion in the part provided may take on a different meaning or be affected in some other way.

1. It follows from what we have said above that, in providing incomplete copies of the letters of offer, the applicant breached cl 2.2.1. The respondent's requests to be provided with complete copies of the letters of offer were reasonable. The applicant's refusal to provide complete executed copies deprived the material which it did provide of the necessary quality of proof that the interest rates on the mortgages taken out by the applicant did not exceed those specified in cl 2.2.1.
2. As the judge observed, no explanation was given for the decision to provide only the first two pages of the letters of offer to the respondent.[28] His Honour inferred that the decision to provide only the first two pages was a conscious decision by or on behalf of the applicant to withhold the fact that the applicant had agreed to pay fees totalling $125,000.[29] One might equally infer that the desire to withhold this information might have been motivated by a concern that disclosure of the full extent of the fees referred to in the letters of offer might have resulted in a dispute as to whether the terms of the applicant's mortgages complied with cl 2.2.1 of the deed. However, it is not necessary for us to go so far, or to draw either of these inferences. It is sufficient for us to say that we see no error in the judge's conclusion that the applicant failed to provide the proof required by cl 2.2.1 and thereby was in breach of its provisions.

Issue 4: Did the applicant breach the contract of sale by failing to pay $100,000 into its own solicitor's trust account?

1. The contract of sale required the applicant to pay the sum of $100,000 into its own solicitor's trust account on the signing of the contract of sale (6 December 2019). However, no such amount was paid at that time. As we have already noted, on 18 December 2019 the mortgage relating to Rothman Consulting's loan of $500,000 was executed. A trust account receipt produced by the applicant's solicitors shows that on 19 December 2019 the sum of $500,000 was received by those solicitors from Rothman Consulting. The trust account receipt shows Rothman Consulting to be the client, and states that the monies were received for the purpose of being advanced to the applicant. As we understood it, the applicant submits that the receipt of these monies by its solicitors (on behalf of Rothman Consulting as a client of the solicitors in its own right) satisfied the applicant's obligation to pay the sum of $100,000 as required by the contract of sale.
2. This submission must be rejected. There is no basis upon which moneys paid by Rothman Consulting to its solicitors to be held on Rothman Consulting's behalf can be considered to contain monies required to be paid by the applicant (and presumably held on behalf the applicant) 13 days earlier. Plainly, in not paying the sum of $100,000 at any time prior to the proposed settlement of the contract of sale, the applicant breached the contract of sale.

Issue 5: Did the applicant repudiate the agreement?

1. In Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd,[30] the plurality[31] discussed the different senses in which the term 'repudiation' is used. Their Honours said:

First, it may refer to conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party's obligations. It may be termed renunciation. The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it.[32]

1. Their Honours then dealt with the question of whether a term in a contract is an essential one.[33] In the course of this discussion, their Honours set out a passage from the well-known exposition of Jordan CJ in Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd,[34] as follows:

The question whether a term in a contract is a condition or a warranty, ie, an essential or a non-essential promise, depends upon the intention of the parties as appearing in or from the contract. The test of essentiality is whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or a substantial performance of the promise, as the case may be, and that this ought to have been apparent to the promisor. If the innocent party would not have entered into the contract unless assured of a strict and literal performance of the promise, he may in general treat himself as discharged upon any breach of the promise, however slight. If he contracted in reliance upon a substantial performance of the promise, any substantial breach will ordinarily justify a discharge.[35]

1. The contract of sale provided for the deferred payment to be secured by a mortgage over the property. In this context, the applicant's ability to make the deferred payment was of fundamental importance to the respondent and was, objectively, the primary purpose of the deed. In furtherance of that purpose, cl 1.3 of the deed required that the prior ranking mortgage or mortgages not exceed $2.5 million, and cl 2.2.1 required proof that the interest rates under the prior mortgage(s) not exceed those specified. Viewed objectively, both of these obligations in the deed were essential promises by the applicant. Thus, cl 2.2.1 was an essential term of the agreement between the parties. In our view, the applicant's continued refusal to provide proof that the interest rates in the mortgages taken out by it did not exceed those specified in cl 2.2.1 of the deed amounted to a repudiation of the agreement between it and the respondent. By its refusal to provide the complete letters of offer to the respondent, the applicant conveyed to a reasonable person in the position of the respondent renunciation of the essential, or fundamental, obligation imposed by cl 2.2.1 of the deed.[36]
2. While it is not necessary for us to determine whether the failure by the applicant to pay the $100,000 in accordance with the contract of sale amounted to a repudiation on its own, or in combination with the applicant's failure to comply with cl 2.2.1 of the deed, we would simply observe that the failure to pay this sum makes the conclusion that the applicant repudiated the agreement between the parties all the stronger.[37]

Issue 6: Acceptance of the repudiation and termination

1. At 11:42 am on Monday 23 December 2019, the solicitor for the respondent sent an email which noted (for at least the third time) the applicant's failures to provide proof that the interest rates on mortgages taken out by the applicant did not exceed the rates specified in cl 2.2.1. Having noted the applicant's 'failures', the email concluded:

As a result of these failures, our client will not be proceeding with the sale.

1. Plainly, by this email, the respondent accepted the applicant's repudiation of the agreement between the parties. During the course of the hearing in this Court, the applicant accepted that this was the case.

Issue 7: Was cl 2.2.1 of the deed an essential term of the agreement?

1. For the reasons we have already given, cl 2.2.1 of the deed was an essential term of the agreement. Having regard to our conclusions on the issue of repudiation by the applicant and the acceptance of it by the respondent, it is not necessary for us to say anything further about this issue.

Issue 8: Was notice required by general condition 27?

1. Similarly, having regard to our conclusion that the agreement between the parties was terminated by the respondent's acceptance of the applicant's repudiation of it, it is not necessary for us to express a view about whether, in the event that there was no repudiation, in order to terminate the agreement for a breach of cl 2.2.1 the applicant was required to give a termination notice under general condition 27. For completeness, however, we will express our conclusion on this issue briefly.
2. The respondent contended that general condition 27 of the contract of sale had no application to cl 2.2.1 of the deed. It submitted that general condition 27 only had application in respect of breaches of the terms of the contract of sale. It pointed to the notice provision in the deed (cl 9) as being the provision governing any necessary notice required under the deed.
3. The respondent's submissions must be rejected. Clause 9 of the deed merely provided ways by which any notice otherwise necessary under the deed might be given by a party to the deed. Consistently with our conclusion that the deed and contract of sale constituted the one agreement between the parties, general condition 27 operated not only with respect to breaches of the contract of sale, but also with respect to breaches of the deed by the applicant and/or the respondent. But for the applicant's repudiation of the agreement and the acceptance of that repudiation by the respondent, the respondent would have been required to give a notice under general condition 27 before it could terminate the agreement for the breach of cl 2.2.1.

Issue 9: Is the respondent entitled to be paid the $100,000?

1. The respondent submitted that the $100,000 amount referred to in the contract of sale was a deposit in the ordinary sense,[38] which fell to be forfeited (paid) to the respondent upon the termination of the agreement brought about by the applicant's repudiation of it. The respondent claimed to be entitled to the deposit both in accordance with ordinary principles of contract law, and also by the terms of s 26(1)(a) of the Sale of Land Act 1962, which relevantly provides:

[W]here in a transaction for the sale of land -

(a) the vendor rescinds the contract as the result of a default by the purchaser, the vendor shall be immediately entitled to be paid the deposit monies in his own right;

The term 'deposit monies' is relevantly defined in s 23 of the Act to include:

... any monies which are part of the purchase price received by the vendor or on behalf of the vendor before the purchaser becomes entitled to a transfer or conveyance of the land ...

1. In order to determine whether or not the respondent is entitled to receive the $100,000 sum referred to in the contract of sale, it is necessary to look at the character of the payment the applicant was required to make and the terms of its obligation to make it.[39] While the label the parties might give to a particular payment may have some relevance, the mere name ascribed to the payment cannot be determinative.[40] The question in the present case is whether the $100,000 payment was in truth a deposit which had the 'character of earnest money' to be paid to secure the purchaser's performance of the contract of sale,[41] or deposit monies within the meaning of ss 23 and 26 of the Sale of Land Act.
2. General conditions 11 and 28.4 suggest that the amount referred to as the 'deposit' in the particulars of sale is a deposit in the sense ordinarily understood. The particulars of sale, however, provide that this 'deposit' is to be paid to the trust account of the purchaser's solicitors and 'held until settlement of the sale' when it is to be paid to the vendor's solicitors. Nothing in the contract of sale requires the amount to be held on trust by the applicant's solicitors for any party other than their own client - the applicant/purchaser. Indeed, on their face, the term in the particulars of sale dealing with the payment of the sum of $100,000 would have permitted (if not required) the applicant's solicitors to repay any amount (including the $100,000) to the applicant at any time prior to settlement upon being instructed by the applicant to do so.
3. While it might be thought that there is a tension between the provisions in the particulars of sale and the general conditions regarding the so-called deposit, it is to be remembered that, by its terms, the contract of sale provides that the particulars of sale have priority over the general conditions of the contract of sale. Giving priority to the particulars of sale in the contract of sale, the payment of $100,000 referred to as a deposit was not an earnest for the purchaser's performance and did not provide any form of security to the vendor (respondent) for the applicant's performance of the contract of sale. It was not payable to the respondent or on its behalf until settlement. Viewed objectively, it was in the nature of a demonstration by the applicant that it was in fact 'providing' $100,000 of the purchase price from moneys other than the permitted mortgage loan proceeds, as acknowledged in cl 2.1.1 of the deed. It follows that the judge did not err in concluding that the $100,000 payment provided for in the particulars of sale was not intended as an earnest in the sense discussed. This result is consistent with the reasoning in Iannello,[42] and Blanco v Wan,[43] where part payments of the 'deposit' which were not payable until settlement were held not to be intended as an earnest for performance of the contract of sale.
4. Similarly, the $100,000 did not constitute deposit monies within the meaning of s 23 of the Sale of Land Act. The $100,000 was neither received by, nor on behalf of, the respondent/vendor. While the definition of deposit monies in s 23 is an inclusive one, a particular payment must have the characteristics of a deposit in the sense we have described before the payment can be held to be deposit monies within the meaning of the section. The use of the word 'includes' in the definition does not give a payment which would not ordinarily be regarded as a deposit the characteristic of being deposit monies.

1. The issues raised by both the application for leave to appeal and cross-application for leave to appeal are sufficiently arguable to justify leave to appeal and leave to cross-appeal being granted. However, in light of our conclusion that the deed and contract of sale were validly terminated by the respondent's acceptance of the applicant's repudiation of the agreement between the parties, the applicant's appeal must be dismissed. Similarly, in light of our conclusion that the $100,000 required to be paid under the contract of sale was not a deposit or deposit monies within the meaning of the Sale of Land Act, the cross-appeal must also be dismissed.

[2] Castaway Avenue Pty Ltd v CSC1957 Investments Pty Ltd [2022] VSC 547 ('Reasons').

[5] Mr Gulabovski executed the deed in his personal capacity, as well as in his capacity as a director of the applicant and in two other capacities which it is not necessary to describe in these reasons. Mr Karas's wife executed the deed in two capacities which are also not necessary to identify in these reasons.

[7] As the judge observed at Reasons [6] the words 'the value of' should be read as 'the [purchaser's] equity in'.

[23] [2015] HCA 37; (2015) 256 CLR 104 ('Mount Bruce Mining').

[24] Ibid, 116 [46]-[47] (citations omitted). See also 116-7 [48]-[51].

[26] [2000] FCA 187; (2000) 278 ALR 429 ('McVeigh').

[27] McVeigh 438 [30] emphasis added; see also [68] - [69] (Kenny J). This approach applies even where one of the two documents has added parties, as here, a matter not referred to in argument. See [31]-[32] per Finkelstein J.

[29] In fact the total amount of the fees not disclosed to the respondent was a little over $150,000.

[30] [2007] HCA 61; (2007) 233 CLR 115 ('Koompahtoo').

[31] Gleeson CJ, Gummow, Heydon and Crennan JJ.

[32] Koompahtoo [2007] HCA 61; (2007) 233 CLR 115, 135 [44]. Emphasis added.

[35] Koompahtoo [2007] HCA 61; (2007) 233 CLR 115, 136-7 [47].

[37] See Carr v JA Berriman Pty Ltd [1953] HCA 31; (1953) 89 CLR 327, 351.

[38] As Lord Macnaghten said in Soper v Arnold [1889] UKLawRpAC 35; (1889) 14 AC 429, 435:

[39] Iannello v Sharpe [2007] NSWCA 61; (2007) 69 NSWLR 452, 461 [31] (Hodgson JA, with whom Santow and Basten JJA agreed) ('Iannello').

[41] See Luu v Sovereign Developments Pty Ltd [2006] NSWCA 40, [24] (Bryson JA, with whom Handley and McColl JJA agreed). See also Commissioner of Taxation v Reliance Carpet Co Pty Ltd [2008] HCA 22; (2008) 236 CLR 342, 351 [25]-[26]; and Iannello [2007] NSWCA 61; (2007) 69 NSWLR 452, 461 [31].

[42] Iannello [2007] NSWCA 61; (2007) 69 NSWLR 452, 461 [32].

[43] [2021] NSWSC 273, [65]-[78].