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[2026] NSWSC 962
Supreme Court of NSW
2026-08-11
Hammerschlag CJ in Eq
Original judgment source is linked above.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: FINAO Pty Ltd v Rosebery 2021 Pty Ltd [2026] NSWSC 962
Hearing dates: 10 – 11 August 2026
Date of orders: 11 August 2026
Decision date: 11 August 2026
Jurisdiction: Equity
Before: Hammerschlag CJ in Eq
Decision: (1) Judgment for the Plaintiff against the First Defendant for $215,302.
(2) The Plaintiff’s claim against the Second Defendant, Geoffrey Morley Cottrell, is dismissed.
(3) The First Defendant’s Cross-Claim is dismissed.
(4) The First Defendant is to pay 60% of the Plaintiff’s costs either as assessed or agreed.
(5) The Plaintiff is to pay Geoffrey Morley Cottrell’s costs of the claim against him either as assessed or agreed.
Catchwords: CONTRACTS — Home Building Act 1989 (NSW) (the Act) ss 4, 5 and 10 and Sch 1 — claim for damages for breach of an oral agreement for the acquisition and development of a house in Mosman funded by Defendant and supervised by Plaintiff with Plaintiff to receive the net profit — net profit made but Defendant did not pay it to Plaintiff — Illegality — Defendant pleads that the contract is illegal because it involves Plaintiff doing residential building work without a licence as required by the Act — EQUITY/TRUSTS — Defendant claims that the parties agreed alternatively on the common assumption that the profit would be held on trust to be used to pay school fees for the children of the director of Plaintiff and his then wife (the daughter of the directors of Defendant) — HELD — contract not illegal — Plaintiff has the benefit of the exception in s 2(3)(i)(iii) of Sch 1 of the Act — HELD — parties agreed that profit would be used for school fees but did not intend the agreement to be legally binding and no trust created — judgment for Plaintiff
Legislation Cited: Competition and Consumer Act 2010 (Cth)
Home Building Act 1989 (NSW)
Cases Cited: Casa Maria Pty Ltd v Trend Properties Pty Ltd (Court of Appeal, 18 December 1998, unreported)
Category: Principal judgment
Parties: FINAO Pty Ltd (Plaintiff/Cross-Defendant)
Rosebery 2021 Pty Ltd (First Defendant/Cross-Claimant)
Geoffrey Morley Cottrell (Second Defendant)
Representation: Counsel:
M R Gracie (Plaintiff/Cross-Defendant)
R Scruby SC/G Napier (Defendants/Cross-Claimant)
Solicitors:
O’Loughlin Westhoff (Plaintiff/Cross-Defendant)
neolaw (Defendants/Cross-Claimant)
File Number(s): 2023/00115317
Publication restriction: Nil
The Plaintiff (Finao) is the corporate creature of Mr Terry Robert Down (Down), the erstwhile son-in-law of retired accountant, Mr Geoffrey Morley Cottrell (Cottrell) and Mrs Marilyn Cottrell (Marilyn). Down and his in-laws may once have been on good terms, but now no longer are. Down was once married to their daughter, Ms Anna Cottrell (Anna). They have four children whose ages range from 9 to 15. The marriage broke down in about April 2021, when their youngest child was about 4. This breakdown has undoubtedly driven the conflict between Down and his in-laws. Both have adopted untenable and unmeritorious positions and claims in this dispute, which turns out to be about $215,302 (exclusive of interest).
Where I use first names, I intend no disrespect.
I ordered the parties to attend mediation and arranged for a Senior Deputy Registrar to preside. They did not settle. They had ample opportunity to settle during the course of the hearing but, obdurately, did not.
A judgment of the Court is therefore required. None of the combatants comes out unscathed. As the Court pointed out, a judgment may be read by anyone for all time.
FINAO is an acronym for “Failure Is Not An Option”. As this case demonstrates, on some level, failure is always an option.
Finao’s main business is digital transformation which, I am told, is an activity which enables organisations digitally to transform their business operations and processes to suit their ever-changing needs. As a sideline, Down completed several house renovations, which by all accounts were successful, and which enabled him and Anna to pay down most of the mortgage on their house in Mosman, a picturesque bayside suburb of Sydney north of the Harbour Bridge.
The First Defendant company (Rosebery) is controlled by Cottrell. Rosebery was, until 30 October 2020, named FINAO Operations Pty Ltd.
Cottrell and Marilyn have a corporate vehicle called Berkhamsted Pty Ltd (Berkhamsted), which I understand to be of the nature of a family investment company.
In about October 2020, Down put a proposal to Cottrell for the renovation of a house at 16 Rosebery Street, Mosman (the Property), which was then up for auction.
Cottrell agreed to become involved. Cottrell says, and I believe him, that Down said to him that he wanted to set aside any profits for (private) school fees for the children, and that, if they (meaning Cottrell and Down) did three or four such developments, they should have sufficient funds to pay all school fees. Cottrell says that he told Down that they (meaning he and Marilyn) were willing to put up their capital, but only on the basis that the development profits were used for the children’s school fees, to which, Cottrell says, Down agreed. Down denied this conversation (and accordingly, any obligation, moral or otherwise, to use the money for the children’s school fees).
On or around 19 November 2020, the parties agreed, in accordance with the structure proposed by Cottrell, that:
a. the plaintiff would provide planning and project management services to the defendant in relation to the development of the Property;
b. in consideration for the provision of the planning and project management services by the plaintiff, the defendant will pay to the plaintiff the Development Fee upon the sale of the Property; and
c. the Development Fee is equal to the sale price of the Property less development costs and the loan amount.
(together, “the Agreement”)
The services provided by the plaintiff included:
a. planning development work to be carried out on the Property;
b. engaging and instructing all contractors; and
c. day-to-day management of the development of the Property.
“residential building work” means any work involved in, or involved in co-ordinating or supervising any work involved in--
(a) the construction of a dwelling, or
(b) the making of alterations or additions to a dwelling, or
(c) the repairing, renovation, decoration or protective treatment of a dwelling.
(1) a person must not contract to do—
(a) any residential building work…
except as or on behalf of an individual, partnership or corporation that is the holder of a contractor licence authorising its holder to contract to do that work.
Rosebery then argues that, by virtue of s 10 of the Act, Finao is not entitled to damages or to enforce any other remedy in respect of the contract committed by Rosebery, and that the contract is unenforceable.
Section 10(1)(a) provides:
(1) A person who contracts to do any residential building work, or any specialist work, and who so contracts--
(a) in contravention of section 4 (Unlicensed contracting)…
is not entitled to damages or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, and the contract is unenforceable by the person who contracted to do the work. However, the person is liable for damages and subject to any other remedy in respect of a breach of the contract committed by the person.
Rosebery argues that the contract “as articulated by Finao” in para 16(c) of the Statement of Claim is a contract to do residential building work, because it is work involved in co-ordinating or supervising one of the forms of work described in s 2(1) of Sch 1.
There is no issue that, as between Finao and Rosebery, Finao was in charge of getting the Property renovated, or that it did so properly. Indeed, the renovated Property sold for a profit. Rosebery referred the Court to the decision of the Court of Appeal in Casa Maria Pty Ltd v Trend Properties Pty Ltd (Court of Appeal, 18 December 1998, unreported), in which the same illegality defence was run, and failed both at first instance (before Windeyer J) and on appeal (before Mason P, Meagher JA, Fitzgerald AJA). The facts of the case bear some similarity to the present case, and if this defence were to succeed would have the same outcome as that articulated by Meagher JA (at 4 [20]) in his Honour’s inimitable fashion as follows which, modified to apply mutatis mutandis to this case, would read as follows: if Rosebery’s contentions be correct, it will have received its full contractual entitlement of repayment of its loan plus interest, retain for itself the profit that has been earned from the renovation carried out under the day-to-day management by Finao for which it otherwise has not been paid, and Finao on the other hand will have precisely nothing.
This defence is the soul of simplicity. As pleaded, it involves no more than determining whether the contract was for Finao to do “residential building work” as defined in the Act. That is, whether Finao was involved in, or involved in co-ordinating or supervising any work involved in, renovating the Property.
Finao’s answer to this defence in its opening was limited to a submission that Counsel could not understand the contention. This no doubt accounts for Finao’s failure to raise a number of arguments apparently available to it as to why Rosebery had not made out the illegality which it pleads, but more importantly, its failure to plead in answer (until the end of final submissions – having initially disavowed any intention to rely on it), what is a complete answer to Rosebery’s complaint, namely s 2(3)(i)(iii) of Sch 1 of the Act, which provides relevantly:
(3) Each of the following is excluded from the definition of “residential building work” --
…
(i) the supervision only of residential building work--
…
(iii) by any other person, if all the residential building work is being done or supervised by the holder of a contractor licence authorising its holder to contract to do that work,
During final submissions, Senior Counsel for Rosebery candidly and properly drew attention to the fact that this had not been pleaded. Ultimately, Counsel for Finao applied to amend. Justice dictated, notwithstanding the egregious delay in pleading it, that leave be given with Finao to pay the costs thrown away.
It was never contemplated that anybody but licensed contractors would do the work, or that Finao itself would actually do any building work (other than pure supervision), and it never did.
All it did was day-to-day management of the development of the Property and it is entitled to the benefit of the exclusion, even if that day-to-day management included co-ordinating or supervising work as contemplated by s 2(1) of Sch 1 (a matter in respect of which I have significant doubt). In any event, I would not hold that the action in this case is to enforce a contract or claim damages for breach of a contract to do work. It is a claim for damages for breach of an obligation to hand over the profit of an enterprise after that work has been done.
Second, Rosebery, in its Defence to the Statement of Claim pleaded that it was a term of the agreement between the parties that the amount payable to Finao “was to be held by it on trust for the sole purpose of making payments to assist Down and Anna in discharging their future liability to pay private school fees for their children”.
In its Cross-Claim (filed on 16 June 2023) Rosebery seeks a declaration that if Rosebery is liable to pay Finao any money, the interest of Finao is to be held by it for the sole purpose of making payments to assist Down and Anna in discharging their future liability to pay private school fees for their children.
This relief is sought on the basis that Down, Cottrell and Berkhamsted formed a common intention that the Development Fee would be held by it on trust for the sole purpose of making payments to assist Down “and his then wife” in discharging their future liability to pay private school fees for their children.
Rosebery pleads that, in reliance on this, it entered into and performed the agreement, that Finao had denied the existence of any trust, and that it was unconscionable for it to deny that trust.
A number of matters are worthy of observation.
The first is that, even if there was such an agreement with respect to school fees, it would be no defence to Rosebery having to pay Finao the money owed to it.
Second, there is some irony in that, on the one hand, Rosebery claims that the money must be used for the benefit of the grandchildren of the protagonists, but takes an unmeritorious illegality defence to the prejudice of those very grandchildren.
A defence of unclean hands may have been available, but like many other issues in this matter, it was not raised.
**********
Tcpt, 11 August 2026, p 128(42)–(45).
FINAO Pty Ltd
Rosebery 2021 Pty Ltd
I prefer Cottrell’s evidence. It is buttressed by the fact that at the end of final submissions, Counsel for Finao (and therefore for Down) proffered an undertaking to the Court that any judgment amount would be paid to Anna to be used for the benefit of the children. It must be said, however, that this came after comments which fell from the bench. These were referred to after the hearing had concluded by Counsel for Finao. The exchange is on the transcript.
One can readily understand that grievance was felt by the grandparents when they perceived, rightly or wrongly, that having originally agreed that the children would benefit from a successful property development, Down’s position changed when the marriage broke down.
Going back to the facts, Cottrell and Down discussed the structure that would be used for the enterprise. Cottrell produced a corporate diagram. Rosebery was selected as the vehicle. At the time, Down held shares in Rosebery, then still called FINAO Operations Pty Ltd. Cottrell says that he made it clear, and once again I believe him, that all the shares were to be held by his company. Down denies this. His version is that he was told that he would have 50% of the shares. Subsequently, Cottrell prepared share transfer documents which Down signed, which resulted in all of the shares being held by Berkhamsted. Down told the Court in the witness box that he consciously decided to go along with this because Anna told him to. How he thereafter thought that it could have been the subject of a legitimate complaint about Cottrell is difficult to fathom.
Some corporate documents to implement the structure were backdated by Cottrell (not something one might generally expect from a person of his experience and stature – and not something to be condoned) and much was sought to be made of this on behalf of Down during the hearing. It was suggested that this goes to Cottrell’s credit. But none of what he did was withheld from Down. Down’s own behaviour undermines the significance of any complaint. Far from any of it being secret, all of it was disclosed to Down, who never made any complaint until their relationship broke down.
But in any event, these complaints go nowhere in the context of this dispute and, in my view, were raised in these proceedings for no legitimate forensic reason, merely to embarrass Cottrell. My understanding is that what occurred was ultimately cleared with ASIC. It can be put to one side.
At the outset of their relevant dealings, Down and Cottrell were both directors of Rosebery but, on 4 August 2021, Cottrell removed Down as a director. I think this is questionable behaviour, but Down sought no relief in relation to it.
In October 2020, Down and Cottrell entered into an entirely oral arrangement on behalf of Finao and Rosebery respectively (which I will take to have been a contract, although the Statement of Claim does not extend to identifying it as such), the salient terms of which are:
Rosebery would buy and renovate the Property and then sell it;
Berkhamsted would fund the purchase and work by lending money, on the security of a first mortgage over the Property, to Rosebery, at an interest rate of 10% per annum; and
upon sale of the Property, after repayment of the loans plus interest, development costs and any liabilities of Rosebery, Finao would be entitled to receive the balance, being the profit (which the parties described as a Development Fee).
Finao pleads that the services it provided relevantly included “day-to-day management of the development of the Property” (Statement of Claim, 11 April 2023, para 16(c)).
On or about 23 October 2020, Rosebery exchanged contracts to purchase the Property and the sale was completed on 4 December 2020.
On about 17 March 2021, Finao entered into a building contract with a licensed builder, Richards Building Co Pty Ltd, to effect the renovations for a fixed price of $479,691. There were various exclusions such as for joinery, which trades Down himself arranged and which items were attended to by licensed contractors. It is not suggested that any actual building work in the conventional sense was carried out by any contractor who was not licensed under the provisions of the Home Building Act 1989 (NSW) (the Act), or that Down did anything other than manage the development of the Property.
On 21 January 2022, the Property was sold for $3.4 million. Berkhamsted’s loan (together with interest) was repaid.
The parties are now agreed that the project yielded a profit of $215,302. This figure appears in a proposed Deed of Settlement brought into existence in February 2022, which Cottrell and Marilyn signed, and which was proffered to Down who declined to sign it (no doubt because it contained releases and other provisions which he was not obliged to, and did not, accept).
Finao claims this as damages for Rosebery failing to pay the Development Fee. It is not altogether clear why this was articulated as a claim for damages rather than a claim in debt for the amount due to it as representing the profit earned.
The Statement of Claim sought this precise figure. It contained a table purporting to show how it was calculated, but the calculation is nonsense. Moreover, when it opened the case, Finao claimed more than this, i.e. $306,463.61, but Counsel was unable to articulate how this figure was arrived at, and gave up the claim for the excess.
The Statement of Claim is an infelicitous document, but one can discern the general trend that the parties agreed on an enterprise, Finao did its bit, and now wants to be paid.
The proceedings started out life in the District Court, but were transferred to this Court because of Rosebery’s Cross-Claim for a declaration, which is referred to below.
Additionally, by way of its Reply, Finao brought a claim against Rosebery (and Cottrell personally, as a person involved in the contravention) based on Rosebery having engaged in misleading and deceptive conduct in contravention of s 18 of the Competition and Consumer Act 2010 (Cth), constituted by Cottrell having misrepresented the structure which would apply, not disclosing that Down had been removed as the sole shareholder of Rosebery, and Cottrell being appointed a director and causing Down, on behalf of Finao, to buy the Property without knowing these things.
This claim was without foundation. It is undermined by the contemporaneous objective material, including the diagram of the proposed structure prepared by Cottrell, Down’s own conduct in signing share transfers, and his own evidence that, having become aware of these matters, he consciously decided to do nothing. Equally importantly, Counsel for Finao was unable intelligibly to articulate how, even if the conduct complained of was made out, Finao suffered any loss or damage thereby. Counsel’s articulation of the loss was that Finao (or Down) could have procured that the money he claims should be paid to him or would have been paid to him earlier because he had signing powers on the bank account. If he is not entitled to be paid any money for breach of contract, he has suffered no loss. If he is entitled to be paid, he has also suffered no loss. Any delay would be compensable by interest. In my view, this claim is a borderline abuse of process. The joinder of Cottrell personally was calculated merely to embarrass. It was correctly abandoned during final submissions.
Rosebery raises two defences, with which I will deal in turn. One is lacking in merit and is unsustainable. The other has a moral foundation, but no legal or equitable one.
First, Rosebery raises a defence of illegality.
In para 10(a) of its Statement of Claim, Finao pleads that:
I think there was consensus between Cottrell and Down that the motivation for the Cottrell’s getting involved was the ultimate intention that the profit would be used for private school fees. But there was no intention that this be a legally binding obligation. It is too uncertain in any event to give rise to binding legal relations. One need only ask, forensically, when was the money to be paid for school fees? It was, in my view, merely a moral obligation. There was no doubt an element of faith and confidence between parents-in-law and son-in-law existed at that time. The marriage had not yet broken down. There is no contemporaneous recording of such arrangement, and nothing that was said supports an intention to create a trust.
Rosebery has made out neither the contract, nor the trust, it asserts.
The Cross-Claim is not based on an express trust, but on unconscionable conduct. That which is pleaded cannot translate into a declaration of trust, only an injunction, which is not claimed. The Cross-Claim, like the Statement of Claim, is an infelicitous document.
In the circumstances, one can readily understand Down’s grievance that Finao had not been paid, but this does not explain his earlier position as to who should get the benefit of the money to be paid in this precise case.
The Court makes the following orders:
Judgment for the Plaintiff against the First Defendant for $215,302.
The Plaintiff’s claim against the Second Defendant, Geoffrey Morley Cottrell, is dismissed.
The First Defendant’s Cross-Claim is dismissed.
The First Defendant is to pay 60% of the Plaintiff’s costs either as assessed or agreed.
The Plaintiff is to pay Geoffrey Morley Cottrell’s costs of the claim against him either as assessed or agreed.