DGF Property Holdings Pty Limited v Di Federico

The Remaining Questions

1. DGF asserts that, during the period of 22 months from 3 July 2015 until 16 May 2017, the proposed subdivision of the Land was delayed by the breaches on the part of the Di Federicos and that, as a consequence, during that period it incurred holding charges in relation to the Land that it would not have incurred, consisting of:

• rates payable to the Council,
• land tax payable to the Office of State Revenue,
• water rates payable to Sydney Water. DGF also claims that, in addition, it incurred interest charges during that period on monies borrowed by it to carry out the works involved in the subdivision of the Land, as well as for the holding charges. DGF claims interest on the amounts alleged to have been borrowed at the rate of 8% per annum. Finally, DGF claims, as damages, the costs that it has been ordered to pay to the purchasers of the lots in the subdivision.

1. Under the terms of the original contracts for sale, DGF was entitled to rescind them if the proposed plan of subdivision had not been registered by specified dates. The Court permitted the contracts to be rescinded, but only on terms that DGF offer to sell the respective lots to the purchasers for increased prices payable by them. The increases in the prices were the result of delay in completion of the contracts for sale. However, no contention has been advanced on behalf of the Di Federicos that DGF should make an allowance, in the calculation of its alleged loss, for any such increases. That is to say, it has not been suggested that any allowance should be made in respect of any increase in the purchase prices payable to DGF or any other benefit flowing from the rescission of the contracts for sale.
2. It has emerged from the written submissions and oral argument advanced on behalf of DGF and the Di Federicos that there are four questions raised by the Di Federicos in response to the assessment of damages advanced on behalf of DGF. While there was some question as to whether it was too late for the Di Federicos to raise the questions, DGF accepted that the terms upon which it was granted the indulgence of reopening included that the Di Federicos would be entitled to raise the questions to which I shall now refer.
3. The first question raised by the Di Federicos is concerned with the claim by DGF that it borrowed the funds necessary for the carrying out of the subdivision of the Land from "investors" and incurred a liability to the "investors" to pay interest on the funds borrowed at the rate of 8% per annum. The Di Federicos do not accept DGF's claim that there was an agreement whereby "investors" would be paid interest on funds advanced by them. Further, the Di Federicos say, to the extent that any such agreement was made before DGF was incorporated, the agreement was not ratified by DGF. The evidence as to the arrangements is not entirely satisfactory.
4. The second and third questions concern the extent to which the breaches by the Di Federicos made any difference to the timing of the completion of the subdivision of the Land. The Di Federicos contend that, for two reasons, their breaches made no difference.
5. The second question is whether, even if the Di Federicos had not acted in breach of the 2013 Deed and the 2015 Agreement, by the unauthorised deposit of landfill on their land, DGF would not have been in a position to complete the proposed subdivision until it had obtained the consent of Mr Paul Scarfone and Mrs Maria Scarfone (together the Scarfones), who owned part of the Land. That consent was not obtained until 18 December 2018 pursuant to a deed entered into on that day between the Scarfones and DGF (the Approval Deed). Mr Frank Gelonesi was also a party to the Approval Deed as a guarantor of the obligations of DGF. The evidence as to the making of the Approval Deed is somewhat unsatisfactory. I shall return to the Approval Deed below.
6. The third question is whether DGF's lack of finance, up to and including the time of the earlier hearing, had the consequence that DGF was unable to complete all of the final development works required by the Council for the purposes of the subdivision of the Land. That contention was based on a concession made in cross-examination of a witness called by DGF. DGF responds that the case was not conducted on the basis that the Di Federicos caused DGF's impecuniously or that, in the absence of the impugned conduct of the Di Federicos, DGF would not have been able to complete the development works any earlier than it did.
7. The fourth question is concerned with whether certain holding charges claimed by DGF were in fact incurred by DGF in relation to the subdivision of the Land. Again, DGF's records as to those matters leave a lot to be desired.

Agreement to pay Interest

1. In its statement of claim filed in the Specific Performance Proceedings on 14 October 2016, DGF claimed an order that the Di Federicos pay damages for breach of the 2013 Deed, including holding charges in relation to lots within the proposed sub-division, such holding charges including "interest charges". The statement of claim alleged that, as a result of breaches by the Di Federicos, DGF suffered loss and damage "including increased interest and other holding expenses" in relation to the Land. In its points of claim filed in the Rescission Proceedings on 17 October 2016, DGF alleged that it had liabilities including "approximately $100,000 for land tax, legal fees and development costs" and was liable for "accrued interest on loans" of approximately $1.2 million. While there are such references to interest in the pleadings, it is significant that there is no reference in the pleadings to any agreement made by DGF with any person to pay interest on any loans or to the rate of 8% per annum.
2. The alleged obligation of DGF to pay interest on the funds provided by "investors" was not recorded in any contemporaneous record of DGF and there was no evidence that any documentary record of a right to receive interest at the rate of 8% was ever created by any of the "investors". For that reason, I observed in the Original Reasons that it was by no means clear that DGF has any liability to pay interest to "investors" who had provided funds for the proposed development. [5]
3. The capital of DGF consists of four shares. The shareholders of DGF were entities associated with Mr Sylvano Frassetto, Mr Frank Gelonesi and Mr Graziano De Bortoli, as to one share each, and Mr Peter Remaili and Mr Michael Remaili, jointly as to the fourth share. Mr Frassetto and Mr Michael Remaili have since died. It is convenient to refer to the four principals as the proposed joint venturers. In doing so, I do not intend to suggest any formal arrangement or agreement among those individuals.
4. Mr Frassetto, who gave evidence at the hearing that resulted in the Original Reasons, was, at relevant times, a director of DGF. Mr Frassetto said nothing about any liability to pay interest on loans made by "investors". While Mr Frassetto referred expressly to "the investor loans", he gave no evidence of there being any agreement to pay interest to "investors" at the rate of 8% per annum or any other rate.
5. In his affidavit of 24 November 2017, Mr De Bortoli said that DGF had operated solely on funds that had been borrowed from 11 "investors", who had debts outstanding to them in relation to their loans. He set out in his affidavit a list of the persons who were said to be "the investors in DGF" (the List), together with the amount said to have been advanced to DGF by each of them. The List showed total indebtedness of $9,664,201. Mr De Bortoli confirmed that DGF does not have any written loan agreement with any of the persons or entities set out in the List.
6. Mr De Bortoli also attached to his affidavit a document (the Summary) that he described as "a GDC Tax summary in respect of loans made to [DGF], from the records of [DGF]". The Summary is headed as follows: Client: [DGF] Balance Date: 2004-2017 Subject: Loan Reconciliation Summary The Summary shows dates on which advances were said to have been made to DGF by each "investor" set out in the List. Significantly, no reference is made in the Summary to interest or any liability for interest.
7. The first entry in the Summary is as follows: "Gelonesi De Bortoli & Remaili $2,368,700.45 13/01/2003 $2,357,759.33 Purchase of property - Delaware Rd" "Gelonesi, De Bortoli & Remaili" are shown in the Summary as having a balance of $2,368,700.45 as at 30 June 2016. That entry suggests that three of the four principals of DGF advanced the purchase price for the Land but Mr Frassetto did not. That is explained by the evidence referred to below that Mr Frassetto was not able to provide his share. The earliest date for other entries in the summary was "10/04/2003" for the sum of "$6,050" in the name of Pollako Pty Limited (Pollako), a company owned by Mr Frassetto, for "Benbow Enviro Invest Aust PL". The next entry for Pollako was $110,000 on "23/06/2004", followed by nine more entries of various amounts. Pollako is shown as having a balance of $228,201.29 as at 30 June 2017 representing the total sum of those eleven entries.
8. The only other entries during 2003 were for the sum of $405,250 on 25/06/2003 and $70,204 on 26/06/2003 in the name of Totu Pty Limited, a company associated with Mr Gelonesi, and a sum of $507,000 on 7/05/2003 in the name of "G De Bortoli". The total amount of loans shown in the summary, including that from "Gelonesi, De Bortoli & Remaili", is $9,664,402.12. When that contribution is excluded, the total amount is $7,295,700.88. Most of the other "investors" are shown in the summary as having made advances in substantial amounts for the first time in 2012 and subsequently.
9. The Summary may suggest that the original intention was that the proposed joint venturers would fund the development. Accordingly, the terms on which the proposed joint venturers were to contribute to the development would not necessarily be the same as the terms upon which outside "investors" would provide funds. Thus, the proposed joint venturers would, through their associated entities, derive a return on their investment from the profit generated by the development while those who made advances would have no interest in the outcome, other than as lenders, and would be expected to receive interest on the amounts advanced.
10. A complication with that thesis, of course, is that the proposed joint venturers appear to have made further contributions through various associated entities, in so far as several of the "investors" are associated with the proposed joint venturers. It may be that those further contributions would be entitled to bear interest. On that basis, for Mr Frassetto to be entitled to share in the profit of the project, it would be necessary for him to compensate the other proposed joint venturers for the shortfall in his original contribution.
11. There was no formal agreement as such between any of the "investors" and DGF. Rather, there was alleged to have been an oral agreement made between, on the one hand, Mr De Bortoli, and, on the other hand, each of the other "investors". In effect, DGF contends that those agreements were made on its behalf by Mr De Bortoli.
12. While in his earlier affidavits Mr Gelonesi referred in some detail to the loans by "investors", he did not refer to any agreement to pay interest at the rate of 8% per annum. It was only in his third affidavit, of 2 September 2019, that Mr Gelonesi first asserted that there was an agreement concerning interest. Mr Peter Remaili has also now given evidence regarding an arrangement as to interest. I shall outline separately the evidence given by each witness as to the alleged arrangements to pay interest. However, before doing so, it is necessary to say something about the date of registration of DGF, about which disputation arose during the course of written submissions.
13. The Di Federicos made submissions both orally and in writing concerning the alleged arrangements between the proposed joint venturers that were said to have been made before registration of DGF. As will appear, evidence was given by several of the DGF witnesses that a meeting of the proposed joint venturers took place in around 2003, at which discussions took place concerning their proposed contributions. Each said that the meeting took place before DGF was incorporated. All of the evidence given by those associated with DGF asserted that the first meeting of the proposed joint venturers occurred before the registration of DGF although each of them said that it was in around 2003. However, DGF was in fact registered on 17 September 2002, as evidenced by a document issued by the Australian Securities and Investments Commission (ASIC).
14. After I had reserved, I drew the attention of the parties to the fact that DGF was in fact registered on 17 September 2002 and invited the parties to make any further submissions that they wished in the light of that fact. That prompted a detailed submission from the Di Federicos to the effect that it was clear that the witnesses who dealt with the matter recalled that the meeting concerning the payment of interest on loans was prior to the registration of DGF. They contended that the references to 2003 as the date of the first meeting of the proposed joint venturers must have been mistaken and that the meeting probably took place about mid-2002, before the registration of DGF. I shall summarise the evidence in question.
15. In his affidavit 30 August 2017, Mr Gelonesi said that the genesis of DGF was when Mr Frassetto located a parcel of real estate in which he wanted the proposed joint venturers to invest. Mr Frassetto first approached Mr De Bortoli to find out if he may be interested in joining the investment and Mr De Bortoli then approached Mr Gelonesi as well as Michael Remaili. Mr Gelonesi said that Mr De Bortoli explained that Mr Frassetto needed extra funds to proceed with the investment and asked if the four together would be interested in becoming involved. Mr Gelonesi said that they all agreed and accordingly DGF was registered to purchase the real estate and then proceed with the subdivision development that has given rise to these proceedings. Mr Gelonesi said in that affidavit that DGF had no money of its own and that all of its capital had come from loans from shareholders and other investors, who included small business clients of Mr Gelonesi's accountancy practice who had surplus cash and lodged the surplus cash with his accountancy practice for investment.
16. In his affidavit of 2 September 2019, Mr Gelonesi said that, to the best of his recollection, there was a meeting "in around 2003" at the old offices of his accountancy practice at which Mr Frassetto, Peter Remaili, Michael Remaili Mr De Bortoli and he were present. He said that they met to discuss the development that DGF ultimately undertook and that they discussed "that a new company would be incorporated for this project".
17. In his cross-examination on 12 August 2019, Mr Gelonesi was asked questions about his affidavit, in which he described his initial involvement in the development of the Land. He was asked whether he or Mr De Bortoli said: "As long as it's adjusted, we are happy to carry it. He responded: "On the basis that it was adjusted by the company paying interest to the investors, yes, that's correct." When asked whether the company did not exist at that stage, he responded: "Well, it was going to. That's a foregone conclusion." He then said it was irrelevant that the company did not exist at that stage, saying: "There is many, many businesses entered into where the companies are ratified after the business has been discussed and agreed to." When it was suggested to him that there never was any such ratification his response was: "Of course there was. The company was set up."
18. Mr Gelonesi then agreed that he knew what a shareholders' resolution ratifying earlier acts made by the company is. When it was suggested that there never had been a shareholders' resolution in respect of DGF, his response was: "We were an association of friends". He also said: "There was no formal resolution written down."
19. Mr Gelonesi also agreed that he has never seen anything in writing recording any agreement made by the shareholders of DGF. He also agreed that he had never been at a shareholders' meeting at which a resolution was passed in respect of 8% interest on loans. He agreed that the most he could recall was a meeting before DGF was incorporated, in which a group of people discussed, first, a shortfall by Mr Frassetto being covered by the others and, secondly, a discussion about 8% that was somehow going to equalise that shortfall. He agreed that that, to his knowledge, was the beginning and end of any agreement between the parties as to the payment of interest in respect of monies borrowed by DGF.
20. In his affidavit of 2 September 2019, Peter Remaili said that he recalled that, during 2003, he was present at a meeting at the Fairfield offices of Mr De Bortoli's firm with his brother Michael Remaili, together with Mr De Bortoli, Mr Gelonesi and Mr Frassetto. Mr Remaili said that the meeting was to discuss the development to be undertaken on the Land, in Delaware Road, Horsley Park. He said that the discussion was that the development was to be undertaken under a company name and all of those present were to receive shares "in this new company".
21. Mr De Bortoli, in his affidavit of 24 November 2017, said that he was responsible for the incorporation of DGF in his capacity as an accountant and that DGF was incorporated for the purpose of undertaking property development. He said that the development that is the subject of these proceedings was the first development undertaken by DGF. In his affidavit, Mr De Bortoli said that at the commencement of the operations of DGF in approximately 2003, when it had an initial need for funds, he attended a meeting with Mr Frassetto, Mr Gelonesi, Peter Remaili and Michael Remaili at his then offices in Fairfield. In his affidavit of 2 September 2019, Mr De Bortoli referred to documents from the business records of DGF, saying that, although DGF had not been incorporated at the time, the documents showed how the amounts contributed for the purchase of the Land were accounted for after DGF was incorporated.
22. In the course of cross-examination on 24 November 2017, Mr De Bortoli was asked whether it was his evidence that what occurred at the meeting that he described in his affidavit was not recorded in any minutes of meeting. His response was: "No, because in 2003, the company wasn't even established, so we got together, we decided to buy property and the company wasn't established at that point of time, so, Mr Syl Frassetto brought this opportunity to us and we got together and we had a meeting." In answer to a question about not mentioning in his affidavit that DGF had not yet been incorporated, Mr De Bortoli replied: "Well I'm sorry, you know I was talking about - it's always in relation to the DGF. So, when we had that meeting we hadn't purchased the property at that time, we haven't even exchanged contracts and the company wasn't established." Later in his cross-examination, Mr De Bortoli was asked about the Remailis and said they were at the initial meeting. When asked whether that meeting was a shareholders' meeting of the Company, his response was: "The company wasn't formed at that time, yes." In cross-examination on 12 August 2019, Mr De Bortoli agreed that he kept no documentary record at all of any agreement to pay 8% on the investment loans. He also agreed that his evidence was that the agreement occurred at a time when DGF had not been incorporated.
23. The contract for the purchase of the Land by DGF was entered into on 2 December 2002, when a deposit in the sum of $262,500 was paid by DGF. Completion took place on 15 January 2003. I have referred above to the first entry in the Summary, which is dated 13 January 2003, recording a credit to "Gelonesi, De Bortoli & Remaili" in the sum of $2,357,759.33. It beggars belief that DGF would have committed to buying the land before arrangements were in place with the proposed joint venturers for the contribution of funds to enable it to complete the purchase. It is clear that the first meeting of the proposed joint venturers occurred sometime during 2002 and prior to the registration of DGF in September 2002. The evidence summarised above would otherwise be nonsensical.
24. In the light of that evidence, it is clear that the witnesses called on behalf of DGF were mistaken as to the time of the first meeting of the proposed joint venturers. That is easily understood in circumstances where any such meeting occurred some 14 or 15 years before the evidence was given. Clearly, the evidence by the witnesses, that a meeting occurred in 2003 before the registration or incorporation of DGF, was wrong in one respect or another. It is much more likely that the mistaken recollection was as to the date of the meeting rather than the order of events, namely, whether the meeting was before or after the registration of DGF.
25. In written submissions filed on behalf of DGF following the Court's invitation referred to above, complaint is made that the question of the date of the first meeting of the proposed joint venturers was an issue that was not pleaded by the Di Federicos. DGF said that the question of when any agreement concerning the rate of interest was made was not an issue foreshadowed in opening submissions and the question about which precise evidence was not adduced because it was not known to be an issue. That complaint on the part of DGF is without foundation. It must be remembered that this question has arisen in the context of the grant of an indulgence to DGF to reopen by reason of a misunderstanding as to whether or not the original hearing was to cover all issues, including assessment of damages.
26. Mr De Bortoli first volunteered during cross-examination the fact that DGF had not been incorporated when the alleged agreement involving payment of interest at the rate of 8% was said to have been made. As summarised above, that was confirmed by other affidavit and oral evidence from witnesses called on behalf of DGF.
27. On 22 November 2019, the Di Federicos submitted that, given the evidence that the agreement about the payment of interest had been made prior to the incorporation of DGF and given that there was no evidence of ratification of that agreement, DGF's claim for damages arising from the alleged agreement must fail. On the same day, DGF requested further time to make submissions concerning ratification and that request was granted.
28. On 29 November 2019, additional submissions on ratification of the alleged agreement concerning interest were filed on behalf of DGF. In those submissions, DGF did not challenge the evidence of its own witnesses that the agreement was made before incorporation of DGF. Rather, the submission argued in favour of express and implied ratification of the alleged agreement.
29. On 4 December 2019, submissions in response on the question of ratification were filed on behalf of the Di Federicos. Those submissions also assumed the correctness of the evidence of DGF's witnesses that the alleged agreement was made before DGF was incorporated.
30. On 9 April 2020, the Court drew the parties' attention to the records of ASIC that suggested that the registration of DGF occurred on 17 September 2002. That prompted the submissions on behalf of the Di Federicos on 15 April 2020 setting out in detail the evidence of the witnesses called by DGF confirming that the agreement concerning interest was alleged to have taken place prior to the incorporation of DGF. That evidence was quite unequivocal and the references to the first meeting of the proposed joint venturers being "about 2003" was much more likely to have been an error.

Mr Frassetto

1. In his affidavit of 9 February 2017, Mr Frassetto referred to balance sheets and profit and loss statements as well as taxation returns of DGF for the years ended 30 June 2015 and 30 June 2016. However, those records do not advance the matter any further. The balance sheet of DGF as at 30 June 2016 showed current liabilities for "trade and other payables" of $43,263.06 and non-current liabilities for "bank and other loans" of $10,420,061.57. There is no indication that any part of those liabilities was for interest. The profit and loss statement for the year ended 30 June 2016 showed income from interest received of $1,737.11 and expenses for interest paid of $719,622.82. No detail is shown in the records as to the recipients of the interest paid. There is no reference to any agreement to pay interest on borrowings from "investors" at the rate of 8% per annum or any other rate.
2. In his affidavit of 10 March 2017, Mr Frassetto asserted that DGF had expended in the vicinity of $9,269,000 on the development of the Land and that that sum included the purchase price of parcels of land and legal costs in funding proceedings. The affidavit referred to copies of accounting records of DGF. While Mr Frassetto refers to DGF funding the costs by borrowing funds from private investors, there is no mention of interest in the affidavit, or in any of the accounting records.

Mr Gelonesi

1. In his affidavit of 2 September 2019, Mr Gelonesi said that, in around 2003, he attended a meeting with Messrs Frassetto, De Bortoli and Peter and Michael Remaili, at which they discussed that a new company would be incorporated for the proposed development at Delaware Road, Horsley Park and the funding of the development. He said they also discussed the situation that Mr Frassetto would not be able to match the contributions to be made by him and by Mr De Bortoli and by Peter and Michael Remaili because Mr Frassetto was not in a financial position to contribute an equal share. Mr Gelonesi said that they discussed that "requiring that interest be paid would be a reasonable way of adjusting" for Mr Frassetto's shortfall. Mr Gelonesi said that Mr De Bortoli said words to the following effect: "You know that [Mr Frassetto] is not able to put money in to the same extent that we are so I think interest is a fair way of balancing these unequal contributions." Mr Gelonesi said that they all agreed that that was a fair way of dealing with "the uneven loans" to the proposed new company and that Mr De Bortoli then said words to the following effect: "We need to fund the development so the partners should be entitled to interest on the investment which I think should be based on comparable rates and maybe a little bit higher because the loans will be unsecured loans. How about 8%?" Mr Gelonesi said that the others agreed.
2. In cross-examination during the hearing on 21 November 2019, Mr Gelonesi agreed that there was a discussion at the meeting to the effect that Mr Frassetto did not have as much money as the rest of them. He said that they did not discuss that Mr Frassetto would pay interest on any shortfall. Mr Gelonesi rejected the proposition that Mr Frassetto said that it would be fair enough if he had to pay interest because his share was being paid by others. Mr Gelonesi said that that would have implied that the others were lending Mr Frassetto money to put in to the project and that that was never discussed. He said that he or Mr De Bortoli said that it would "be adjusted" by the proposed company paying interest to "the investors".
3. Mr Gelonesi agreed in the course of that cross-examination that he had never been at a shareholders meeting of DGF at which a resolution had been passed in respect of 8% interest on loans. When asked whether he had ever been present when a resolution had been passed in respect of ratification of any agreement for DGF to pay 8% interest on loans, his response was "no, purely informal". He agreed that the most that he could recall was "the meeting in 2003", at which those present discussed a shortfall on the part of Mr Frassetto being covered by the others and discussed about interest of 8% that was somehow going to equalise that shortfall. Mr Gelonesi agreed that, to his knowledge, that was "the beginning and the end" of any agreement between the parties as to the payment of interest in respect of monies borrowed by DGF.

Mr Remaili

1. In his affidavit of 2 September 2019, Mr Peter Remaili said that, during 2003, he attended a meeting at which the others present were Mr Remaili's brother, Michael, who died in January 2007, Mr De Bortoli, Mr Gelonesi and Mr Frassetto. Mr Peter Remaili said that the purpose of the meeting was to discuss the development to be undertaken on the Land under a company name in which all present were to receive shares.
2. Mr Remaili said in his affidavit that, during the meeting, those present discussed how the development was to be funded and the way in which they would need to deal with the fact that Mr Frassetto's contribution to the development would be less than the others. Mr Remaili said that that issue was raised by Mr De Bortoli and that that was another reason why interest and the rate of interest was discussed. He said that Mr Frassetto was not in a position to contribute funds in the same proportion as the others and they all realised that they would need to carry a component of his contribution throughout the development. He said that Mr De Bortoli said that Mr Frassetto would not be able to put in as much money as the rest of them so they would need to "carry him" and the way to deal with that was "for interest to be paid".
3. Mr Remaili said that Mr Frassetto said: "What can do if I cannot put in any money. If I have to pay interest because my share is being paid by others and if it is adjusted accordingly then that is fair enough." Mr Remaili said that either Mr De Bortoli or Mr Frassetto said words to the following effect: "As long as it is adjusted, we are happy to carry it. How about the rest of you?" Mr Remaili said that he and his brother agreed that that was "fair". Mr Remaili said that either Mr De Bortoli or Mr Gelonesi said words to the following effect: "Because the company will need to borrow the money it should pay interest. I suggest that the interest should be 8% because that is slightly above market." Mr Remaili said that he and his brother and Mr Gelonesi agreed with that proposal and that Mr Frassetto said words to the following effect: "We have to do what we need to do and get the job done so the 8% is fair."
4. In cross-examination, Mr Remaili said that there was a discussion about the funds that had to be borrowed "to carry" Mr Frassetto. When asked how much they were going to have to borrow to carry Mr Frassetto, Mr Remaili responded "it was 8%", a totally unresponsive answer. When pressed, Mr Remaili said that he did not know at the time how much they needed to borrow. He then said that the amount that was going to be borrowed was not discussed. Mr Remaili said that there was discussion about the amount of interest needed to be incurred and said "the amount that was suggested was 8%". Mr Remaili said that Mr De Bortoli said: "It was put down that we needed to borrow funds, and at the time interest rates were between 7 to 8%, and we agreed to carry the amount, and it was put to the table at 8%, and everybody agreed."
5. When asked whether Mr Frassetto said that he had to pay interest of 8% on the shortfall of his share, Mr Remaili responded "of his share that was borrowed, yes". Mr Remaili was then asked whether the conversation was about the others putting in more than Mr Frassetto and Mr Frassetto agreeing to pay 8% on the shortfall on what he was putting in. Mr Remaili agreed that they were all going to share equally in the profits of the proposed development "as long as the interest was calculated". He was asked whether it was agreed at the meeting that anybody who put in less than the other shareholders were putting in had to pay interest on their shortfall. Mr Remaili responded that it was Mr Frassetto who "needed the shortfall". It is difficult to make sense of the evidence given by Mr Remaili.

Mr De Bortoli

1. In his affidavit of 24 November 2017, Mr De Bortoli said that, in approximately 2003, he attended a meeting with Mr Frassetto, Mr Gelonesi and Peter and Michael Remaili. He said that, at the meeting, he said words to the following effect: "We are all going to have to inject money into this company. I propose that the interest rate that this money be lent will be 8% per annum unless we agree to change the interest rate later on. Everyone agree?" He said that all present agreed to that proposal.
2. Mr De Bortoli also said in his affidavit of 24 November 2017 that, after the initial investment of money, as referred to in the meeting in 2003, he was involved in the negotiation of every other loan with the "investors" and had separate conversations with each of the principles of the "investors" other than those where he himself was the principal. He said that, during those occasions, it was his standard practice to say to each prospective "investor" words to the following effect: "Any funds which you advance would be used in the development that DGF is undertaking in Horsley Park. DGF will pay you interest at 8% per annum. The interest payments and the repayment of principal will not occur until the sales of the lots settle after the subdivision has been completed." He said that all of the "investors" said words to the effect that they agreed.
3. Mr De Bortoli said that, for various reasons, some "investors" later requested their money back. He asserted that, in those cases, the funds were repaid with interest. In his affidavit of 2 September 2019, Mr De Bortoli said that, during the meeting in 2003, he raised the fact that Mr Frassetto was not in the best financial position to be able to contribute equally to the development. He said words to the following effect: "[Mr Frassetto] is not going to be able to contribute to the development of Delaware Road in the same proportion as the rest of us. … Any loan funds should attract interest and I'm thinking of about 8% as it is an unsecured loan and I think that interest rates are about 7% of the moment. … Loan repayments and interest payments will not be paid until the project is finalised and settlement proceeds are realised." Mr De Bortoli said that those present agreed to his proposal.
4. In cross-examination, Mr De Bortoli disagreed with the proposition put to him that it was decided at the meeting that Mr Frassetto would have to pay 8% on the shortfall in his contributions compared to the other shareholders' contributions. Mr De Bortoli said "the 8% was about any monies advanced to the company in excess of other people's loans". When asked whether Mr De Bortoli accepted that the discussion as to a rate of 8% was about the interest that Mr Frassetto would incur on the difference between Mr Frassetto's loan account and the loan accounts of the other shareholders, Mr De Bortoli responded: "No, no; all the shareholders in the company, or their related entities, any inequalities in the loan would be - will be charged 8% interest." Mr De Bortoli agreed that at the meeting in 2002, Mr Frassetto said: "If I have to pay interest because my share is being paid by others and it is adjusted accordingly then that is fair enough … As long as it's adjusted we are happy to carry it. How about the rest of you?" Mr De Bortoli agreed that everybody accepted that that would be fair. However, he said that the way it was calculated was that "it comes out of the company, it's like getting a bank loan, you pay the interest back to the Bank". He asserted that that is what was said. He denied that the conversation was in respect of Mr Frassetto's shortfall compared with the others.
5. In his affidavit of 24 November 2017, Mr De Bortoli said that the financial accounts for DGF for the period ended 30 June 2016 were prepared by a staff member of his firm, that it was his practice to review accounts prepared by his staff members in relation to clients that he was managing and that DGF was one of the clients that he was managing at the time. Mr De Bortoli said that, in the week before swearing his affidavit, after reviewing the accounts more carefully, he had formed the view that the accounts were incorrect, as the non-current liabilities failed to set forth accurately the loan liability that should have been included as payable by DGF. He said that DGF operated on an accruals basis and that, in applying that methodology to DGF's accounting records, income and expenses were brought to account when they are accrued, whether or not revenue was actually received and whether or not expenses were actually paid. Mr De Bortoli said that, having reviewed the accounts of DGF for the years 2013 to 2017, he had formed the opinion that the accounts did not accurately reflect a true and fair view of DGF because of the incorrect figure for bank and other loans. Mr De Bortoli identified copies of accounts for the years 2013 to 2017 that had been prepared on 23 November 2017.

Conclusions as to Interest

1. The Di Federicos contend that the Court should not be satisfied that it is more likely than not that an agreement to pay interest at 8% was ever made. They rely on the following matters:

• Nothing about interest was ever reduced to writing, notwithstanding the obvious experience in commercial affairs possessed by Mr De Bortoli and Mr Gelonesi;
• There is no record of DGF recording such an agreement, by way of minutes or otherwise;
• Mr De Bortoli agreed that to his knowledge the shareholders of DGF have never resolved to pay interest on any loans;
• There was obvious confusion in the evidence of Mr De Bortoli, Mr Gelonesi and Mr Remaili as to exactly what was said about interest at the first meeting of proposed shareholders in DGF ;
• Mr Frassetto, the only director of DGF, gave no evidence as to any agreement as to interest, and gave no evidence as to what was said at the first meeting of the proposed joint venturers;
• There is obvious confusion and inconsistency in the evidence of Mr De Bortoli, Mr Gelonesi and Mr Remaili as to exactly what was said at the first meeting of the proposed joint venturers;
• None of the non-shareholder "investors" gave any evidence about being a party to any such an agreement;
• The only evidence of any conversation with "investors" about payment of interest on their loans was given by Mr De Bortoli related not a conversation on behalf of DGF but conversations in the capacity of an "investor".

1. The only financial material of DGF in evidence consisted of the accounts to which I have referred. There are no primary accounting records in evidence, such as ledgers. Further, DGF accepts that the details of the first meeting of the proposed joint venturers are "vague". It justifies that characterisation by asserting that "these people were all friends and associates and did not seem to make notes of their decisions". DGF asserts, however, that, in the evidence of the witnesses, there is uniformity as to the discussions concerning Mr Frassetto not having funds to match the other shareholders' contributions to the proposed development and that the way to "balance" unequal contributions was for DGF to borrow money to fund the development and pay interest on the money borrowed. DGF asserts that various contributions made to the project for the purchase of land, payment of stamp duty were finalised in January 2003 and many more payments were thereafter made to or on behalf of DGF, which DGF asserts were "loans".
2. The only records of DGF in evidence show paid up capital of $4, being four shares of $1 each. As I have said, three of the shares were held by companies controlled by Mr De Bortoli, Mr Gelonesi and Mr Frassetto respectively and the fourth was held on behalf of the Remaili brothers. Clearly enough, if the prosed joint venturers and "investors" had provided funds to DGF as share capital, the accounts of DGF would be expected to have shown substantial paid up capital rather than substantial non-current liabilities.
3. It is remarkable that quite significant sums of money were provided without any adequate record as to the terms upon which the advances were being made. Clearly enough, "investors" who provided funds after the first meeting of the proposed joint venturers did so in the expectation of receiving a return on their "investment". It appears that most of the "investors" were associated in some way with the original four shareholders. Nevertheless, I consider that it is more likely than not that "investors" provided funds on the basis of the statements made to them by Mr De Bortoli that they would receive interest at the rate of 8% per annum on the amounts advanced.
4. There is no reason to doubt that Mr De Bortoli had authority from DGF to make arrangements with the "investors", including arrangements as to the payment of interest at the rate of 8% per annum on advances made by "investors". It was not suggested to Mr De Bortoli that his evidence with other "investors", from time to time was a fabrication. I accept that the advances by "investors", as distinct from advances by shareholders, were loans to DGF and that DGF is liable to pay interest on those loans at the rate of 8% per annum.
5. The position in relation to the principals is less clear. It is necessary to draw a distinction between the original contributions made by the principals, on the one hand, and subsequent contributions by "investors", on the other. I accept that there was a discussion the first meeting of the proposed joint venturers in which an arrangement was discussed whereby Mr Frassetto was to be treated as an equal principal notwithstanding that he was not in a position to contribute his fair share of the funds necessary to begin the proposed development. However, the terms of the arrangement are quite obscure. Some evidence suggests that the shortfall was to be equalised by treating all contributions by principals as loans to the proposed company, which would bear interest at the rate of 8% per annum. However, Mr Remaili's evidence suggests that the imbalance in contributions was to be equalised by Mr Frassetto paying interest on the shortfall in his contribution. On that basis, the interest payable by Mr Frassetto on his shortfall would be payable to the other shareholders rather than to DGF. I am simply not persuaded that it is more likely than not that an arrangement was made that had legally binding effect that the proposed new company would have a liability to pay interest to its shareholders on funds provided by them for the purposes of the proposed development. I am unable to make a finding as to the extent to which, if at all, Mr Frassetto agreed to pay interest on the shortfall in his original contribution.
6. Thus, a distinction should be drawn between the advances made by the original corporations, Mr Frassetto, Mr Gelonesi, Mr De Bortoli and the Remaili brothers, on the one hand, and advances made by other investors. That is to say, the intended profit from the venture was to be shared among the shareholders of DGF. There has been no suggestion that the other "investors" were to share in the profit. It is unclear whether the arrangements whereby the original shareholders were to contribute equally were to be distinguished from the arrangements with other "investors".
7. It is clear that the arrangement among the proposed joint venturers referred to above occurred prior to the incorporation of DGF. The Di Federicos contend that the evidence as to the arrangements made during the discussions at the first meeting of the proposed joint venturers, even if it were to be accepted, does not lead to a finding that the arrangements were binding on DGF. It is common ground that there was no written record made either at the time when the alleged arrangements were entered into, or after the incorporation of DGF, that purports to record those arrangements. More particularly, it is common ground that there was no meeting of the directors of DGF at which the arrangements were ratified or adopted. In the absence of any evidence of adoption or ratification by DGF of the arrangements made at the first meeting of the proposed joint venturers for the payment of interest at 8% per annum on funds advanced to DGF by joint venturers or companies associated with them, the question is whether the evidence supports a conclusion that the actions of DGF and those who participated in the first meeting of the proposed joint venturers were sufficient to give rise to a finding that the alleged arrangements were in fact ratified or adopted by DGF.
8. Under the general law, a contract made on behalf of a non-existent company does not bind the company after incorporation and a company could not ratify a contract made prior to its incorporation. [6] Section 131 of the Corporations Act 2001 (Cth) (the Corporations Act), which deals with contracts before registration of a company, was enacted to overcome what was perceived to be a difficulty in that regard.
9. Section 131(1) relevantly provides that, if a person purports to enter into a contract on behalf of or for the benefit of a company before it is registered, the company becomes bound by the contract and is entitled to its benefit if the company, or a company that is reasonably identifiable with it, is registered and ratifies the contract within a reasonable time after the contract is entered into. Section 131(2) provides for liability of a person to pay damages to each other party to the pre-registration contract if the company is not registered. Under s 131(4), if a company ratifies the pre-registration contract but fails to perform all or part of it, the Court may order the person who entered into the contract on behalf of the company to pay all or part of the damages that the company is ordered to pay.
10. DGF contends that the arrangement to pay interest at the rate of 8% on funds provided for the subdivision project was ratified expressly by the shareholders or by its sole director, Mr Frassetto. Alternatively, DGF says, the ratification of the arrangement is to be inferred from the fact that it has taken legal proceedings, by continued borrowings or by accounting for the payments received as loans. The Di Federicos contend that, because an agreement made before the incorporation of a company cannot be ratified under the general law, it is necessary for DGF to establish the criteria set out in s 131 of the Corporations Act in order to demonstrate ratification. They reject the contention that there was an implied or inferred ratification, in the absence of establishing that there was an agreement with an identifiable person, within the meaning of s 131(1) of the Corporations Act.
11. In cross-examination at the hearing that led to the Principal Reasons, Mr De Bortoli agreed that the shareholders of DGF had never resolved to pay interest on any loans made to it. He also said that he was not aware whether Mr Frassetto made any agreement. He said that there was no shareholders' meeting called and it was all "before the company was established". Mr De Bortoli also said that Mr Frassetto, the only director of DGF, had commented a number of times on the fact that DGF had never resolved to pay any interest on any loans made to it. Mr De Bortoli also said that he was not aware of any minute recording any resolution by DGF to pay any interest on loans made to it. A call for the minute book made by counsel for the Di Federicos produced no such minute.
12. I have referred above to the evidence, given by Mr Gelonesi at the hearing following leave to reopen, to the effect that there has never been a resolution passed in relation to the payment of interest at 8% on loans. In the circumstances, it is difficult to see how any pre-incorporation agreement made among the prospective shareholders was ratified by DGF after its incorporation in accordance with the statutory requirements of s 131 of the Corporations Act.
13. Nevertheless, DGF asserts that Mr Remaili's evidence was to the effect that there were numerous meetings where "it was discussed" that loans were to accrue interest at 8%, being meetings at which the proposed joint venturers were present, albeit that they were not formal meetings of shareholders. When asked whether "between some date in 2003 and a couple of days prior to 2 September 2019" he had ever been asked to recall his recollection of that meeting that had taken place some 16 years ago, Mr Remaili responded: "We've had meetings in the past and we've always spoke about what's in my affidavit".
14. It is quite unclear from that evidence when the meetings took place, who was present at the meeting and what exactly was discussed. Ratification by the members of a company of a pre-incorporation agreement requires, at least, an agreement by the members to that effect. Thus, where a meeting of the members of a syndicate who have formed a company of which they are the sole shareholders are all present at a meeting, the meeting can be treated as a general meeting of the shareholders even if the minutes of the meeting record it as a board meeting. [7] However, a vague general informal discussion by some of the shareholders about a matter will not be sufficient. It is necessary for all of the members to agree expressly, after incorporation, albeit at an informal meeting, that the company be bound by the pre-incorporation agreement. There is simply no such evidence of any such meeting of the members of DGF.
15. If all the shareholders of a company are present together in a meeting and signify their assent to a transaction, their decision would be effective to adopt the transaction on behalf of the company as if a resolution of that effect had been passed at a properly constituted meeting. That would be so, if all shareholders are present and believe they are conducting a meeting even if the requirements as to notice in the company's constitution have not been observed. A transaction will be a valid transaction of a company if all corporators of the company assent, whether that assent is given at a meeting of some kind or even without a meeting and whether or not that assent is given simultaneously by all shareholders or at different times and places. [8] However, DGF has adduced no evidence of express assent by the shareholders of DGF, after the incorporation of DGF, to the acceptance of a liability on the part of DGF to pay interest on monies provided for the purposes of the subdivision.
16. DGF relies, in the alternative, on a possible ratification by Mr Frassetto, who was the sole director of DGF. DGF asserts that Mr Frassetto "may have had a directors' meeting and resolved to ratify the pre-incorporation agreement". However, there was no evidence of any such meeting or resolution. DGF also relies on evidence given by Mr De Bortoli at the first hearing in answer to the suggestion that there was not any actual agreement reached at a meeting: "There was a discussion and an agreement, so people were putting different amount of funds, we agreed to compensate the other people by paying interest on those funds. Not everybody had the funds available at that point in time." When asked whether the shareholders of DGF ever resolved to pay interest on loans made to it, Mr De Bortoli replied: "This meeting did happen but it wasn't the shareholders of DGF."
17. Mr De Bortoli agreed that the shareholders of DGF have never resolved to pay interest on any loans made to it but asserted that he was not aware whether Mr Frassetto made any agreement. Mr De Bortoli asserted that he conveyed "on to other investors that 8% would be paid on Mr Frassetto's undertaking". However, Mr De Bortoli, having accepted that there should be a minute taken, said that he was not aware of any minute recording any resolution by DGF to pay any interest on loans made to it. DGF concedes that it is unlikely that there was a minute.
18. In his affidavit of 10 March 2017, Mr Frassetto asserted that DGF had expended in the vicinity of $9,269,000 on the subdivision, which included the purchase price of the Land, including a parcel of land purchased from the Di Federicos and legal costs in funding various proceedings. Mr Frassetto asserted that DGF had funded those expenditures by borrowing funds "from private investors". It is highly significant that Mr Frassetto made no mention of any agreement to pay interest on funds borrowed from "private investors".
19. DGF asserts that, in the light of that evidence, there "probably was express ratification" by Mr Frassetto as a director and that "it just was not written down, so it was express but not formal". DGF asserts that it would be likely that Mr Frassetto, in his capacity as the only director of DGF, had determined "albeit informally" that DGF would pay interest on loans made to it in circumstances where its "modus operandi was borrowing funds".
20. DGF points to the fact that Mr De Bortoli, apparently with DGF's authority, was soliciting payments to DGF from third parties and that DGF continued to receive funds upon which interest "would be paid". In his affidavit of 24 November 2017, Mr De Bortoli said that, after the initial investment of money following the agreement at the first meeting of the proposed joint venturers, he was involved in the negotiation of every other loan with "the investors" on behalf of DGF. He said in his affidavit that he had separate conversations with each of the principals of the investors during which it was his standard practice to say to each prospective investor words to the effect: "Any funds which you advance would be used in the development that DGF is undertaking in Horsley Park. DGF will pay you interest at 8% per annum. The interest payments and the repayment of principal will not occur until the sales of the lots settle after the subdivision has been completed".
21. DGF asserts that it was "extraordinarily unlikely" that the payments received by DGF were donations. DGF asserts that it would be "highly unlikely", that in the balancing exercise to account for a shortfall of contributions by Mr Frassetto, the contributors other than Mr Frassetto would receive no benefit for their contribution and that profits would then be shared as per the shareholding. DGF asserts that that would defeat the point of the exercise. It asserts that it would be equally unfair that as subsequent borrowings occurred both from companies associated with the shareholders and from third parties that the new borrowings would attract interest but the original borrowings would not. Therefore, DGF asserts, "the likelihood is that [Mr Frassetto] expressly but informally ratified the agreement."
22. In effect, DGF invites the Court to draw inferences as to matters that were within the direct knowledge of Mr Frassetto, who gave evidence at the first hearing, but about which Mr Frassetto gave no evidence. However, the Court should not draw inferences favourable to a party in circumstances where a witness who had direct knowledge of the matters gives evidence but is not asked any questions by the party as to those matters. [9] Inferences should not be drawn in favour of a party that calls a witness who could have given direct evidence when the party refrained from asking the crucial questions of the witness. [10]
23. In any event, s 131(1) of the Corporations Act requires that the agreement said to be ratified be entered into "by a person" on behalf of the company to be incorporated. That requires an identifiable person. [11] In the present case, it is by no means clear who is said to have entered into the alleged agreement on behalf of DGF. At best, the evidence referred to above establishes no more than that the prospective shareholders of DGF agreed amongst themselves that, at some point in the future, they would enter into an agreement with the proposed company to pay 8% interest on loans. That is not sufficient to satisfy the requirement of s 131(1). [12]
24. DGF asserts that, where a principal sues on a transaction effected by an agent outside the authority of the agent or grounds a defence to legal proceedings on the basis of the validity of such a transaction, it is implicit in the principal's actions that the agent's unauthorised transaction has been ratified. [13] DGF accepts that it has not sued on any transaction between it and any of the "investors" who advanced funds to it. However, it asserts that it has sued the Di Federicos on the basis of the transaction and that in resisting the Di Federicos' assertion that there was no agreement to pay interest, the actions of DGF are the equivalent of suing on such a transaction or basing a defence on such a transaction. DGF says that the essence of taking proceedings or defending proceedings on the basis of a transaction made by an agent outside the agent's authority is that it is a formal and open acknowledgement by the principal of the act of the agent. DGF asserts that the position that it has taken in the Rescission Proceedings has been an endorsement of the case that it is conducting, namely, that by virtue of the conduct of the Di Federicos, DGF incurred increased interest in addition to other holding expenses.
25. The claim relied on may well be correct, in that a party be permitted to approbate and reprobate. That is to say, it cannot claim that there is a valid act by its agent on the one hand and then sue its agent for taking action without its authority on the other hand. [14]
26. The evidence of Mr Gelonesi was that DGF had no money of its own and all of its funds had to come from loans made by shareholders and other "investors", being clients of Mr Gelonesi's accountancy practice who had surplus cash lodged with his practice for investment. It asserts that, in those circumstances, it was obvious that there would be a return on the investment. Mr Frassetto said in his affidavit that DGF had funded the outgoing by borrowing funds from private investors.
27. DGF asserts that the continued borrowing of money from lenders and the repayment to certain lenders with interest at 8% was evidence of an implied or inferred ratification of the pre-incorporation agreement. It asserts that DGF continued to receive money from various entities and accounted for the receipt as loans. Thus, DGF says, since the money received from DGF from the "investors" was not by way of donation, it must have been by way of loan and, if they were loans, is highly unlikely that they were made on an interest-free basis and highly likely that they were received on the basis that interest would be paid at the rates about which evidence was given. However, it is by no means clear that the advances were not by way of contribution to the capital of a joint venture, on the basis that the contributors would be entitled to receive a share of the profits in proportion to their respective contributions.
28. DGF also relies on the proposition that the receipt or retention of money with knowledge of the circumstances of a contract under which it is paid will normally constitute ratification of that contract. [15] DGF asserts that there is no difference in principle between keeping the money advanced and keeping the land purchased with the money advanced. DGF accepts that the alleged loans were made until finalisation and sale of the lots in the subdivision. However, it asserts, it acted in accordance with the pre-incorporation agreement by retaining the funds except in the case of those where the funds were earlier repaid. The answer to the contention is that DGF has not proven any agreement the ratification of which might have been affected by retaining the funds advanced.
29. DGF also asserts that, if it is accepted that there was a pre-incorporation agreement concerning the lending of funds to DGF, even if it were not accepted that there had been other acts amounting to express or implied or inferred ratification, DGF would nonetheless have tacitly adopted the agreement by acquiescing in it. It asserts that its conduct in not denying the existence of a pre-incorporation agreement is the equivalent of "a clear adoptive act". [16] The answer to such a contention is that there is no evidence that any party alleged that such an agreement existed.
30. DGF then asserts that s 131 of the Corporations Act provides a mechanism whereby, even if there is no ratification by DGF, it may be ordered to pay damages. DGF asserts that, if it be assumed that Mr Frassetto entered into the arrangements with the "investors" in respect of the funds originally provided for the purchase of the land, Mr Frassetto is the "person" referred to in s 131. Accordingly, proceedings could be brought against Mr Frassetto (or presumably his estate) to recover damages and under s 131(3) the Court could order DGF to pay damages. However, it is no more likely that Mr Frassetto, rather than any other person present at the pre-incorporation meeting, was the "person" within the meaning of s 131(1). Further, there has been no order for DGF to pay damages and, accordingly, no basis for asserting that the acts of the Di Federicos have caused DGF to incur a liability to pay such damages. There has been no evidence from any of the "investors" as to the existence of any agreement to be paid interest by DGF.
31. Finally, DGF advances a contention that it has been kept out of the proceeds of the sale of the lots in the subdivision and will therefore be entitled to interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW). However, such interest is only payable in proceedings for the recovery of money on the money awarded as damages. The proceeds of the sale of the lots in the subdivision are not DGF's damages. Section 100 cannot have any application.
32. It is more likely than not that some arrangement was made involving Mr Frassetto, on the one hand, and the other proposed shareholders on the other, whereby the imbalance in contributions by the proposed shareholders would be adjusted in some way by the payment of interest. It may be that the arrangement was to the effect that all advances made by shareholders would bear interest at the rate of 8% per annum. However, I am not persuaded that any such arrangement was subsequently adopted or ratified by DGF when it was incorporated. I am not persuaded that DGF incurred a liability to pay interest on any funds provided prior to its incorporation. On the other hand, I am satisfied that "investors" who subsequently provided funds did so on the basis that the funds would bear interest at 8% per annum. However, there is no evidence as to the time when such interest was to be payable. It may therefore be reasonable to conclude that it was implied that the funds would be repayable when the project was completed and DGF was in a position to repay the advances from the proceeds of the sale of lots in the proposed subdivision.

Involvement of the Scarfones

1. The involvement of the Scarfones in the proposed subdivision dates from 2004, when the subdivision was first proposed. In late 2004, correspondence was exchanged between the solicitors for the Scarfones, Messrs Galluzzo Golotta and Andriano (Galluzzo), and the solicitors for DGF, Messrs Peter Zipkis & Associates (Zipkis), concerning a proposed joint venture agreement. The parties to the joint venture agreement were to be DGF, the Di Federicos, the Scarfones and Mr John Galea and Mrs Nina Galea (together the Galeas). At some time in the first half of 2005, a proposed joint venture agreement appears to have been executed by DGF, the Galeas, the Di Federicos and Scarfones as well as Mr Gelonesi, Mr De Bortoli and Mr Frassetto, as guarantors of the obligations of DGF.
2. That joint venture agreement recited that the parties had agreed to form a joint venture for the purpose of subdividing the Land into rural residential lots largely in accordance with the plan annexed to the joint venture agreement. By cl 3 of the joint venture agreement, the parties acknowledged that the development costs would be in the range of $1.1 million to $1.2 million, as outlined in a letter from Britten & Associates Pty Ltd dated 19 May 2004, a copy of which was annexed to the joint venture agreement.
3. By cl 5 of the joint venture agreement, each party was to sign promptly all documents and consents necessary for application to the Council for approval of the proposed development. Clauses 6, 7 and 8 dealt with the responsibility of the Galeas, the Di Federicos and the Scarfones respectively. Under cl 6, the Galeas were to pay the sum of $160,000 to DGF as their joint venture contribution. Under cl 7, the Di Federicos were to enter into a contract to sell to DGF part of their land for the price of $170,000. Under cl 8, the Scarfones were to pay the sum of $180,000 to DGF as their joint venture contribution.
4. Although the joint venture agreement appears to have been signed by all parties, it appears that it was not regarded as operative. Thus, on 31 May 2005, Galluzzo wrote to the Scarfones noting their advice that they were not proceeding with the joint venture, but saying that Galluzzo had received "an upgraded agreement" that appeared to satisfy "all our requirements as to alterations". On 20 June 2005, Galluzzo wrote to Zipkis saying that they had not heard any further from the Galeas or the Scarfones and therefore assumed that they were not proceeding.
5. However, on 28 September 2005, Zipkis wrote to Galluzzo saying that further negotiations had been held with the Galeas who now agreed to the terms of the final agreement. An amended copy of the joint venture agreement was enclosed with the letter of 28 September 2005. On 6 October 2005, Galluzzo wrote to the Scarfones noting that the Galeas had executed the joint venture agreement. Galluzzo asked the Scarfones to contact them to discuss the terms of the agreement for the purpose of signing it.
6. On 20 January 2006, Galluzzo wrote to Zipkis saying that they had been through the revised agreement with the Scarfones who had requested a number of amendments, including that "the net figure" payable by them be $130,000. Galluzzo also said that there was to be no payment made by the Scarfones until the plan of subdivision had been finally registered and separate title deeds returned. Zipkis responded on 7 February 2006, saying that the agreed amount was $130,000 but that a payment of $147,000 was to be made within seven days of provision of a final account from "the road contractor".
7. On 14 March 2006, Zipkis wrote to Galluzzo enclosing "draft letter of agreement", which was said to incorporate "payment of the amount as agreed between the parties" together with the points raised in the letter of 20 January 2006. The Scarfones also signed a letter addressed to DGF dated 14 March 2006 granting a licence to DGF, in consideration of payment of the sum of $43,500, to park and store equipment and materials on the Scarfones' land from time to time during the period of any road construction. The sum was to be paid on completion of road works and was to be offset against any money owed by the Scarfones to DGF.
8. On 23 March 2006, Galluzzo wrote to the Scarfones referring to discussions with the Galeas and Mr De Bortoli. The letter said that Galluzzo had drafted "an ancillary deed" that simply stated that the amount of $180,000 was no longer payable but that instead the amount would be $136,500 payable as a total sum. Galluzzo requested the Scarfones to sign the enclosed deed of variation. Subsequently, DGF and the Scarfones signed a deed of variation, which had the effect of deleting cl 8 of the joint venture agreement, which dealt with the Scarfones' responsibility to pay $180,000. The deed of variation stated that the amount payable by the Scarfones was $136,500 payable, as to $68,250, upon completion of the road works and, as to $68,250, upon the developer providing the Scarfones with two separate title deeds following registration of the proposed plan of subdivision. The deed of variation also inserted a further clause providing that, if the development was not completed within five years of the date of the deed of variation, any party might terminate the agreement by notice in writing to all parties, in which case DGF was to be obliged to do all things necessary to return the land as near as practicable to the state in which it was prior to the deed of variation.
9. However, on 12 April 2006, Galluzzo wrote to Zipkis saying that they were instructed that neither the Galeas nor the Scarfones were bound by any agreement to proceed and could withdraw from the arrangement at any time. On 20 June 2006, Galluzzo wrote to Zipkis inquiring whether the matter was proceeding. Galluzzo said that the Galeas had indicated that, if "exchange" did not take place within a certain time of their signing, they may not proceed with the matter. On the same day, Galluzzo wrote to the Scarfones saying that they had not heard further from DGF's solicitors in relation to finalisation and had written to them asking for advice as to the present position.
10. On 16 October 2006, Zipkis wrote to Galluzzo saying that they understood that the Galeas had not executed the joint venture agreement. Zipkis also asked Galluzzo whether the Scarfones had signed the agreement. Galluzzo replied on 1 November 2006, saying that they had clear instructions from the Galeas that they were not prepared to proceed any further until receipt of consent from all adjoining owners.
11. On 16 February 2007, Galluzzo wrote to the Scarfones saying that the Galeas had now obtained development approval and would be instructing Galluzzo shortly to proceed with the "exchange of contracts". On 6 March 2007, Galluzzo wrote to the Scarfones again, confirming that the matter was "now ready to settle exchange", subject to the Galeas confirming in writing that they were to proceed. The letter noted that Galluzzo held signed documents from the Scarfones, including the deed of variation. The original joint venture deed and the deed of variation were enclosed. On 29 March 2007, Galluzzo wrote again to the Scarfones requesting instructions so that they could "proceed with the exchange of contracts". On 1 May 2007, Galluzzo wrote to the Scarfones once more, saying that they had not heard further from DGF in respect to the exchange of contracts. On the same day, Galluzzo wrote to Zipkis saying that they were ready to exchange the joint venture agreement, subject to payment of their costs upon exchange. The letter said that Galluzzo understood that Mr Frassetto required that the matter be exchanged urgently.
12. On 2 July 2007, Galluzzo wrote to Zipkis saying that they had instructions from the Galeas to release the signed documents upon payment of their costs. Galluzzo also said that they had been unable to reach the Scarfones to seek instructions regarding the timing of the payment of costs but assumed that the instructions would be the same as those from the Galeas. On 13 July 2007, Galluzzo wrote again to the Scarfones saying that they had been informed by Mr Frassetto that the Scarfones had agreed as to the amount of costs payable. Galluzzo requested confirmation so that they could proceed to "exchange".
13. On 20 July 2007, Galluzzo wrote to Zipkis saying that they had received instructions from the Scarfones agreeing to DGF paying the sum of $2,640, being part of their fees to date. The letter said that amendments were proposed to cll 6 and 8 of the joint venture agreement to provide for legal costs of the Galeas and Scarfones to be paid by DGF. On 8 August 2007, Zipkis wrote to Galluzzo requesting them to make the alterations to cll 6 and 8 as outlined in the letter of 20 July 2007.
14. On 14 August 2007, Galluzzo sent to Zipkis an acknowledgement addressed to the Scarfones, signed by Mr Frassetto on behalf of DGF, that cl 8 of the joint venture agreement was not applicable or enforceable and that the provisions of the deed of variation applied whereby the total amount payable by the Scarfones was $136,500. DGF also acknowledged that both the joint venture agreement and the deed of variation were to be executed simultaneously.
15. On 29 August 2007, Galluzzo wrote to Zipkis requesting confirmation of "the exchange of contracts" in relation to the joint venture agreement involving the Scarfones and DGF. Zipkis replied on 30 August 2007 saying that they were still awaiting approval from the Di Federicos' solicitors prior to exchange of contracts.
16. On 22 November 2007, Galluzzo wrote to Zipkis pointing out that it was three months since the Scarfones' signed agreement had been provided to Zipkis "by way of exchange". The letter said that, if the contract was not exchanged, the documents were to be returned to Galluzzo, any offer to exchange existing by virtue of submission of the documents was then revoked and until they were returned they were to be held strictly in escrow. On 10 December 2007, Galluzzo wrote again to Zipkis requesting return of the documents signed by the Scarfones and asking Zipkis to note that they were not entitled to proceed with an "exchange of contracts" unless Galluzzo authorised them in writing to do so.
17. On 20 December 2007, Zipkis wrote to Galluzzo, saying that they had been advised that, following further discussions, the Scarfones were ready to proceed. Zipkis requested confirmation that Galluzzo held the signed original deeds of variation. On 22 January 2008, Galluzzo wrote to Zipkis saying that the Scarfones were not prepared to proceed with the matter. After noting that Zipkis held the deed of variation in escrow, Galluzzo requested that it be returned for deletion of all references to the Scarfones.
18. On the same day, Galluzzo wrote to Zipkis referring to a telephone discussion in which Zipkis confirmed that they were "now ready to proceed". The letter said that the ancillary deed of variation for signature by DGF had been misplaced and enclosed the agreement with marked up changes to paragraph 6. On 12 March 2008, Galluzzo wrote to Zipkis again, saying that they had not received a reply to the letter of 22 January 2008 and requesting that they return any documentation held by Zipkis signed by the Scarfones "upon the basis that the matter is now no longer proceeding".
19. Galluzzo wrote to Zipkis again on 27 March 2008, noting that they had previously advised that the Scarfones did not intend to proceed and requesting return of the signed documents being held in escrow "upon the basis that the matter is not to proceed further". On 20 May 2008, Galluzzo wrote to Zipkis again, referring to the letter of March 2008 and confirming that the matter did not proceed "to an exchange" and was therefore at an end. The letter again requested return of the documents "held in escrow". On the same day, Galluzzo wrote to the Scarfones saying that they had not heard further from DGF's solicitors and that the signed documentation had not been returned despite their requests. On 15 July 2008, Galluzzo pointed out to Zipkis that they had written on four occasions without a reply. On 4 September 2008, Galluzzo wrote to Zipkis again, referring to "your recent letter" and confirming that "the contracts are of no effect and the matter is therefore at an end". The "recent letter" is not in evidence.
20. On 3 November 2009, the Scarfones signed a consent form dated 16 October 2009 authorising Britten & Associates Pty Ltd to lodge a development application, construction certificate and any other documentation required to facilitate "release of the development approval". The consent form was signed by the Scarfones as the owner of land in Delaware Road, Horsley Park. However, the development approval referred to in the consent was not identified. Subsequently, the Scarfones signed a consent addressed to the Council dated 9 March 2011, whereby they consented to the lodgement by Britten & Associates Pty Ltd of a "Development Application and/or s 96 Modification Application and Construction Certificate" in relation to several parcels of land described as being situated in Delaware Road, Horsley Park. Again, there is no evidence of the development application or other documents referred to in that consent. On 5 October 2012, the Council gave notice of determination of the s 96 modification to Britten & Associates Pty Ltd. The modification application related to the proposed increase in the width of a proposed road in the subdivision. The notice was given in relation to a property substantially as described in the consent of 9 March 2011. The three documents just referred to are curious, in the sense that there is no other evidence to indicate how or why the Scarfones came to sign the two forms of consent that apparently led to the approval of the modification of the proposed plan of subdivision.
21. On 9 August 2013, DGF filed a statement of claim in the Equity Division in which it, as plaintiff, sought relief against the Di Federicos, as defendants, in relation to the joint venture agreement. The statement of claim sought a declaration that DGF and the Di Federicos had entered into a joint venture agreement on several alternative dates and an order for specific performance of the joint venture agreement. A defence was filed in those proceedings on 25 September 2013. On the same day, the Di Federicos filed a statement of cross-claim against DGF seeking damages in relation to the failure to register a plan of subdivision. DGF filed a defence on 29 November 2013.
22. Ultimately, the proceedings described above were settled by the 2013 Deed. The terms of the 2013 Deed are referred to briefly in the Original Reasons. DGF relies on the fact that neither it nor the Di Federicos considered it appropriate to join the Scarfones in those proceedings. They contend that, in those circumstances, an inference should be drawn that both DGF and the Di Federicos believed that the Scarfones regarded themselves as bound by the joint venture agreement. The more likely inference is that both parties accepted that, at that stage, the Scarfones could not be regarded as parties to the joint venture agreement.
23. There is no evidence of any further communication between the Scarfones and DGF in relation to the proposed subdivision of the Land, or otherwise, until an email of 17 September 2018 from Galluzzo to the solicitors then acting for DGF. Galluzzo said that they were instructed by the Scarfones that they would agree to approve the subdivision and produce their title deed in order to enable registration of the plan of subdivision to proceed, provided that they were not required to make any payments whatsoever in respect of the development or Council contributions, in circumstances where the plan of subdivision indicated that part of their land had been dedicated for the purpose of road widening. Galluzzo suggested that a deed be entered into between the parties to that effect. The email went on to note that the area of the two parcels belonging to the Scarfones was slightly less than one hectare and that it would be necessary to be satisfied that the Council approved the subdivision with the area being less than the minimum size allotment of one hectare. The email requested advice as to whether DGF agreed to those terms.
24. The email of 17 September 2018 began by saying that Galluzzo had spoken to their clients. That suggests that there must have been some prior communication between the Scarfones and DGF. That is confirmed by the fact that the email of 17 September 2018 was preceded by an email of 4 July 2018 from Galluzzo to DGF's solicitors. That email, however, is not in evidence and DGF has adduced no evidence as to any communication that led to the email of 17 September 2018.
25. On 23 October 2018, Galluzzo emailed the solicitors acting for the purchasers of one of the lots in the subdivision and a copy of the email was sent to the solicitors for DGF. The email said that Galluzzo was awaiting confirmation that DGF would accept the proposal made by Galluzzo in their email of 17 September 2018. On 25 October 2018, Galluzzo wrote to the Scarfones saying that they had conveyed the proposal as to finalisation of the matter to DGF on 17 September 2018 and had not heard back from them. The letter confirmed that the Scarfones would agree to the subdivision plan and dedication of land comprising shoulders to the road as constructed, provided that there was no expense to them and a deed of release was signed.
26. On 29 November 2018, DGF's solicitors wrote to Galluzzo confirming the agreement that the Scarfones would sign the subdivision plan conditional upon:
27. DGF not requiring that the Scarfones contribute to the cost of the development, despite the agreement made between DGF and the Scarfones at the outset of the development; and
28. DGF agreeing to pay Galluzzo's costs of $2,200. DGF's solicitors noted that Galluzzo would prepare a deed to evidence the agreement and requested that the Scarfones sign "the plans" as soon as possible. On 5 December 2018, Galluzzo sent an email to DGF's solicitors enclosing a draft deed. The email said that the Scarfones did not agree that any agreement ever existed that they would contribute to the cost of the development.
29. On 18 December 2018, the Approval Deed was executed. The Approval Deed recited that the Scarfones were the owner of a property in Delaware Road, Horsley Park comprising 2.12 hectares and that DGF had prepared a plan of subdivision encompassing an area of approximately 12 hectares that included the Scarfones' land. The Approval Deed then recited that DGF had obtained a development approval for such subdivision, that DGF had constructed a road and provided services to all the lots in the proposed subdivision, that the Scarfones intended to approve the plan of subdivision attached and that DGF intended to assume responsibility for the cost of the entire subdivision.
30. By cl 6 of the Approval Deed, the Scarfones acknowledged that a portion of their land had been excised when "the road and nature strip" were constructed. By cl 8, DGF released the Scarfones from all costs and expenses of the subdivision and agreed that it was estopped from taking any future action against the Scarfones in relation to such costs and expenses. By cl 10, the Scarfones agreed to answer any requisitions required by Land Registry Services and otherwise do all necessary acts and things on their part to facilitate registration of the plan of subdivision, at DGF's cost.
31. There was no other evidence as to the circumstances in which the Approval Deed was executed. The email of 17 September 2018 and the other evidence concerning the Scarfones set out above came to light as a result of subpoenas issued to the Scarfones and their legal advisors. A notice to produce of 28 February 2019 given to DGF on behalf of the Di Federicos requested copies of any documents recording or evidencing any communication to or from the Scarfones or to or from their legal advisors regarding the preparation of or consent to the proposed plan of subdivision. The only documents produced in answer to that notice to produce were a copy of the Approval Deed and the plan of subdivision. It is significant that DGF produced none of the correspondence produced by the Scarfones, which was clearly covered by the notice to produce. The above documents described above were largely uncovered by means of a subpoena addressed to the Scarfones.
32. DGF has the onus of establishing that any impediment to the registration of the proposed plan of subdivision was the result of delay on the part of the Di Federicos. The Di Federicos point to the fact that the registration of the plan of subdivision could not have proceeded prior to signature by the Scarfones, which could not be enforced prior to the execution of the Approval Deed on 18 December 2018. The material set out above indicates that there was a dispute of some kind between the Scarfones, on the one hand, and DGF, on the other, concerning Scarfones' consent to the plan of subdivision. It is not possible to determine the nature of the extent in the absence of evidence from the Scarfones beyond that which is set out above.
33. DGF sought to adduce hearsay evidence to indicate that the Scarfones were at all times willing to execute the plan of subdivision prior to their actual signature in 2018. The evidence consisted of statements made by Mr Frassetto, who died after the earlier hearing and before the re-opening. Mr De Bortoli gave evidence in his affidavit of 2 September 2019 that, as the development progressed and problems were experienced with the Di Federicos, he asked Mr Frassetto how things were going with the Scarfones. Mr De Bortoli said that Mr Frassetto replied to the effect: "Not a problem. Whenever we have asked them to sign documents he has always complied and he has said once Di Federico signs he and his wife will sign off".
34. Mr Peter Remaili gave evidence in his affidavit of 2 September 2019 that he raised with Mr Frassetto on at least three different occasions the position with respect to the Scarfones. He said that each time he raised the issue, he received a similar answer from Mr Frassetto to the effect: "The Scarfones will not be a problem. I have the Scarfones under control. They will sign the documents when Di Federico signs."
35. Mr Frank Gelonesi gave evidence in his affidavit of the same date that on the rare occasions when he saw Mr Frassetto at his accountancy practice office he would ask what the position was with the Scarfones. He said that Mr Frassetto responded with words to the effect: "Scarfone will sign once the Di Federicos sign."
36. That evidence was admitted only as evidence of the fact that the statements were made, on the basis that Mr Frassetto's state of mind might have been relevant to issues in the proceedings. However, the evidence was not admitted to prove the truth of the statements made by Mr Frassetto concerning the attitude of the Scarfones. Their attitude must be based on the material that is dealt with in some detail above.
37. The absence of any evidence to establish either that DGF was prepared to forego any contribution by the Scarfones to the cost of the subdivision or that the Scarfones remained willing to make that contribution, in circumstances where the Scarfones have not been called and no explanation for failing to call them has been provided, gives rise to the inference that neither the evidence of the Scarfones nor evidence of communications between DGF and the Scarfones that resulted in the Approval Deed, would have assisted DGF in establishing that the Scarfones' consent to an execution of a plan of subdivision could have been enforced prior to execution of the Deed of Consent. [17] DGF says that an inference should be drawn that, had there been no breach by the Di Federicos, negotiations between DGF and the Scarfones would have led to execution of an instrument in the same terms as the Approval Deed. Therefore, DGF says, the only effect of the arrangements is that the delay period should be reduced by the time that it took to have the Scarfones sign the Approval Deed.
38. It is apparent from the email of 17 September 2018 that the Scarfones were, at that time, willing to consent to the registration of a plan of subdivision only if DGF accepted that the joint venture agreement requiring them to contribute to the development would not be enforced and there was a deed of release in respect of any such obligation. There is no evidence that the conduct of the Di Federicos prevented DGF from giving such a release. However, DGF did not agree to those terms until 29 November 2018.
39. There is no evidence of DGF seeking consent from the Scarfones prior to July 2018 at the earliest, an email on the question having been sent by Galluzzo to DGF's solicitors on 4 July 2018. It is likely that, at some time prior to 4 July 2018, DGF began taking steps to secure the consent of the Scarfones to the registration of the proposed plan of subdivision. However, it is a matter of speculation as to when DGF first sought the Scarfones' consent. That is a matter about which DGF could have adduced evidence but chose not to do so.
40. Having regard to the history of the negotiations between the Scarfones and DGF as outlined above, an inference should be drawn that discussions commenced some time prior to 4 July 2018, some time after DGF became aware that the Council was satisfied that the subdivision could proceed. That occurred on 16 May 2017. Assuming the first approach to the Scarfones for their consent was made, say, in August 2017, three months after DGF knew that the Council was satisfied, the final consent was not obtained until December 2018. That suggests that it took 15 months to secure the consent of the Scarfones. Even if the first approach was made shortly before the email of 4 July 2018, the time needed for obtaining the consent of the Scarfones was some six months. I would conclude, therefore, that it took DGF a period of somewhere between six and 15 months to secure the consent of the Scarfones. Had DGF sought that consent at the time when the Council first imposed the s 121B order on 3 July 2015, there would have been a delay of between six and 15 months before DGF was in a position to proceed even in the absence of the s 121B order.
41. It follows that the period of delay occasioned by the breaches on the part of the Di Federicos was not 22 months. Rather, it was somewhere between six and 15 months, say 11 months. I conclude, therefore, that DGF is entitled to be compensated for holding charges incurred from 16 June 2016 to 16 May 2017.

Impecuniosity of DGF

1. DGF has now paid for the additional work necessary to complete the development of the Land and procure registration of the plan of subdivision. The bulk of the funds necessary to complete that additional work, amounting to some $248,000, was borrowed from entities associated with Mr De Bortoli and Mr Gelonesi. In addition, DGF received a refund of tax in the sum of $18,653. Those borrowings were confirmed by Mr De Bortoli as being used to pay for the finalisation of the works necessary to achieve registration of the plan of subdivision.
2. Mr Frassetto indicated in his oral evidence that some delays were occasioned because DGF did not have the necessary funds. However, I am persuaded that it is more likely than not, had there been no other impediment to registration of the plan of subdivision, DGF would have been able to borrow the funds earlier than the respective times when advances were made by parties associated with the development.

Attribution of Holding Charges

1. As I understand the position, DGF and the Di Federicos have reached accord as to the amounts actually expended by DGF in relation to the subdivision and the holding charges, save for the claim by DGF in relation to land tax. DGF claims a total amount of $225,642.35 as the land tax incurred during the period of delay occasioned by the Di Federicos.
2. Mr De Bortoli attached to his affidavit of 24 November 2017 several documents that he described, without objection, as "true copies of land tax statements in respect of the land the subject of these proceedings". He was not cross-examined on that assertion.
3. One of those documents (the 2016 Assessment) is expressed to be a "land tax assessment notice" dated 11 February 2016 addressed to DGF showing $169,258.35 due on 22 March 2016. Attached to the 2016 Assessment is another document entitled "supporting information" in the name of DGF, which shows an "issue date" of 11 February 2016, refers to an assessment for the 2016 tax year of $41,866.65 and shows amounts due and payable in respect of earlier tax years as follows: 2012 tax year total $28,723.27 2013 tax year total $30,175.36 2014 tax year total $32,928.95 2015 tax year total $36,192.13 The document shows the total amount payable as $169,886.35, if paid by instalments.
4. Another of the documents annexed to Mr De Bortoli's affidavit is a "land tax assessment notice" addressed to DGF and dated 13 January 2017 showing a total amount due on 22 February 2017 of $48,224 (the 2017 Assessment). Attached to the 2017 Assessment is a document headed "supporting information" addressed to DGF and dated 13 January 2017, which states that the assessment for the 2017 tax year is based on "land at 79-95 Delaware Road, Horsley Park owned as at 31 December 2016" and that the total tax payable, if paid by instalments, is $49,021.30. The supporting information records a payment on 16 November 2016 of $61.93, rendering a total amount payable of $48,959.35.
5. Land tax is assessed on land in New South Wales held as at 31 December in any year. The quantum of land tax depends upon the unimproved value of land in question. However, there is no evidence as to the unimproved value of the Land. DGF has not attempted any reconciliation between the accounts of DGF, the assessment documents or the payment documents. In the circumstances, I conclude from the documents described above that DGF incurred liabilities for land tax totalling $218,907.66 which was incurred as follows: 31 December 2011 $28,723.27 31 December 2012 $30,175.36 31 December 2013 $32,928.95 31 December 2014 $36,192.13 31 December 2015 $41,866.65 31 December 2016 $49,021.30
6. Whether those liabilities would not have been incurred but for the breaches by the Di Federicos is a different question. That question depends upon the period of the delay occasioned by the breaches.

Conclusion

1. Having regard to the unfortunately piecemeal way in which these proceedings have been conducted I do not propose to make any orders until the parties have had the opportunity of considering my reasons for the further conclusions that I have reached in relation to the dispute between DGF, on the one hand, and the Di Federicos, on the other. As I understand the position, the conclusions indicated above should resolve all outstanding issues between the parties. If that is so, I propose to direct DGF to bring in short minutes giving effect to the conclusions. If, however, it is necessary for further questions to be resolved, the parties will be directed to formulate those questions for further consideration. I have not yet heard argument on the question of costs as between DGF and the Di Federicos in relation to the Rescission Proceedings or the Performance Proceedings. I will hear the parties on the question of costs after all issues have been resolved.

Endnotes

1. See DGF Property Holdings Pty Limited v Di Federico; DGF Property Holdings Pty Limited v Butros [2018] NSWSC 344.
2. Note that s 66ZL was altered in 2018 with new provisions following the Conveyancing Legislation Amendment Act 2018 (NSW).
3. See DGF Property Holdings Pty Limited v Di Federico; DGF Property Holdings Pty Limited v Butros (No 2) [2018] NSWSC 1137.
4. See Original Reasons at [174].
5. See Original Reasons at [377].
6. See Kelner v Baxter (1866) LR 2 CP 174; Black v Smallwood (1966) 117 CLR 52.
7. See Re Express Engineering Works Ltd [1920] 1 Ch 466; [1920] All ER Rep Ext 850.
8. See Sydney Appliances Pty Limited (in liquidation) v Robert Bosch (Australia) Pty Limited [2000] NSWSC 32; 33 ACSR 680.
9. See Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418.
10. See Ex parte Harper; re Rosenfield [1964-5] NSWLR 58 at 62.
11. See BJ McAdam Pty Ltd v Jax Tyres Pty Ltd (No 3) [2012] FCA 1438 at [23].
12. See Painaway Australia Pty Ltd v JAKL Group Pty Ltd [2011] NSWSC 205 at [275].
13. See Gino Dal Pont, Law of Agency (LexisNexis Butterworths, 2014) at [5.29].
14. See Verschures Creameries Limited v Hull & Netherlands Steamship Company Limited [1921] 2 KB 608.
15. See W Bowstead, FMB Reynolds, P Watts, Bowstead and Reynolds on Agency (19th ed, 2010, Sweet & Maxwell) at [2-071].
16. Gino Dal Pont, Law of Agency (LexisNexis Butterworths, 2014) at [5.31].
17. See Jones v Dunkel (1959) 101 CLR 298. 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: 08 May 2020