Freeman v Londish

Freeman v Londish - [2018] NSWSC 1425 - NSWSC 2018 case summary — Zoe

[3]

Judgment

There are occasions when experienced people of business enter into a handshake deal, never confirmed in writing, with enormous financial implications. There are also occasions when those business people fall out, where they disagree about what was said in a vital conversation in which, depending whose version is to be preferred, one or other of them repudiated their agreement.
This is such a case.
In December 2010 Mr Robert Freeman and the late Mr Sidney Londish entered into an oral joint venture agreement to purchase and develop land at Woodend in Victoria into a retirement village. I will refer to the planned development as the "Project" and the oral joint venture agreement as the "Oral JV".
The land was owned by Mr Londish's brother, Mr Ivan Londish. To avoid confusion, and without intending any disrespect, I will refer to Mr Ivan Londish simply as "Ivan".
A company controlled by Mr Londish, Tiffany Developments Pty Ltd, held a planning permit in respect of the land. Subject to the ongoing requirements of the Macedon Ranges Shire Council, the permit allowed construction of a retirement village on the land.
Mr Londish predicted that the Project would cost some $80 million and that its end value would be some $124 million.
Ivan agreed to make the land available for the purpose of the joint venture. After his death in March 2012 his widow, Mrs Marie Londish, made the same commitment.
At the time of the Oral JV Mr Londish did not have access to funds to prosecute the development because of his involvement in a matrimonial dispute.
Mr Freeman agreed to advance $1.25 million on an unsecured basis to the Project.
It was agreed that Mr Freeman's advance would be repaid to him as a priority from the proceeds of the Project. Mr Freeman was also to be entitled to receive 50 per cent of the net profits of the Project plus commissions from selling units proposed to be included in the retirement village.
The men pursued the Project and Mr Freeman advanced some $725,000.
The Project required further capital. After a number of unsuccessful attempts to raise capital privately, Mr Freeman and Mr Londish agreed to try and raise the funds from the public through an Initial Public Offering.
On 28 December 2013 Mr Freeman and Mr Londish had a conversation that led to the end of the Oral JV.
The key dispute in these proceedings is what was said during that conversation. Each of Mr Londish and Mr Freeman allege that the other repudiated his obligations under the Oral JV.
Thereafter Mr Londish caused another company controlled by him, Prestige Estates (Vic) Pty Ltd, to purchase the property from Ivan's widow's estate (as Mrs Londish had then also died).
Prestige bought the property in February 2016 for $5 million and sold it in December 2016 for $7.5 million. Between those two dates Prestige expended funds allegedly improving the property, but without constructing the proposed retirement village.
Mr Freeman brings these proceedings to recover the $725,000 he advanced.
Mr Londish, then aged 94, died prior to final submissions. The case proceeded against a representative of his estate.
Mr Londish had brought a cross-claim against Mr Freeman. That cross-claim was not pursued in final submissions.

[6]

Negotiations with Ivan about the land

Before turning to the terms of the Oral JV, I will mention a number of matters concerning dealings between Mr Freeman, Mr Londish and Ivan concerning the Woodend property.
On 15 December 2010 Mr Londish, Mr Freeman and Ivan agreed that Ivan would grant Mr Londish and Mr Freeman an option to purchase the land, subject to the parties reaching and executing a formal agreement. No such agreement was executed.
On or about 15 August 2011 Ivan withdrew his offer to grant Mr Londish and Mr Freeman an option to purchase the land. Instead he offered to sell the land to Mr Londish and Mr Freeman for $7 million.
In mid August 2011 Mr Londish proposed, and Mr Freeman agreed, that: 1. the proposed contract for sale of the land from Ivan would provide for settlement of the purchase price by $3.5 million in cash and 3.5 million $1 A-class non-voting shares in proposed corporate vehicle for the Oral JV, Grand Lifestyle Estates Pty Ltd ("GLE") which would be gifted by Mr Londish to Ivan; and 2. this arrangement would not disturb the equal shareholding of Mr Londish and Mr Freeman in GLE.
At around that time, a written draft of the joint venture was prepared for execution by each of Mr Londish, Mr Freeman, GLE and a company associated with Mr Freeman, Falmouth Holdings Pty Ltd.
That document provided: 1. for Mr Freeman's company, Falmouth, to advance up to $1.25 million to GLE to develop the property; 2. that Falmouth was only required to provide those funds if it and Mr Freeman were "satisfied acting reasonably that the funds are required for a purpose" associated with the Project (this is cl 3.2(b) to which I will return); and 3. that the proceeds of the venture would be used to: first, repay the amount advanced by Falmouth; second, pay the agreed purchase price of the land ($7 million, with half of that going to Ivan and half, for reasons not relevant to this dispute, to Mr Londish); and third, divide the balance equally between Mr Londish and Falmouth.
Neither Mr Freeman nor Mr Londish signed the agreement.
It is not clear whether Ivan signed it. He died in February 2012.

[10]

The nature of Mr Freeman's funding obligation

The second implied term bears upon the nature of Mr Freeman's funding obligations. Its precise import is significant because of what was allegedly said at the 28 December 2013 meeting.
Mr Freeman claims that it was an implied term of the Oral JV that he was only obliged to advance funds if he and Mr Londish agreed that payment of a specific amount was "reasonably necessary for the purposes of the Project".
The corollary of this alleged implied term is that Mr Freeman could refuse to make a specified payment if he did not agree it was "reasonably necessary for the purposes of the project".
As I have mentioned, where a contract has not been reduced to writing, the Court can imply a term by reference to the imputed intention of the parties if it is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case.
The question is whether the term for which Mr Freeman contends was necessary for the reasonable or effective operation of the Oral JV by reference to the imputed intention of the parties.
The idea of the Oral JV was that Mr Freeman and Mr Londish would develop the Woodend property together. It was, literally, a joint venture. Mr Londish brought to the venture his considerable skill as a developer. Mr Freeman had access to funds. Mr Londish did not. As both men must have understood, the venture was a risky one from Mr Freeman's point of view. He was advancing funds without security in the hope, that both men must have shared, that the venture would be profitable; in which event they would share the profits equally.
The agreement was that Mr Freeman would advance money when funds "were required". But there is no suggestion that Mr Freeman would act simply as a banker and dispense funds on request by Mr Londish. The agreement was that there had to be a "requirement" for the funds. That is an actual requirement. It must follow from Mr Freeman's unsecured, and for that reason vulnerable, position that the men must have intended that for the reasonable and effective operation of their dealings together there be some qualification on Mr Freeman's obligation to advance funds.
In my opinion, that qualification is fairly expressed in the implied term for which Mr Freeman contends.
In these circumstances, I impute to Mr Freeman and Mr Londish the intention that: 1. Mr Freeman was not obliged to provide funding merely because Mr Londish asked him to; 2. if Mr Londish made a request for funding he and Mr Freeman would discuss whether the funding was reasonably necessary for the purpose of the Project; and 3. if, acting reasonably, Mr Freeman concluded that the proposed funding was not reasonably necessary for the purpose of the Project, he could decline to make that funding.
That appears to be how both men understood the position.
In cross-examination, Mr Freeman gave this evidence: Q. Your position at that time was, was it not, that you were not committed to provide all of the money if you chose not to do so? That was your position, wasn't it? A. It swings on the word 'obliged.' Q. I think I used the word 'committed'? A. I know you did."
And a short time later: "Q. Your state of mind as at 28 December 2013, was that you were not obliged to provide all of the money if you chose not to? That's correct, isn't it? A. It's correct in the sense that, the word 'obliged' has a certain meaning, which we addressed at the very start of our relationship. Q. I'm not asking you about that, I'm asking you about your state of mind from 28 December 2013, and I'm suggesting to you that it included this. That you weren't under an obligation, or obliged, to provide all of the money if you chose not to do so. That was your state of mind, was it not? A. I intended to spend the $1.25 million, properly, on the project. That was my state of mind. Q. But you didn't consider yourself to be under any obligation? A. No. Q. That's the point, isn't it? A. Sir, if you allow me to reply HIS HONOUR: Mr Parsons. Q. Mr Freeman, what do you want to say? A. At the outset, I said to my solicitor, I didn't want to be in a position where I could be told what to pay. That somebody could run through my $1.25 million, on all sorts of things. I needed to have the protection, right, of the wording that is in the first JV document, and in subsequent documents, including the prospectus, the wording being in [cl 3.2(b)], you'll find. Whereby Falmouth and Robert Freeman were not obliged, the wording was, were not obliged to spend this money. I could make a reasonable decision if it was in line with the budget, project, and the money was spent on the project as described. Words to that effect are in all the documents, so when he, and I, we talked about this in the early days of the JV, the wording from Bartier Perry. And Mr Londish was aware of the fact, that 'obliged' is not the word he could use. And he used this word, I think knowingly. Cause he knows it would annoy me, because we wanted, every time he changed the type of arrangement we had, Bartier Perry checked it for that."
A short time later: "Q. I'll just ask you once again, I'm sorry for the repetition, but that was your state of mind at the time [i.e. on 28 December 2013], that you weren't under an obligation to provide money for the joint venture if you chose not to? A. Reasonably chose not to. Q. That's the way you put it? A. No, that's the way it's in the documents" (Emphasis added.)
Mr Freeman's reference to "the documents" was a reference to cl 3.2(b) of the unsigned joint venture agreement which, as I have mentioned, was to the effect that Mr Freeman's company, Falmouth, was only required to provide funds if it and Mr Freeman were "satisfied acting reasonably that the funds are required" for a purpose related to the Project (see [34(b)] above).
Following his evidence that "that's the way it's in the documents" Mr Freeman gave this evidence in response to questions from me: "Q. The question is, is the clause to which you were referring a moment ago, when you said 3.2(b), is that the clause at the top of page 680? A. Yes, sir. That's what I was referring to. Q. Was your state of mind as at 28 December 2013 that even though no joint venture agreement had been executed, your [commitment] to funding was to the effect of what is in that clause? A. Yes. Q. In that there? A. Yes. Q. That may or may not be correct legally but that is what your state of mind was -- A. Yes, sorry, I used words that I shouldn't use, sorry. Q. All I am saying is that from my point of view I have got to decide whether that is the legally correct conclusion but that was your, you are telling me, your state of mind on this café conversation with Mr Londish? A. Yes. Q. You didn't actually mention clause 3.2(b) on the day? A. No, but the use of the word 'obligation,' yes."
A short time later: "Q. You took the view that your expenditures on this joint venture were voluntary on your part, not as a result of an obligation to make them, that is true, is it not? A. They reflected the understanding we had between the two of us… Q. Your state of mind at the end of 2013 was that you were not obliged under the joint venture agreement to provide funds but that you had, in fact, provided them voluntarily. A. No, I wouldn't allow him to tell me to pay something. Q. Yes. A. On the other hand, I had to reasonably consider it in the context of the development." (Emphasis added.)
The last answer given by Mr Freeman is revealing. It was not directly responsive to the earlier question, but reveals what I consider to the true position concerning Mr Freeman's understanding of his obligations; namely to "reasonably consider" a proposal made by Mr Londish for expenditure.
Overall, this evidence shows that Mr Freeman understood that Mr Londish could not dictate when and in what circumstances Mr Freeman should advance funds ("I wouldn't allow him to tell me to pay for something").
Mr Freeman understood that he could only "reasonably" choose not to make a payment following discussion with Mr Londish. The implied term contended for accommodates this, in that Mr Londish and Mr Freeman had to agree that the payments were "reasonably necessary".
Mr Londish had a similar understanding. He gave this evidence: "Q. You would agree that your relationship with Mr Freeman and the payment of fees, in other words, his contribution, was not one in which you directed him to pay fees, you asked him to pay fees and if there was agreement he would pay them; correct? A. I asked him to pay, yes. … Q. Mr Londish, when you asked Mr Freeman to make a payment for something to do with the project -- A. Yes. Q. -- did you think about a blank cheque, that you could make him pay for anything you wanted or did you expect there would be discussion? A. No, there would be discussion…". (Emphasis added.)
Later, Mr Londish gave this evidence initially in response to a question from me: "Q. … Was it your state of mind that you had a blank cheque from Mr Freeman, so that you could ask him to pay for the project up to that figure and he had to pay, no [matter] what he thought about the merits of the payment? A. That's correct. SILVER Q. Mr Londish, the answer to at least some of the question yesterday was exactly the opposite where you said that whenever an amount of money had to be paid, if there was a disagreement between you and Mr Freeman, it would be subject to discussion; do you remember that? A. I do remember that, but Mr Freeman - I accepted that Mr Freeman had the money. I respected the fact and I'd also asked always from him if he didn't want to do it, he didn't do it, but the fact was that it was expected that it would come from him or the public which we later on decided to go for, but the initial program was he was providing the money. Q. Mr Londish, yesterday you agreed, without any qualification, that if an expense was raised and Mr Freeman challenged it or debated with you, it would have to be agreed before it was paid? A. Absolutely. Q. Correct. So when you say you had a blank cheque, what you're saying is there was an amount of money available up to 1.25 million? A. Correct. Q. And the way it was spent had to be by agreement; correct? A. Absolutely." (Emphasis added.)
For those reasons I accept the implied term as set out in the Commercial List Statement.

[11]

Dispute concerning the earthworks

The dispute on 28 December 2013 was born of, amongst other things, an assertion then made by Mr Londish that Mr Freeman had an unqualified obligation to fund certain earthworks on the site.
An understanding of the events of 28 December 2013 requires consideration of what passed between the two men earlier in 2013 concerning the earthworks.
Mr Freeman was a meticulous diarist. Shortly after each of his meetings with Mr Londish he made a note of what was said and, on occasions, his observations about what was said and the Project generally.
Mr Freeman's affidavit evidence of his conversations with Mr Londish is based primarily on his diary.
In his affidavit, Mr Londish accepted that Mr Freeman's account of the conversations generally accorded with his recollection (save for the 28 December 2013 conversation). The following accounts of conversations between Mr Londish and Mr Freeman come, in large part, from Mr Freeman's affidavit.
In early April 2013, Mr Londish proposed to use funds "from investors" for the "site works".
Thus in early April 2013 he and Mr Freeman had this conversation: "[Mr Londish]: Robert I think we should talk about commencing the site works for public relation reasons. We can use funds taken from the early payments for shares from investors and not from you. [Mr Freeman]: Are you sure you can do that from the investors' money? [Mr Londish]: Why not?" (Emphasis added.)
Mr Londish expressed a different view several days later on 8 April 2013 when this conversation took place: "[Mr Freeman]: Now that we do not have an option how are we able to go onto the land and do earthworks without any legal basis and how could we conduct presales without any title? [Mr Londish]: I can get permission from Marie [Londish] for us to go onto the land. [Mr Freeman]: We are currently working up the PR program to promote development, and the expenditure of $250,000.00 on a hole in the ground would not generate sales. In any event we have no right to sell units before we buy the land in terms of title. Where is the $250,000.00 coming from? [Mr Londish]: It's coming from you as part of your undertaking from the start for the $1,500,000.00. [Mr Freeman]: On the basis of the original agreement being the existence of an option over the land and the intention of erecting two display units for our selling campaign of stage 1, with the object of getting bank funding on presales, at least on that basis I have some cover for my loans. [Mr Londish]: You've got an obligation to pay for this and I will hold you to it. [Mr Freeman]: Do you actually know how much substantial commencement will satisfy the Council if it is to do with the DA? Where does the figure of $250,000.00 come from, just for the lake? [Mr Londish] shouted: You have never done a development and you wouldn't know how to. I don't know why I bother with someone like you and I'll see you in Court." (Emphasis added.)
At this point Mr Londish lost his temper and "stormed out" of the meeting.
In his diary for 8 April 2013, Mr Freeman recorded, as a note to himself that: "[Mr Londish] is under considerable strain - he says he has no money (hence the loan) and is suffering depression from time to time… There will be bluster and sweeping statements. However [Mr Londish] will need to consider…if I am pushed into it I will stop paying everyone and advise them accordingly…".
During the hearing, much attention was paid to this note. Mr Parsons submitted it cast light on what Mr Freeman was likely to have said on 28 December 2013 concerning his funding obligations under the Oral JV. I was initially attracted to that submission. However, on reflection, and for the reasons I set out below, I think a more reliable guide as to what was said on that occasion is to be found in the contemporaneous documents each of Mr Freeman and Mr Londish prepared following the 28 December 2013 meeting. This note was prepared eight months earlier, and following a heated outburst from Mr Londish. Mr Freeman described it as a "thought bubble I wrote to myself at the end of one of his blow ups". I think that is a fair characterisation of the note.
On 17 April 2013 Mr Londish sent an email to Mr Freeman stating that his "proposal" about the earthworks "needs to be resolved asap" and suggesting that he and Mr Freeman should "seek an arbitrator to resolve who is right and who is wrong" about the earthworks issue in an effort to "resolve this impasse".
On 19 April 2013 Mr Freeman replied suggesting that he and Mr Londish get advice from a town planner. Shortly thereafter Mr Freeman agreed to pay $9,000 for a feasibility study into the proposed earthworks to be carried out by Mr Jon Buckle, a consulting engineer. In due course Mr Freeman paid Mr Buckle's invoice.
Mr Freeman and Mr Londish met again on 25 April 2013. The following discussion took place: "[Mr Londish]: I have also now got three investors totaling $6 million and with Peter Cotterall saying that he could guarantee $6 million of investment, we are going well. [Mr Freeman]: Has there been any further information on the earthworks? [Mr Londish]: I have spoken to [a town planner] by telephone on the substantial commencement issue. It was largely unchanged. We will have to be ready with consultants appointed to get moving on the earthworks once we have the Investors on board and we press the button." (Emphasis added.)
Thus Mr Londish was now proposing that the earthworks be progressed "once we have the investors on board" with funding from the earthworks to come from investors' funds (as Mr Londish had proposed in the early April 2013 meeting referred to at [74] above).
Mr Freeman's note of that meeting includes: "The meeting went well enough…passing reference to earthworks. [Mr Londish] has spoken to [the town planner] on the substantial commencement…this did not lead to a repeat of the previous upset. More on 'we must be ready with the consultants appointed to get moving once 'we press the button' which (in the context) did not mean when I agreed to pay for the excavation. More to do with when we had raised the funds… At this stage the insistence of [Mr Londish] for the earthworks to commence immediately (at [my] expense) prior to the fundraising has gone… Having discussed Prospectus at length and the organising of the outstanding material [Mr Londish] observed that having a meaningful role in the process would be good for him (his mental and marital state) - perhaps being busy is enough to lose the appetite for earthworks."
Mr Londish confirmed the matters in [81] above in an email he sent on 11 June 2013 to which he attached a document called "the Woodend Development Plan 24.5.13 a Reminder List of What Has to be Done".
In that document Mr Londish said: "When the Bell Rings, and when the Funds [from investors] are promised and Assured I would like for this to happen within the next four weeks end of June. We will hopefully start construction September 2nd."
Mr Londish was asked about this in cross-examination: "Q. So what you were envisaging in this document is that 'when the bell rings' i.e. when the funds are promised and assured from external investors -correct? A. Correct. Q. That's when earthworks would hopefully be allowed to start - correct - in September? A. Hopefully."
On 7 August 2013 Mr Londish sent Mr Freeman a document called "Milestones for Prospectus" which projected that funding would be available in October 2013 and that site works commence in November 2013.
Mr Londish gave evidence about that document in answer to questions from me: "Q. …Mr Londish, you were meaning to convey in this document, were you, that if funding could be available by October [2013], site works could commence in November [2013] - A. Yes, your Honour. We were presuming we were raising the money and [Mr Freeman] was sure of raising the money, so we decided to wait until we got that and then we would proceed with this program. Q. And your projection at site works could commence, as you say here, assumed funding did become available? A. Yes. Somebody had to give the money, either he or the public. Q. He, being Mr Freeman? A. Yes."
On 27 October 2013 Mr Londish sent Mr Freeman a further copy of the "Reminder List" attached to his 11 June 2013 email. His covering email said: "I ask that you read it again as a reminder of what is not happening and should be, we are slipping away and it's important that we address these issues on Monday as well as the prospectus, the funds etc".
In relation to this document, Mr Londish gave this evidence in cross-examination: "Q. Once again, you said to Mr Freeman in this document, leaving aside what was in your mind, what you actually said…, once again, that, 'When the bell rings and when the funds are promised and assured, things can get going.'? A. Yes. Q. Now, a number of things happened between October up to December and one of them was that the due diligence process continued and both you and Mr Freeman were involved in that process; correct? A. Correct. Q. He was funding all of the lawyers and so forth at that stage? A. Yes. Q. And you were also trying obtain some rights to the land from your late brother's wife, Marie [Londish]; correct? A. Well, yes."
Another stormy meeting occurred between Mr Londish, Mr Freeman and Mr Gary Reid (another director of GLE) on 25 November 2013. A matter for discussion on that occasion was whether the permit in respect of the land had expired. In fact the permit had expired on 21 July 2013. Any application to extend the permit had to be made by 21 January 2014. This was not then known to Mr Londish and Mr Freeman.
The following discussion took place: "[Mr Londish]: Take it from me, [the permit] hasn't expired. [Mr Freeman]: I am concerned that there is an ethical problem if we sign the option knowing there's a chance the DA has expired. [Mr Reid]: We could pass a motion of the board that if the DA was lost we would cancel the option. [Mr Freeman]: Shouldn't we cancel the due diligence process? [Mr Londish]: We should proceed with the due diligence process. [Mr Freeman]: I still think that we should at least defer the due diligence process and you should contact the Macedon Council planners yourself and the Mayor on the extension period otherwise our investment is in real danger. [Mr Londish] shouted: You are trying to control things with your money and this has to end, you should keep making the payments under the original arrangement or I'll get my lawyers on to it."
An insight into the pressure that Mr Londish felt is given in an email he sent to Mr Freeman shortly after the 25 November 2013 meeting.
Mr Londish said: "Gentlemen, I have to apologise for my outburst on Monday and I hope that you understand and forgive me why it happened. We have been with this Project and prospectus in particular, for a very long time and slowly going nowhere. I have not earned any income for more than 7 years and have now completely run out of money and unless we move forward I will have to seek work elsewhere to earn income to survive. This has had a material and mental effect upon me as I have never been like this before in my life, where I am begging from my friends to stay alive until my apartment is sold [as a part of the settlement with his former wife]."
Mr Londish and Mr Freeman met again on 9 December 2013.
In his affidavit Mr Freeman stated that Mr Londish said: "I am confident that the apartment will be sold soon. I will then have some funds and will be able to pay some of the costs with you, say $120,000.00, for the works to ensure substantial commencement. I can do this because now we are pursuing the Prospectus approach."
In the note he made that day Mr Freeman said: "[Mr Londish] mentioned he was expecting his apartment to sell soon, and he would have money - he would pay for some of the works to ensure 'substantial commencement' with me - acknowledged the JV was not in force 'because we are pursuing the Prospectus'." (Emphasis added.)
Mr Freeman's note continued with the comment that: "Acknowledged the JV development agreement has lapsed - which is what has led to him talking of sharing the costs".
Mr Freeman thus recorded that Mr Londish foreshadowed paying for "some" of the earthworks with Mr Freeman ("with me"), and of thus "sharing" with Mr Freeman those costs.

[15]

Notes of the meeting

Mr Freeman and Mr Londish each made a note of the meeting. I see no reason to doubt that the notes represent their recollection of the meeting. I find the notes to be the most accurate guide as to what was said on the day.
Each note reveals that the meeting commenced with consideration of the revelation that the permit had expired. It appears that Mr Freeman was expressing exasperation that, as he saw it, Mr Londish had let matters come to this.
Mr Londish's note of the meeting is in these terms: "Memo of a meeting this morning in the coffee shop at 8.30 am 28/12/13 ● Robert came to see me with a serious look on his face and looked as though he was about to burst with angry and abusive words and he did ● His first words were I asked you a month ago about the possible loss of Woodend approval position and you [Mr Londish] have not heeded my request and done very little or nothing about it. And it's now very serious ● I replied that I have done an awful lot about it and that we have a genuine claim against them with the dates because I believe [the Victorian Civil and Administrative Tribunal] is the approval Authority not the Council because of the previous council mistakes ● He then said have you seen [the email from the town planner] re fees how outrageous that was and how can we avoid [the town planner] and do we need him when you know the Mayor & most of the aldermen at Macedon and you should go down there and spend a week if necessary to see them all ● I told him and had included him in my emails to the mayor and that I will go and see him ASAP as I [had] sent another email this morning [requesting] a meeting ASAP ● I also said to [Mr Freeman] that had he taken my [advice] in April this year and started the earth works we would not have had this trouble as we would have had substantial commencement, but no you refused to listen or discuss this in order to avoid spending money he went red in the face and, he replied I do not wish to invest any more money and I am not committed to putting up the rest as we do not have any signed JV agreement (which is correct we don't have a signed agreement and I believe the reason it is not signed is because he left himself with this position of not having a legal commitment, therefore as he said he has not signed the JV agreement, therefore he does not have to put up any further funds, but because there is no signed agreement, he is also not in any JV agreement) ● I got up and told him I do not wish to be seen with you, you mean miserable little shit who is so self-opinionated and believe because he is putting up the money he is the boss and makes all decisions". (Emphasis added.)
I will return to this note. A critical aspect of it is what Mr Londish recorded Mr Freeman as having said concerning his commitment to the funding of the Project. According to Mr Londish's note, Mr Freeman said he did not "wish to invest any more money" and was not "committed to putting up the rest". The note also recorded Mr Londish's belief that Mr Freeman's position was that, as Mr Freeman "has not signed the JV agreement", he did not have to "put up any further funds". Thus, according to the note, Mr Freeman's statements, and Mr Londish's understanding of them, were directed to Mr Freeman's obligations concerning future funding; not his obligation to provide funds to date.
Mr Freeman made his note in his diary. It reads: "28.12.13 Macedon Waters - [Mr Londish]-[Mr Freeman] Saturday meeting following the email confirmation from [the town planner] that in their opinion the Permit has lapsed and there is 21 days to get an extension. 1. We discussed [the email from the town planner] - [Mr Londish] placed emphasis on still being right about [the Victorian Civil and Administrative Tribunal] being the Authority/ still seems to feel that the Mayor can ease the way for an extension if it is actually needed. 2. I stressed the need for [Mr Londish] to see the Mayor to get a quick reading on what was required, I went on to say that [Mr Londish] should spend time lobbying the Councillors (he felt they would be on holidays) and the planners at council (he guessed the council would be shut) and I then asked the rhetorical question 'perhaps someone should simply ask [the Victorian Civil and Administrative Tribunal] if they are the authority.' We spoke of [the town planner's] requirement for payment in advance (he referred to the matter of his sister-in-law's house permit over which he had a loud disagreement of fees) - we both felt there was a probable need for them. [Mr Londish] felt the case he would make to Mayor Dukes rested on the error the Council had made previously on our Project where they acted outside their authority and cost us much time & the high demand for the facility in Woodend and other benefits for the community. He acknowledged we may be back to [the Victorian Civil and Administrative Tribunal] on appeal. *At that point [Mr Londish] lost his composure and made derogatory remarks about [Mr Freeman] interspersed with which was, 'you have an obligation to invest $1.2m' - we were asking for works on site in (May) and you refused (implication it was all my fault) - I offered you 50% of my interest in Oxford Falls for what: you have done nothing and tell me what to do etc' [Mr Londish] left saying he would 'let me sweat' and implying I had no pursuable claims (the pattern is that when in this state of some of his private tactics are revealed)". (Emphasis added.)
So far as concerns funding, Mr Freeman records Mr Londish asserting that Mr Freeman had an "obligation to invest" $1.2 million. Mr Freeman did not record his response to that assertion. It is probable he rejected it.

[16]

Affidavit evidence

Mr Freeman and Mr Londish each gave an account of what happened in the meeting in their affidavits.
Mr Freeman and Mr Londish agree that the relevant part of the conversation commenced this way: "[Mr Londish]: [The Victorian Civil and Administrative Tribunal] is the authority we need to approach for an extension, but the local Mayor may be able to assist. If the Mayor doesn't assist I will make the case that the Council previously made an error on our Project and that it cost us so much time and money, plus there is high demand for the Project and other benefits for the community. [Mr Freeman]: Given the urgency I think you should go to Woodend and talk to the Mayor, Councillors and Planners. Perhaps someone should just ask [The Victorian Civil and Administrative Tribunal] if they are the authority."
The men agree that Mr Londish then stood up and shouted: "You have an obligation to invest $1.2 million! We were asking for works on site in May 2013 and you refused! I offered you 50% of my interest in Oxford Falls for what? You have done nothing and you tell me what to do! You have made be beg for money. I will deal with the Permit without you and let you sweat on the outcome".
What divides Mr Freeman and Mr Londish is whether the following words, which the parties referred to as "the Disputed Words", were said. They are set out in Mr Londish's affidavit. Mr Freeman denies they were said.
The Disputed Words were: "[Mr Londish]: Why did you [not] provide the moneys for the earthworks as agreed? Had you provided the money for the earthworks back in April, as I had requested we would not be in the position we are now in. [Mr Freeman]: Sid, there is no signed JV. I haven't [signed] one therefore I am not, nor was I committed to provide all of the money if I chose not to do so. I chose not to do so. I don't have to do anything. [Mr Londish]: Then you are no partner of mine. [Mr Freeman]: That's right."
The Disputed Words do not appear in Mr Londish's note. Mr Londish's note records that Mr Freeman said he did not wish to invest "any more money" and was not committed to "putting up the rest". That is, he spoke prospectively.
According to the Disputed Words, Mr Freeman went further and said he "was" not committed to provide money if he "chose not to do so" and that he "chose not to do so" and did not "have to do anything". Some, but not all of those words first emerged in an email Mr Londish sent Mr Freeman a month later, on 29 January 2014, to which I will return.

[19]

The 2 January 2014 emails

On the morning of 2 January 2014 Mr Freeman sent Mr Londish three emails in the period of some 25 minutes.
In the first of those emails Mr Freeman said: "I write in reference to our meeting on the 28th December at which you mentioned several issues regarding our relationship and performance in particular your assertion that I have an obligation to provide $1,200,000 to fund the Macedon Waters Project. You know this is incorrect, as recently as the 9th December in the presence of Gary Reid and myself you discussed [you're] paying for some earthworks and specifically mentioned the original JV concept was not in force." (Emphasis added.)
Mr Freeman continued: "In our original discussions in 2010 the proposal was to obtain an Option over your brother's land in Woodend over which you had obtained a planning permit for development. I was to provide funds for various site works, the construction of 2 demonstration units and advertising/promotional activities for which your estimate was $1,200,000. The objective being to generate sufficient pre-sales of units to obtain Bank funds for the development. Your brother would not agree to the Option and subsequently the planning permit came under pressure from the Macedon Shire Council. Without the Option and therefore the ability to achieve pre-sales the draft joint-venture agreement between us was dropped."
Later in the email Mr Freeman said: "As you care to mention the $1.2m from time to time I have had my Solicitors review my position and they confirm our arrangements do not include any such obligation." (Emphasis added.)
In these passages Mr Freeman referred to Mr Londish's 28 December 2013 assertion that Mr Freeman had an "obligation" to provide funding to the Project, and denied having any such obligation. I think it probable Mr Freeman also made that denial at the meeting itself.
The debate on 28 December 2013 focused on Mr Freeman's asserted obligation to fund the earthworks. In this email Mr Freeman referred to the discussions on 9 December 2013 concerning Mr Londish paying for earthworks.
At 10.10 am on 2 January 2014 Mr Freeman sent Mr Londish a further email. This email was directed to the question of the earthworks. Mr Freeman attached three emails that had passed between the men in April 2013 which, Mr Freeman said, "should remind you that I questioned, not refused the costs of the earthworks…".
At 10.29 am Mr Freeman sent a third email referring to the fact that the 28 December 2013 meeting had "ended acrimoniously" and expressing concern at remarks that Mr Londish had made. Mr Freeman said: "I have supported you both financially and emotionally for the extended period of your ill health and traumatic break up of your marriage and have received numerous apologies from you for your outbursts in the past… As if to emphasise your determination to break our relationship you went on to say that you would not tell me what you were going to do regarding the crisis of the planning permit as you wanted to 'see me sweat'!"
In the first email Mr Freeman also wrote: "I trust we can move on with the Project and concentrate our efforts in safeguarding the planning permit for Macedon Waters."
In the email he sent shortly thereafter he said: "We now need to be unified and focused to ensure the future of this excellent Project in which we have both invested much time and money".
In third email Mr Freeman said: "This can end very badly or we can put it behind us and get on with the Project now you are getting access to your own assets and have some order in your private life. I continue to sympathise with your health and personal issues but I will no longer accept your outbursts…".

[23]

Mr Londish's email of 29 January 2014

Several days later, on 29 January 2014 Mr Londish sent this email to Mr Freeman: "Your concern about my health is appreciated but what would have been appreciated more was that you had honoured your agreement that I thought we had. The statement you made to me that Saturday morning in reply to my statement 'had you provided the money for the earthworks back in April as I had requested we would not have been in the position we are now' was, 'there is no signed JV as I have not signed it therefore I am not nor was I committed to have to provide all of the money if I chose not to do so and I chose not to do so'. This statement of yours is the reason as to why you had not signed the agreement was something that has shown me who the real Robert Freeman is … As you have sabotaged Grand Lifestyle Estates from the beginning and now showed your hand, I no longer want to be involved with you or with Grand Lifestyle Estates. It's all yours and I will forward my resignation as a director to you in the next few days".
The words of the second paragraph of this email correspond to an extent to those in Mr Londish's affidavit account of the Disputed Words.
However they attribute to Mr Freeman words more extensive and different from those recorded in Mr Londish's 28 December 2013 note. In the note Mr Londish attributed to Mr Freeman words to the effect that he was not committed to ongoing funding ("putting up the rest"). In this email Mr Londish attributed to Mr Freeman words to the effect that he was never committed to provide funding ("nor was I committed"); that he could choose whether to advance funds, and that he "chose not to do so" (presumably in respect of the earthworks).
However Mr Londish did not assert in this email that Mr Freeman added: "I don't have to do anything". There is no record in Mr Londish's note that Mr Freeman said anything like this. The assertion that these words were said was first made in Mr Londish's account of the Disputed Words in his affidavit of 20 October 2017 in these proceedings; sworn almost four years after the meeting.
Nor did Mr Londish assert in this email that Mr Freeman had, in April 2013, "agreed" to fund the earthworks; as opposed to refusing to discuss funding the earthworks (which is what Mr Londish recorded in his 28 December 2013 note). The assertion that Mr Freeman had in April 2013 agreed to fund the earthworks was also first made in Mr Londish's affidavit.

[25]

The Confidential Briefing Note

On 8 February 2014 Mr Freeman sent to Ivan's daughter, Ms Lyn Ingles, a "Confidential Briefing Note".
In his covering email, he made an enquiry as to Mrs Londish's health and continued: "I attach the briefing notes I promised which I hope are timely, they cover the events of the time of my involvement and include some references to your father which I would not normally make but this is not a commercial dispute rather a very personal crisis of your uncle. You will see that I have provided $700,000 of my family money to Woodend to pay all expenses which I will lose, you will also see that far from withholding funds I have been supporting Sid financially and he currently owes me $93,000. The notes are fully supported by documentation so if there is something that appears untrue or contradicts other views I can provide them. May I urge you to read the briefing notes and not be hurried into actions which are later revealed as very unfair and irreversible." (Emphasis in original.)
The Confidential Briefing Note included the following: "Like all successful developers [Mr Londish] is single minded and assertive, he also believes what he wants to believe which can become a problem e.g. that he was not mistaken over the length of the development permit - denied the Council had the right to say it had expired and was only prepared to concede our problem when our Town Planners confirmed the position over Christmas leaving us 21 days to submit an application for its extension - also his current fixation that he only learnt at our Christmas meeting that the original JV agreement was not in force and the story in his mind that all the delays of last year was because I had not provided funds. This last illustration is particularly exasperating as it implies that I have somehow tricked him over the original Joint Venture agreement as it would have required both of us to sign, it wasn't signed by either of us as the conditions it covered were nullified by Ivan not wanting to proceed with the Option, it ignores the many agreements between us since including our Directorship of GLE. Can anyone image someone as experienced as Sid Londish being fooled into thinking he had signed an agreement when he hadn't? Far from being obliged by the agreement to provide funds without the agreement I have provided them voluntarily." (Emphasis in original.)
Much attention was paid to this note both in cross-examination and in submissions.
On reflection, my conclusion is that it has little bearing on the issues before me. It casts some, somewhat distant, light on what Mr Freeman said on 28 January 2013 (although there is no suggestion that he use the word "voluntarily" on that occasion). It may also cast some light on what Mr Freeman intended by the words he used on 28 December 2013. However, for the reasons I discuss below, Mr Freeman's subjective intentions as to the words he used are not relevant to the question of repudiation. What matters is how a reasonable person in Mr Londish's position would have taken those words to convey so far as concerns Mr Freeman's commitment to the Project.
Nonetheless, in deference to the careful attention that was taken to this note I will make some observations about it.
In cross-examination, Mr Freeman agreed that he was "seeking to impress upon Ms Ingles, in the exercise of seeking to persuade Mrs Londish, that [he] had provided the funds to the joint venture voluntarily, rather than as a result of being obliged to do so".
However, I think a fair reading of Mr Freeman's words is that he meant that he was providing funds to the joint venture "voluntarily" in the sense of otherwise than by reason of a documented legal obligation. Thus his statement that he provided funds "voluntarily" was preceded, in the same sentence, by the statement that he was not obliged "by the agreement" (that is "the original Joint Venture agreement" proposed with Ivan to which he had referred earlier in the paragraph) to provide funds.
The point Mr Freeman was evidently seeking to make was that despite the fact that he and Mr Londish had not executed the proposed joint venture agreement with Ivan (because of Ivan's decision not to grant an option over the land) and the resultant absence of documentary compulsion to advance funds to the venture, he had in fact advanced funds. He characterised his payments as being made, in that circumstance, "voluntarily".
The word was not apt to reflect what I have found to be Mr Freeman's true understanding of his obligations. In cross-examination Mr Freeman said "I shouldn't have used the word 'voluntarily' there".
However, I cannot conclude that he meant, by use of the word, to convey that he thought he had no obligation, of any kind, to advance funds to the venture.
Indeed, Mr Freeman's note suggested that he remained committed to the Project.
Thus he said: "While I would prefer that Sid's outburst in January had not happened and we could proceed with the development, Sid appears to be determined to part company as he has today sent me his resignation from the GLE companies. … This is not a commercial dispute, progress was made in December - the Option was almost ready - the Due Diligence process for the Prospectus was within 2 final check meetings of being submitted to ASIC - it is in fact a repeat of the numerous times he has previously declared 'our relationship is finished'. The difference this time is that with the settlement of his marital separation Sid will have his own money to proceed and without your fairness and consideration I will lose the work of 2 ½ years and $700,000 of my family's money!"

[28]

"I am not, nor was I committed to provide all of the money if I chose not to do so. I chose not to do so. I don't have to do anything"

What is critical to the question of repudiation is what Mr Freeman said about the nature of his obligations under the joint venture agreement concerning advancing funds for the Project.
The express term of the agreement was that Mr Freeman would advance up to $1.25 million from time to time when funds "were required" (see [37(d)] above).
I have found that it was an implied term of the agreement that Mr Freeman was only obliged to advance funds if he and Mr Londish agreed that payment of a specific amount was reasonably necessary for the purposes of the Project.
What I must do is form an opinion as to what, probably, Mr Freeman said on this topic.
Recently, Rein J uttered the memorable words: "If the track of the truth in this matter is to be found, it is narrow and poorly lit." (The Estate of Colleen McCullough [2018] NSWSC 1126 at [22].)
In this case too, the track of the truth as to what was said on 28 December 2013 is narrow and poorly lit.
In his 28 December 2013 note Mr Londish recorded Mr Freeman as saying: "I do not wish to invest any more money and I am not committed to putting up the rest as we do not have any signed JV agreement".
In his note made at about the same time, Mr Freeman recorded Mr Londish as asserting that "you have an obligation to invest $1.2m".
It thus appears likely that Mr Londish spoke in terms of Mr Freeman's "commitment" and "obligation".
Both words appear in emails exchanged between the two men shortly after the meeting.
In his 10.04 am 2 January 2014 email Mr Freeman denied that he was under "an obligation to provide $1,200,000 to fund the Macedon Waters Project".
This was consistent with Mr Freeman's overall position that he was not prepared to characterise his role in the joint venture as being one where he had an unqualified "obligation" to advance funds. His state of mind was "I wouldn't allow him to tell me to pay something".
Although Mr Freeman did not record this in his note of the meeting, or assert it in his affidavit, it appears likely that he refuted Mr Londish's assertion that he had "an obligation" to invest any particular amount in the Project.
Mr Londish's 28 December 2013 note and his reasonably contemporaneous emails suggest the likelihood that Mr Freeman also denied being "committed" to providing funds.
Mr Londish's assertions as to what Mr Freeman said about this evolved in his emails over the next few weeks.
Mr Londish was apt to lose his temper and suddenly leave meetings. It is common ground that, on this occasion, Mr Londish stood up and began shouting, then stormed out.
Mr Londish's emails following the meeting show that he remained in a state of high agitation. This, together with Mr Londish's age and failing health, may explain how Mr Londish's recollection of what was said changed over time.
First, on 14 January 2014 Mr Londish asserted that Mr Freeman said he was "not committed to provide any more funding" (see [142] above). Then, on 29 January 2014 he said that Mr Freeman said he was never committed to provide funds if he chose not to (see [149] above). Finally, on 6 February 2014 he said that Mr Freeman said he had deliberately not signed to joint venture agreement in order not to be committed to funding (see [154] above). In his 20 October 2017 affidavit Mr Londish added that Mr Freeman had also said "I don't have to do anything".
In my opinion, Mr Londish allowed his memory to be embroidered by details that have no foundation in his near contemporaneous note, nor his immediate email response to Mr Freeman.
Mr Londish has allowed his recollection of what Mr Freeman said to become overlaid, perhaps unconsciously, with perceptions of self-interest, and what he came to actually remember was, perhaps, little more than an impression from which plausible details were, again perhaps unconsciously, constructed (to paraphrase the words of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 319). As His Honour said, "all this is a matter of ordinary human experience".
I am not persuaded that Mr Freeman said anything to the effect that he could "choose" not to provide funds or that "I don't have to do anything". I do not accept that the email in which Mr Londish asserted the first of these matters to accurately reflected what was said, nor that his later assertion as to the second of these matters is correct.
My conclusion is that it more likely than not, that in response to Mr Londish's unjustified complaint that "we would not have had this trouble" or that "we would not be in the position we are now in" (that is that the permit had expired) had Mr Freeman "started the earthworks" or "provided the money for the earthworks as agreed", Mr Freeman said something to the effect that he was not "obliged" to advance funds.
I think it also likely that Mr Freeman linked that lack of "obligation" and "commitment" to the undocumented nature of the men's relationship.
I am not persuaded that Mr Freeman said anything more about the nature of his funding obligation.

[29]

Were those words repudiatory?

Breach of contract by repudiation occurs when a party "evinces an intention no longer to be bound by the contract...or shows that [he or she] intends to fulfil the contract only in a manner substantially inconsistent with [his or her] obligations and not in any other way" (Shevill v Builders Licensing Board (1982) 149 CLR 620; [1982] HCA 47 at 625-626 per Gibbs CJ).
The purported repudiator's intention is assessed objectively from the perspective of a reasonable person in the shoes of the "innocent" party. The test is described by Deane and Dawson JJ in Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623 at 657-658: "An issue of repudiation turns upon objective acts and omissions and not upon uncommunicated intention. The question is what effect the [repudiating party's] conduct 'would be reasonably calculated to have upon a reasonable person'... It suffices that, viewed objectively, the conduct of the relevant party has been such as to convey to a reasonable person, in the situation of the other party, repudiation or disavowal either of the contract as a whole or of a fundamental obligation under it." (Citations omitted.)
The purportedly repudiatory conduct must be considered in its broad factual context.
The principles were set out by McDougall J, with whom Beazley P and Simpson JA agreed, in Wesiak v D&R Constructions (Aust) Pty Ltd [2016] NSWCA 353 at [109]: "…the alleged repudiatory conduct must not be considered in isolation. It must be analysed with reference to its entire factual setting. That setting is not limited… It includes all the events and correspondence leading up to [the allegedly repudiatory conduct]".
The question here is whether a reasonable person in the situation of Mr Londish would have understood the Mr Freeman's conduct, in its entire factual setting, bespoke an intention to no longer be bound by his obligations.
That is, would a reasonable person in the position of Mr Londish understand Mr Freeman's conduct, leading up to and at the meeting in which he said words with the effect that he did not consider himself "committed" or "obliged" to provide funds, to evince his unwillingness to comply with his obligation under the Oral JV to advance funds if he agreed with Mr Londish that a request for funding was reasonably necessary for the purposes of the Project.
The objective circumstances against the background of which Mr Freeman's statements must be viewed included that: 1. by the time of the 28 December 2013 meeting Mr Freeman had already advanced some $725,000; 2. he had never refused (unreasonably or at all) to make a payment for the Project; 3. the meeting took place at a coffee shop; 4. it was arranged urgently to discuss the previous day's revelation that the permit had lapsed, seemingly under Mr Londish's watch; 5. Mr Londish had wrongly accused Mr Freeman of unreasonably refusing to provide funding for the earthworks; and 6. Mr Londish had lost his temper.
As to the latter, Mr Freeman said, in cross-examination: "Sir, he was on his feet, and he was shouting. In a public place. These were a series of shouted accusations… He was on his feet, shouting at me, I didn't have a conversation with him sir".
Mr Freeman's statement that he was not "committed" or "obliged" - that is, at all - to provide funding misstated his obligation in that it omitted the subtle but important qualifiers to which I have referred.
However it was correct for Mr Freeman to assert that he was not "committed" or "obliged" to provide funds in the sense that he was not obliged to provide funds merely because Mr Londish asked him to.
He was also not "committed" or "obliged" to provide funds if he did not agree that funds Mr Londish proposed be expended were reasonably necessary.
Repudiation is a serious matter that is not lightly found or inferred (Shevill at 633). It is a "drastic conclusion which should only be held to arise in clear cases of a refusal, in a matter going to the root of the contract, to perform contractual obligations" (Harold R Finger & Co Pty Ltd v Karellas Investments Pty Ltd [2016] NSWCA 123 at [128] per Ward JA, with McColl JA agreeing).
In DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423; [1978] HCA 12 Stephen, Mason and Jacobs JJ said at 432: "…there are other cases in which a party, though asserting a wrong view of a contract because he believes it to be correct, is willing to perform the contract according to its tenor. He may be willing to recognise his heresy once the true doctrine is enunciated or he may be willing to accept an authoritative exposition of the correct interpretation. In either event an intention to repudiate the contract could not be attributed to him".
Their Honours cited Sweet & Maxwell Ltd v Universal News Services Ltd [1964] 2 QB 699; [1964] 3 All ER 30 at 734, in which Pearson LJ observed at 43: "A party should not too readily be found to have refused to perform the agreement by contentious observations in the course of discussions or arguments".
There is no repudiation where a party is prepared to perform its obligations on the proper construction of the contract as determined by a court, notwithstanding that it has earlier "taken a stand" on an incorrect understanding of its obligations (see also Wesiak at [95]).
In my opinion, notwithstanding Mr Freeman's unvarnished statement that he did not consider himself "committed" or "obliged" to providing funds, a reasonable person in the shoes of Mr Londish would not understand Mr Freeman to have thus renounced his obligation to consider with Mr Londish whether payment of a specific amount was reasonably necessary for the purposes of the Project.
The words fell from Mr Freeman during a public argument with Mr Londish. The meeting had been arranged to save the venture from the immediately preceding "crisis" of a lapsing permit. Mr Freeman had historically complied with his obligations to consider whether proposed Project expenses were reasonably necessary.
It would be a serious and drastic conclusion to hold that Mr Freeman had, by an inexact statement, intended to bring their agreement to an end. That is especially so given that he funded and pursued the Project in 2013 and his efforts to save his commercial relationship with Mr Londish in January 2014. Mr Londish agreed that the latter conduct showed "[Mr Freeman] wasn't trying to walk away".
My conclusion is that the words uttered by Mr Freeman were not repudiatory.

[30]

"Then you're no partner of mine" / "That's right"

Mr Londish claims that, at the conclusion of his conversation with Mr Freeman on 28 December 2013 he said, following Mr Freeman's statement that he was not committed to providing funds, that "then you're no partner of mine" and that Mr Freeman responded "that's right".
Mr Londish makes no reference to such words in his 28 December 2013 note nor in any of his emails to Mr Freeman in January and February 2014.
According to Mr Londish's note, his final words to Mr Freeman at the meeting were "I do not wish to be seen with you, you mean miserable little shit", together with words to the effect that Mr Freeman was "self-opinionated" and believed that because "he is putting up the money", "he is the boss and makes all the decisions".
In cross-examination Mr Londish agreed that "probably" those were his final words on the day.
Mr Londish also gave this evidence: "Q. It was nothing to do with him being a partner of yours, when you stood up and walked out? A. But I had said it before that. Q. When you got up, your final words were what is stated in your typed up note, and not what was written in your statement, correct? A. That's not correct. I did tell him, 'You're not a partner of mine anymore.' He said, 'No.' Q. Why did you not record that in this written document, which is meant to be a record of your meeting? A. I don't know why I didn't. Q. I put it to you that you didn't record it, because it was never said? A. No. It's not correct. Q. Once again, you may have been mixing up what was a conclusion that you'd come to in your mind, rather than what was actually expressed. Could that be a possibility? A. No. Q. In fact, when you got up and said you did not wish to be seen with Mr Freeman, I put it to you you did say that, it was you who was trying to terminate the agreement with Mr Freeman, not the other way around? A. I'm sorry, but it's the reverse. Q. By putting these to statements in your affidavit, that 'You are no partner of mine,' and 'That's right,' you were just trying to make your conversation look better for your case, correct? A. I wasn't thinking of any case. Q. When you did -- A. I made -- Q. -- your affidavit, I'm talking about? A. Yes, I'm saying to you, I didn't do it for my case. I wasn't thinking of any case. The fact is, I told him 'You're not a partner of mine.' He said, 'That's correct.' And that is the truth."
Mr Freeman's note records that Mr Londish said something to the effect "you have done nothing and tell me what to do" and left the meeting saying that we would "let me sweat". In cross-examination Mr Freeman said "the bit about letting me sweat stays in my mind".
In his note Mr Freeman also recorded that he understood Mr Londish was "implying I had no pursuable claims".
It does seem clear that Mr Freeman has not recorded in his note all that happened on 28 December 2013. Mr Freeman's note states that Mr Londish "lost his composure" and made "derogatory remarks" about Mr Freeman which were "interspersed" with the particular comments that Mr Freeman recorded. It seems that Mr Londish made other "derogatory remarks" that Mr Freeman did not record.
Further, in Mr Freeman's 2 January 2014 email he recorded that Mr Londish had said that he was not going to say what he proposed to do "regarding the crisis of the planning permit". This is another detail that Mr Freeman did not record in his note.
None of this is surprising.
However Mr Freeman gained the impression from what Mr Londish was saying that Mr Londish's position was that Mr Freeman "had no pursuable claims". That suggests that something was said about what "claims" Mr Freeman might be able to "pursue". The most obvious claim Mr Freeman would wish to "pursue" was recovery of the funds he had advanced.
It would be consistent with that for Mr Londish to have said something to the effect "you're no partner of mine".
Further, Mr Londish seemed to me to be very certain, in the passage of cross-examination that I have set out at [238] above that he said those words, although perhaps earlier in the conversation.
In those circumstances I think it is probable that, at some time during the meeting, but following Mr Freeman's statement about the nature of his obligations under the agreement, Mr Londish said something to the effect that Mr Freeman had no further rights against him.
I am not able to come to any conclusion as to what, if anything, Mr Freeman said in response.
Whether or not a reasonable person in Mr Freeman's position would have regarded what Mr Londish said as bespeaking Mr Londish's repudiation of his obligations under the Oral JV, the matter was put beyond doubt by Mr Londish's emails of 14 January 2014 ("we are no longer a JV and you do not need to worry any longer about what is going on for Woodend") (see [142] above) and 29 January 2014 ("[a]s you have sabotaged Grand Lifestyle Estates from the beginning and now showed your hand, I no longer want to be involved with you or with Grand Lifestyle Estates. It's all yours and I will forward my resignation as a director to you in the next few days") (see [149] above).

[34]

Reliance damages

The object of an award of damages for breach of contract is to put Mr Freeman in the same position he would have been in had the contract been performed, so far as money can achieve this result: Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54 (Mason CJ and Dawson J) at 80 citing the familiar words of Parke B in Robinson v Harman (1848) 1 Exch 850 at 855; (1848) 154 ER 363 at 365.
Expenditure actually and reasonably incurred in preparation for, or in the course of, performance of a contract is recoverable to the extent to which it is wasted as a result of a breach: McRae v Commonwealth Disposals Commission (1951) 84 CLR 377; [1951] HCA 79. These are "reliance damages".
A person seeking to recover reliance damages must ordinarily prove that the net value of the benefits to which he or she would have been entitled under the contract would have exceeded the wasted expenditure incurred in reliance on the defendant's promise (for example Amann Aviation per Brennan J at 104).
However, where a contract is repudiated by one party and thereby makes it impossible for the other party to prove its loss, "it is just to shift to the defendant the ultimate onus of proving that, had the contract been performed, the net value of the plaintiff's benefit would not have covered the expenditure he had incurred before rescission" (per Brennan J in Amann Aviation).
In these circumstances, a plaintiff may rely on a presumption that it would not have entered into a contract in which its costs were not recoverable (Mason CJ and Dawson J in Amann Aviation at 87) and that "the value of [the benefits the plaintiff would have derived had the defendant performed the contract] would have been at least equal to the total detriment which has been…sustained by the plaintiff in doing whatever was reasonably necessary to procure and perform the contract" (per Deane J at 126).
Until that presumption is rebutted by the defendant, "the plaintiff may rely on it to recover his or her reasonable expenses…in the case of a contract where the outcome of the contract, if it had been fully performed, cannot be demonstrated…" (per Mason CJ and Dawson J at 87).
The authors of Cheshire & Fifoot put the matter this way: "…once the plaintiff proves that such costs were reasonably incurred, the onus shifts to the party in breach to show that they would not have been recouped. This means that if it is uncertain whether costs would have been recouped, the presumption is applied that they would have been, and damages are awarded." (At [23.12], citations omitted.)
In Amann Aviation Brennan J said (at 106-107): "A plaintiff's inability to quantify his lost benefits is no justification by itself for casting on the defendant an onus to prove that the plaintiff would not have recouped reliance damages had the contract been performed. What justifies the reversal of the onus is the defendant's repudiation or breach which denies, prevents or precludes the existence of circumstances which would have determined the value of the plaintiff's contractual benefits."
The other members of the Court reached a similar conclusion (Mason CJ and Dawson J at 86-88, Deane J at 126-127, Toohey J at 142-143 and Gaudron J at 155-156).
Mr Freeman's case is that, had the venture proceeded, it would have been sufficiently successful for him to have been able to recoup his expenditure.
There is no suggestion that Mr Freeman's expenditure was not reasonably incurred for the purposes of the venture.
As it is Mr Londish's repudiation of the contract with Mr Freeman that "denies, prevents or precludes the existence of circumstances which would have determined the value of [Mr Freeman's] contractual benefits" it was for him to prove that Mr Freeman would not have recovered his expenditure, had the joint venture proceeded.
Accordingly, although it may be true, as Mr Parsons submitted that "the joint venture was not on the brink of fruition" and that "a lot remained to be done [to progress the venture] and Mr Freeman's money was not enough" this is not a circumstance that Mr Londish can call in aid to justify denying Mr Freeman the remedy he seeks.
As Mr Londish repudiated the Oral JV, it is for him to show that the Project would not have been sufficiently profitable for Mr Freeman to recoup the amount he advanced.
He has not done that.

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (38 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (19)