Golden Oceans (NSW) Pty Ltd v Evewall Pty Ltd

Australian Hardwoods Pty Ltd v Commnr for Railways [1961] 1 All ER 737; [1961] 1 WLR 425 Australian Securities and Investments Commission v Rich [2006] NSWSC 826 Bahr v Nicolay (No 2) (1988) 164 CLR 604 Carydis v Merrag Pty Ltd [2007] NSWSC 1220 Empirnall Holdings Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 Fekala Pty Ltd v Castle Construction Pty Ltd [2002] NSWCA 297 Golden Oceans (NSW) Pty Ltd v Evewall Pty Ltd [2009] NSWSC 486 Gurney v Gurney (No 2) [1967] NZLR 922 Ianello v Sharpe [2007] NSWCA 61 CASES CITED : Luu v Sovereign Developments Pty Ltd [2006] NSWCA 40, [2006] NSW Conv R 56-146 Manufacturers House Pty Ltd v Ashington No 147 Pty Ltd [2005] NSWSC 767 Mearns v Parris Holdings Pty Ltd (1994) 6 BPR 13,677 Network Channel Pty Ltd v Optus Vision Pty Ltd [2009] NSWSC 132 Raso v NRMA Insurance Ltd (Court of Appeal, 14 December 1992, unreported) Steinberg v Federal Commissioner of Taxation (1975) 134 CLR 640 Thompson v GIO (Supreme Court of New South Wales, Rolfe J, 15 June 1994, unreported) Tsoa-Lee v Urban Property Consultants Pty Ltd [1983] 1 NSWLR 569 Union Eagle Limited v Golden Achievement Limited [1997] AC 514 Urban Transport Authority of New South Wales v Nweiser (1992) 28 NSWLR 471 Workers Trust & Merchant Bank Ltd v Dojap Investments Ltd (1993) AC 573

TEXTS CITED : CCH Conveyancing Law and Practice at [7-220] Meagher, Gummow and Lehane's Equity Doctrines & Remedies, 4th ed (2002), LexisNexis Butterworths

Golden Oceans (NSW) Pty Ltd (Plaintiff/First Cross Defendant) PARTIES : Evewall Pty Ltd (Defendant) Glenn Raymond Carroll (Second Cross Defendant) Michelle Anne Carroll (Third Cross Defendant)

COUNSEL : Plaintiff and Cross Defendants: D Warren (2 & 23 June 2009); J Sexton SC, A Connolly ( 3 July 2009); M Williams SC (3 & 6 July 2009) Defendant: J Oakley

SOLICITORS : Plaintiff and Cross Defendants: Trisley Lawyers Defendant: Robert King Solicitor

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EXPEDITION LIST

Date of Hearing: 22 - 23 June 2009 Date of Hearing of application to reopen: 3 & 6 July 2009 Date of Judgment: 13 July 2009

2511/09 Golden Oceans (NSW) Pty Ltd v Evewall Pty Ltd

1 REIN J: The defendant, Evewall Pty Ltd ("the vendor"), owns a property at 6 Wine Country Drive Cessnock ("the property") and entered into a contract for the sale of the property to the plaintiff, Golden Oceans (NSW) Pty Ltd ("the purchaser"), on 29 September 2008 ("the contract"). The consideration payable was $3.74 million. Contracts were exchanged on 29 September 2008 with a $200,000 deposit being paid on that date as part of a specified $374,000 deposit (see clause 39 at pp 21 and 23A of Exhibit A). The contract arose as a result of a put and call option but nothing arises from that aspect. 2 Mr Neil Wallace is a director of the vendor and the solicitor acting for the vendor on the conveyance was initially Mr King and then Mr Flaherty. Mr Glenn Carroll is a director of the purchaser and the solicitor acting for the purchaser on the conveyance was Ms Bennett of Bilbie Dan. Mr Wallace and Mr Carroll are the only persons (other than the solicitors) who represented the vendor and purchaser respectively in respect of the transaction. 3 The purchaser, by its Amended Summons, seeks specific performance of the contract. 4 The vendor, by Notice of Termination served on 27 February 2009, claims to have terminated the contract and seeks an order that the amount of $200,000 paid has been forfeited by the purchaser and seeks to recover the remaining $174,000 expressed to be part of the deposit. It also seeks to recover as damages holding costs and charges as well as an amount of $44,000 agreed to be paid by the purchaser in return for an extension of time until 20 February 2009 to which I refer below. It claims against Mr and Mrs Carroll on a guarantee given by them in connection with the contract for sale. 5 Although initially there was an argument advanced by the purchaser that the Notice to Complete issued on 2 December 2008 was invalid, that argument was abandoned (correctly, in my view). That Notice required completion by 31 December 2008. 6 There is no dispute that at the purchaser's request the vendor agreed to extend the time for completion from 31 December 2008 to 20 February 2009. There is no dispute that at all times in the past the purchaser was unable to complete because it was reliant on borrowed funds and those funds were not available at any relevant time. It was the vendor's case that in fact there had been an intermediate extension from 31 December 2008 to 20 January 2009 sought and agreed to by the purchaser before 20 February 2009 was agreed to. Other than its relevance to credit there is no significance as to this point given the acceptance by both parties that prior to 31 December 2008 a new date of 20 February 2009 was agreed upon in return for a payment of $40,000 plus GST by the purchaser to the vendor: see p 130 of Exhibit A. 7 I will set out the vendor's version of what occurred from 9 February to 27 February 2009 based upon Mr Wallace's evidence and the documentary evidence (all page references are to Exhibit A): (1) On 9 February the vendor's solicitor (Mr Flaherty) wrote by email to the purchaser's solicitor (Ms Bennett) enquiring whether the purchaser "will be in a position to settle this matter on 20 February 2009 when the Notice to Complete is due to expire": see p 140A. (2) On 9 February Ms Bennett asked Mr Carroll for instructions: see p 140A. (3) On 12 February Mr Flaherty sought a response to his earlier email and said: "The Notice to Complete expires next Friday. Kindly forward your settlement figures as soon as possible.": see p 141. (4) On 12 February Ms Bennett wrote to Mr Carroll seeking "urgent instructions": see p 141A. (5) On 12 February Ms Bennett informed Mr Flaherty that she was awaiting instructions: see p 112. (6) On 13 February Mr Wallace told Mr Flaherty that he had had discussions with the other side and that they had mentioned they might need a week but that there had been no deal: see p 143. (7) Between 16 and 20 February Mr Wallace was attending at the John Hunter Hospital for dialysis tests and training on new equipment: see para 4(j) of Mr Wallace's affidavit of 13 May 2009 ("Mr Wallace's second affidavit"). (8) On 16 February Mr Carroll told Ms Bennett that he tried to contact Mr Wallace "with regards to extensions of time for the contract". He asked Ms Bennett to request an extension of time adding "I would imagine 6 - 8 weeks would be needed as a minimum": see p 143A. (9) On 17 February Bilbie Dan wrote to Mr Flaherty: "We refer to previous correspondence and confirm the Notice to Complete will expire at 4.00pm on 20 February 2009 . Our client has experienced considerable difficulty obtaining the lender's confirmation of their readiness to settle as scheduled. We are instructed to request an extension of time for compliance with the Notice to Complete for eight (8) weeks." (emphasis in original): see p 145. (10) On 17 February Mr Flaherty contacted Mr Wallace who denied that Mr Carroll had sought an extension but said that he would be having a discussion with him on the Thursday (i.e. 19 February): see p 146. Mr Flaherty advised Mr Wallace to request the sum of $40,000 now and any extra on settlement. (11) On 17 February Mr Flaherty wrote "I refer to your letter of today and am instructed that my client is having a meeting with yours on Thursday for discussion of the matter.

I will advise you of my instructions shortly thereafter.": see p 147. (12) On the morning of 20 February: Mr Wallace spoke to Mr Carroll on the telephone. Mr Carroll asked Mr Wallace if he could meet him at the Hunter Valley Gardens the following day and Mr Wallace agreed to do so: see para 4(j) of Mr Wallace's second affidavit. (13) Following that conversation Mr Wallace spoke to Mr Flaherty and asked him to write to the purchaser's solicitor extending the settlement date "to enable an opportunity for Mr Carroll and I to have our meeting": see para 4(j) of Mr Wallace's second affidavit. (14) On 20 February Mr Flaherty sent a letter to Ms Bennett: "I refer to previous correspondence and advise my client has not had an opportunity as yet to have a meeting with yours.

In the circumstances I am instructed to extend the period under the Notice to Complete to 4pm Tuesday 24 February 2009."

The letter was emailed: see pp 151 - 152. (15) On 20 February at 10:40am Ms Bennett replied to Mr Flaherty (through his secretary): "I will wait to hear further from you prior to 4:00pm Tuesday 24 February 2009.": see p 153A. (16) On 20 February at 10:42am Ms Bennett wrote to Mr Carroll saying "Please find attached letter received from the vendor's solicitor this morning.

Please let me know when you have met with the vendor and the outcome of that meeting as soon as possible.": see p 153B. (17) On 20 February at 11:17am Mr Carroll replied to Ms Bennett: "I am meeting with [Mr Wallace] at 2:30pm.": see p 153B. (18) Mr Wallace met with Mr Carroll not on 20 February but on 21 February 2009. He says that he had the following conversation with Mr Carroll: "GC: It looks like the Section 96 Application won't get before Council until April, rather than March. NW: Glenn, tell me straight, what is the position with your finance? GC: It's still a long way off. Can you give me until 10 April? NW: You put me in a difficult position. I've had to borrow some money to run my business because of the delays in you settling. I'm not prepared for this to go on indefinitely. GC: How about I pay $100,000 on top of the price at settlement, inclusive of interest. NW: I couldn't agree to that here and now. I would have to have a look at it, but it doesn't sound like you're offering anything in real terms. Work out your best proposal and have your Solicitor put it to mine in writing. Remember that the notice to complete now expires on Tuesday." See Mr Wallace's second affidavit at para 4(k). (19) On 23 February at 2:18pm Ms Bennett wrote to Mr Carroll: "could you confirm urgently the outcome of your meeting with the vendor on Friday 20 February 2009.": see p 154. (20) On the same day, Mr Carroll replied via email saying: "Extension to 10/04/09. Interest to be paid plus balance to 100K extra. For example, if penalty interest is $45,000 the purchase price will increase by $55,000 to a total of $100K.": see p 155. (21) Ms Bennett took that email to mean that the vendor and purchaser had agreed on a new date for completion and sought Mr Flaherty's response. (22) Mr Wallace says he rang Mr Carroll on 24 February and said: "NW: I'm not prepared to accept what you offered on Saturday. By 10 April the interest will be a lot more than the $100,000 that you offered. You will have to come up with something to get your extension. I proposed the $40,000 when you got the extension in December. This time, you put an offer to me.

GC: How about $50,000 extra, paid at settlement, together with the earlier $40,000 plus the interest owed under the Contract[?]

NW: I'd agree to that but only on the condition that you pay $200,000 immediately.

GC: If I pay you $200,000 now, will that come off the price[?].

NW: Yes. I just need some payment upfront so if you fall over I've got something for wasting my time. Can you make such a payment?

NW: Do that and get back to me urgently. If you can come up with that payment we'll both need to have our Solicitors formalise the agreement.

GC: I'll see what I can do. I shall give you a call." See Mr Wallace's second affidavit at para 4(l). (23) Mr Flaherty obtained instructions from Mr Wallace on 24 February which were that he had told Mr Carroll what he (Mr Wallace) wanted but had not heard back from Mr Carroll. (24) Mr Flaherty's secretary told Ms Bennett by email at 1:46 pm that Mr Wallace was awaiting advice from Mr Carroll: see p 156A. (25) Ms Bennett then rang Mr Carroll at 2:15pm and said she had received the email from the vendor's solicitor requesting information about the agreement. According to her note Mr Carroll "confirmed that the deal was $100,000 inclusive of penalty interest" but she then noted: "not sure if this $100K is in addition to $40K already agreed. Instructed me not to mention $40,000 at this stage and see what they say": see p 156B. (26) Ms Bennett then sent a letter to Mr Flaherty in the following terms: "We are instructed the parties have reached an agreement regarding a further extension of the time for compliance with the Notice to Complete. The Notice will expire at 4.00pm on 10 April 2009 . In consideration of the grant of extension our client will pay to your client on settlement in addition to the balance of the purchase price an amount of one hundred thousand dollars ($100,000.00) which is inclusive of any penalty interest your client is entitled to claim under the Contract. Please confirm you client's instructions as a matter of urgency." (emphasis in original): see p 157.

It was sent at 2:27pm: see p 158. (27) Mr Flaherty called Ms Bennett at 2:45pm on receipt of the letter and said that the $100,000 "does not even cover interest". (28) Mr Flaherty contacted Mr Wallace, who told him that what was asserted in the letter from Bilbie Dan was what Mr Carroll had offered but had been rejected by Mr Wallace: see Mr Wallace's second affidavit at para 4(k). Mr Flaherty's note is to similar effect. (29) Mr Flaherty then phoned Ms Bennett and told her that his instructions were that the vendor's conditions for an extension were that $200,000 would be payable immediately and $100,000 payable on settlement with interest continuing to accrue; that the offer in the letter was way short of what Mr Wallace understood was under discussion, since $90,000 in interest had already accrued; that his instructions were to let the Notice to Complete stand, terminate the contract and the parties could renegotiate a purchase price. He requested that Ms Bennett "speak to her client and confirm": see p 159A. (30) Ms Bennett then wrote to Mr Carroll setting out the terms upon which the vendor was prepared to grant an extension to 10 April 2009. Having done so she pointed out to Mr Carroll: "As discussed, if you are not able to comply with the Notice to Complete issued by the vendor the vendor can terminate the Contract. Upon such termination the deposit paid by you under the Contract is forfeited to the vendor. We note in this regard you have paid a reduced deposit in the amount of $200,000.00. You will be liable to pay the balance of the 10% deposit on valid termination of the Contract by the vendor. In addition to recovering the deposit the vendor may also commence proceedings against you to recover any deficiency on resale together with any costs and/or damages. Would you please contact our office urgently with your instructions, having regard to the Notice to Complete which expires at 4:00pm today.": see pp 159B - 159C. (31) She sent the letter at 3:21pm to Mr Carroll. (32) At 3:30pm Ms Bennett left a message for Mr Carroll to ring her back as soon as possible: see p 159D. (33) At 4:05pm Mr Carroll rang back and in the course of the discussions Ms Bennett told him that interest at $1000 day meant that interest was almost $100,000 already, so an offer of $100,000 "won't cut it". She discussed with Mr Carroll the vendor's right to terminate. Mr Carroll said that he would contact Mr Wallace and let him know: see p 159D. (34) On 25 February Mr Carroll told Ms Bennett that he had left messages for Mr Wallace but had not heard back. Ms Bennett said she would contact the vendor's solicitors and tell them the clients were having further discussions. She did so at 12:52pm: see 159E. (35) On 25 February Mr Flaherty wrote to Ms Bennett noting that he had been instructed that Mr Carroll had had no further discussions with Mr Wallace. He indicated: "Your client having failed to comply with the Notice to Complete, my client is now considering its position and I expect to have further instructions and advise you of the same by the end of the week.

In the interim, my client requests that all future communications from you be directed to me via your office rather than to my client.": see p 160. (36) Ms Bennett sent the letter received from Mr Flaherty to Mr Carroll at 2:48pm on 25 February. (37) On 26 February Mr Flaherty phoned Ms Bennett and told her that his client was likely to terminate the contract on 27 February. Ms Bennett said she would get back to him (I infer, after taking instructions). (38) On 27 February at 11:12am Mr Flaherty sent the Notice of Termination.

8 If the evidence of Mr Wallace is accepted, it is clear that there was no agreement reached on 21 February for an extension of time to 10 April 2009, only a request for such with an offer of payment that Mr Wallace indicated was unlikely to be sufficient, and which was responded to by Mr Wallace with a counter offer which was never accepted.

9 Mr Carroll's version of the conversation on 21 February is set out at para 20 of his affidavit of 23 April 2009 ("Mr Carroll's first affidavit") (emphasis added): "GC: Our Section 96 application is progressing, however it is looking more likely that the application will go before the Council in April rather than March. NW: Have you been able to negotiate a settlement with your lender prior to the Section 96 application being assessed? GC: Not at this stage. NW: I am aware the application will not be heard until April. I do not have an issue with extending the date. The only issue I have is that I have invested a lot of my money into a high yielding investment and I have borrowed money in the short term. It is costing me money with further delays in settlement. We need to come to an arrangement. GC: With my loan approval and the delays with Council, I would need at a minimum until 10 April, 2009 to settle. This should be our target date and we will need to be flexible depending on Council's ability to assess the Section 96 application within the timelines discussed. If I were to increase the purchase price by $100,000, being interest plus a gratis payment to the total of $100,000, would this be acceptable? NW: Yes that it agreeable."

10 It will be observed that on the basis of Mr Carroll's evidence of the conversation, Mr Carroll sought Mr Wallace's agreement to an extension to 10 April in return for an increase in the purchase price by $100,000, not as a firm date, but as a "target date". Mr Carroll, it will be observed, did not, on his version, actually offer to pay that amount but asked whether if he did increase the price that would be acceptable. 11 There is no dispute between Mr Wallace and Mr Carroll that they had further conversations on or after 27 February. 12 Mr Wallace's evidence of those dealings is: (1) Mr Wallace says he rang Mr Carroll on 27 February after he had received confirmation that the Notice of Termination had been sent and left Mr Carroll a message in the following terms: "Glenn you didn't get back to me with an acceptance of what we had discussed on Tuesday and my solicitors haven't had that confirmation either. My solicitors have sent yours notice of termination of the contract today. I'm afraid you left me with no choice, you haven't been able to give me any confidence that you could complete the contract.": see Mr Wallace's second affidavit at para 4(p). (2) Mr Wallace says that on 5 March Mr Carroll left a message on his answering machine saying: "I've received a letter from my lender. It's very good.": see Mr Wallace's second affidavit at para 4(q).

and another message: "Rabo and Triumph letters due tomorrow. I should have that money accessed today.": see Mr Wallace's second affidavit at para 4(q). (3) Mr Wallace says that he rang Mr Carroll on 6 March and arranged to meet him at Hunter Valley Gardens on 7 March. (4) Mr Wallace met with Mr Carroll at Hunter Valley Gardens and had a conversation, he says, in the following terms:

NW: I had little choice. You've given me no confidence in you ever being able to settle.

GC: I've got some correspondence here from my lenders. Can't we reach some agreement to re-negotiate the Contract.

NW: Those letters don't give me any confidence. I'm not even sure what they mean, except that the loan still looks like a long way off. What are you offering?

GC: Can we go back to what we were discussing before, $50,000 as a penalty with a payment of $200,000 now, provided that was credited against the price.

GC: I've got a buyer for two blocks being subdivided off the Singleton Golf course site. The buyer's prepared to pay upfront to get two good blocks.

NW: How could that be, the subdivision hasn't been registered at Land Titles yet, has it?

GC: I'll get my solicitor to confirm it for you. Neil please don't contact those lenders. I'll give you a ring on Monday.

NW: I don't know about this. I'll give it some thought and see what your solicitors have to say." See Mr Wallace's second affidavit at para 4(s). (5) Mr Wallace says that on 10 March he telephoned Mr Flaherty to ascertain whether Mr Flaherty had heard from Mr Carroll's solicitor and was told that he had not. (6) On 12 March Mr Carroll left a message on Mr Wallace's answering machine: "I can get my hands on $150,000 to pay you now. I'll be in contact soon to discuss options.": see Mr Wallace's second affidavit at para 4(t). (7) Mr Wallace says that he heard nothing further from Mr Carroll or his solicitor until he received copy of the letter from Bilbie Dan dated 25 March 2009.

13 The letter of 25 March (see p 178) was a response to a letter from Mr King (who had taken over conduct of the matter from Mr Flaherty (see p 172)) noting termination of the contract on 27 February and demanding payment of the balance of the deposit of $174,000, the $44,000 being the amount agreed for the extension of time to 20 February and interest. On 25 March Bilbie Dan wrote:

"we put you on notice our client regards the Contract of Sale, dated 29 September 2008, as not having been validly terminated by the vendor. As such your client remains bound by the provisions contained in the Contract." 14 Mr Carroll's version of what occurred after termination by the vendor is as follows (emphasis added): (1) On hearing from his solicitor that the vendor had terminated the contract he rang Mr Wallace and left messages on 24 February, 25 February, 27 February and 3 March. (2) He says in his affidavit of 15 June 2009 ("Mr Carroll's second affidavit") that on 7 March he arranged to meet Mr Wallace later that day at the Hunter Valley Gardens. He says that he arrived first and that he had an A4 writing pad which he had open on the table. He says he had the following conversation (emphasis added): "[GC]: Why did you terminate the contract. I thought we had a rock solid deal.

[NW]: I followed my solicitor's advice. Anyway, your solicitors haven't done you any favours.

[NW]: They got the deal wrong. What was in their letter is not what they agreed on.

[GC]: This is what we agreed on. The due date for settlement was in November. Agreed?

[GC]: We agreed that up to the date of settlement as per your Notice to Complete I would pay you the contract price plus $40K plus interest.

[GC]: The Contract was to be extended to 10 April and I would pay you a further $100,000.00 from this point on, including interest.

[NW]: That's fine, but that's not what your solicitors had put in their letter.

[GC]: OK. I am sorry about that. What do you need from me?

[GC]: Good. No worries. I have a letter here from a Lender's representative confirming approval.

[NW]: I want payment of $200,000.00 to be part of the agreement.

[GC]: $150,000.00 will be possible, but I will need some time to confirm the timing of the payment. I'll call you during the next week or so to confirm the timing of the payment.

[NW]: I'd like the $150,000.00 paid to me as a consultant fee.

[GC]: I'll have to look at the implications of this. Are you in agreement with the extension of time?

[GC]: You'll see there that I should receive the SKR in 3 weeks and I will need 20 days to settle after that.

See Mr Carroll's second affidavit at para 17. (3) Mr Carroll denied having the conversation set out at [12(1)] but not the conversation or messages at [12(2)] and [12(6)].

15 The version of this conversation in Mr Carroll's first affidavit of 23 April did not include the claimed admission by Mr Wallace of having agreed to an extension to 10 April at the meeting of 21 February and did not refer to the use of a writing pad. The writing pad or notebook which contains the note dated 7 March which Mr Carroll says he made (except for the words in parenthesis on the note: i.e. "(provided at meeting)", "(letter states SKR 3 weeks then 20 days to settle after this)" and "(has arranged awaiting paperwork)") during the meeting, was tendered and became Exhibit D. A copy of the relevant page had been annexed to Mr Carroll's second affidavit of 15 June. 16 Mr Wallace denied that he had a conversation in the terms alleged by Mr Carroll and he denied that Mr Carroll had had any writing pad or notebook or that Mr Carroll had been writing at the table during the meeting: see T117 - T118.

Application to reopen 17 Having heard the matter on 22 and 23 June, I reserved judgment. On Friday 3 July the purchaser, by notice of motion filed in Court, but of which notice had been given a few days earlier, sought leave to reopen its case. Extensive material was put forward in support of the reopening. The vendor resisted the application and I stood the matter over to Monday 6 July at the purchaser's request. Essentially there were two limbs to the application to reopen:

(1) The purchaser sought to establish that Mr Carroll had provided a copy of his note of the meeting of 7 March to Bilbie Dan on 20 March and not, as might be inferred from the absence of any reference to the note in Mr Carroll's first affidavit of 23 April, after that 23 April.

(2) The purchaser sought to call evidence from a waitress at the Hunter Valley Gardens which would corroborate Mr Carroll's assertion that he had been writing at the table when speaking with Mr Wallace. An affidavit of a Ms Melisa Gilbert (the waitress) was tendered on the application. Her evidence was that she knows a man called Neil who normally attends at the café with a woman called Sadie or is alone, that on two occasions she has seen 'Neil' at the café with a man she did not know "once in about late February and once in about early March. It was the same man on both occasions." Ms Gilbert says on the second occasion she saw the other man "was writing on something while they were sitting at their table." She says she remembers the two occasions because they were the only times she has seen 'Neil' with anyone other than his wife: see Ms Gilbert's affidavit of 3 July 2009.

18 At the hearing of the notice of motion and given concessions made by Ms Oakley of counsel on behalf of the vendor, the need for evidence from Mr Carroll concerning when he provided a copy of his diary note dated 7 March to Bilbie Dan evaporated. Ms Oakley read onto the transcript at T11.11 - T11.14:

"The defendant concedes Mr Carroll's failure to annex the document which is annexure C to his affidavit of 15 June 2009 to his affidavit of 23 April 2009 does not lead to the inference that the document was not in existence at the time he swore his first affidavit of 23 April 2009."

and at T30.50, Ms Oakley drew attention to the fact that Mr Carroll had said in cross-examination in the hearing that he had provided a note of the conversation of 7 March 2009 to his solicitor and that she had not challenged that evidence. The evidence of Mr Carroll to which I have referred is at T74.5 - T74.6. Mr Williams SC, who appeared on 3 July for the purchaser, accepted that the consequence of these concessions was that the purchaser did not need to reopen the case to lead evidence to establish that Mr Carroll gave a copy of the note to his solicitor before 23 April. 19 The only evidence then, which is now sought to be lead by the purchaser is the evidence of Ms Gilbert. Ms Oakley indicated that should the purchaser be granted leave to reopen the vendor would be relying on an affidavit dealing with this aspect as well. 20 Ms Oakley objected to receipt of the evidence of Ms Gilbert in support of the application to reopen on the basis that it infringed s 102 of the Evidence Act 1995. For the same reason she contended the evidence would not be admissible at the hearing. I do not accept this contention. In my view, evidence that Mr Carroll was writing is not evidence solely referable to credibility, but goes to establishing a fact potentially relevant to a fact in issue. This is not to say that proof that Mr Carroll was writing proves that his version of the conversation is truthful: see below. 21 The principles relevant to whether a party should be permitted to reopen its case are authoritatively stated in Urban Transport Authority of New South Wales v Nweiser (1992) 28 NSWLR 471 per Clarke JA at p 478D-F (with whom Mahoney and Meagher JJA concurred):

"The principle which should guide the court in determining whether to grant an application for leave to re-open is whether the interests of justice are better served by allowing or rejecting the application as the case may be. No doubt it is relevant to take account of a number of matters such as likely prejudice to the party resisting the application and the reasons why the evidence was not led in the first place, but there is not, in my opinion, any hard and fast rule which requires the court to reject an application where the decision not call the witness in the party's case was a deliberate one. Of course that does not mean that that is not a very relevant consideration. It is. Where, for instance, a decision was based on tactical grounds it may be difficult to resist the conclusion that the interests of justice were better served by the rejection of the application. But even in that circumstance there may be cases in which it is felt that the client whose application it is should not have to suffer for his or her counsel's deliberate decision. Where the decision is not made for tactical reasons and is based on a mistaken apprehension of the law or the facts the case is more appropriately to be considered as one in which the application has resulted from an error by counsel."

22 In Australian Securities and Investments Commission v Rich [2006] NSWSC 826 at [18] Austin J helpfully listed the factors relevant to the exercise of the discretion to be considered:

"(i) the nature of the proceeding; (ii) whether the occasion for calling the further evidence ought reasonably to have been foreseen; (iii) the consideration of fairness that the defendant is entitled to know all of the evidence he has to meet in taking forensic decisions as to cross-examination and the nature and extent of the evidence he will himself adduce on the matters in question; (iv) the extent to which the plaintiff has embarked upon calling evidence on the issue in question in its case in chief; (v) the importance of the issue on which the further evidence is sought to be adduced to the pleaded issues in the case; (vi) the degree of relevance and probative value of the further evidence sought to be adduced and its potential to involve an undue waste of time; (vii) the prejudice to the defendant in terms of delay in the completion of the proceeding and the consequential costs; (viii) the public interest in the timely conclusion of litigation; (ix) what explanation is offered by the plaintiff for not having called the evidence in chief." 23 This approach was implicitly approved by Einstein J in The Movie Network Channel Pty Ltd v Optus Vision Pty Ltd [2009] NSWSC 132 at [8]. 24 These proceedings are a claim by the purchaser for specific performance of a contract for the sale of land. The purchaser was permitted to maintain a caveat on the land the effect of which was to prevent the vendor from offering the property for sale and selling it to a third party: see Golden Oceans (NSW) Pty Ltd v Evewall Pty Ltd [2009] NSWSC 486 per Brereton J on 30 April 2009. There was evidence on the application for expedition concerning Mr Wallace's health. He has had kidney failure and is on dialysis: see the affidavit of Mr Robert King of 29 May 2009 in support of expedition and annexure "A" thereof. 25 In my view, given that Mr Carroll's first affidavit said nothing about the note, the second affidavit provided very little explanation for the change in evidence and the appearance of the note and given the clear contest as to the content of the conversation as originally deposed in Mr Carroll's first affidavit which is established by Mr Wallace's affidavit of 13 May, the prospect of a challenge to the authenticity of the note should have been envisaged. 26 I think the vendor was entitled to know all of the evidence that it was to meet concerning the notebook. I am conscious of the argument that if Mr Wallace, in asserting that Mr Carroll had no notebook with him at the 7 March meeting and that Mr Carroll did not write at the table, was untruthful in so asserting, in a sense, he should not gain a benefit by his dishonesty, but the truth or falsity of this evidence is not established and I think there is an element of unfairness in his not having had all of the purchaser's evidence before having to give his own version. 27 This is not a case involving any misapprehension of the facts or law. There was no decision not to call the evidence from Ms Gilbert, rather there was a failure to be aware of it or obtain it. 28 There is a prejudice to the defendant in terms of delay. The case would have to be delayed for at least six weeks due to Ms Oakley's and my own unavailability and there is evidence which points to an inability of the purchaser to compensate the defendant for any damages arising from its inability to complete and doubts as to whether Mr Carroll could so do. Mr Williams pointed out that there was no evidence of any buyer in the wings. Given the currency of the proceedings that is hardly surprising and is likely to result from the inability of the vendor to market the property. 29 There is, as Austin J noted in ASIC v Rich (supra at [22]), a public interest in the conclusion of litigation. 30 The remaining questions (v) and (vi) identified by Austin J are ones of considerable significance here. 31 The potential significance of the evidence already given by Mr Carroll relating to 7 March is that if accepted:

(1) Mr Wallace admitted that he had agreed on 21 February to extend the time for completion to 10 April; and

(2) Mr Wallace indicated that he was agreeable to extend the time for completion to 17 - 21 April if Mr Carroll could obtain $150,000 to pay on settlement.

The question on this aspect is: did Mr Wallace say the words attributed to him by Mr Carroll? Mr Carroll's version of the agreement claimed to have been made on 7 March does not establish any firm agreement as to the extension of time (and the diary note only reinforces the absence of a firm agreement). Further, the purchaser's case was that the agreement to extend to 10 April was made on 21 February, not 7 March: see plaintiff's list of issues and outline of submissions dated 19 June 2009. Mr Carroll's assertion that Mr Wallace accepted on 7 March that he had agreed on 21 February to an extension to an imprecise date when Mr Wallace had already had his solicitor terminate the contract for sale is somewhat unlikely. The conversation of 21 February, on Mr Carroll's version, does not evidence an agreement that settlement would be on 10 April. I leave aside for the moment the question of whether in assessment on its true construction the conversation was Mr Carroll merely enquiring whether if Mr Carroll was able to obtain $100,000 that would be acceptable to Mr Wallace, but in Mr Carroll's version of what Mr Wallace accepted on 7 March, Mr Carroll has Mr Wallace agreeing that the extension of time was to 10 April and not that 10 April was a minimum or target date, to be further discussed when the Council has assessed the section 96 application. 32 If I assume for the moment that Ms Gilbert's evidence is accepted, Ms Gilbert was not a party to the conversation. Her evidence as it stands does not establish that Mr Carroll was the person who she saw writing in early March, as she would have to identify him (and Mr Wallace as well). Her evidence does not establish what the person she observed writing was writing in or on. If there is no evidence that Mr Wallace met other persons at the café at around that time, if she is able to positively identify Mr Carroll as the man she saw and if her recollection is found to be reliable it would undermine Mr Wallace's denial that Mr Carroll wrote anything in front of him and undermine Mr Wallace's credibility more generally. It would not establish that what Mr Carroll or Mr Wallace said is what Mr Carroll wrote. Even if I was positively persuaded that Mr Wallace had been untruthful in denying that Mr Carroll was using a writing pad it would not establish that the rest of his evidence was untruthful: see Steinberg v Federal Commissioner of Taxation (1975) 134 CLR 640 at 694-695 per Gibbs J on the significance of lies, and see Raso v NRMA Insurance Ltd (Court of Appeal, 14 December 1992, unreported) and Thompson v GIO (Supreme Court of New South Wales, Rolfe J, 15 June 1994, unreported). 33 There is foreshadowed by the vendor the possibility of another witness who will undermine Ms Gilbert's evidence with the prospect that the existence or absence of the notebook will be no clearer than based on the evidence of Mr Wallace and Mr Carroll. I will elaborate further on these matters shortly but there are problems with the purchaser's case and with Mr Carroll's evidence that do not stem from whether he was writing at the table when he met Mr Wallace and whether or not the note was a fabrication, some of which I have already touched upon in [10] and [31].

34 In my view, the only substantive significance of the conversation on 7 March is the alleged admission. Were I to permit the purchaser to reopen and were the new evidence to persuade me that Mr Wallace was not a reliable witness, because of his denial that Mr Carroll was writing at the table, the difficulties in Mr Carroll's evidence to which I have and will refer would not be resolved. 35 I am not, in all the circumstances, persuaded that the interests of justice require the purchaser to be permitted to reopen its case.

Whether the purchaser is ready, willing and able 36 In evidence is a 'Loan Contract' between Triumph Management Ltd ("Triumph") and the purchaser. It is dated 16 December 2008. Triumph agrees to lend $5,300,000 to the purchaser subject to terms, conditions and provisions. The $5.3 million was to be payable

"within twenty (20) banking days from the receipt of the Safe Keeping Receipt (hereinafter called "SKR") from the borrower and acceptance and confirmation by the lender's Bank of the validity of such SKR": see p 105(v).

The purchaser (borrower) was required to procure the issue of an SKR "or Bank Guarantee" from a bank acceptable to the lender for an amount equivalent to the principal sum and, inter alia, was required to procure:

"at the request and in the form required by the lender or the Bank issuing the SKR the execution of a freehold mortgage in favour of the lender or the Bank issuing the SKR"

"to procure and obtain any other form of security required and execute a freehold mortgage over land described in the Schedule".

The document was signed by Mr Carroll (or the purchaser) but it had not been signed by Triumph. In para 25 of his first affidavit Mr Carroll said:

"Annexed hereto and marked with the letter "AA" is a copy of a letter dated 17 April 2009 confirming issue of the SKR and loan documentation to follow." 37 What the letter "AA" actually states is:

"The Loan Contract for the loan to Golden Oceans (NSW) Pty Ltd will be forwarded under separate cover for signature by all directors.

We have been advised by the lender that the Custodial Receipt (SKR) has been raised and approved by Rabo Bank in Hong Kong and is currently being validated and confirmed by the lender.

You will be advised once validation has been confirmed." See p 105ff of annexure to Mr Carroll's first affidavit. 38 At p 169 of Exhibit A is a letter dated 28 February 2009 from Triumph to the purchaser by which Triumph apologies for the delay "with the processing of your approved loan" and it makes reference to the present financial crisis. It then states:

"You will be notified without delay once the SKR/BG against your loan is finalized. I envisage that this will occur within the next few weeks." 39 There is in evidence a letter dated 4 March 2009 from Professional Mortgage Providers (Vic) Pty Ltd to Mr Carroll. The letter, at p 170 of Exhibit A is addressed to Overdean Pty Ltd, another company controlled by Mr Carroll, but the relevant version is "NW6" to Mr Wallace's second affidavit. That letter explained the reason for delays and then said that Rabo Bank was now involved and required all SKR's to be sent to head office for approval:

"Once the SKR is raised Rabo send the SKR to the lenders who confirm and verify the SKR. The lenders [sic] bank then issues their acceptance and they provide settlement instructions.

This is the reason it is taking longer than you were originally advised but the process is now well underway. The process is considerable [sic] faster if client provides their own Bank Guarantee.

We have requested a letter of comfort from the lender and Rabo Bank confirming this and expect to receive it within the next 48 hours. We will forward it to you on receipt."

No such letter of comfort from Rabo Bank was ever obtained or produced. The letter at p 169 of Exhibit A might be such a letter of comfort from Triumph. 40 From 17 April 2009 to the date of the hearing the only further communications received by the purchaser were a letter of 28 May 2009 from a Ms Michelle Calvert-McCredie, a Melbourne solicitor, and one on 4 June 2009: see Exhibit B. The letter of 4 June advises of the progress of the SKR "required for your loan to finalise and advise that the issuing of your hard copy SKR is imminent". 41 On 18 June Ms Calvert-McCredie sent an email to the purchaser stating:

"Attached are the first part of the documents for the above loan. A couple of ancillary documents are missing and will be completed on Friday. The main documents are attached. At this stage the email has only be [sic] forwarded to you."

The documents were draft in form and one of them - the Loan Agreement - appears to be a replacement of the Loan Agreement signed by the purchaser in December 2008. Nothing further was received by the purchaser prior to the hearing. 42 Ms Oakley cross examined Mr Carroll and established:

(1) Triumph's proposed loan amount of $5.3 million was based on a valuation figure for the site with unconditional development approval: see T19.50, T22 - T23.

(2) There was an establishment fee of 5.75% to be paid to Triumph ($304,750): see T26.30.

(3) The SKR had to be in a form acceptable to Triumph: see T27.8.

(4) There had to be a mortgage in favour of Triumph or the bank issuing the SKR.

(5) No documentation produced established that a bank was about to issue the SKR: see T28.32 - .39.

(6) Mr Carroll has been given various assurances by brokers that Rabo Bank was to be involved in issuing the SKR: see T28, but neither Rabo Bank nor ABN Amro (which was previously indicated as the bank which would issue the SKR) sent anything to the purchaser directly or indirectly: see T29.

(7) Mr Carroll has never been told by Rabo Bank what its requirements are nor received any communications: see T30.30.

(8) The annual fee payable for the SKR has not been confirmed: see T30 - T31, and whether an establishment fee would also be required by Rabo Bank was not clear (although Mr Carroll believes that he will not be liable for such a fee): see T31 - T32.

(9) Mr Carroll has tried to obtain a bank guarantee suitable to Triumph from another source but without success: see T32.15 - .26.

(10) On 13 January 2009 Mr Carroll believed that he would soon receive the relevant mortgage documents: see T38.45, but none were forthcoming and only drafts were sent very recently: see T39.6.

(11) Mr Carroll has been told many times that the issue of the final documents was imminent.

(12) Mr Carroll has been told since January 2009 that the issue of the SKR was imminent: see T39.30.

(13) The purchaser has very little in the way of funds and could not complete the transaction without a loan and Mr Carroll has only limited funds: see T68 - T69.

(16) The receipt for a payment by the purchaser in Bangkok and the receipting company provides only a Yahoo email address: see T40.

(17) Mr Carroll has not told Triumph or Rabo Bank that the DA approved by Council was approved subject to qualifications: see T42 - T43, and those conditions could affect the valuation of the property at $5.3 million: see T43.1 - .5, T43.41, T44.9 and T45.44 - .47.

(18) There was evidence of an offer from Nationwide Capital Pty Ltd of a loan on 9 April of $3.862 million: see pp 182-183 of Exhibit A. The purchaser has not pursued this, partly, it would seem because $3.86 million is insufficient having regard to the purchaser's needs and lack of financial resources: see T67 - T69 and it was not contended that it would. I note that the loan was expressed to be only for one month with an interest rate of 4% per month or 8% per month in the case of default.

43 It is clear that as at the date of commencement of these proceedings (24 April 2009) the purchaser could not complete the contract, and it follows that it could not obtain a decree of specific performance: see Meagher, Gummow and Lehane's Equity Doctrines & Remedies, 4th ed (2002), LexisNexis Butterworths at [20-115] and cases there cited: Gurney v Gurney (No 2) [1967] NZLR 922 at 925 and Australian Hardwoods Pty Ltd v Commnr for Railways [1961] 1 All ER 737 at 742, [1961] 1 WLR 425 at 432-3. The onus is on the plaintiff to aver and, more importantly, prove readiness and willingness: see Bahr v Nicolay (No 2) (1988) 164 CLR 604 at 620, 640-1 and 659. I accept that there may be cases in which the Court can be satisfied that a necessary step in completion by the party seeking specific performance will be able to be taken within a reasonable period of the decree being made, but that is not the case here. 44 Even treating the date of the hearing as relevant (see Carydis v Merrag Pty Ltd [2007] NSWSC 1220 per Brereton J at [36]), the purchaser has not established an ability to complete the transaction now or in a reasonable period which I would assess as two weeks from the date of a decree, if the contract has not been validly terminated. This is not because the purchaser is not desirous of completing but because the funds have not materialised. The provision of finance is fundamental and the failure of those from whom finance has been sought to commit to its provision and the failure, even now, of the ultimate lender to confirm its involvement is of critical significance. The funds have not been shown to be likely to materialise at any time soon, if ever.

45 The purchaser is not ready nor able to complete the contract due to the lack of funds and if I am correct in concluding that the purchaser is not entitled to specific performance of the contract due to an inability to complete as at the commencement of the proceedings, or even now, then even accepting the formation of a loose agreement to extend time to April, as Mr Carroll asserts, the inability to complete then and now even 8 months after the date for completion, constitutes a level of delay that is so unreasonable in the circumstances as to amount to a repudiation of the contract by inability to perform which the vendor would be entitled to accept: Tsoa-Lee v Urban Property Consultants Pty Ltd [1983] 1 NSWLR 569. 46 I must now deal with the question of whether the contract was validly terminated by the vendor and I turn first to consider the credibility of Mr Wallace and Mr Carroll. 47 Mr Carroll's credit was very significantly attacked by Ms Oakley on a number of bases, which I accept: (1) If there had been a concluded agreement on 21 February it is strange indeed that when Mr Flaherty told Ms Bennett that the vendor did not agree with Mr Carroll's version no more was said about it. (2) None of the notes of Ms Bennett's conversations with Mr Carroll up to 18 March record any subsequent assertions of a concluded agreement even when she discussed the vendor's right to terminate, although Mr Carroll asserts he did refer to it: see T56.35. There was no response of that kind when she sent Mr Carroll a copy of Mr Flaherty's letter of 25 February 2009 (at p 160): see pp 161A and 161C of Exhibit A. Mr Carroll told Ms Bennett in response to Mr Flaherty's letter of 25 February: "I will confirm in the next 24 hours whether I will have the money to pay Neil as per last letter… I will consider my position with Neil in the same time and consider coming back very aggressively, as he needs the $200K as much as I want the property.": see p 161C of Exhibit A. (3) Mr Carroll apparently did not instruct Ms Bennett to send a letter reiterating that an agreement had been reached: see T61 - T62, and he did not assert that he did say that to Ms Bennett on 25 February: see T61. The only explanation for not having done so was "because Neil had asked for more": see T61.23. (4) Whilst Ms Bennett understood Mr Carroll's email of 23 February to be a statement of the agreement claimed to have been reached since it was a response to her query "can you confirm urgently the outcome of your meeting", it is not expressly worded as "it was agreed". On its own, I would place little significance on that, but when coupled with other matters it is more significant. (5) Mr Carroll instructed Ms Bennett not to mention the $40,000: see T52, and he said that the reason for that is that "it had already been agreed to": see T58.50. He agreed that the letter sent by Ms Bennett (at p 157 of Exhibit A) reflected his instructions and did not indicate that he accepted he had to pay the $100,000 on top of the $44,000 already agreed to. The words which Mr Carroll attributes to himself in para 20 of his first affidavit are ambiguous and given his instructions to Ms Bennett it would seem deliberately so. (6) There was an earlier occasion (on 12 December 2008) when Mr Carroll had told Ms Bennett that he had an agreement for extension but his affidavits have provided no support for such an agreement: see T33.

(7) Mr Bennett wrote to Mr Flaherty asserting that there had been an agreement and Mr Flaherty responded with Mr Wallace's instructions rejecting that assertion and nothing more was written or said about it.

(8) Mr Carroll is recorded as having told Ms Bennett on 27 February that he thought he would negotiate a new contract with Mr Wallace: p 168A of Exhibit A. Mr Carroll denied having said this but the note is a contemporaneous note produced form his solicitor's conveyancing file and there is no reason to doubt its accuracy. Its reliability is reinforced by the further notation: "suggested he try to make subject to finance", which is clearly a reference to the proposed new contract.

(9) Mr Carroll said that he did not know if he had instructed Ms Bennett prior to 18 March 2009 to assert that the contract was still on foot in response to Mr Flaherty's letter: see T74. It is clear on the evidence that he did not since there is no letter and no file note recording any such instructions.

(10) I deal with the diary note dated 7 March below.

48 I should add that there is an ambiguity about Mr Carroll's version of the conversation on 21 February and I am not persuaded even on Mr Carroll's evidence that the conversation establishes a firm agreement. 49 There was an attack on Mr Wallace's credit. The attack was limited to one matter which was that when Mr Warren of counsel, for the purchaser, put to Mr Wallace that he had used the word:

"How about I pay a hundred thousand dollars on top of the price at settlement inclusive of interest": see T108.45.

Mr Wallace denied "very strongly" that he had. He repeated his denial saying that he denied "very strongly" (see T109.1) that he had said those words. This was rather surprising as Mr Warren was quoting from Mr Wallace's own version of the conversation set out in his second affidavit. When Mr Warren drew this to Mr Wallace's attention he resiled from his denial and said that he had been confused. There was no other aspect of Mr Wallace's evidence that was shown independently of Mr Carroll's evidence to be wrong or internally inconsistent and as Ms Oakley put it, his evidence was entirely consistent with the notes of his solicitor and the letters sent. For example, Mr Wallace's evidence was that he told Mr Carroll on 24 February that he wanted $200,000. Mr Carroll said (at T60) he could not recall if Mr Wallace said that on 24 February. I accept that it was on that date and the fact that it was that date supports Mr Wallace's contention that he told Mr Carroll he would consider Mr Carroll's proposal and get back to him. Mr Carroll's affidavit makes no reference to the $200,000. That he knew Mr Wallace wanted $200,000 is made clear by his letter of 25 February to Ms Bennett: see p 161C of Exhibit A. Mr Carroll admitted that the purchaser could not raise $200,000: see T58.16 - .20. 50 Mr Wallace's evidence of what occurred on 7 March is that essentially Mr Carroll sought to negotiate a new contract, as indeed, Ms Bennett noted Mr Carroll said on 27 February he would do and in response Ms Bennett apparently recommended he needed to obtain a longer period of settlement: see p 168A of Exhibit A.

51 There is also the issue of the note of 7 March 2009. I have already referred to Ms Oakley's concession and to the unchallenged evidence of Mr Carroll that he had given a copy of his diary note to Ms Bennett. I proceed on the basis that Mr Carroll did provide Ms Bennett on 20 March with a copy of the note for 7 March that forms part of Exhibit D. Two questions remain:

(1) whether the note was made contemporaneously with the conversation at the café; and

(2) whether the note accurately records what was said by each of them. 52 There are a number of problems with the note:

(1) Mr Carroll did not, on his own evidence, contact Mr Wallace in relation to the consultancy fee. He has provided no evidence of what he did following the supposed agreement in reliance on it. The only step established to have been taken by the purchaser was a response to the vendor's solicitor's letter of demand: see p 174 of Exhibit A.

(2) Mr Carroll gave no evidence of having done anything to establish the timing of the payment, and he did not, on his evidence, return to Mr Wallace to tell him he could obtain the extra $150,000.

(3) If Mr Wallace had indicated his willingness to accept $150,000, in the circumstances, it is surprising that Mr Carroll did not instruct Ms Bennett in relation to that immediately after he had confirmation that 20 working days after 21 March 2009 (i.e. to 18 April) was acceptable to Mr Wallace. There is no evidence from Mr Carroll that he took any steps either with his solicitor or some other lawyer to "look at the implications of this", i.e. the consultancy fee for which, according to Mr Carroll, Mr Wallace asked, as he claims he said he would.

(4) The reference to "you'll see there" is to a letter from Professional Mortgage Providers: see "NW6" to Mr Wallace's second affidavit. It does not state within what period the SKR would issue. There was an indication of that kind in a letter from Ms Calvert-McCredie (see Exhibit B), but it is dated 28 May 2009 and hence post-dated the meeting on 7 March 2009.

(5) I have noted that Mr Carroll did not dispute in his affidavit the message set out as [12(6)]. That message has Mr Carroll saying he can get his hands on $150,000 "now" but it undermines his asserting that Mr Wallace had indicated that payment at settlement was acceptable.

(6) The note "Glenn = should have a good indication for $150,000 has arranged awaiting paperwork" is odd because it is expressed as 'Glenn'.

53 Ms Oakley put to Mr Carroll that the purpose of the meeting on 7 March was an attempt by Mr Carroll to ascertain from Mr Wallace what it would take to revive the contract: see T73.25. Even on the basis of what is contained in the note dated 7 March, it has that appearance. Mr Carroll's words to Ms Bennett on 27 February reinforce that impression. 54 Leaving aside the question of whether Mr Carroll was writing on a notebook when he sat with Mr Wallace, I would accept the evidence of Mr Wallace over that of Mr Carroll. Mr Wallace's evidence fits with the documentary material and I accept Mr Wallace's evidence as a truthful account of what occurred and reject Mr Carroll's evidence of the disputed conversations. On the material before me I would also accept Mr Wallace's denial that Mr Carroll was writing. Further, if Mr Carroll was writing I do not accept Mr Carroll's claim that what he wrote reflects what was said. 55 I am not persuaded that Mr Wallace agreed on 21 February or at any later time to extend the date for completion beyond 24 February. 56 This conclusion does not resolve the question of whether the Notice of Termination was valid as Mr Warren argued that the extension of time from 20 February to 24 February was a unilateral extension of time and invalid, and argued that as at 24 February the vendor was not ready, willing and able to complete.

Unilateral Extension 57 Mr Warren relied on Fekala Pty Ltd v Castle Construction Pty Ltd [2002] NSWCA 297 for the proposition that the party who has given notice cannot unilaterally extend the time. In Fekala the recipient of the Notice to Complete, having responded to it by readying itself to complete on the nominated date, was held entitled to insist that completion take place on the specified date. It would follow that the purchaser here, having received a letter purporting to extend time, would have been entitled to assert that the vendor had to proceed with settlement on 20 February. Of course, the purchaser did not do so and could not have settled on 20 February. Mr Warren eschewed any argument based on estoppel since, as he pointed out, his client had not relied on the letter. He submitted, however, that there had been waiver in the sense of an election between two inconsistent rights. I doubt whether a party could at the same time assert (other than in the context of estoppel) that a letter extending time was invalid, but yet assert that it had an effect, i.e. removing the essentiality of time. Mr Warren sought to answer this concern by saying that the party issuing such an invalid extension could not rely on it for any purpose but the recipient could rely on it. 58 Ms Oakley submitted that the purchaser could not establish any election between two inconsistent rights if the Notice given was invalid, which has much force, but in any event, she resisted the proposition that there had been any unilateral extension of time. Looked at literally, and without regard to context, the letter of 20 February from the vendor's solicitor to the purchaser's solicitor could be so viewed, but in my view, the context which I have earlier set out makes it clear that:

(1) the purchaser was unable proceed on 20 February and wanted to bargain for another 6 - 8 weeks within which to complete the contract;

(2) the vendor was willing to hear the purchaser's proposal and could not - due to ill health - meet before 21 February;

(3) the parties wanted to postpone the settlement on 20 February to enable those discussions to be held; and

(4) the vendor and purchaser's solicitors understood that their clients both wanted that opportunity to meet and that practically the time for settlement had to be postponed at least for a few days to enable the possible agreement to be explored and reached. 59 In my view, the extension of time to 24 February was the subject of implicit agreement - with one party hoping he could bargain for a much longer period within that short period. I think it is confirmatory of the understanding of the parties that the purchaser's solicitor told the purchaser on 24 February that he had to settle that day if he could not obtain agreement to a further extension. I note Mr Carroll's agreement that the letter at p 147 of Exhibit A reflected his understanding: see T47.40. I think it is a case where there was an agreement to extend time so that discussions could occur: see Empirnall Holdings Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 at 535 per McHugh JA dealing with the formation of contract, but which involved similar principles. Whether the vendor was ready, willing and able 60 The purchaser disputed that the vendor was ready, willing and able to complete on 24 February. The vendor's solicitor sought particulars of that assertion and none were provided until the morning of the trial. Mr Warren indicated that the absence of a tax invoice (necessary under the contract for sale: see Special Condition 36 at p 23 of Exhibit A) meant that the vendor could not have completed on 24 February. 61 Ms Oakley, having had very short notice of this point, called Mr King her instructing solicitor. Mr King did not have conduct of the conveyancing file in February 2009 but he had had involvement of it in 2008 (up until 28 November 2008) and he has had many years of conveyancing experience. He said that the practice in relation to conveyancing is that the purchaser's solicitor provides to the vendor's solicitor a settlement sheet in advance of settlement. The solicitor will then check the document and, if correct or with such necessary adjustments, will then prepare a tax invoice with the client's tax file number and the amount of the consideration. Additional amounts such as the $40,000 plus GST payable for the first extension would be included. He said that it would take "moments" to prepare the documents. 62 Mr Wallace was cross examined about the tax invoice. He said he would have prepared it on behalf of the vendor. He admitted that he had not done so because he had no indication that settlement was or could take place on 24 February. 63 I think it is obvious that, had the purchaser's solicitor contacted Mr Flaherty to fix a time for settlement on 24 February, as would have been usual, the invoice could have readily been prepared by the vendor or its solicitor. The certificate of title for the property was held by the solicitor, the transfer document had already been sent signed by the vendor's solicitor to the purchaser's solicitor and the property was unencumbered so no mortgagees were involved in the settlement. Thus the only step required on behalf of the vendor was the provision of the document as no settlement sheet had been provided by the purchaser's solicitor. It does not matter that Mr Wallace would normally prepare the tax invoice - it could have been prepared by him very quickly and sent electronically to Mr Flaherty and Mr Flaherty, in accordance with normal conveyancing practice, could also have prepared it. 64 Mr Warren drew my attention to Union Eagle Limited v Golden Achievement Limited [1997] AC 514, a case in which a courier had arrived with the cheque 10 minutes late. Accepting that time for completion is essential, the present case is not one where the purchaser turned up cheque in hand, ready to settle and the tax invoice had not been prepared; it is a case where the purchaser could not settle and did not attempt to do so, and the vendor could. The case of Mearns v Parris Holdings Pty Ltd (1994) 6 BPR 13,677 per Santow J (as his Honour then was) offers support for the contention that it is the date in a Notice to Complete which is essential not the hour, but I do not think it is necessary to consider whether there is any conflict between Union Eagle and Mearns. 65 In my view, the vendor was ready, willing and able to complete as at the time specified. I do not think that the fact that no tax invoice was actually prepared shows that it was not. 66 It follows that in my view the vendor was entitled to terminate by Notice on 27 February. It follows in my view that in accordance with the contract, the vendor is entitled to the deposit and to any holding costs incurred to date. This leads to a further issue. 67 The vendor seeks the payment of the balance of the deposit ($174,000) not paid. The purchaser resists that payment on the basis that it is a penalty. Mr Warren referred me to Luu v Sovereign Developments Pty Ltd [2006] NSWCA 40, [2006] NSW Conv R 56-146 and Ianello v Sharpe [2007] NSWCA 61 which support the proposition that the fact that the parties have called a payment 'a deposit' is not determinative of whether an amount is a penalty. However, as Ms Oakley pointed out, the courts have long accepted that a 10% deposit forfeited in the event of a plaintiff's failure to complete is not a penalty: see Workers Trust & Merchant Bank Ltd v Dojap Investments Ltd (1993) AC 573, and see Manufacturers House Pty Ltd v Ashington No 147 Pty Ltd [2005] NSWSC 767 at [54] - [60] and see CCH Conveyancing Law and Practice at [7-220]. 68 In my view the fact that the vendor did not insist on the payment of all the deposit on exchange does not turn the contractual obligation to pay the amount specified as a deposit (and in total 10% of the purchase price) into a penalty. 69 There is no dispute that there was a binding agreement to extend time to 20 February 2009 in return for a payment of $44,000 (inclusive of GST). The purchaser contends that this payment is also a penalty. I do not think that an amount agreed to be added to the purchase price in consideration of an extension of time to complete is a penalty, particularly since there was evidence that interest was accruing to the debit of the vendor at almost $1000 a week. The difficulty is, however, that if it was agreed to be added to the purchase price or paid on settlement, the contract was terminated and the amount would fall into the general pool of damages. No claim for general damages is maintained other than in respect of the items listed below. 70 A claim for agent's commission on resale and advertising and legal costs was abandoned by the vendor. This leaves various holdings costs, such as Council rates, of which there is evidence and which will need to be calculated up to the date of judgment.

Guarantee 71 The only issue in relation to the guarantee was whether or not the purchaser's liability for the $44,000 would be caught by it. There was very little said about the guarantee given by Mr and Mrs Carroll. A copy of it unsigned is at p 23B of Exhibit A and the only issue raised by the second and third cross defendants in relation to the guarantee was whether the $174,000 balance was a penalty and whether the $44,000 was payable by them: see para 10 of the plaintiff's list of issues. The issue of whether the $44,000 agreed to be paid by Mr Carroll on behalf of the purchaser was addressed in oral submissions by Mr Warren. I have explained why I do not think that $44,000 is claimable per se against the purchaser and it would follow that the guarantors are not liable to the vendor for that amount. This leaves, then, the amount of $174,000 and the amounts referred to in [70] and no reason has been advanced as to why the second and third cross defendants are not liable for those amounts.

Orders and Costs 72 It follows that the plaintiff fails in its Amended Summons and the defendant succeeds on its Cross Summons. The solicitors for the defendant should prepare a draft form of orders with such orders including costs orders proposed on behalf of the defendant as reflect these reasons.

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.