Galati v GC NSW Pty Ltd [2020] NSWSC 217 | Case summary

Supreme Court of NSW|2020-02-21|Before: Robb J

The parties

The first plaintiff is Mrs Marcellina Galati (Mrs Galati).
The second plaintiff is the trustee of Mrs Galati's superannuation fund. The third and fifth to eighth plaintiffs are Mrs Galati's children and their husbands or wives. The fourth plaintiff is a company which is the trustee of a trust for the benefit of Mrs Galati's son, Bruno Galati, and his family.
It will be sufficient to refer to the plaintiffs other than Mrs Galati as the remaining plaintiffs, as each of their legal positions in these proceedings is essentially the same.
In the beginning, Mrs Galati was the owner of a farming property known as 192 Garfield Road East, Riverstone (the Property). Neighbouring properties of comparable size were owned by families related to Mrs Galati, being Mr and Mrs Nicotera and Mr and Mrs Zappia.
The defendants belong to a group of companies controlled principally by the same persons, who have, for some time, engaged in the business of acquiring suitable properties for the purpose of subdivision and sale of the resultant lots for residential purposes. It will be convenient to describe this group of companies loosely as the Greencapital group.
A company in the Greencapital group acquired land adjoining Mrs Galati's Property, and was in the course of developing it, when the idea was formed that it would be feasible for the group to acquire Mrs Galati's property and the two adjoining properties, and amalgamate them into a single residential subdivision and redevelopment project.
Initially, the Greencapital group dealt with Mrs Galati through the second defendant, Greencapital Development Pty Ltd (Greencapital). The first defendant, GC NSW Pty Ltd (GC NSW) was incorporated late in the transaction and was substituted for Greencapital.
Lin Wu Tang (sometimes called Lin Wu Tan in the documents) is the sole director of Greencapital, which presently has two shareholders who hold 70 and 30 shares respectively. I infer from common addresses in the ASIC Extract for the company that Lin Wu Tang has some association with the 30% shareholder.
GC NSW was incorporated on 21 March 2017. Its sole director is Lin Wu Tan. It has 200 issued shares. I infer from common addresses in the ASIC Extract for the company that Lin Wu Tang has an association with a company that holds 130 shares. A person holding 30 shares appears to be the same person who holds 70% of the shares in Greencapital. Another company holds 20 shares.
It appears that Mr Darren Van Aardt was a project manager who had experience in providing services to companies in the Greencapital group, for the purpose of carrying out residential subdivision and redevelopment projects. Mr Van Aardt was also issued minority shareholdings in Greencapital companies that engaged in the projects. I infer from the ASIC Extracts in evidence that Mr Van Aardt is associated with the company that holds 20 shares in GC NSW.
Mr John Sherwood was also a project manager who had a history of providing his services to projects being managed by Mr Van Aardt, including for the Greencapital group.

Background

It will be convenient to outline how the dispute that is the subject of these proceedings arose before I examine the evidence in more detail.
Mr Sherwood made an approach to Mrs Galati to explore the possibility of her Property being acquired by a member of the Greencapital group. Substantially all of the negotiations on behalf of Mrs Galati and the owners of the adjoining properties were conducted by Bruno Galati with Mr Sherwood or Mr Van Aardt.
Eventually, terms were agreed that Greencapital would enter into put and call option agreements with the owners of the three properties. That company was selected because it had been used to carry out a development elsewhere in Sydney and was available as a nominal company to enter into the agreements.
Mrs Galati and her husband had acquired Mrs Galati's Property decades earlier for the purpose of conducting farming and bringing up their family. Unfortunately, Mr Galati died early, I understand at some time in the 1980s, and Mrs Galati continued the farming enterprise and brought up her children on the Property. The Property therefore had considerable sentimental value to Mrs Galati and her children, as they regarded it as Mr Galati's gift to them.
Consequently, from the outset, Mrs Galati and her children formed a strong desire to acquire the right to purchase a number of adjoining lots in that part of the proposed subdivision that comprised Mrs Galati's Property. One aspect of the arrangement was that one of the streets in the new subdivision would be named Galati Street, and it was proposed that the relevant lots would be on that street.
During the course of negotiations, it was initially proposed that the put and call option agreement that Mrs Galati was to enter into with Greencapital would give her a corresponding option to acquire up to five lots in the completed subdivision for prices at an agreed rate per square metre.
However, as the Greencapital group wished to avoid having to give the owners of the adjoining properties equivalent options, Mrs Galati was dissuaded from mentioning her proposed option to those owners, and eventually the reference to Mrs Galati's option was removed from the draft put and call option agreement to which Mrs Galati was to be party.
On 28 May 2015, Mrs Galati and the owners of the two adjoining properties entered into put and call option agreements with Greencapital on equivalent terms. The agreements provided for Greencapital to pay a fee to have an exclusive due diligence period, and then to pay another fee for a call option period that could be extended upon payment of additional fees. The owners were also given options to put the properties to Greencapital after the end of the call option period. The price for each property on exercise of the options was to be $7,000,000. I will return to an analysis of the terms of these agreements in more detail below.
Greencapital did not simultaneously enter into an option agreement with Mrs Galati to create the options intended to be given to her in respect of five lots in the proposed subdivision.
However, after further negotiations, on 8 April 2016, Mrs Galati and Greencapital entered into an option deed that did grant options in respect of five lots (the 2016 Deed).
Greencapital exercised its right of due diligence and paid the call option fee and a call option extension fee. It pursued a development application with Blacktown City Council. The Council approved the Development Application on 4 November 2016. However, at some time in the process, apparently at the request of the Council, the layout of the plan of subdivision was changed in a manner that had the result that the five lots identified in the April 2016 Deed were not created.
It was accepted by the parties at the hearing that they all thereafter proceeded on the conventional basis that Mrs Galati had a right to select five alternative lots in the approved plan of subdivision.
Thereafter, negotiations took place concerning the selection of five new lots from those that were available, and the possible alteration of the terms of purchase given that the original lots had not been created. Differences of view arose concerning the amount of the deposit that would be payable on the exercise of the options and how it would be paid.
Eventually, on 17 March 2017, Mr Van Aardt had a meeting with Bruno Galati that was mutually intended to resolve all outstanding issues so that the two agreements could be completed as soon as possible. I will call the result of these discussions the 17 March 2017 Agreement, although the parties were at issue about whether the agreement was final and binding, as the plaintiffs said, or only in principle and subject to exchange of detailed contracts, as the defendants contended.
Mr Van Aardt prepared an email to Bruno Galati on 20 March 2017 in which he set out, in some detail, his understanding of the agreement that had been reached, together with instructions as to who was required to take the steps necessary to implement it.
I will set out the terms of the 20 March 2017 email below, but for the purpose of this introduction it will be sufficient to note that they included an agreement that the put and call option agreements would be rescinded and Mrs Galati and the owners of the other properties would enter into new contracts with a company that would be a special purpose vehicle for the Greencapital group. It also included the terms upon which Mrs Galati would be given options in relation to the five lots to be chosen by her were also agreed.
GC NSW was incorporated the next day, 21 March 2017, as the chosen special purpose vehicle.
On 24 March 2017, Mrs Galati and the owners of the two adjoining properties executed deeds that rescinded the put and call option agreements. At the same time, each vendor exchanged a contract with GC NSW to sell the relevant property to it for a price slightly higher than the original $7,000,000, on the basis that completion of the three contracts was expressed to be interdependent.
GC NSW did not enter into any new agreement with Mrs Galati granting her options to purchase the five substitute lots that, by then, had been chosen by her.
Mrs Galati nominated the remaining plaintiffs as purchasers of the five lots and draft contracts were prepared on behalf of GC NSW by its solicitor and sent to those purchasers' solicitors for approval.
However, for reasons connected with the state of Mrs Galati's Property on completion of the contract for sale, which occurred on about 20 June 2017, GC NSW advised Mrs Galati on 4 July 2017 that it would no longer proceed with the sale of the five lots.
I will describe the issues raised by these proceedings in more detail below when I consider the parties' pleadings. However, before I examine the relevant facts in more detail, it will be appropriate to briefly outline the principal issues.
The plaintiffs claim that Mr Van Aardt and Bruno Galati reached a binding agreement on 17 March 2017, for which Mr Van Aardt's 20 March 2017 email provided a sufficient memorandum in writing. The plaintiffs assert that the agreement not only binds Greencapital, but also GC NSW, even though it was not incorporated until 21 March 2017. The plaintiffs primarily seek specific performance of that agreement.
The defendants reply that the so-called agreement did not bind the alleged parties, as the persons involved in the negotiation did not have authority to make the agreement; in any event it was only an agreement in principle and was not intended to become binding until formal contracts were exchanged; and finally, the so-called agreement could not bind GC NSW as it did not exist at the time the agreement was made.
Mrs Galati puts an alternative case, that if no agreement was made on 17 March 2017, the April 2016 Deed had not been rescinded, and remained enforceable, and she sought orders for the enforcement of that deed. The defendants responded with a claim that the parties to the April 2016 deed had mutually abandoned it.
Further, the defendants claim that, by her actions, Mrs Galati agreed that her obligations under the contract she entered into for the sale of her Property were independent of any intended options to purchase five lots in the new subdivision, with the result that Mrs Galati was obliged to sell her Property to GC NSW, but she could not insist on being granted options in respect of the five lots by GC NSW.
There were subsidiary issues which may be dealt with more conveniently together below.

Detailed facts

As the issues in this case raise questions of whether binding contracts were created, of authority, of ratification and adoption, and of abandonment, it will be necessary to examine in some detail the facts upon which the parties based their submissions.
As the parties' submissions dealt with the entire history of the parties' dealings, this analysis of the facts will do likewise, although, as will be seen below, the outcome of the dispute primarily depends upon events starting with the making of the 2016 Deed.
On 26 February 2015, Mr Sherwood sent an email to Bruno Galati that was copied to Mr van Aardt with the subject "OFFER TO PURCHASE".
The email was addressed to Mrs Galati, Bruno Galati and his wife Maria and Caterina Galati.
Mr Sherwood wrote in his capacity as project manager to Greencapital. Mr Sherwood put an offer to purchase the Property by way of put and call option.
The purchase price was $1,400,000 per usable acre, and the meaning of usable acre was defined.
The purchaser was to be Greencapital.
The option fee was 5% of the purchase price to be released at call option and one dollar for the put option. The duration of the option was: "12 months from date of Exchange of Option where the purchaser may exercise the option prior to that date at its discretion".
Upon exercise of the option the deposit was to be 10%, of which the 5% call option fee would form part, and settlement was to take place six weeks from date of exchange.
The purchaser was to be given a due diligence period of six weeks from the date of the email for a fee of $5000.
The email contained the following term: Other conditions of the contract;- The vendor may remove items from the residence prior to demolition…
This condition may have relevance to a dispute concerning the significance of the removal of items from the residence on the Property and the damage done to the property immediately before completion of the ultimate contract for sale of the Property.
Later the same day, Mr Sherwood sent a further email in which he amended the offer to refer to the purchaser as "Greencapital Pty Ltd or nominee".
On 27 February 2015, Bruno Galati responded to Mr Sherwood's email by noting, among other things, that at a purchase price of $1,400,000 per acre the purchase price would be $7,124,250. Bruno Galati added: We would also like to pre-sale purchase 3-5 serviced min 450 sqm blocks of land and if possible as you mentioned, name 1 to 2 streets. My father passed away when I was young and this is what he left us all, so we would like to keep a few blocks of land as memory of all his and mums hard work. All of the above is all on behalf of mum (Marcellina Galati).
Mr Sherwood and Bruno Galati then undertook negotiations that amended and refined the terms of the proposed purchase.
One clarification made by Mr Sherwood on 2 March 2015 was that: "… The nominee will be a Special Purpose Vehicle formed for the purpose of carrying out the development where the directors will be the directors of Greencapital".
Mr Sherwood added: "… We will give you a simple DD agreement which will have the terms sheet that we agree on tonight and the understanding that the legal documents when drawn will reflect those terms and if so that and all parties will be obliged to proceed…"
On 3 March 2015, Mr Sherwood sent Bruno Galati a deed for execution. He referred to the prospect that the neighbouring related owners to Mrs Galati might also sell their properties at Nos 198 and 210 in the following terms: "Please feel free to discuss this with your family members in the adjoining properties 198 and 210 as we would like to immediately proceed with them on similar terms. We however ask that you do not defer our arrangements."
Bruno Galati responded on 3 March 2015, inquiring, among other things: "If we can agree on 15% discount that would be great".
On 4 March 2015, Bruno Galati advised Mr Sherwood that he had been advised by the Galati's' solicitor that a put and call option agreement incorporating the due diligence together with the contract for sale should be prepared by Greencapital's solicitors, rather than to sign the individual due diligence agreement that had been provided earlier.
Bruno also advised Mr Sherwood in respect of the adjoining properties that: "…both families have agreed to proceed based on the same terms as you offered mum at 192".
Mr Sherwood advised Bruno by email dated 4 March 2015: "… We agree with all of this however we need a clear undersanding (sic) that if we are expending solicitors funds then the parties proceed on the terms outlined…"
Mr Sherwood advised Bruno Galati by email dated 8 March 2015 concerning proposed meetings with the three vendor families: We have had our on (sic) internal meetings and all is good however there is concern that here (sic) may have been discussion as as (sic) to the five lots discounted by 15% with all of the other families. If so the extent of these discounts amougs (sic) to a huge sum. It was intended to be (sic) have been a matter between us for your family with a maximum of 5 lots discounted and at last discussion it may not necessarily have been that many. Clearly it cannot be for 5 lots for each of the three families being 15 lots as If (sic) discounted by 15% that exceeds one million dollars and I am sure you did not intend that. Please ring me in the morning as we need to discuss options where no one loses…
On 10 March 2015, Bruno Galati sent an email to Mr Sherwood that sought to obtain from Greencapital firm offers of $7,000,000 for the three properties, notwithstanding that the usable acres may have been less than expected. The email included the statement in relation to Mrs Galati's Property that he believed Mrs Galati would accept a $7,000,000 price and the sale of five lots at a 15% discount.
Mr Sherwood replied on 10 March 2015, in which he stated Greencapital's preferred position in relation to Mrs Galati's property as being a price of $6,747,280, plus the discounted sale of five 350 m² lots but: "This offer relates to [Mrs Galati's Property] only".
Further negotiations ensued in which Bruno Galati pressed for a price of $7,000,000 for each of the three properties.
On 23 March 2015, the solicitor then representing Greencapital sent a draft put and call option agreement for each of the three properties to Mrs Galati's solicitor. He also asked for contracts for the sale of the three properties so that they could be annexed to the put and call option agreements.
The draft put and call option agreement to be entered into with Ms Galati contained a special condition 17, which gave the "Purchaser" (an erroneous reference to Mrs Galati) the right "to procure up to five completed properties at a discount of 15% to achieved sales for equivalent lots or to current market value at the time, whichever is higher…" The special condition appears to contemplate that the full price of the lots would be deducted from the $7,000,000 purchase price for Mrs Galati's Property.
The draft put and call option agreements for the Nicoteras and the Zappias did not contain a special condition 17.
A revised draft of the put and call option agreement was provided to Mrs Galati's solicitor. An amendment to the special condition giving the option to procure five properties was made, which included that the price would be a discount of 15% "to the purchase price as agreed by the Grantor and Grantee in accordance with clause 2.7". Clause 2.7 required mutual agreement during the Due Diligence Period "…on a purchase price for five properties referred to in clause 18. In the event the Grantee and Grantor cannot mutually agree on a purchase price, the Grantee cannot exercise the Call Option".
On 2 April 2015, Greencapital's solicitor stated its response to suggestions for the amendment of the draft put and call option agreement made by the solicitors for Mrs Galati that clauses 2.7 and 18 were not agreed.
On 4 May 2015, what was described as the final form of the put and call option agreements and the contracts for sale of land were provided by Greencapital's solicitor to Mrs Galati's solicitor.
Clause 20 of the draft put and call option agreement to be entered into between Mrs Galati and Greencapital provided: 20. SPECIAL CONDITIONS TO BE INCLUDED IN TAKEOUT CONTRACT 20.1 The Purchaser shall have the right to procure up to five completed properties at a discount of 15% to achieved sales for equivalent lots or to current market value at the time, whichever is higher, where the settlement of the property will be: (a) cash to the value of $7,000,000 less the previously paid call option fee and call option extension fee (if applicable) and less the full amount of the presold contracts; and (b) registrable titles of the presold lots including the signed transfers thereto where the value shown on the transfer will be the highest of the current market value or the price per square metre of sales achieved by the Purchaser for equivalent lots, less 15%.
It was intended that Mrs Galati would have the right to procure the five lots. Mrs Galati was described in the draft agreement as "Galati" or "the Grantor". There was no definition of "Purchaser". Mrs Galati was described in the annexed draft contract for the sale of land as the vendor. The reference to the "Purchaser" in the first line of the chapeau to clause 20.1 must be an error for Vendor.
The draft contract for the sale of land annexed to the draft put and call option agreement contained a special condition 46.1 that was substantially the same as clause 20 of the draft put and call option agreement, save that the erroneous reference in the latter to the Purchaser had been corrected and the option to procure the five lots was given to the Vendor.
The draft put and call option agreements and the draft contracts for the sale of land concerning the Nicotera and Zappia properties did not contain the provisions concerning the right to acquire up to five lots in the completed development.
On 2 May 2015, Mr Sherwood sent an email to Bruno Galati in which he referred to the issue of all three put and call option agreements with the contracts of sale and said: I now have authority to reach agreement with you on the sale prices of the 5 lots and will talk with you on Monday when it is suitable for you.
Mr Sherwood advised Bruno Galati on 15 May 2015, in contemplation of exchange taking place the next day, that the documents concerning Mrs Galati's Property would be reissued "…removing all matters relating to clause 46", which was the term of the special conditions intended to create the option in relation to the five lots.
Mr Sherwood added: "Therefore I 1attach (sic) the Deed for your execution and I will arrange for GCD to sign off tomorrow".
The deed referred to in Mr Sherwood's email was a draft deed between Mrs Galati and Greencapital. It provided as follows: PROVISION TO BUY 5 RESIDENTIAL LOTS RECITALS The vendor has entered into a contract of sale with the Purchaser for the sale of the 192 Garfield Road East (the land) for the purpose of subdivision and sale of residential allotments. AGREEMENT The parties acknowledge and agree that the Vendor shall have the right to procure up to five completed residential allotments at the rate of $950.00 per square metre (the presold contracts) where all 5 allotments are to be adjacent one to the other, where the settlement of the Property will be: Cash to the value of $7,000,000 less the previously paid call option fee and call option extension fee (if applicable under the contract) and less the full amount of the presold contracts; and Registrable Titles of the presold lots in including the signed transfers thereto where the value shown on the transfer shall be $950.00 per sq. metre. The parties acknowledge and agree that the purchase price of the Contract of Sale of the Property shall be reduced by the value of the adjustments set out in this agreement. This Deed shall have affect only when the Contract of sale is in force.
On 18 May 2015, Mr Sherwood sent an email to Bruno Galati in which he said: "As undertaken please find the executed Deed". Mr Sherwood referred to an apparent delay in exchange of the put and call option agreements that he understood was due to illness.
Mr Sherwood attached to his email a copy of the deed whose terms are extracted immediately above that was executed by the sole director of Greencapital.
The deed was not executed at any time by Mrs Galati.
In fact, exchange of the put and call option agreements did not take place until 28 May 2015. The previous day, 27 May 2015, Mrs Galati's solicitor sent an email to the solicitor for Greencapital that said: We confirm that the agreements have now been executed by our clients. … In relation to the property owned by Marcellina Galati and the subsequent purchase of the 5 lots, we are instructed that our client has spoken with your client who has asked us to prepare the relevant agreement. Obviously our client does not want to hold up exchange of the agreements pending finalisation of this agreement. Please provide us with a letter by your client confirming that they will enter into an agreement on the following terms: 1. The vendor has entered into a contract of sale with the Purchaser for the sale of the 192 Garfield Road East (the land) for the purpose of subdivision and sale of residential allotments. 2. The parties acknowledge and agree that the Vendor shall have the right to procure up to five completed residential allotments at the rate of $950.00 per square metre (the presold contracts) where all 5 allotments are to be adjacent one to the other, where the settlement of the Property will be: a. Cash to the value of $7,000,000.00 less the previously paid call option fee and call option extension fee (if applicable under the contract) and less the full amount of the presold contracts; and b. Registrable Titles of the presold lots including the signed transfers thereto where the value shown on the transfer shall be $950.00 per sq. metre. 3. The parties acknowledge and agree that the purchase price of the Contract of Sale of the Property shall be reduced by the value of the adjustments set out in this agreement. 4. If the Vendor elects to procure any of the Lots, it has the right to lodge a caveat over the Property. We look forward to hearing from you in relation to the above.
Greencapital did not provide to Mrs Galati the letter sought by her solicitor before the exchange of the put and call option agreement.
The evidence does not disclose why Mrs Galati's solicitor made the request in the 27 May 2015 letter, given that, on 18 May 2015, Bruno Galati had been sent, by Mr Sherwood, the deed executed by the sole director of Greencapital.
Numbered paragraphs 1 to 3 of the solicitor's email are identical to the equivalent paragraphs of the deed.
The final paragraph of the deed on the second page has been omitted.
The solicitor has added the fourth numbered paragraph. It appears that the solicitor must have had a copy of the deed provided by Mr Sherwood, and sought an additional right, being the right to lodge a caveat over the Property.
The defendants submitted that, as Mrs Galati chose to exchange the put and call option agreement without having the letter requested by her solicitor, she in legal and practical terms created the situation where she could be obliged by Greencapital to sell her property for $7,000,000, without having any option to purchase the five lots.
The effect of this submission was that any earlier intention that the sale of Mrs Galati's Property be dependent on her right to acquire five lots had been abandoned, so that, for the future, the Court should analyse the evidence concerning the sale of Mrs Galati's property and the negotiations for agreements to buy five lots as being separate and unconnected.
They are contentious propositions that cannot be resolved on the evidence and the issues raised in the proceedings. As will be seen, on 8 April 2016, after further negotiations, Greencapital entered into the 2016 Deed with Mrs Galati, in which it gave her an option to acquire five lots in the development. Consequently, when she exchanged the put and call option agreement, the question whether Mrs Galati ceased to have any enforceable rights in respect of the acquisition of the five lots did not arise. The delivery of the deed of agreement executed by the sole director of Greencapital may or may not have constituted an agreement that bound Greencapital, or may have constituted a representation that, if Mrs Galati exchanged the put and call option agreement with the option to acquire the five lots deleted, Mrs Galati would nonetheless be given that option. There may have been discussions between Mr Sherwood and Bruno Galati, or between the solicitors, on that issue. There was no evidence of such discussions, and there was no need for such evidence, as Mrs Galati's option to acquire the five lots was established by the 2016 Deed.
In these circumstances, I do not accept that the evidence discloses, at this stage of the parties' dealings, any positive agreement or objective intention on the part of the parties to disconnect the sale of Mrs Galati's Property from her right to acquire five lots in the completed development. In fact, it is clear, on the basis of the evidence up to this time, that, objectively determined, both Mrs Galati and Greencapital were proceeding on the basis that both aspects of the transaction were part of the one deal.

Put and Call Option Agreement

Clause 2 of the Put and Call Option Agreement that was signed by Mrs Galati, Greencapital, and Lin Wu Tang as guarantor on 28 May 2015 (Put and Call Option Agreement), provided for a Due Diligence Period of 28 days from the date of the agreement. The Grantee was required to pay a Due Diligence Fee of $5000. That entitled the Grantee to an exclusive Due Diligence Period to finalise its assessment of the purchase of the Property. During the Due Diligence Period, the Grantor was prohibited from entering into discussions for the sale of the Property with any other party, and was required to facilitate the Development Application.
Clause 2.3 required the Grantee, if it wished to take up the Call Option, to pay the Call Option Fee to the Grantor on the date of expiry of the Due Diligence Period. The Call Option Fee was defined in clause 1.1 as being $350,000, which was 5% of the Takeout Price. The Takeout Price was $7,000,000.
Clause 3.1 created a Call Option to purchase the Property for the Takeout Price and on the conditions set out in the Takeout Contract.
In a similar manner, clause 3.3 created a Put Option in favour of the Grantor upon payment of the Put Option Fee of one dollar.
By clause 4, the Call Option had to be exercised before 5 PM on the Call Option Expiry Date, which was defined as being 12 months after the Call Option Commencement Date, which itself was defined as being the date of payment of the Call Option Fee.
By clause 4.2, the Grantor was entitled to exercise the Put Option at any time during the Put Option Period, which was defined in clause 1.1 as the period after the Call Option Expiry Date up to 5 PM on the Put Option Expiry Date.
Clause 4.3 entitled the Grantee to extend the Call Option Expiry Date by agreement in writing between the parties for a further period of six months, subject to payment of the Call Option Extension Fee of $70,000.
Clause 8.1 entitled the Grantee to nominate a Nominee. The Grantee, in that case, had to assure the financial capacity of the Nominee to complete the purchase of the Property, and the Grantor was given a discretion to consent to the nomination of the Nominee, which consent could not unreasonably be withheld.
The Nominee's rights were governed by clause 8.2 as follows: 8.2 Nominee's Rights The Nominee: (a) may exercise the Call Option in accordance with the terms and conditions of this Agreement; (b) is bound by the Put Option as if the Nominee had granted the Put Option; and (c) will be deemed to be the Grantee under this Agreement and be subject to and have the benefits conferred by the terms, conditions, rights and obligations of this Agreement from the date of service on the Grantor of the Nomination Notice.
Clause 20.1 governed the amount payable on settlement of the purchase of the Property as being: "cash to the value of $7,000,000 less the previously paid call option fee and call option extension fee (if applicable)."
Annexure A to the Put and Call Option Agreement contained the terms of the Takeout Contract.
The price was $7,000,000 and the deposit $350,000.
None of the boxes on the first page of the draft contract identifying the agreed inclusions was marked.
The draft contract contained special conditions 30 to 47.

Negotiation of 2016 Deed

On 10 June 2015, Mrs Galati's solicitor provided, to the solicitor for Greencapital, a draft deed governing the entitlement of Mrs Galati to purchase five lots in the completed development.
Mr Sherwood responded by email to Mrs Galati's solicitor on 14 June 2015. He advised that the terms of the proposed deed were not practicable as they required Greencapital to be able to sell registered lots before completion of the contract for the sale of Mrs Galati's Property. Mr Sherwood also advised that it was never agreed that Mrs Galati could lodge a caveat against the title to her property. Mr Sherwood ended by saying: Greencapital wishes to honour its agreement with Mrs Galati and looks forward to receiving an amended deed for immediate execution.
That comment is consistent with Mr Sherwood having an understanding that Mrs Galati and Greencapital had an existing agreement for Mrs Galati to be entitled to purchase up to five lots.
On 23 June 2015, Greencapital paid the $350,000 Call Option Fee pursuant to the Put and Call Option Agreement to Mrs Galati's solicitor. Consequently, the Call Option Expiry Date became 23 June 2016 unless it was further extended.
Negotiations continued concerning the terms of the proposed deed. At one stage, the parties explored the possibility that Mrs Galati could retain her existing residence on her Property and for that purpose acquire the lots in the proposed subdivision that accommodated the home.
On 10 March 2016, Mrs Galati's solicitor provided a revised draft of the proposed deed to Greencapital's solicitor. By this time the subdivision plan had progressed to a stage that enabled the identification of the five lots that Mrs Galati would become entitled to acquire. They were stated to be lots 49 to 53.
Mr Sherwood advised Bruno Galati on 11 March 2016 that the terms of the draft deed were acceptable, save that Greencapital's funders would not accept the lodgement of a caveat.
Mrs Galati's solicitor advised Greencapital's solicitor on 17 March 2016 that the deletion of the right to lodge a caveat was accepted.
On 21 March 2016, Greencapital by letter to Mrs Galati, signed by its sole director, offered the terms on which it would sell identified lots to Mrs Galati to enable her to retain her existing residence. The letter made provision for Mrs Galati to indicate her agreement by signing a copy of the letter.

2016 Deed

On 8 April 2016, Mrs Galati and Greencapital executed a deed to govern the terms upon which Mrs Galati was to have a right to purchase up to five lots in the proposed subdivision, being the 2016 Deed.
Recital C was: "Galati has the right to purchase up to five Approved Lots in the Property pursuant to the terms of this Deed". Thus, the recital recorded, in the present tense, the existence of a right in Mrs Galati to purchase the lots.
Clause 1.1.1 identified the Approved Lots as meaning: "the individual fully serviced Lots in accordance with clause 3.1 and being lots 48, 49, 50, 51 and 52 on the Plan". The Plan was Annexure B to the 2016 Deed.
The effect of clause 1.1.6 and Annexure A was that the draft contract at Annexure A constituted the terms of the contract to be entered into in respect of any lot chosen to be purchased by Mrs Galati.
Clause 2.1 provided for consideration of one dollar from Mrs Galati, the receipt of which was acknowledged.
Clause 3 of the 2016 Deed was in the following terms: 3. Purchase of Approved Lots 3.1 Greencapital is to inform Galati In (sic) writing that the Approved Lots are available for selection and Galati or her Nominee will at her absolute discretion have the right to purchase up to five of the Approved Lots from Greencapital on the following terms: 3.1.1 the Approved Lots purchased by Galati or her Nominee are to be adjacent to one another; 3.1.2 the purchase price for each Approved Lot is to be calculated at the rate of nine-hundred and eighty five dollars ($985.00) per square metre which is inclusive of any applicable GST; 3.1.3 within sixty (60) days of receiving notification from Greencapital in accordance with clause 3.1 of this Deed, Galati is to notify Greencapital in writing how many Approved Lots and which Approved Lots Galati or her Nominee wishes to purchase and if a Nominee is to purchase the Approved Lots, Galati must provide Greencapital with details of the Nominee. 3.2 Upon Greencapital receiving written notification from Galati in accordance with clause 3.1.3: 3.2.1 Presold Contracts will be exchanged by Greencapital and Galati (or Nominee) within seven (7) days; and 3.2.2 The relevant completion date for the Presold Contracts is to be in accordance with the Presold Contracts; and 3.2.3 the purchase price for each Lot will be calculated in accordance with clause 3.1.2 of this Deed. 3.3 In the event Galati does not forward to Greencapital written notification in accordance with clause 3.1.3 of this Deed, Greencapital cannot require Galati to purchase the Lots. 3.4 Upon settlement of the Contract, the deposit required to be paid for the Presold Contracts will be deducted out of settlement monies due to be paid by Greencapital to Galati under the Contract.
The Contract referred to in clause 3.4 of the 2016 Deed was the contract for the purchase of Mrs Galati's Property entered into following the exercise by Greencapital of its Call Option under the Put and Call Option Agreement.
Clause 11 of the 2016 Deed was an 'entire agreement' term in common form that had the effect that no representations not embodied in the deed shall have any force or effect.
Annexure A to the 2016 Deed contained the terms of the contract if Mrs Galati exercised her right of purchase in respect of any of the lots, including special conditions 30 to 45.
Annexure B to the 2016 Deed was a plan of proposed subdivision that identified the location of proposed lots 48 to 52.

Deed of Consent

Also on 8 April 2016, Mrs Galati and Greencapital executed a deed of consent whereby Mrs Galati agreed to allow Greencapital or its nominee to acquire a portion of Mrs Galati's Property required for the construction of one half of a road required by the Council in order to permit the related company to carry out the neighbouring subdivision and to realign the boundary of the Property.
The deed of consent is not otherwise connected with the 2016 Deed, but it is of some contextual relevance to the defendants' submission that, until the 2016 Deed was executed, Mrs Galati was legally required to sell her Property to Greencapital, if the Call Option was exercised, without having any enforceable right to acquire the five lots. Even if that were strictly the case, the parties were in continuing negotiations in respect of Mrs Galati agreeing to take the steps necessary to facilitate the Greencapital companies implementing both developments in an expeditious manner. Mrs Galati maintained significant commercial bargaining power.

Agreement to pay $10,000

On 2 August 2016, Mr Sherwood sent an email to Bruno Galati in which he confirmed, on behalf of the Greencapital company engaged in the neighbouring subdivision development, an agreement to pay Mrs Galati $10,000 in return for her allowing that company to construct a batter on Mrs Galati's property in association with the neighbouring development.

Change in lot numbers and further negotiations

On 20 September 2016, Mr Sherwood provided Bruno Galati with a copy of the then proposed plan of subdivision. The lots were quite different to the original plan because the layout of the streets in the subdivision had changed significantly. Mr Sherwood asked Mr Galati to inform him of his preferences, saying: "Please let me know your lot preferences, I had a note of 101 to 105 incl."
Bruno Galati responded on 27 September 2016 by saying that, at that stage, the Galatis were looking at Nos 301-306 on Galati Street, but that he would confirm once he had had a chat with his siblings.
Blacktown City Council's Notice of Determination of a Development Application for the staged subdivision of 192 to 212 Garfield Road East Riverstone was issued on 4 November 2016.
On 18 November 2016, Mr Van Aardt sent a text to Bruno Galati in which he advised that he was sending contracts for lots 101 to 105 to Mrs Galati's solicitor.
On 18 November 2016, Bruno Galati confirmed to Mr Van Aardt that the Galatis had selected 301 to 305 as the five lots, but added a request that 306 be held until Mr Galati had had a chance to chat to his siblings.
Mr Sherwood sent a more extensive email to Bruno Galati on 20 November 2016, in which he stated that it seemed that lots 301 to 305 had been sold, which was an accident for which Mr Sherwood sincerely apologised. Mr Sherwood asked if he could work with Bruno Galati to ensure that the Galatis got what they needed to the satisfaction of Bruno and Mrs Galati. Mr Sherwood advised that the Council required the change to the lot layout that was first proposed in the 2016 Deed, and that Mrs Galati's first choices "had evaporated". Mr Sherwood asked whether Mrs Galati would go back to accepting Nos 101 to 105.
On 24 November 2016, the sales and marketing director for the Greencapital group advised Mrs Galati's solicitor, by reference to discussions and agreement between Bruno Galati and Mr Sherwood, that Greencapital's solicitor had been instructed to issue the sales contracts for lots 324, 325, 326 326 and 328. The second reference to 326 was a typographical error for 327.
The letter appears to have enclosed an executed but undated copy of the 2016 Deed. The letter appears to have recorded a proposed substituted manner of performance of the 2016 Deed.
Greencapital's solicitor wrote a letter to Mrs Galati's solicitor on 1 December 2016 on the subject of: "… Option to Purchase Properties: Lots 324, 325, 326, 327, 328 / 192 Garfield Road East, Riverstone".
The letter referred to the 2016 Deed, and to the requirement in clause 3 thereof that Greencapital inform Mrs Galati in writing that the Approved Lots were available for selection. The letter advised that Greencapital had received approval to its development application and the Approved Lots referred to in the 2016 deed did not exist.
The letter referred to discussions between the respective clients and the writer's understanding that Mrs Galati had agreed to purchase the five identified lots for prices set out in the letter.
The letter concluded: We would be grateful if you would urgently confirm that your client wishes to proceed to purchase all the above lots and also advise whether they are to be purchased in your client's name or in the name of a nominee.
On 12 December 2016, Bruno Galati sent a text message to Mr Van Aardt asking whether there was agreement to the price per square metre being reduced to $950, stamp duty being paid by Greencapital and fencing being installed by that company.
It is apparent that Bruno Galati, on behalf of his mother, tried to negotiate more favourable terms than were provided for in the 2016 Deed, clause 3.1.2 of which required the price to be calculated on the basis of $985 per square metre.
The issue was not explored in detail in the evidence, but Bruno Galati's attempt to improve the terms may have been triggered by the fact that Mrs Galati was being asked to accept lots other than those identified in the 2016 Deed.
Mr Van Aardt replied by text on 13 December 2016, in which he insisted on the original terms, although he offered that Greencapital would compact and level the lots as well as undertake any retaining needed. Mr Van Aardt indicated that Mrs Galati could choose the lots she wished, but a decision was required as soon as possible.
Bruno Galati wrote an email to Mr Sherwood on 14 December 2016, in which he referred to a meeting with Mr Sherwood on 21 November 2016, and sought confirmation that it had been agreed that the five lots would be 324 to 328 with 323 on hold, the price would be reduced to $950 per square metre, fencing would be installed, stamp duty paid by Greencapital, and consent to an electrical easement signed by Mrs Galati.
It is not clear why this email was sent given Mr Van Aardt's text the previous day.
At Mr Sherwood's request, Bruno Galati sent a copy of his email to Mr Van Aardt later that day.
There was some delay in the period after 15 December 2016 in the parties' attempt to exchange a deed of variation of option agreement. That appears to have been caused in part by the unavailability of Mrs Galati's solicitors.
On 21 December 2016, Mrs Galati, Greencapital and Mr Tang executed a Deed of Variation of Option Agreement.
The Deed recited that Greencapital was not in a position to exercise the Call Option by the Call Option Expiry Date, and had requested Mrs Galati to extend the date.
The Call Option Expiry Date was extended to 23 February 2017, for the payment of a non-refundable Call Option Extension Fee of $60,000.
On 22 December 2016, Greencapital's solicitor sent a letter to Mrs Galati's solicitor in respect of the sale of Lot 324 to Mrs Galati. Inexplicably, the vendor is described as Greencapital No 1 Pty Ltd.
The letter contained the following statement: The draft Contract is subject to final approval by our client and is forwarded on the basis that no binding relationship exists prior to exchange.
The enclosed draft contract contained special conditions 30 to 73, which were substantially different to the special conditions included in the draft contract that was an annexure to the 2016 Deed.
On 22 December 2016, Mrs Galati's solicitor replied, stating that he had been advised that, on 21 November 2016, there had been an agreement that the price of the lots would be reduced to $950 per square metre, fencing would be installed and stamp duty would be paid.
Bruno Galati sent a text to Mr Van Aardt on 12 January 2017, in which he referred to his discussion with Mr Sherwood: "with us excepting (sic) the other blocks based on a reduced rate and S/duty paid…" He said that discussions had not finished.
On 12 January 2017, Mr Van Aardt replied to Bruno Galati's 14 December 2016 email. The reply took the form of Mr Van Aardt inserting responses in red into the different parts of Mr Galati's email. In essence, Mr Van Aardt relied upon what he described as a signed agreement, which I take to be the 2016 Deed. He declined to agree to the change of price or the other requests made by Mr Galati.
Bruno Galati replied to Mr Van Aardt on 13 January 2017, to the effect that he had discussions with Mr Sherwood and only agreed to lots 324 to 328 based upon the change in the lots that Greencapital had offered to Mrs Galati. As the change was not acceptable, Mr Galati indicated that the Galatis would like to remain with the original lots 301 to 305 that were selected in Mr Galati's 27 September 2016 email.
Mr Van Aardt in turn replied on 13 January 2017, by advising that he now understood the source of the confusion concerning the terms and added: "… I am committed to our current agreement". He said that he would give an instruction to the solicitors to deliver contracts for the sale of lots 101 to 305 "for execution in the next few working days".
On 19 January 2017, Greencapital's solicitor sent an email to Mrs Galati's solicitor referring to her earlier 22 December 2016 letter forwarding the draft contracts for sale. She added: "Please see attached letter and amended front pages of contract for the Lots your client has now nominated to purchase".
The attached letter dated 19 January 2017 enclosed new front pages to replace those on the earlier provided contracts for sale for lots 324 to 328. It also listed the price for lots 301 to 305 at a rate of $985 per square metre. The letter asked for execution contracts to be returned so that exchange may be effected.
Mrs Galati's solicitor replied on 24 January 2017, asking for confirmation that any contract entered into for lots 301 to 305 have been rescinded. This must have been a reference to the earlier misunderstanding that those lots had been contracted to be sold to other parties.
The solicitor also referred to a request by his client that the deposit amounts be changed to nil, and the 60 day period within which Mrs Galati had to exercise the option could begin on 19 January 2017, the date when the draft contracts were received.
The new front pages sent on 19 January 2017 provided for a 10% deposit. In Annexure A to the 2016 Deed, one dollar was stated as the amount of the deposit. Accordingly, the request to reduce the deposit to one dollar was in accordance with the 2016 Deed.
Clause 3.1.3 of the 2016 Deed required Mrs Galati to notify how many Approved Lots she wished to purchase within 60 days of receiving written notification from Greencapital that the Approved Lots were available to be selected. Evidently, the request was made for a new starting date for the 60 day period because the lots identified in the 2016 Deed were not created, and there was confusion as to the availability of the alternative lots preferred by Mrs Galati, and negotiations concerning possible changes in the terms of the contract to reflect the unavailability of the original lots.
Greencapital's solicitor responded on 24 January 2017 and confirmed that contracts to sell lots 301 to 305 had not been entered into.
In relation to the deposit, the solicitor asserted that condition 73 of the contract set out the requirement regarding the payment of the deposit.
Special condition 73 of the draft contract enclosed with the 22 December 2016 letter provided: 73. Payment of deposit by instalments Notwithstanding any other provision in this contract, if the vendor agrees to accept part payment of the deposit, it shall be paid as follows (and in respect of each payment time is of the essence): - (a) $1.00 on or before the date of this contract; and (b) the balance of the 10% deposit on the date of completion of the Contract for Sale between Marcellina Galati as Vendor and Greencapital Pty Ltd (or its nominee) in respect of the property at 192 Garfield Road East, Riverstone being the land in Folio Identifier 16/N/712.
As I have said, that special condition was not included in the draft contract that is Annexure A to the 2016 Deed.
However, clause 3.4 of the 2016 Deed provided that, on settlement of the contract for the sale of Mrs Galati's Property: "the deposit… will be deducted out of settlement monies due to be paid by Greencapital to Galati under the Contract".
In response to the request concerning the start date for the 60 day decision period, Greencapital's solicitor asserted that clause 3.1 of the 2016 Deed had already been satisfied, as Mrs Galati had elected to purchase lots 301 to 305. Therefore, clause 3.2 was operational and contracts should have been exchanged within seven days of notification of the lot selection, which was said to have occurred on 13 January 2017.
That assertion appears to misunderstand the effect of the provisions in the 2016 Deed to which reference was made. Given that the identified Approved Lots were not created, the provisions of the 2016 Deed could not operate precisely in accordance with their terms.
Mrs Galati appears to have treated Bruno Galati's statement in his 13 January 2017 email to Mr Van Aardt, requesting whether Mrs Galati could go back to lots 301 to 305, as an agreement merely to substitute those lots for the Approved Lots referred to in the 2016 Deed that were not created. Thus, the effect of the agreement would be to trigger the commencement of the 60 day period provided for in clause 3.1.3 in which Mrs Galati could choose which lots to purchase.
Greencapital's solicitor appears to have treated the request concerning lots 301 to 305 as being a notification of intention to purchase for the purposes of clause 3.1.3 of the 2016 Deed. If that were correct, Mrs Galati would be required to exchange contracts within seven days.
On 23 January 2017, Mr Sherwood sent an email to Bruno Galati referring to the appearance that the parties had "solved the issues" concerning the five lots. He then said: "I trust this honours all of the underkakings (sic) given both ways…"
Mrs Galati's solicitor informed Greencapital's solicitor, by email dated 25 January 2017, that Mrs Galati had advised that there had been no formal notification as per clause 3.3.1 of the 2016 Deed.
It appears that, on 25 January 2017, a meeting occurred between Mr Sherwood and Bruno Galati. Mr Sherwood sent an email on the subject to Bruno Galati on 26 January 2017. The email deals with Greencapital's position on the continued attempts by Mrs Galati to obtain more favourable terms because the original Approved Lots were not created. In essence, Greencapital's position was that the draft contracts for lots 301 to 305 represented the terms of the "agreement", which I infer is a reference to the 2016 Deed.
On the subject of the confusion concerning the deposit, Mr Sherwood said: "… Careful reading illustrates the deposit required is not 10%. Under the Special Condition in these contracts the deposit required is $1.00. As you no doubt appreciate a consideration is required in any contract. The consideration is the deposit. I trust this clarifies the purpose of the $1.00 deposit."
Bruno Galati replied to Mr Sherwood on 27 January 2017. In effect he accepted Greencapital's position on behalf of Mrs Galati, and said of his mother: "… She would like to honour all previous agreements that have been made between GCD and herself".
Bruno Galati thanked Mr Sherwood for confirmation that the deposit would be one dollar.
He also said that he would discuss with Mrs Galati and his siblings what lots were required and that the Galatis' solicitor would advise in writing: "… how many lots and whom will me (sic) purchasing as section 3.1.3 of the deed requires".
Bruno Galati also referred to the delivery of the remaining 57 tonnes of ironbark firewood, and $10,000 being deposited into Mrs Galati's bank account.
On 9 February 2017, Mr Sherwood by email requested that Bruno Galati provide a tax invoice addressed to Greencapital No 1 Pty Ltd for "… payment of the agreed sum of $10,000 net of GST as per the signed agreement".
On 14 February 2017, Greencapital's solicitor advised Mrs Galati's solicitor that she would arrange to forward further copies of the five contracts for sale as soon as possible.
The email also stated: …In addition, we spoke also of the possibility that our client may elect to nominate another SPV from its group to exercise the Option. It will be a Greencapital company. The shareholding of the new SPV will be altered, however, effectively the company is still in the control of our client. We are seeking accounting and taxation advice from our client's accountant and will advise once we have the name of the proposed nominee company. In view of the fact that the proposed nominee is within our client's group of companies (as opposed to an outside buyer), could you please advise whether your clients will require strict compliance with the terms of the Option Deeds i.e. financial details of the SPV and statutory declarations from directors and shareholders…
On 21 February 2017, Mrs Galati's solicitor sent an email identifying which of the present plaintiffs would purchase each of the five lots. He also stated that he was advised that Greencapital had agreed to accept nil or one dollar deposits on the contracts.
Greencapital's solicitor responded on 21 February 2017, referring to special condition 73 in relation to the payment of the deposit, and stating that Greencapital would require the balance of the 10% paid once completion of the contract for the sale of Mrs Galati's Property was effected.
Discussions about the effect of the 2016 Deed concerning the amount of the deposit payable continued. On 27 February 2017, in an email to Mr Van Aardt, Bruno Galati referred to the draft contract annexed to the 2016 Deed and noted that it stated that the "consideration" was stated to be one dollar, and the deposit was to be withheld from settlement. It did not state that the deposit amount was to be 10% of the purchase price.
Mr Van Aardt responded on 28 February 2017, stating his understanding that one dollar would be paid to secure the lot and "… [w]hen we settle your land in the future you will then pay the 10% deposit as is normal practice and then settle when the lots are registered".
On 2 March 2017, Bruno Galati responded to Mr Van Aardt, enclosing a copy of the "option agreement" and stating: "Part 2 states $1 consideration and 3.4 states deposit required to be deducted from settlement monies".
On 8 March 2017, Greencapital's solicitor said in an email to Mrs Galati's solicitor, in response to the nomination of the plaintiffs as purchasers of the lots: We refer to our recent telephone conversation and confirm that, provided the balance of 10% deposits is paid by all purchasers in respect of the contracts at the same time that our client completes the purchase of the Galati land, our client agrees to enter into contracts with the parties named below.
On 9 March 2017, Mr Van Aardt reiterated to Bruno Galati his understanding that one dollar was to be paid on exchange of contract and the balance of 10% deposit on the settlement of the sale of Mrs Galati's Property.
On 10 March 2017, Bruno Galati replied to explain his understanding as to why the deposit was only one dollar.

17 March 2017 meeting

Mr Van Aardt met with Bruno Galati on 17 March 2017 to resolve the issues that had arisen between the parties.
Mr Van Aardt gave the following evidence concerning the 17 March 2017 meeting at T 199.31-199.36: Q. By calling this meeting with Bruno, you were hoping to resolve any minor issues that were still in existence that were standing in the way of getting it going? A. I was frustrating with the progress and frustrated with all the other people involved. I wanted to be able to clear the source, just Bruno and I and resolve it and move forward. That was the intention.
Further, at T 202.28-202.39: Q. Can I suggest to you in relation to that email, Mr Van Aardt that the reason you say in the third full paragraph "Bruno and I now ask you to prepare the contracts as instructed below" and the reason you've put the pink text in is because this document set out the roadmap for how this agreement was to be mechanically implemented? A. This email was an email in frustration to all parties involved to resolve the matters and move forward, and I was leaning on the fact that Bruno and I as the two principle negotiating parties here come to an agreement, this was the agreement, please enact your roles and complete this agreement, so this was a frustrated email from me to all parties to say, "stop blaming each other, just please, Bruno and I are in agreement, these are the terms, please proceed on these points".

The 20 March 2017 email

On 20 March 2017, Mr Van Aardt sent the following email to Bruno Galati, with copies to the solicitors for both parties. In order to facilitate the later discussion of the meaning and effect of this email, I have inserted paragraph numbers in square brackets in the email that do not appear in the original.
Mr Van Aardt said in his affidavit that he prepared the whole of the email using two colours. The printing in black represented the substance of the email. The insertions in pink represented Mr Van Aardt's interpolated directions as to who should act on the various matters and how that should be done. The wording in pink in the original will be represented below in italics.
The email said: Hi Bruno, Dean & Sue [1] As discussed please find the terms as agreed between Bruno (Representing 192, 198 & 212 Garfield Rd) and I (Representing Greencapital) at our meeting on Friday the 17th of March 2017 [2] These terms agreed supersede any other discussions and I have broken them into segments so that the roles and responsibilities are clear. This agreement must be completed in full and in a timely manner [3] Bruno and I now agree that you prepare the contracts as instructed below. There should be two sets of contracts prepared [4] The rescission and exchange of the land purchase contracts with no changes to the contract as per the terms below [5] The exchange of the 5 Galati Lots on the terms below [6] Land settlement contracts - Sales contracts need to be prepared and we agree that the current agreement will be rescinded. The current contract will then be simultaneously exchanged with a Greencapital (GC) SPV which will be nominated in the next day or so. (Sue and Dean will prepare and facilitate this immediately) [7] Galati 5 Lots- as the deed is rescinded it is agreed with Bruno and GC that we will [8] GC to accept a $1 deposit on each nominated lot (Bruno to pay $5 now) [9] When the land settlements for 192, 178 and 212 proceed then the $1 deposits will simultaneously be increased to a 10% deposit of the purchase price for each contract. This deposit will be held in trust with Atkinson Vinden lawyers pending settlement of the lots. Payment of the 10% deposits will come from the proceeds of the settlement of 192 Garfield Rd (Sue and Dean will prepare and facilitate this) [10] Bruno is to confirm the purchasing entities for each lot asap (Bruno asap please) [11] GC will if possible change one of the 5 lots for another lot. If this is possible then the price of the lot will increase in price by $1325/m2 for every extra m2 increase in the size of the lot. i.e. if a 300 m² Lot is changed for a 301 m² Lot then the price will be $985 × 300 + $1325 for the extra 1 m². Confirmation of this needs to happen asap (Bruno to advise) [12] Bruno has requested that his legal bill be added to the price of one of the blocks which GC has agreed to. i.e. if the nominated legal bill is say $4400 and the price of one of the lots is $295,500 then we will simply add the $4400 to the $295000 = $299,900 (Sue to adjust as instructed by Darren) [13] Bruno has requested that GC has agreed to reduce that the purchase price of one of the lots by $10,000 in lue (sic) of an agreed payment to 192 for storage of material on site (Sue to amend contract accordingly) Other points of agreement - [14] GC has agreed to pay the interest on the Galati home loan until settlement of 192 Garfield Rd. To date GC has already paid $12,656.62 (Darren to continue payments until settlement has occurred) [15] GC has agreed to supply and deliver 57 tons of split iron bark firewood to the address provided by Bruno (Simmons have now been instructed by GC and Bruno will lias (sic) directly with Simmons) [16] GC has agreed to supply and deliver one concrete pipe to the address already provided by Bruno (Simmons have now been instructed by GC and Bruno will lias (sic) directly with Simmons) [17] GC agree to pay 192 $10,000 for allowing storage of materials on 192 (Sue to amend contract as above in Galati 5 lots) [18] These terms above are agreed to between 192, 198 & 212 and GC and need to be prepared in anticipation of exchange of contracts before the end of the week. The responsible parties are nominated in Pink and the time to complete these actions is before the end of the week. [19] Please can you advise me if there are any issues that I might have missed or need to be changed or if this deadline is a problem.
Mr Van Aardt explained that he had added, at the bottom of this email, a transcription of his hand-written notes made at the meeting with Bruno Galati on 17 March 2017. Mr Van Aardt has since lost his notes. Mr Van Aardt added in red his response to the matters noted so that they could be dealt with. The wording in red has been printed in italics.
Mr Van Aardt's note at the bottom of the 20 March 2017 email read as follows: Bruno as agreed [20] Mum's Legal expenses in regards to the easement are paid by GC - the difference will be added to one of the 5 lot purchases [21] Exchange of contracts on the 5 lots, with a $1 deposit - $1 to settlement of 192 Garfield then 10% deposit when we settle 192 and normal terms thereafter [22] Confirm loan interest paid Mums purchase at Maraylya is reimbursed until funds are settled as agreed and discussed [23] 57 tons split ironbark firewood to be delivered - DVA to confirm agreement with 192 in email [24] One length of approx.. 6-7m of concrete pipe delivered to her land at Maraylya, with some rock riprap to build small culvert headwall - as above [25] $10,000 agreed for the batter is paid, John has asked for a Tax Invoice but the agreement does not require it - to be paid and Bruno will give an invoice stating or within a lot as discussed [26] All cut firewood at 198 Garfield Rd be delivered to the Maraylya address - Joe/Bruno to organise [27] In regards to the demolition consent, the vendors agreed to obtain legal advice for peace of mind prior to signing. I believe that all vendors are willing to sign, however cannot confirm until Henry has advised the vendors. Bruno to address as well as the CC application form [28] Sale Contracts need to be prepared for settlement we agree to simply rescind the current agreements and simultaneously insert a Greencapital SPV [29] If a 192 lot is changed then the m2 difference is paid at $1325/m2 i.e. change a 330 m2 Lot for a 335 m2 lot then the sale is increased by 5m2 X $1325 on top of the agreed price
Later on 20 March 2017, Greencapital's solicitor, Ms Sue Falkner, sent a letter to Mr Van Aardt and Mrs Galati's solicitor, Mr Dean Claughton, in which she interpolated her comments into Mr Van Aardt's email "to confirm instructions". Ms Falkner's comments were inserted in capital letters. For brevity, I will set out Ms Falkner's comments against the paragraph numbers I have created for Mr Van Aardt's email. Ms Falkner said: [6] Response: noted Dean to confirm instructions to rescind option deeds and simultaneously exchange unconditional contracts on same terms. [8] Response: noted [9] Response: noted. The current contracts already state this [10] Response: I believe we know the purchaser details for each lot. [11] Response: Bruno will need to check with his brother to confirm whether he wishes to swap (if the alternative lot is available - Darren to confirm) [12] Response: Bruno to advise which lot is to have the legal costs added. On this basis, Coleman and Greig will issue a tax invoice to the SPV who ultimately purchases the land for the legal fees payable by Mrs Galati which are apparently $4,400.00 [13] Response: noted. Bruno to advise which lot price is to be reduced. [14] Response: Noted [15] Response: Noted [16] Response: Noted [17] Response: Noted
As mentioned above, GC NSW was incorporated on 21 March 2017.
Ms Falkner sent draft deeds of rescission to Mr Claughton on 22 March 2017.
Bruno Galati sent an email to Mr Claughton on 23 March 2017 giving instructions. Those instructions included that the current option agreements would be rescinded and simultaneous contracts entered into. Bruno Galati agreed to pay the 10% deposits on the five lots once the sale of Mrs Galati's Property was completed. Up-to-date nominations of the purchasers for the five lots were provided, including that Gregorio Galati would purchase lot 325 rather than lot 305 for a price of $357,571, which conformed with the formula agreed between Bruno Galati and Mr Van Aardt on 17 March 2017. Bruno Galati instructed that the legal costs were to be added to lot 301 and the price for that lot reduced by $10,000.
On the same day Mr Claughton forwarded Bruno Galati's email to Ms Falkner.
As Mr Claughton's clients were not in a position to exchange on 23 March 2017, Mr Claughton stated in his email: "… your client is granted an additional 1 day within which to exercise the option".

Rescission of Port and Call Option Agreement and new Contract for Sale

On 24 March 2017, Mrs Galati, Greencapital and Mr Tang executed a deed that had the effect of rescinding the Put and Call Option Agreement dated 28 May 2015, and requiring a refund by the relevant party of the Call Option Fee, the Call Option Extension Fees and the Put Option Fee.
I infer that at the same time as the deed rescinding the Put and Call Option Agreement was exchanged on 24 March 2017, contracts were exchanged between Mrs Galati, Mr and Mrs Nicotera and Mr and Mrs Zappia, as vendors, and GC NSW, as purchaser, for the sale of the three properties that were to be the subject of the new development.
The price stated in Mrs Galati's contract was $7,240,000 and the deposit was $981,325.
By special condition 44 of each contract, the sale of each property was made conditional upon and subject to the completion of the sale of the other two properties.
On 3 April 2017, a solicitor at D'agostino Solicitors, sent an email to Ms Falkner concerning lot 325. The meaning of the email is not entirely clear. It said: We refer to the above-mentioned matter and confirm we are the solicitors instructed to act on behalf of Mr Francesco & Mrs Barbara Camera. At present, the Contract for the above Lot has been issued to Marcellina Galati who as I understand is my client's daughter. Ms Galati has decided that she no longer wishes to proceed with this purchase however her parents intend to purchase the Lot instead. Dean Claughton who acts on behalf of Ms Galati has advised that he has contacted you to amend the Contract accordingly. If you could please provide same at your earliest convenience.
On 24 April 2017, Ms Falkner sent an email to Coleman Greig, the solicitors for Mrs Galati, in respect of the sale of lot 301 to the second plaintiff. It said: We refer to previous correspondence and enclose the draft counterpart Contract for approval. The draft Contract is subject to final approval by our client and is forwarded on the basis that no binding relationship exists prior to exchange. … We would be pleased to hear from you regarding an exchange of Contracts as soon as possible.
The attached draft contract was between GC NSW as vendor and VM Galati Super Fund Pty Ltd ATF VM Galati Super Fund as purchaser.
The price was $393,221.55 and the deposit was $39,322.15.
The draft contract contained special condition 73 that had the effect of requiring one dollar of the deposit to be paid on or before the date of the contract and the balance of the 10% deposit on the date of completion of the contract for the sale of Mrs Galati's Property, which was described as: "… The Contract for Sale between Marcellina Galati as Vendor and Greencapital Pty Ltd (or its nominee) in respect of the property at 192 Garfield Road East, Riverstone…"
Also on 24 April 2017, Ms Falkner sent similar letters to Coleman Greig enclosing draft contracts for sale of lot 302 to Caterina Galati, lot 303 to BMG Riverstone Pty Ltd ATF BMG Riverstone Property Trust, lot 304 to Francesco Camera and Barbara Camera, and lot 325 to Gregorio Galati and Celeste Levingson (wrongly spelt Leingson).
On 31 May 2017, D'agostino sent an email to Atkinson Vinden, who was Greencapital's and GC NSW's solicitors, which was in turn forwarded to Ms Falkner. The email concerned the contract for the purchase of lot 304 and included an email dated 31 May 2015 that D'agostino had sent to Atkinson Vinden.
The email advised that D'agostino acted for the purchases of lot 304 not Coleman Greig.
The email included the statement: "Our client has had the opportunity to peruse the Contract for Sale and has instructed us to seek the following amendments and alternatives to the Contract for sale submitted by you…" The email contained 17 numbered paragraphs, some of which requested amendments to the terms of the draft contract. For example: "1. Kindly advise whether the Vendor will accept a 5% deposit upon exchange". Some other amendments to the draft contract were suggested, although a number of the paragraphs only sought information.
On 8 June 2017, Mr Van Aardt advised Bruno Galati that he had already paid for the firewood and the concrete piping and did not know why it had not yet been delivered. He promised to sort the issue out.
On 15 June 2017, Mr Claughton wrote to Ms Falkner in respect of the four lots for which Coleman Greg was acting for the purchasers. Mr Claughton requested seven changes to all four contracts. They included a change to the Sunset Date to 30 June 2019 as well as the deletion of six provisions.

Completion of the contract for the sale of Mrs Galati's Property

By a series of text exchanges on 15 and 16 June 2017, Mr Van Aardt initially asked for the keys to Mrs Galati's Property so that the agent could conduct an inspection. Bruno Galati said that he could hold the keys until settlement and asked: "If the houses are getting demolished, is inspection required?" Mr Van Aardt replied: "The inspection is more so for waste i.e there is not any piles of asbestos or old cars, tyres, dead bodies etc left on the site", and said that he might not need the keys.
The evidence contains a settlement sheet prepared by Atkinson Vinden for the purpose of the completion of the contract for the sale of Mrs Galati's Property at 2:30 PM on 20 June 2017.
After adjustments were made in accordance with the contract, the balance payable to Mrs Galati on settlement was $6,270,566.19.
The settlement sheet set out how this balance was to be paid out, and one of the items was: "2. Atkinson Vinden Lawyers Trust Account $171,707.75". That amount is equal to the sum of the deposits in the five draft contracts issued by Atkinson Vinden on 24 April 2017. The deposit calculations in the draft contracts did not allow for the separate payment of one dollar on exchange for each property. The $171,707.75 did not allow for the separate payment of five amounts of one dollar each as the initial deposit for each of the five lots.
That may be because, in the events that happened, completion of the sale of Mrs Galati's Property to GC NSW occurred before any of the contracts for the sale of the five lots were exchanged, so, consequently, the whole of the deposit was paid into the Atkinson Vinden trust account on completion of the sale of Mrs Galati's Property.
The Atkinson Vinden Trust Ledger for the sale by GC NSW of lot 301 to VM Galati Super Fund Pty Ltd appears to record a credit on 21 June 2017 in the name of Mrs Galati for "Deposit" and a debit on 18 July 2017 in Mrs Galati's name for: "Refund of deposit monies".
The evidence establishes that, at the time of completion of the sale of Mrs Galati's Property, it was discovered by representatives of GC NSW that fixtures had been removed from the Property, a significant amount of damage had been done, and a considerable quantity of rubbish had been left on the Property. I will return to this issue below.

GC NSW's refusal to sell lots to Mrs Galati

It is sufficient to say that, after some communications between the parties concerning the issue, on 4 July 2017, Atkinson Vinden wrote a letter to Coleman Greig that included the following: Our client has instructed that, because of the loss our client has suffered as a result of your clients' blatant vandalism of the properties, our client will no longer agree to enter into contracts with Mr Galati and his relatives for the proposed purchase of lots in the subdivision. Please provide banking details so that the deposit monies can be refunded as soon as possible.
On 18 July 2017, Atkinson Vinden sent a letter in the following terms to Coleman Greig: We refer to previous correspondence and note that these matters are no longer proceeding. We enclose herewith cheque for $171,707.75 in favour of Marclina (sic) Galati being a refund of deposit monies.
Coleman Greig did not accept the repayment and the cheque was not banked.
Subsequently, inconclusive negotiations took place between the parties concerning settlement of the dispute.
On 17 November 2017, a solicitor at Atkinson Vinden sent an email to Mr Claughton recording an instruction that the parties had agreed to enter into a deed of settlement and release all claims subject to GC NSW making a payment of $10,979.41 for interest, paying the $10,000 for the retaining wall, and providing 12 tonnes of firewood in addition to 48 tonnes that had already been provided.
On 5 December 2017, Coleman Greig informed Atkinson Vinden that Mrs Galati had not agreed to enter into any deed of settlement.

Plaintiffs' claim for relief

Prayer 1 of the statement of claim sought an order requiring GC NSW to do all things reasonably necessary to procure registration of the relevant proposed deposited plans.
The Court was informed that registration had occurred in the period when the proceedings were pending, so that it is not necessary for the Court to consider this prayer.
Prayer 2 sought a declaration that Mrs Galati has an equitable interest in lots 301 to 304 and 325 or in 305 in the alternative to 325. As I understand this claim, it is really in the alternative to prayer 3. It will only become necessary if the Court does not order GC NSW to enter into contracts for the sale of the preferred five lots to the relevant plaintiffs.
Prayer 3 sought an order requiring GC NSW to prepare, execute and exchange contracts for the sale and purchase of lots as follows - lot 301 to the second plaintiff, lot 302 to the third plaintiff, lot 303 to the fourth plaintiff, lot 304 to the fifth and sixth plaintiffs, and lot 325 to the seventh and eighth plaintiffs. The sale price in each case is to be at the amount per square metre agreed by Mr Van Aardt and Bruno Galati on 17 March 2017.
I will initially direct attention to whether the plaintiffs are entitled to the order sought in prayer 3.
Prayers 4, 5 and 6 sought orders to enforce the subsidiary aspects of the 17 March 2017 Agreement in respect of the reduction of the purchase price of lot 301 by $10,000, the delivery by "the Defendant" to Mrs Galati of the 12 tonne balance of the ironbark firewood, and in lieu thereof, an order that GC NSW pay certain damages to Mrs Galati.
Prayer 8 sought, in the alternative, an order for damages against Greencapital.
The balance of the prayers sought procedural orders.

Authority of Bruno Galati, Mr Sherwood and Mr Van Aardt

The plaintiffs alleged in par 2 of their statement of claim that Bruno Galati has been the agent of Mrs Galati at all material times authorised to negotiate the terms of the various agreements involving Mrs Galati described in the statement of claim.
The defendants admitted this allegation in par 2 of the defence, but added that Bruno Galati was authorised, or held himself out as being authorised, by the vendors of all three adjoining properties, to act on their behalf in dealings with the defendants.
The Court is therefore able to proceed on the basis that the authority of Bruno Galati to contract on behalf of Mrs Galati has been admitted on the pleadings.
The plaintiffs alleged in par 7 that Mr Sherwood was an authorised agent of both defendants, as he was appointed by the defendants as the project manager of the development.
The plaintiffs also alleged that Greencapital was the authorised agent of GC NSW.
In par 7 of their defence, the defendants said that Mr Sherwood was an independent contractor, but added that in so far as Mr Sherwood dealt with Mrs Galati or Bruno Galati, he did so as authorised agent of Greencapital.
The statement of claim does not contain an equivalent allegation that Mr Van Aardt was the agent of the defendants. However, in relation to the agreement made on 17 March 2017, which is pleaded in par 21 of the statement of claim, the plaintiffs gave as particulars: "Meeting between Mr Galati and Mr Van Aardt on 17 March 2017".
In par 21(a) of their defence, the defendants admitted that, on 17 March 2017, "Mr Darren Van Aardt acting on behalf of [Greencapital] met with Mr Bruno Galati acting on behalf of all vendors of [the three adjacent properties]". Then, in par 21(b), the defendants admitted that Mr Van Aardt and the three vendors "reached an agreement in principle, which was not and was not intended to be legally binding".
I take these paragraphs of the defence as being admissions that Mr Van Aardt had the authority of Greencapital to make the agreement made on 17 March 2017, whatever the effect of that agreement may have been, but the defendants assert that it was an agreement in principle that was not capable of being binding, at least in respect of the sale of the lots to the plaintiffs, until formal contracts for sale were exchanged.
I also note that par 22 of the statement of claim contained an allegation that, on 20 March 2017, the 17 March 2017 agreement was reduced to writing by means of Mr Van Aardt's email, and by par 23(b) that the email was sent for and on behalf of GC NSW.
The defendants responded to this last allegation in their defence by saying, in par 23(b), that "the email was sent for and on behalf of [Greencapital] and the unnamed and unknown Greencapital special purpose vehicle".
The statement of claim contained a number of allegations concerning performance by the plaintiffs of the 17 March 2017 Agreement, but in particular, it contained allegations in par 26 that Greencapital notified Mrs Galati that GC NSW was its nominee to purchase Mrs Galati's property; on 24 March 2017 the Put and Call Option Agreement was rescinded by deed; and concurrently Mrs Galati exchanged contracts for the sale and purchase of Mrs Galati's Property by GC NSW.
The allegations in pars 26 to 28 of the statement of claim were admitted by the defendants in their defence.
The plaintiffs also alleged, in par 31 of the statement of claim, that pursuant to the 17 March 2017 Agreement and the 2016 Deed as varied, on 24 March 2017 Mrs Galati paid the sum of $171,707.75 to GC NSW, as the balance of the 10% payable as the deposit for the five lots to be purchased by nominees of Mrs Galati.
The defendants admitted that GC NSW withheld the amount, but alleged in par 31(b) of their defence that it did so "in contemplation that [Mrs Galati and her nominees] would proceed to exchange contracts for the sale of lots [301 to 305], on the basis that this sum would be applied as a payment of the deposit on exchange of such contracts".
So far as the pleadings are concerned, it appears that there was no issue about the authority of Mr Van Aardt or Mr Sherwood to act as the agents for both defendants, albeit that in the case of GC NSW, before 21 March 2017, both persons could only act for a company yet to be incorporated. It also appears that, on that basis, Mr Van Aardt had authority to act for both defendants in making the 17 March 2017 Agreement. Where the parties differed was that it was the defendants' case that the agreement was only made in principle and was not intended to be immediately binding. So far as it contemplated other agreements being entered into, such as the rescission of the Put and Call Option Agreement, and the exchange of contracts for sale between Mrs Galati and GC NSW, according to the defendants, the parties' intention was that such agreements would only become binding when formally made. One consequence was that the two transactions became severed in that one may become legally binding and the other not.
It is convenient to add at this point that, even if my conclusion that the authority of Bruno Galati, Mr Sherwood and Mr Van Aardt that was admitted on the pleadings is wrong, I am satisfied that their respective principals ratified their actions; in particular, in the case of Bruno Galati and Mr Van Aardt by implementing the 17 March 2017 Agreement.

Formation of 17 March 2017 Agreement

During the course of the openings, it came to appear that the defendants may contend that GC NSW was not bound by any contract made on 17 March 2017, because at that time it had not been incorporated. Further, it was suggested that nothing in the statement of claim alleged separately a mechanism by which GC NSW could have become bound by the agreement, such as ratification or adoption.
On the second day of the hearing, the plaintiffs provided to the Court a one-page document summarising their claim on the making of the agreements alleged, which became MFI 1.
In respect of the making of the 17 March 2007 agreement, which the plaintiffs called the "Relevant Agreement", the document said: 1. The parties are bound [by] the "Relevant Agreement" because: a. It was immediately binding upon them; or, in the alternative b. The body of conduct between them reveals an understanding or agreement (a manifestation of mutual assent) of their intention to be bound by it.
In relation to par 1(b), the document relied upon pars 5(c), 23 to 28, 30 to 34 and 40 of the statement of claim and the "contemporaneous correspondence in the evidence".
The defendants responded to this document by asserting that the basis of the plaintiffs' claim summarised in par 1(b) was not available to them on the pleadings.
The defendants submitted that the plaintiffs were limited to a case that the 17 March 2017 Agreement became finally binding on that date, and that the reference in MFI 1 to unidentified "contemporaneous correspondence in the evidence" was embarrassing, and that it was also impermissible to expand the plaintiffs' case. They relied upon the statement by Ipp JA in Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (2008) 73 NSWLR 653; [2008] NSWCA 206 at 704: … an essential purpose of pleadings is provision of procedural fairness, and a convoluted and confusing pleading is unlikely, justly, to permit picking up for one pleaded case facts pleaded for another.
They also relied upon the statement by Mason CJ and Gaudron J in Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279; [1990] HCA 11 at 286-287: Accordingly, the circumstances in which a case may be decided on a basis different from that disclosed by the pleadings are limited to those in which the parties have deliberately chosen some different basis for the determination of their respective rights and liabilities.
The defendants submitted that, in their case, they had not conducted themselves in any way suggestive of their acquiescence to the plaintiffs running any case beyond that which was pleaded. On the contrary, the defendants made it clear before the plaintiffs went into evidence that they did not consent to any enlargement of the case.
The plaintiffs replied by relying upon a statement by Stephen, Mason and Jacobs JJ in Leotta v Public Transport Commission of New South Wales (1976) 50 ALJR 666 at 668: … But the duty of the trial judge was clear. If in the cause of action upon which the plaintiff sued there had emerged at the conclusion of the evidence facts which, if accepted, established that cause of action, then it was the duty of the trial judge to leave the issue of negligence to the jury. The pleadings should have been amended in order to make the facts alleged and the particulars of negligence precisely conform to the evidence which had emerged. Part 20, r. 1(2) of the New South Wales Supreme Court Rules provides that all necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings. Now, and for many years past, a plaintiff does not fail by being refused leave to amend or through failure formally to apply for amendment, where the evidence has disclosed a case in the cause of action fit to be determined by the tribunal of fact. Particularly is this so when the action finally determines the rights of the parties in the cause of action. In a case where the question arose whether an amendment ought to have been requested and allowed in order to raise breach of a different duty of care the court in Mummery v. Irvings Pty. Ltd. (1956) 96 CLR 99 at p.112 said: "There is, of course, no doubt that the question of extending the issues at the trial was peculiarly within the discretion of the trial judge. But, on the assumption that there was some evidence upon which the jury could have reached a conclusion on this additional issue, there was every reason why it should have been submitted to the jury. If, as the members of the Full Court appear to have thought, the present judgment precludes the appellant from bringing any further action that was an additional reason why that course should have been adopted. We find it unnecessary to express any view upon that question but our doubts on this point do not lessen our belief that, if there was evidence upon this additional issue, a refusal to extend the issues was not, in the circumstances, justifiable." These observations apply a fortiori to a case where amendment would not raise a fresh issue based on a different duty of care but would only amend the expression of the course of events so that the facts pleaded would conform with the evidence given. An amendment to allege a different duty of care, namely, that of occupier to invitee, was rightly refused by the trial judge upon the ground that there was no evidence to support an issue of breach of that different duty. It is further to be observed that there was no suggestion made at the trial on behalf of the Commissioner that the case proposed to be left to the jury required the giving of further or other evidence and no application was made for an adjournment. It was no ground of appeal to the New South Wales Court of Appeal that a case contrary to the pleadings or the particulars had gone to the jury. The grounds of appeal were that there was no evidence of negligence, that the verdict was against the evidence and the weight of evidence, that there was an error in the trial judge's direction to the jury, and that the damages were excessive. …
The plaintiffs also relied upon the following passage from the joint judgment of the High Court in Dare v Pulham (1982) 148 CLR 658; [1982] HCA 70 at 664 (footnotes omitted): … Pleadings and particulars have a number of functions: they furnish a statement of the case sufficiently clear to allow the other party a fair opportunity to meet it (Gould and Birbeck and Bacon v. Mount Oxide Mines Ltd. (In liq.)); they define the issues for decision in the litigation and thereby enable the relevance and admissibility of evidence to be determined at the trial (Miller v. Cameron); and they give a defendant an understanding of a plaintiff's claim in aid of the defendant's right to make a payment into court. Apart from cases where the parties choose to disregard the pleadings and to fight the case on issues chosen at the trial, the relief which may be granted to a party must be founded on the pleadings (Gould and Birbeck and Bacon; Sri Mahant Govind Rao v. Sita Ram Kesho). But where there is no departure during the trial from the pleaded cause of action, a disconformity between the evidence and particulars earlier furnished will not disentitle a party to a verdict based upon the evidence. Particulars may be amended after the evidence in a trial has closed (Mummery v. Irvings Pty. Ltd.), though a failure to amend particulars to accord precisely with the facts which have emerged in the course of evidence does not necessarily preclude a plaintiff from seeking a verdict on the cause of action alleged in reliance upon the facts actually established by the evidence (Leotta v. Public Transport Commission (NSW)). …
I have considered these principles elsewhere in Griffiths v Martinez [2019] NSWSC 664 at [78]-[96] and Almona Pty Ltd v Parklea Corporation Pty Ltd [2019] NSWSC 1868 at [332]-[335]. Those cases were, however, quite different to the present, in that rulings were made preventing a party from introducing an unpleaded fraud claim into the proceedings after the opposing party had committed itself to a particular forensic course and presented its case without being warned of the impending attempt to introduce the fraud claim.
In connection with this, it must be remembered that rule 14.7 of the Uniform Civil Procedure Rules 2005 (NSW) requires that "a party's pleading must contain only a summary of the material facts on which the party relies", and that rule 14.14 relevantly requires that: "In a statement of claim, the plaintiff must plead specifically any matter that, if not pleaded specifically, may take the defendant by surprise".
I do not generalise, as every case is likely to require consideration of the particular facts. However, where plaintiffs allege that a particular contract binds the defendants, and the relevant terms of that contract, and allege the material facts upon which they rely to prove the making of the contract, it will not usually be necessary for the plaintiffs to be specific in their pleading as to the alternative legal principles that may be applicable in establishing the existence of the contract. The flexibility allowed by Leotta is likely to extend to permitting the plaintiff to establish the contract, if that can be done on the evidence that is admitted, without the plaintiff pleading specifically what is the offer and what is the acceptance, or, if no offer and acceptance emerges, what is the evidence that establishes that, by their conduct, the parties have entered into the legal relationship of contracting parties and manifested mutual assent.
I am satisfied that the plaintiffs' statement of claim sufficiently informs the defendants that the plaintiffs seek an order that GC NSW exchange contracts for the sale of the five lots with the relevant plaintiffs, and that the primary basis of that claim was the agreement made between Mrs Galati and Greencapital on 17 March 2017, which could be performed by Greencapital or its nominee. The plaintiffs alleged that the 20 March 2017 email was sent by Mr Van Aardt for and on behalf of GC NSW, even though it had not then been incorporated. Greencapital then notified Mrs Galati that GC NSW was its nominee, and, following that, Mrs Galati participated in the rescission of the Put and Call Option Agreement and entered into the contract for sale with GC NSW. The plaintiffs alleged that it was a term of the 17 March 2017 agreement that the sale of Mrs Galati's Property to GC NSW was conditional on GC NSW selling the five lots to Mrs Galati or her nominees (par 29). The plaintiffs also alleged, in pars 30 and 31, that they paid the deposit for the contracts of sale of the five lots to GC NSW. Further, in par 32, they alleged that those steps were in part performance of the five contracts for sale.
Although there may be scope for debate about the true legal significance of the facts upon which the plaintiffs relied, particularly their description as to part performance, I am satisfied that the plaintiffs put the defendants on notice of substantially all of the facts necessary to make their case that GC NSW became bound by the 17 March 2017 agreement.
I do not accept the defendants' submission that the plaintiffs' reliance upon the contemporaneous correspondence in evidence was embarrassing, as there was a limited amount of contemporaneous correspondence in which the solicitors for the parties sought to negotiate certain amendments to the terms of the contracts for the sale of the five lots.
I am also satisfied that the defendants were not deprived of any opportunity to call evidence that would make it procedurally unfair for the Court to permit the plaintiffs to pursue the claim they make that the events of 17 and 20 March 2017, and the subsequent involvement of GC NSW in implementing the terms agreed, gave rise to a binding contract to which GC NSW was bound.
The defendants did not identify any specific evidence or category of evidence that was reasonably necessary for their defence that they were unable to call because of the change in the formulation of the plaintiffs' case.

Contractual right to nominate performance or receipt of benefit by a third party

The 17 March 2017 Agreement permitted Greencapital to nominate a special purpose vehicle to enter into the new contract for sale with Mrs Galati to purchase her Property (par [6]), and it also permitted Mrs Galati to purchase five lots herself, or to nominate other parties to purchase those lots (par [10]).
The issue of the nature of the rights and obligations of the respective nominees is of some significance to the determination of the present dispute.
I respectfully accept the following statement of principle made by Finkelstein J in Avzur Hotels Pty Ltd v Ivanhoe Entertainment Pty Ltd [2009] FCA 701 at [9]: [9] Ordinarily when a purchaser is described as "A or his nominee", A is treated as having the power to nominate the person to whom the property purchased is to be transferred. The nominee does not become a party to the contract, much less a party with the rights and obligations of the purchaser: Tonelli v Komirra Pty Ltd [1972] VR 737. On the other hand, a contract may permit the purchaser to nominate a person that will stand in his place as the purchaser but, of course, under a novated contract: Salter v Gilbertson (2003) 6 VR 466 at 473-475; Commissioner of State Revenue v Politis [2004] VSC 126 at [16]. A nomination clause will have that effect only if it clearly so provides: Harry v Fidelity Nominees Pty Ltd (1985) 41 SASR 458 at 460 per King CJ ("I would be most unwilling to construe a contract as containing a provision of such unusual character [a substitution clause] … unless the language of the contract was quite clear"); Lambly v Silk Pemberton Ltd [1976] 2 NZLR 427 at 432 per Cooke J ("And in the absence of compelling language I do not think the court should impute to the parties an intention to allow an original signatory to substitute for himself a man of straw"). In Salter v Gilbertson (at 473) Phillips JA adopted the need to show a "compelling language" test.
See also the more elaborate discussion of the circumstances where a party to a contract may nominate a non-party to receive a benefit under the contract and where the nominated party may come to stand in the shoes of the nominating party by novation in the judgment of Barrett AJA (with whom Macfarlan and Gleeson JJA agreed in Fu Tian Fortune Pty Ltd v Park Cho Pty Ltd [2018] NSWCA 282 at [22]-[34].
A consideration of clause 8.2 of the Put and Call Option Agreement (set out above at par 100) shows that, had that agreement been performed, GC NSW would not have been a mere nominee, but would have been that class of nominee that becomes bound by the terms of the contract under which the nomination is made in lieu of the nominating party.
However, if the plaintiffs establish that GC NSW became a party to the 17 March 2017 Agreement, the principles considered above concerning the nature of the rights and obligations imposed upon a nominee will cease to be relevant. That is because the parties to the 17 March 2017 Agreement agreed to rescind the Put and Call Option Agreement, and that aspect of the agreement was implemented.
Mrs Galati entered into a new contract of sale directly with GC NSW as the purchaser.
The terms of the Put and Call Option Agreement concerning the introduction of a nominee by Greencapital may be relevant, however, in a subsidiary way. That is, to the consideration of whether the events of 17 March 2017 were objectively intended to give rise to a binding agreement.
The effect of clause 8.1 of the Put and Call Option Agreement was set out above at par 99. Greencapital had to provide information to Mrs Galati concerning the nominee, and Mrs Galati had a discretion to withhold her consent to the nomination, which could not unreasonably be withheld.
The Put and Call Option Agreement did not itself oblige Greencapital or its nominee to give Mrs Galati an option to acquire up to five lots in the subdivision. That right only existed under the 2016 Deed, to which Greencapital alone was a party. It follows that there is at least a strong argument that Mrs Galati could reasonably have refused to accept any nominee who would become the registered proprietor of Mrs Galati's Property, and who would not separately agree to grant an option in respect of the five lots to Mrs Galati.
The significance of this matter is that one aspect of the 17 March 2017 Agreement, as recorded in the 20 March 2017 email, (at [6]), was that Mrs Galati agreed to exchange contracts for the sale of her Property with a Greencapital special purpose vehicle, which would be nominated in the next day or so, without having the right to reject that nominee, as was given to her by the Put and Call Option Agreement.
There is no commercial reason why Mrs Galati would have thrown away that right, if, as a consequence, she lost the right to insist upon being granted an option in respect of the five lots by the special purpose vehicle. That is a consideration that weighs heavily in favour of the parties to the 17 March 2017 Agreement having an objective intention that the special purpose vehicle, whether it existed or would subsequently be incorporated, would be bound by the simultaneous obligation to sell the five lots to Mrs Galati's nominees (see [6] to [11]).
In relation to Mrs Galati's right to nominate purchasers of the five lots under the 17 March 2017 agreement, (see [10]), I am satisfied that the nominees would only become parties to individual contracts for the sale of particular lots, once those contracts were exchanged between the nominated special purpose vehicle and the particular nominees were selected by Mrs Galati. It was Mrs Galati alone who had the right to make the nominations, and to enforce the 17 March 2017 agreement against Greencapital and the nominated special purpose vehicle.
This finding is consistent with the fact that the plaintiffs do not allege in their statement of claim that Bruno Galati was authorised to enter into contracts by any of the plaintiffs other than Mrs Galati.
Consequently, it is only Mrs Galati who has contractual standing to enforce the 17 March 2017 Agreement, and to obtain the order sought in prayer 3 of the statement of claim. There was no suggestion by the defendants that a finding to this effect would make any difference to the outcome of these proceedings.

17 March 2017 Agreement immediately binding or in principle only

On the issue of whether the 17 March 2017 Agreement was intended objectively by the parties thereto to be immediately binding, subject to the special purpose vehicle nominated by Greencapital subsequently becoming bound, the plaintiffs relied principally on the following passage from the judgment of McHugh JA (as his Honour then was, and with whom Kirby P and Glass JA agreed) in GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 634-635: An agreement for the sale of property at a specified price does not necessarily indicate a legally binding contract. The magnitude, subject matter, or complexities of the transaction may indicate that the agreement was a limited one not intended to have legal effect: Sinclair, Scott & Co Ltd v Naughton (1929) 43 CLR 310 at 316-317. In New South Wales, real estate is ordinarily sold by signing and exchanging contracts in the form approved by the Real Estate Institute and Law Society. Accordingly, even though the parties agree in writing that real estate is sold for a specified price, the presumption is that no binding contract exists until "contracts" are exchanged: Smith v Lush (1952) 52 SR (NSW) 207 at 212; 69 WN (NSW) 220 at 222; Allen v Carbone (1975) 132 CLR 528 at 533. The vendor contends that the proper conclusion to be drawn from the sale of land, buildings and equipment which constitute a hospital containing sixty-two beds is that the sale was to be the subject of a formal contract drawn up by lawyers. However, the decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of the surrounding circumstances: Godecke v Kirwan (1973) 129 CLR 629 at 638; Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 332-334, 337. If the terms of a document indicate that the parties intended to be bound immediately, effect must be given to that intention irrespective of the subject matter, magnitude or complexity of the transaction. Even when a document recording the terms of the parties' agreement specifically refers to the execution of a formal contract, the parties may be immediately bound. Upon the proper construction of the document, it may sufficiently appear that "the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms": Sinclair, Scott & Co Ltd v Naughton (at 317). Thus, in Niesmann v Collingridge (1921) 29 CLR 177, the defendant made a "firm offer" of his land to the plaintiff at a specified price part of which was payable "on the signing of contract". The plaintiff verbally accepted the offer. The High Court upheld a finding that there was a binding contract. Rich J and Starke J said (at 185) that the signing of the contract was a term of the bargain which could be specifically enforced. That decision was applied in Godecke v Kirwan where a document signed by the vendor and the purchaser offered to buy the vendor's land at a specified price subject to the conditions of the Transfer of Land Act 1893 (WA) and eleven special conditions. Possession was to be taken "upon the signing and execution of a formal contract of sale within 28 days of acceptance of this offer". One of the special conditions provided for "a further agreement to be prepared … by (the vendor's) solicitors containing the foregoing and such other covenants and conditions as they may reasonably require". The High Court held that the document constituted a contract. Walsh J, with whose judgment Mason J agreed, said that the parties did not intend to make the execution of a formal contract a condition of the existence of a binding contract. He held (at 641) that "… there should be implied a promise by each of the parties that he would sign a formal contract within the twenty-eight days and would do everything necessary to enable this to be done within that time". In my opinion the grounds in this case for holding that a binding contract was made are stronger than in either of the last two cases. The effect of the correspondence was to create an immediately binding contract which was to continue until formal contracts were exchanged. The offer of 20 March 1986 contemplated that contracts would be exchanged within thirty days. A written acceptance of that offer "would constitute a legally binding acceptance until such time as it is superceded (sic) by a formally binding agreement". The letter of 21 March accepted that offer subject to nine conditions. One of them was that formal contracts were to be exchanged by 18 April 1986. Another was that written acceptance "of these additional conditions" was to be received by 25 April 1986. In legal theory, the letter of 21 March was a counter-offer. On receipt of the acceptance of that counter-offer there was "a legally binding agreement in principle" which was to continue "until such time as formal Contracts were exchanged as aforesaid".
As I understand their submissions, the defendants accepted the relevance of these principles, but submitted that the application of the principles to the events of 17 and 20 March 2017 did not establish that the parties intended to create an immediately binding contract, particularly by reason of the absence of any statement to the effect that the parties agreed to be immediately bound.
For the following reasons, I hold that Mrs Galati and Greencapital did intend to be immediately bound by the 17 March 2017 Agreement, as recorded in the 20 March 2017 email, and that they also intended that the special purpose vehicle to be nominated by Greencapital would become bound by the agreement, and that GC NSW did become so bound after it was incorporated by reason of its conduct in adopting the terms of the agreement.
There is a significant aspect of the facts in this case that differs from the circumstances of GR Securities, but which in my view substantially strengthens the plaintiffs' case that the parties intended to be immediately bound.
In GR Securities, the question was whether the parties intended to be immediately bound, by reason of a relatively simple exchange of correspondence, to an agreement to sell a relatively substantial private hospital that may involve relatively complex commercial considerations. The trial judge and the Court of Appeal held that the parties did so intend to be immediately bound by reason of the explicit terms of the simple correspondence.
In the present case, however, the surrounding circumstances included the fact that the Put and Call Option Agreement was in force and it gave Greencapital a right to exercise the Call Option and require Mrs Galati to sell her Property to itself or its nominee.
Also, under the 2016 Deed, Mrs Galati had an enforceable right to oblige Greencapital to enter into contracts with her to sell five lots in the subdivision to herself or her nominees. Although the originally identified five lots had not been created, the parties had conducted themselves in a manner that bound Greencapital to sell five alternative lots to Mrs Galati or her nominees, which was reflected at the hearing in the defendants' acceptance that the parties had proceeded on that conventional basis. The 2016 Deed annexed the terms of the contracts of sale, and dealt with the price of the alternative lots by containing a price per square metre.
In the manner that I have suggested above, even though Mrs Galati did not have a right to oblige Greencapital's nominee to implement the 2016 Deed in her favour, it is probable that she could reasonably have rejected any nominee that did not agree to do so.
Consequently, the significance of the events of 17 March 2017 must be considered on the basis that, on the morning of that day, both Mrs Galati and Greencapital had existing enforceable rights to require the other to deliver all of the commercial benefits that each party sought as a result of the transaction that had been ongoing since 2015.
There is no commercial basis for the Court to think that, in entering into the 17 March 2017 Agreement, either party objectively intended to abandon its existing rights, without at the same instant acquiring alternative and equal, or more advantageous, rights on a binding basis. In particular, from Mrs Galati's perspective, there is no commercial reason for thinking that she would rescind the Put and Call Option Agreement and the 2016 Deed, and enter into a contract with the nominated special purpose vehicle, on a basis that gave that nominee a right to refuse to sell the five lots to Mrs Galati or her nominees.
The proper complexion to put on the reasons for Mr Van Aardt and Bruno Galati coming to the 17 March 2017 Agreement is that, by reasons of delay, doubts and misunderstandings, the implementation of the two existing agreements had become delayed. The better view is that those two agreements continued to be enforceable in accordance with their terms, save in the case of the 2016 Deed, for the conventional arrangement whereby Mrs Galati could choose five alternative lots.
The discussions that took place on 17 March 2017 occurred as a result of frustration on Mr Van Aardt's part, and were intended to resolve outstanding uncertainties. They were also intended to introduce a number of changes and additions to the existing agreements that would enable the objectives of the parties to be implemented with greater expedition.
Although changes to the existing agreements were made, which included the rescission of both and their replacement by substantially equivalent (although adjusted) agreements, there is no justification for the Court to find that the parties had an immediate intention to rescind or abandon the existing agreements, and to replace them with an agreement in principle that would only become binding when detailed contracts were exchanged.
That conclusion is reinforced by the fact that there was no need for the parties to agree the detailed terms of contracts, because they had already done so in the Annexures to the Put and Call Option Agreement and the 2016 Deed.
The same conclusion as to the parties' objective intention to create an immediately binding contract can be justified from an analysis of the terms of the 20 March 2017 email in its context.
First, Mr Van Aardt's email was not only addressed to Bruno Galati, but it was also addressed to the parties' solicitors. Paragraphs [6] and [9] contained instructions to the two solicitors to "prepare and facilitate" the rescission of the Put and Call Option Agreement, the exchange of contracts for the sale of Mrs Galati's Property, and the exchange of contracts for the sale of the five lots.
The tenor of the instructions agreed between Mr Van Aardt and Bruno Galati was that the agreed arrangements were to be implemented forthwith. There was no need for detailed terms to be agreed, and it is implied that the transactions were to proceed on the detailed terms that had already been agreed.
Secondly, in pars [1] and [2], Mr Van Aardt speaks of "the terms as agreed", and that the "terms agreed supersede any other discussions". The positive references to there being an existing agreement, and the absence of any suggestion in the email that the agreement is provisional and dependent upon further negotiations, supports the conclusion that the parties objectively intended to be immediately bound.
Thirdly, although in par [3] there is an instruction that demonstrates that Mr Van Aardt and Bruno Galati had agreed that the solicitors should prepare two sets of contracts, it does not follow that there was an intention that the subject matter of each of the contracts was intended to be independent of the other. This flows from the statement in par [2] that Mr Van Aardt had broken the superseded "discussions" "into segments so that the roles and responsibilities are clear". The transaction was being divided into separate agreements for practical reasons, and there is no suggestion that the parties objectively intended that the party with the benefit of one aspect of the transaction could enforce it without giving the other party the benefit of the other aspect.
Fourthly, the conclusion that the parties objectively intended to use the existing, agreed forms of contract of sale is reinforced by the reference in par [4] to "exchange of the land purchase contracts with no changes to the contract". There is also the observation in par [6] that, for the purposes of the sale of Mrs Galati's Property to the nominated special purpose vehicle "the current contract will then be simultaneously exchanged" (emphasis added in each case).
Fifthly, the fact that par [9] refers to the increase in the deposits for the five lots to 10% of the purchase price being held in trust at the time of completion of the sale of Mrs Galati's Property to the nominated special purpose vehicle, pending completion of the sale of the lots, shows that the parties intended that the two aspects of the transaction would be interdependent.
Finally, as to the subsidiary matters of agreement, pars [12] to [17] either use the language of Greencapital having agreed to pay, or Mr Van Aardt giving Greencapital's solicitor an instruction to amend the relevant contract in accordance with the agreement.
The defendants submitted that the discussion between Mr Van Aardt and Bruno Galati on 17 March 2017 have legal effect falling within the third class of situation discussed by Dixon CJ, McTiernan and Kitto JJ in Masters v Cameron (1954) 91 CLR 353 at 360 in which "the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract".
If that were the proper legal analysis, it would be as true for Greencapital's right to acquire Mrs Galati's Property as it would have been for Mrs Galati's entitlement to an option to purchase up to five lots. The defendants have been spared this difficulty because Mrs Galati acted upon what was agreed on 17 March 2017, rescinded the Put and Call Option Agreement and entered into a contract for the sale of her Property to GC NSW. Consequently, the defendants are now in a position to assert that Mrs Galati abandoned her existing rights and now has none at all in respect of the five lots.
Both the objective documentary evidence and Mr Van Aardt's testimonial evidence are entirely inconsistent with Greencapital having an objective intention on 17 March 2017 of agreeing to rescind the Put and Call Option Agreement without having a right to acquire Mrs Galati's Property by means of a contract entered into by its nominated special purpose vehicle. The time, money and effort that must have been invested by Greencapital in the project by this stage are completely inconsistent with Greencapital having an objective intention consistent with the third class in Masters v Cameron.
The defendants submitted that two discrete formal arrangements were contemplated by the non-binding, in principle agreement reached at the 17 March 2017 meeting. This submission, if correct, would attenuate the reasoning set out in the preceding paragraphs, as it would leave Greencapital free to act in its own interests by ensuring that the new contract of sale of Mrs Galati's Property was exchanged at the same time as the Put and Call Option Agreement was rescinded, and leave Mrs Galati to her own fate in trying to achieve an exchange of contracts with GC NSW in respect of the five lots.
I do not accept that the evidence justifies a conclusion that the parties to the 17 March 2017 agreement intended that there would be two separate and independent transactions, one of which might be completed but not the other.
I have explained in par 305 above my reasoning for concluding that the wording of the 20 March 2017 email does not support the conclusion that the parties intended that there would be two entirely separate transactions, even though there needed to be two sets of contracts. I have also explained above at par 302 why I do not consider that Mrs Galati would have abandoned her existing rights under the 2016 Deed, as altered by the convention that arose between the parties, and entered into a contract to sell her Property to a company that was not party to the 2016 Deed, unless there was an agreement that the purchaser would sell the five lots to Mrs Galati or her nominees.
In my view, the whole history of the dealings between the parties is only consistent with Mrs Galati always insisting upon having a right to acquire five lots in the completed subdivision, and Greencapital agreeing that the granting of that right was part of the consideration for Mrs Galati's agreement to sell her Property to Greencapital.
In terms of the contractual outcome considered by the Court of Appeal in GR Securities, the wording of the 20 March 2017 email, on balance, suggests strongly that Mr Van Aardt and Bruno Galati had the objective intention of making an immediately binding agreement that involved the sale of Mrs Galati's Property and the purchase of the five lots on the basis of the existing agreed contractual terms. The instruction given by both parties to their solicitors was not for the negotiation of terms from a clean slate, but the preparation of any necessary contracts using the existing terms.
Two factors militate against that conclusion. The first is that, for reasons that were not explained in the evidence, Greencapital's solicitor provided draft contracts for the five lots to Mrs Galati's solicitor on 22 December 2016 that contained new special conditions that were not the same as the special conditions included in the draft contract for sale that was annexed to the 2016 Deed. The second factor is that, after new draft contracts for the five lots were provided by GC NSW's solicitor on 24 April 2017, the two solicitors that acted for the prospective purchasers sent letters requesting agreement to amendments to the draft contracts for sale.
The evidence did not establish, in any precise way, whether or not Mr Van Aardt and Bruno Galati were aware on 17 March 2017 that the special conditions attached to the current version of the draft contracts for sale of the five lots were not the same as the special conditions in the draft contract that was annexed to the 2016 Deed. There was no positive evidence that they were aware of the change.
In my view, this minor uncertainty in the evidence is not material. The better view is that either Mr Van Aardt and Bruno Galati objectively intended to make an immediately binding agreement upon the basis of the then current versions of the draft contracts for sale, or they intended, in the same manner as was found in GR Securities, to make an agreement that was immediately binding in respect of the essential terms of the transactions, as reflected in the current versions of the draft contracts for sale, and the additional matters agreed on 17 March 2017, leaving the parties free to negotiate and agree upon additional consequential terms if they were able to do so.
Against this conclusion, the defendants submitted that the 17 March 2017 agreement was uncertain and incomplete.
First, they submitted that there was no identification of the five lots to be sold. However, there is no reason why parties cannot agree that the owner of numerous lots in a subdivision will sell a given number of lots to a purchaser to be subsequently notified by the purchaser. There is nothing uncertain about that arrangement.
Secondly, the defendants submitted that there was no identification of the purchasers.
However, the party to the agreement was Mrs Galati, and not her nominees, and there is nothing uncertain about a contract for sale that provides that the transfers will be made in favour of nominees subsequently identified by the purchaser.
Thirdly, there was nothing uncertain about the fact that the agreement was silent about the precise time of exchange of formal contracts and completion of the sales. Absent those time stipulations, the law would imply reasonable time limits that would be dependent on the circumstances. That was not an issue that was explored in the evidence.
The fact that GC NSW's solicitors had no difficulty in providing complete draft contracts for the sale of the five lots, with the price and the identity of the purchasers included, shows that there was no operative uncertainty in the 17 March 2017 Agreement.
Nor did the requests for amendments made by the solicitors for the nominated purchasers show that the agreement was uncertain. When analysed, the purchasers' solicitors' letters sought, in a relatively conventional way, amendments to the draft contracts for sale that had been provided to which GC NSW was free to agree, or not, as it saw fit. The letters were not in substance counter offers.
The defendants submitted, in pars 140 to 147 of their final written submissions, that neither the discussions on 17 March 2017, nor the 20 March 2017 email, could have created a binding agreement because neither Bruno Galati nor Mr Van Aardt had authority to bind their respective principals.
I have already explained above at pars 243 to 259 why I consider that the authority of both men to bind their principals was conceded on the pleadings.
It is true that at T 89:17, Mrs Galati accepted in cross-examination that she had not in fact ever authorised Bruno Galati to enter into contracts for her, and slightly later that Mrs Galati had the final decision about what terms she would sell on.
That line of cross examination was in the context that Mrs Galati had never made Bruno Galati her agent by power of attorney to act unilaterally on her behalf.
The questions were not directly related to the events on 17 March 2017, and in any event by that time Mrs Galati had already made her own decisions on the principal terms of the agreement, and the evidence does not require a finding that, when Bruno Galati went to the meeting, he did not have guidelines from Mrs Galati as to what he could agree.
Nor does Bruno Galati's evidence at T 130:21-24 of his cross-examination that he was a middle man for the purpose of negotiating terms with Greencapital change this conclusion.
In any event, had the authority of Bruno Galati and Mr Van Aardt been put in issue on the pleadings, the evidence that Mrs Galati and Greencapital implemented the agreement by rescinding the Put and Call Option Agreement so that Mrs Galati could enter into the contract for sale with GC NSW, after Greencapital had nominated GC NSW, would clearly have constituted ratification by Mrs Galati and Greencapital of the authority of their agents to enter into the 17 March 2017 agreement.
Mrs Galati gave specific evidence of ratification of the 17 March 2017 Agreement in par 22 of her 10 December 2018 affidavit.
It is not necessary for the Court to respond in detail to two further submissions made by the defendants. The first was that, if the 17 March 2017 Agreement was binding, it was not performed by Mrs Galati. The defendants rightly accepted that nothing in the agreement made time of the essence. Mrs Galati promptly performed the part of the agreement that was for the benefit of Greencapital, and she was responding in a timely way to the exchange of contracts for sale of the five lots, when GC NSW terminated the process.
Secondly, I reject the submission that Mrs Galati elected to rescind the 17 March 2017 Agreement.
After GC NSW returned the deposit on 18 July 2017, no complaint was made by Mrs Galati until December 2017, and the deposit was only returned to GC NSW's solicitor on 5 March 2018. These events occurred after GC NSW repudiated the 17 March 2017 agreement on 4 July 2017. Mrs Galati did not accept that repudiation as bringing the agreement to an end. Her delay in commencing proceedings to enforce the agreement, and the timing of her return of the deposit that was involuntarily received by her, are not consistent with the rescission of the agreement by Mrs Galati.

Ratification of 17 March 2017 Agreement by GC NSW

The final substantive issue that must be addressed is the question of whether GC NSW became bound by the agreement that was entered into by Greencapital on its behalf before the company was incorporated.
Section 133 of the Corporations Act 2001 (Cth) has the effect that Part 2B.3 of the Act, which deals with contracts made on behalf of companies before the date of their registration, replaces any rights or liabilities anyone would otherwise have on the pre-registration contract. The provisions of the Part therefore replace the common law rules.
Section 131(1) relevantly provides: (1) If a person enters into, or purports to enter into, a contract on behalf of, or for the benefit of, a company before it is registered, the company becomes bound by the contract and entitled to its benefit if the company, or a company that is reasonably identifiable with it, is registered and ratifies the contract: (a) within the time agreed to by the parties to the contract; or (b) if there is no agreed time - within a reasonable time after the contract is entered into.
In his opening, counsel for the plaintiffs made clear at T 4:2 that the plaintiffs' case was that GC NSW had become bound by the 17 March 2017 Agreement by operation of s 131 of the Corporations Act by reason of acts undertaken by GC NSW that constituted ratification of the agreement.
As mentioned above, the defendants objected to this claim on the basis that reliance upon s 131 had first been made in opening, and ratification was not in terms pleaded by the plaintiffs in the statement of claim. For the reasons given above at pars 260 to 277, I have rejected the defendants' submission. The plaintiffs' statement of claim made it sufficiently obvious that they asserted that GC NSW was bound by the agreement, and they pleaded the actions of the company that constituted ratification. The use of the word "ratification" was not essential to the availability of the claim.
That conclusion raises the question as to whether the 17 March 2017 Agreement was entered into by Mr Van Aardt, or by Greencapital, on behalf of, or for the benefit of, GC NSW, or whether it purported to be so.
In Mr Van Aardt's 20 March 2017 email, he stated in par [1] that he entered into the agreement "representing Greencapital".
In par [6] of the email Mr Van Aardt said: "… The current contract will then be simultaneously exchanged with a Greencapital (GC) SPV which will be nominated in the next day or so…"
The better view is that, when Mr Van Aardt used the word "Greencapital", he meant to refer to the Greencapital group, rather than the second defendant, which I have called "Greencapital" for the purpose of these reasons. Looking at the whole of the evidence, Mr Van Aardt generally saw himself as acting for the persons who had the underlying interests in particular companies in the Greencapital group, and sometimes that would involve acting for a particular company that had been chosen for a particular commercial purpose.
That conclusion is reinforced by the reference in par [6] of the 20 March 2017 email to "a Greencapital (GC) SPV". On balance, that was not a reference to an existing or future subsidiary of Greencapital, the second defendant, but some appropriate special purpose vehicle selected by the controllers of the Greencapital group.
There is then a question as to whether, in par [6], Mr Van Aardt was referring to the special purpose vehicle as if he intended that the agreement was to be on behalf of the special purpose vehicle, or whether the special purpose vehicle would participate in the first sense considered by Finkelstein J in Avzur Hotels Pty Ltd v Ivanhoe Entertainment Pty Ltd at [9]. That is, whether the special purpose vehicle was only to be a nominee with whom Greencapital could oblige Mrs Galati to enter into a new contract for sale of her Property, at the same time as the Put and Call Option Agreement was rescinded. If that were the intention, there would be no agreement that could be ratified by GC NSW.
I consider the better view is that Mr Van Aardt and Bruno Galati assumed, even though they did not address the issue directly, that the special purpose vehicle would participate in the transaction in the second sense discussed by Finkelstein J. That is, the special purpose vehicle would become a party to both types of contract referred to in the 20 March 2017 email. In that sense, the 17 March 2017 email was an agreement entered into, or purported to be entered into, by Mr Van Aardt on behalf of, or for the benefit of, GC NSW.
The first reason for that conclusion is that the new contract for sale of Mrs Galati's property was to replace the rescinded Put and Call Option Agreement. Clause 8.2 of the Put and Call Option Agreement had the effect that Greencapital's nominee was to be entitled to exercise the Call Option and was to be bound by the Put Option as if the nominee had granted it.
As par [2] of the 20 March 2017 email provided that the terms were to "supersede any other discussions", I would infer that it was intended that the role of the nominated special purpose vehicle was to be broadly the same as in the rescinded agreement.
The second reason for my conclusion is that the evident intention of the 17 March 2017 Agreement would be placed in jeopardy if Mrs Galati allowed the special purpose vehicle to become registered as the proprietor of her Property in circumstances where it was not bound by that part of the agreement that required it to enter into contracts for sale of five of the lots to Mrs Galati or her nominees. It was, in effect, self-evident that the special purpose vehicle was to have the benefit of, and be bound by, the terms of the 17 March 2017 Agreement, and that could only be achieved if the agreement was made on its behalf.
In my view, it is clear that GC NSW ratified the agreement made on its behalf. After the date of incorporation of GC NSW, it engaged in the following conduct that in my view was unequivocally referable to implementation of the 17 March 2017 Agreement and its acceptance of being bound by that agreement.
First, GC NSW entered into the contract for the sale of Mrs Galati's Property on 24 March 2017, after it had been nominated by Greencapital.
Secondly, GC NSW instructed its solicitor to send draft contracts for the sale of the five lots to the solicitor for Mrs Galati.
Finally, GC NSW, through its solicitors, retained the $171,707.75 that was the total of the deposits under the contracts for the sale of the five lots in its solicitors' trust account. GC NSW's right to deduct the deposit from the adjusted sale price of Mrs Galati's Property was found in par [9] of the 20 March 2017 email.
The description by GC NSW's solicitors in their trust account ledger and their letter dated 18 July 2017 returning the money as the "deposit" cannot be ignored, and reflects a realistic understanding by the solicitors that the money was, in fact, the deposit retained in accordance with the 17 March 2017 agreement.

Payment of five dollars by Bruno Galati to Mr Sherwood

I mention, briefly, an issue that was contested as to whether the plaintiffs' claim that the 17 March 2017 Agreement was immediately binding and became binding on GC NSW has been established because Bruno Galati actually paid the five individual one dollar payments that were required by par [8] of the 20 March 2017 email. Bruno Galati gave evidence that he gave Mr Sherwood a five dollar note with an instruction that it be given to Mr Van Aardt. Mr Sherwood denied this evidence. Mr Van Aardt said that he had not received the five dollars. No receipt was given.
In the circumstances, I find that the plaintiffs' claim concerning payment of the five dollars is not sufficiently proved. That finding is not meant to be to the discredit of Bruno Galati. I am reinforced in my conclusion because of the consideration, discussed above at par 362, that the amount of the deposit retained by GC NSW's solicitor was the entire amount, and was not apparently calculated on the basis that five dollars had already been paid.
This finding is not material to my overall finding that GC NSW ratified and was bound by the 17 March 2017 Agreement, because I have found other sufficient grounds for finding ratification by GC NSW.

Damage to the Galati residence

Completeness requires the Court to mention an issue strenuously fought between the parties that was ultimately agreed to have no bearing on the legal outcome.
The defendants pleaded in par 33(b) of their defence that, on completion of the contract for the sale of Mrs Galati's property to GC NSW, they discovered that the plaintiffs had removed multiple fixtures from the house on the Property and left significant refuse and garbage. That was in answer to the allegation by the plaintiffs that the contract for sale of the Property was completed on 20 June 2017.
The defendants then admitted in par 35(c) of their defence that, by letter dated 4 July 2017, GC NSW notified Mrs Galati that it no longer agreed to conclude the sale of the five lots to Mrs Galati or her nominees, but said that the letter advised that GC NSW would no longer agree to sell the five lots because of damage done to the houses on the Property and the other two adjoining properties.
The defence did not contain any allegation that, if the damage alleged by the defendants had been done, it provided a legal justification for the defendants, or GC NSW alone, to decline to perform any contract that they had with Mrs Galati.
When this issue was raised by the Court, senior counsel for the defendants acknowledged that the matters raised did not provide a defence for the defendants.
In that case it is unnecessary for the Court to make any findings of fact in respect of the issue. Notwithstanding that the issue was keenly fought, the evidence was incomplete, which is a circumstance that may have been caused by the fact that the defendants did not plead any relevant legal consequence of the matter.
Photographic evidence demonstrated that some fittings and fixtures had been removed from the residence on Mrs Galati's Property. There was a significant amount of refuse and garbage on the Property at the time of completion. One bathroom in the residence had been vandalised. There was a somewhat absurd issue about whether a window that may have been removed had ever been installed in the first place. There was a vague suggestion that residences on the other properties may have been damaged in the same way.
The Court would have found it difficult to make findings of fact that attributed blame for the state in which the residence on Mrs Galati's Property was left. The very first email in which Greencapital offered to purchase the Property sent by Mr Sherwood on 26 February 2015 offered: "The vendor may remove items from the residence prior to demolition": see par 49 above. There was some evidence that the foreman of the civil contractor for the neighbouring Greencapital development may have authorised Mrs Galati to remove items, though he had no authority to do so. The Galati family apparently believed that there was no reason why items should not be removed because the residence was going to be demolished as part of the redevelopment. Mrs Galati and Bruno Galati both conceded responsibility for removing some items, but not for leaving the residence in the state that it was in at the time of completion. The evidence was inadequate to determine whether the Galati family or strangers may have been responsible for some of the more egregious damage.

Conclusion

I therefore find that Mrs Galati is entitled to enforce against GC NSW an obligation created by that company's ratification of the 17 March 2017 Agreement to enter into contracts to sell the five lots identified in the draft contracts for sale forwarded by GC NSW's solicitor to Mrs Galati's solicitor on 24 April 2017 to the proposed purchasers stated in those draft contracts.
I am inclined to the view that the contractual terms should be those contained in the 24 April 2017 drafts, varied if necessary to ensure that they conform to all aspects of the 17 March 2017 Agreement, but I accept that there is an unresolved issue as to the precise terms of the contracts. Mrs Galati and GC NSW should confer on this issue, and if agreement cannot be reached, it may be necessary for the proceedings to be relisted so that the Court can settle the terms of the contracts. Mrs Galati is entitled in principle to the order sought in prayer 3 of the statement of claim.

Enforcement of the 2016 Deed

As Mrs Galati has succeeded in her claim to enforce the 17 March 2017 Agreement against GC NSW, it is not strictly necessary for the Court to determine her alternative claim to enforce the 2016 Deed, by way of the declaration sought in prayer 2 of the statement of claim.
The two claims are strict alternatives because, if the 17 March 2017 agreement was final and binding, one of its terms was that the 2016 Deed was rescinded. Mrs Galati provided consideration for the 17 March 2017 Agreement, in the form of the promises that she made in favour of Greencapital, and, if ratified, in favour of GC NSW. The rescission of the 2016 Deed was therefore effective in equity, even if the common law would not recognise the rescission because it was not effected by deed: see Federal Commissioner of Taxation V Orica Ltd (1998) 194 CLR 500; [1998] HCA 33 at [114]; Hawcroft General Trading Co Pty Ltd v Hawcroft [2017] NSWCA 91 at [35].
I reject the defendants' submission that, by their conduct during 2017, the parties to the 2016 Deed abandoned it, within the principle discussed by McColl JA in Ryder v Frohlich [2004] NSWCA 472 at [135]-[137]. It is not the case that the parties conducted themselves in a manner that demonstrated that neither intended that the 2016 Deed should not be performed, such that they abandoned or abrogated the deed. The parties did intend to rescind the deed, but only on the basis that it was replaced by the terms of the 17 March 2017 Agreement.
If, contrary to the conclusion that I have expressed above, the 17 March 2017 Agreement never became final and binding, then the 2016 Deed would remain in effect.
I accept the defendants' submission that GC NSW was not a party to the 2016 Deed. That deed was not entered into on behalf of GC NSW, as the incorporation of that company was not in contemplation at the time the 2016 Deed was made. It could therefore not be ratified by GC NSW in accordance with s 131 of the Corporations Act, and in any event GC NSW did nothing to ratify the deed.
In the prayers for relief in the statement of claim, Mrs Galati did not in terms seek a remedy against GC NSW based upon the 2016 Deed, although it is not clear whether the equitable interest the subject of prayer 2 was claimed to have arisen in favour of Mrs Galati under the 2016 Deed in a manner that bound GC NSW.
The plaintiffs alleged in par 11 of the statement of claim that only Mrs Galati and Greencapital were parties to the 2016 Deed.
Consequently, if the only remedy available to Mrs Galati involved the enforcement of the 2016 Deed, her remedy would be in damages against Greencapital for breach of its obligations in clause 3 of the 2016 Deed.
That the consideration of this alternative remedy is somewhat artificial is demonstrated by the fact that Greencapital was unable to comply with the obligation in clause 3 because Mrs Galati had in fact transferred her Property to GC NSW in performance of her obligations under the 17 March 2017 Agreement.
It is doubtful whether the evidence tendered by Mrs Galati for the purpose of quantifying her damage was sufficient for that purpose. Mrs Galati did not tender expert valuation evidence of the present market value of the five alternative lots selected by her. She attempted, during the course of the hearing, to establish the market value of the lots by means that were rejected for various reasons.
There may be a basis for finding that, by their conduct, Mrs Galati and Greencapital proceeded upon the conventional assumption that the agreed rate per square metre of the lots was 85% of the assumed market value of the lots. That may have provided sufficient evidence of value to justify the quantification of the damage suffered by Mrs Galati. This was not a matter pursued in submissions, so the Court will not make a finding on the amount of damage given that it is not necessary to do so.

Subsidiary aspects of 17 March 2017 Agreement

As the Court has found that the 17 March 2017 Agreement is enforceable against both defendants, then in principle all of the promises made by the defendants in that agreement are enforceable.
In par 21 of their defence, the defendants admit all of the terms of the 17 March 2017 Agreement alleged by the plaintiffs although, as I have said, they claimed that the agreement was an in principle one only.
The subsidiary terms include the reduction in the purchase price of one of the lots by $10,000 (par [13] of the 20 March 2017 memorandum), the continuation of the payment of interest on the Galati home loan (par [14]), the delivery of the final 12 tonnes of firewood (par [15]), and the agreement by Greencapital to pay Mrs Galati $10,000 for allowing storage of materials on her Property (par [17]).
There is no reason why the Court should not enforce the agreement that the price of one of the lots be reduced by $10,000, that the outstanding interest payment be made, and that the $10,000 storage payment be made. I could not find the evidence that establishes that the amount of unpaid interest is $10,979.40, as the evidence citation in the plaintiffs' submissions does not appear to deal with the issue. The parties should consider this matter when conferring about the final orders that should be made in these proceedings.
Mrs Galati submitted that there is no reason why specific performance should be refused in respect of the 12 tonnes of firewood, but Mrs Galati does not seem to have responded to the defendants' submission, based upon Toveill Pty Ltd v Australian Quality Plus Pty Ltd [2010] NSWSC 1003 at [36] that an order for specific performance will only be made where damages is not an adequate remedy. The defendants submitted that firewood is a mere commodity for which damages is plainly an adequate remedy.
On the state of the evidence I accept that Mrs Galati is not entitled to an order for specific performance of the agreement to supply the 12 tonnes of firewood.
In principle, Mrs Galati would be entitled to damages in respect of that breach, and as I understand her submissions, she claims the amount of $2520. The evidence that Mrs Galati sought to tender to prove the amount of damages was rejected at the hearing for procedural and evidentiary reasons. Mrs Galati submitted, however, that the 48 tonnes of firewood that was delivered was delivered at a cost of $209 per tonne. In cross-examination, Mr Van Aardt appeared to make a guarded concession at T 210:2 that $209 per tonne "sounds about right". However shortly afterwards senior counsel for the defendants objected to Mr Van Aardt being asked to opine on the market value of firewood. Counsel for the plaintiffs then did not press the question. I do not consider that Mrs Galati has provided evidence that proves the value of the firewood that was not delivered. Consequently, this aspect of Mrs Galati's claim fails.

Alternative Estoppel claim

Mrs Galati pleaded an alternative claim to her claims to enforce the 17 March 2017 Agreement and the 2016 Deed based upon five alleged representations made by either or both of Greencapital and GC NSW.
Initially, Mrs Galati made a claim under ss 18 and 30 of the Competition and Consumer Act 2010 (Cth) Schedule 2 based upon the alleged representations. Those claims were not pursued at the hearing.
Instead, Mrs Galati pursued her other pleaded claim that the representations gave rise to estoppels that bound the defendants.
As Mrs Galati has succeeded in her claim based upon the 17 March 2017 Agreement, it is also not strictly necessary for the Court to determine Mrs Galati's alternative estoppel claims.
However, it is appropriate for the Court to make the following observations, given that the parties made detailed submissions on the issue.
Mrs Galati pleaded in the statement of claim that the First Representation was made by Greencapital on around 4 and 15 May 2015, and was to the effect that, if Mrs Galati entered into the Port and Call Option Agreement, Greencapital would allow her to procure up to five lots, once developed by Greencapital.
The representation was alleged to have been made by two communications. The first was in an email dated 4 May 2015 written by Greencapital's solicitor to Mrs Galati's solicitor, which attached a draft of the Put and Call Option Agreement that included clause 20. Clause 20 required that the contract to be entered into upon the exercise of the Call Option would give Mrs Galati the right to procure up to five lots.
Secondly, Mrs Galati relied upon an email dated 15 May 2015 from Mr Sherwood to Bruno Galati enclosing the draft deed of agreement by Greencapital in favour of Mrs Galati that is referred to in par 77 above. Strangely, Mrs Galati did not rely upon the later email dated 18 May 2015 that attached a copy of the deed executed by the sole director of Greencapital.
Mrs Galati then alleged that, on 27 May 2017, she notified Greencapital that she was relying upon the First Representation and would agree to proceed to exchange the Put and Call Option Agreement if Greencapital confirmed in writing that it would enter into an agreement on the terms contained in the deed executed by Greencapital, which was not executed by Mrs Galati, plus an additional term that Mrs Galati had a right to lodge a caveat over the Property to protect her option to acquire five lots. That stipulation was in an email sent by Mrs Galati's solicitor to the solicitor for Greencapital on 27 May 2017. The email requested that Greencapital confirm the agreement in writing.
Mrs Galati then alleged that, in response to her solicitor's email, Greencapital "either confirmed the agreement as set out in that email or was silent and proceeded to exchange the Put and Call Option Agreement".
There was no evidence that Greencapital confirmed the agreement, and its solicitor did not provide the letter of confirmation requested by Mrs Galati's solicitor. Mrs Galati chose to exchange the Put and Call Option Agreement that omitted the clause requiring that the contract for sale contain the option in respect of the five lots. Consequently, Greencapital was silent in the face of Mrs Galati's request.
Mrs Galati then alleged the Second Representation based upon the conduct of Greencapital just described, where Greencapital proceeded to exchange the Put and Call Option Agreement without responding to Mrs Galati's solicitor's request for a letter of confirmation. That conduct was alleged to be a representation that Greencapital would enter into an agreement on the terms contained in Mrs Galati's solicitor's 27 May 2015 email, and that it would subsequently sell five lots in accordance with the agreement.
It should be noted, at this point, that there is no evidence that Greencapital ever agreed that Mrs Galati could lodge a caveat against the title to the Property, and whenever it made a comment on this issue it was to the effect that it could not agree to the lodgement of a caveat as this was inconsistent with its arrangement with its funder.
Mrs Galati then alleged that the terms of the 2016 Deed itself constituted the Third Representation that Mrs Galati could acquire five lots on the terms provided in the deed.
It is relevant to make a number of comments addressing Mrs Galati's allegations that Greencapital made representations up to this point.
The first is that clause 11 of the 2016 Deed bound Mrs Galati to the position that no previous representations not embodied in the deed shall have any force or effect: see par 122 above.
Consequently, Mrs Galati was not entitled to rely upon the First or the Second Representation, even if they were made.
However, even if the facts relied upon were capable of constituting the First and the Second Representation, they were made in the context of an underlying incompletely documented negotiation between the parties that culminated in the 2016 Deed. Accordingly, whether or not the representations had been made, Greencapital entered into the 2016 Deed, which gave to Mrs Galati the rights in respect of the five lots that she claimed to be entitled to. In that sense, Greencapital consummated the representations. They ceased to have any effect, because Mrs Galati acquired the legal rights to which she claimed to be entitled.
If the 2016 Deed remained in effect, Mrs Galati could enforce it. If she voluntarily rescinded the 2016 Deed, she would relinquish her rights. That would be so irrespective of whether or not Mrs Galati's rights under the 2016 Deed were effectively replaced by new contractual rights in the 17 March 2017 Agreement.
The same considerations apply in respect of the Third Representation, which is said to arise out of the covenants in Mrs Galati's favour made in the 2016 Deed.
Thus, as the 2016 Deed had the effect of giving Mrs Galati the rights in respect of the five lots that she alleges Greencapital represented she would get, none of the three representations could remain alive now to create an estoppel that would oblige Greencapital to sell five lots to Mrs Galati or her nominees, if, for any reason, Mrs Galati had voluntarily acted in a way that prevented her enforcing the 2016 Deed.
The Fourth Representation is alleged to have been made on or about 8 March 2017 by Greencapital or GC NSW, or both, that irrespective of any prior agreements or events, Greencapital or its nominee would enter into contracts for the sale of the five lots, provided the balance of the 10% deposit was paid by all purchasers at the same time that Greencapital or its nominee completed the purchase of Mrs Galati's Property.
The Fourth Representation was said to have been made in Ms Falkner's email to Mr Claughton dated 8 March 2017.
In her 8 March 2017 email, Ms Falkner said: We refer to our recent telephone conversation and confirm that, provided the balance of 10% deposit is paid by all purchasers in respect of the contract at the same time that our client completes the purchase of the Galati land, our client agrees to enter into contracts with the party's name below.
That statement was made on behalf of Greencapital, as GC NSW was not incorporated at the time.
The 8 March 2017 email has been relied upon by Mrs Galati without regard to the context in which it was sent. The email was sent during the course of the negotiations between representatives of Mrs Galati and Greencapital concerning the final terms of the agreement that would entitle Mrs Galati to purchase five lots, following the recognition that the lots identified in the 2016 Deed had not been created. These are the negotiations that caused Mr Van Aardt to become frustrated, and to have the discussions with Bruno Galati on 17 March 2017, which I have found gave rise to a final and binding agreement. Ms Falkner's email was a statement of what Greencapital would agree to do as one among a number of terms that were still apparently under negotiation. This statement was not a separate representation as to what Greencapital would do irrespective of the outcome of the ongoing negotiations.
As it has happened, the statement was embodied in the 17 March 2017 Agreement. However, if it had not been so embodied, or the 17 March 2017 Agreement had not become final and binding, it would be illegitimate for Mrs Galati to rely upon a statement made on behalf of Greencapital, as to one of the terms that Greencapital would agree to include in any future agreement, as an independent representation upon which Mrs Galati could rely notwithstanding the failure of the parties to reach a final and binding agreement as to all terms.
The final representation alleged by the plaintiffs, which they called the "Affirming Representation", was that, on or about 24 March 2017, GC NSW represented to Mrs Galati and her nominees, the remaining plaintiffs, that it affirmed the representations made by Greencapital and would conduct itself in accordance with those representations.
The particular of the Affirming Representation given was that it was express or, alternatively, implied by entering into the contract for the sale and purchase of Mrs Galati's Property as Greencapital's nominee, whereby GC NSW agreed to take the benefit of that contract "on the basis of the prior negotiations and agreements between [Mrs Galati] and [Greencapital], including the Representations": statement of claim par 53.
I have found above that GC NSW became bound by the terms of the 17 March 2017 Agreement because the persons making that agreement intended it to be final and binding, and Mr Van Aardt entered into the agreement on behalf of the Greencapital special purpose vehicle, which, as it happened, had not yet been incorporated. GC NSW's subsequent actions, after its incorporation, constituted a ratification of the agreement within the meaning of s 131 of the Corporations Act. In that context, any representation in terms of the Affirming Representation lost significance, because GC NSW had bound itself by contract to sell the five lots to Mrs Galati or her nominees.
The question is, would the evidence have justified a finding that GC NSW made the Affirming Representation if the evidence had not established that the company had ratified the 17 March 2017 Agreement?
The answer would, of course, depend upon the conduct of GC NSW as established by the evidence.
All that the evidence establishes, consistently with the allegation made by the plaintiffs, is that GC NSW entered into the contract for sale as Greencapital's nominee. There was no evidence of any express representation made to Mrs Galati before contracts were exchanged that GC NSW would honour any representations earlier made by Greencapital that Mrs Galati or her nominees would be given the right to buy the five lots.
In my view, the implication that the plaintiffs ask the Court to find is too tenuous in these circumstances.
It should be added that, on the issue of whether Mrs Galati acted to her detriment on the faith of any of the representations alleged, Mrs Galati did not give any evidence of specifically doing so, although she said in par 18 of the 10 December 2018 affidavit that it had always been her understanding, through discussions with Bruno Galati, that the terms for selling her Property were agreed to and that there would be an option for her or her nominees to purchase the five lots.
The evidence of Bruno Galati in pars 56 to 58 of his 10 December 2018 affidavit was consistent with him acting in accordance with what he believed was a binding agreement made on 17 March 2017, but nothing else in that affidavit, or Bruno Galati's 17 May 2019 affidavit, supports a finding that Bruno Galati, as agent for Mrs Galati, understood that either defendant had made any representations that were separate from the agreements that they entered into, or that Bruno Galati caused Mrs Galati to enter into the contract for sale of her Property to GC NSW on the faith of some separate representation, even if the only role of the company was to enter into the contract for sale as Greencapital's nominee.
In these circumstances, I do not accept that the plaintiffs have established a separate case against either defendant based upon the alleged representations.

Costs

The plaintiffs asked the Court to defer consideration of the issue of costs, as they wished to rely upon additional evidence. I will make directions to deal with this issue when these reasons for judgment are delivered.

Orders

I will require the parties to confer for the purpose of agreeing, if possible, short minutes of order to give effect to these reasons. The parties may approach my associate to relist the matter if agreement cannot be reached.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 March 2020

Transfer of Land Act 1893(WA)

Galati v GC NSW Pty Ltd

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