Interim Finance Pty Ltd v Bright Beginnings Learning Centre Glendenning Pty Ltd

Background

1. Interim Finance is in the business of providing short-term financial accommodation. Bright Beginnings is a company that carries on business as a provider of child care services. Romany and Mena Ibrahim (the Ibrahims) are brothers who jointly own the shares in Bright Beginnings. Romany Ibrahim is the sole director and secretary of Bright Beginnings.
2. In or about June 2016, Bright Beginnings made an application to Interim Finance for a loan of $450,000 (see email dated 22 June 2016).
3. Interim Finance prepared a letter of offer (the Letter of Offer) dated 22 June 2016 addressed to Mena and Romany Ibrahim, in which there were set out: in Part A, details as to the borrower (Bright Beginnings) and mortgagor (the Ibrahims); in Part B, the credit details; in Part C, the fees and charges; in Part D, a declaration as to loan purpose (namely, working capital to assist with the completion of a child care centre); in Part E, the proposed method of repayment (sale of a radiology practice); in Parts F and G, requirements to be completed prior to settlement; and in Part H, the statement that "[t]his offer is valid for seven days from the issue date …".
4. Also part of the Letter of Offer were terms for the acceptance of the offer (Part I - Offer Acceptance), which relevantly included: I/We acknowledge and agree that in the event that Interim Finance Pty Limited discovers or is otherwise made aware of any item or issue which changes its decision to provide the Loan Amount, then Interim Finance Pty Limited may withdraw or amend this Letter of Offer. In addition, I/we agree that Interim Finance Pty Limited is not required to provide me/us any reason for any decision to withdraw or amend this Letter of Offer, nor will I/we make any claim, demand or order against Interim Finance Pty Limited or its solicitors for any harm, loss or damage that I/we may or will suffer as a result of Interim Finance Pty Limited withdrawing or amending this Letter of Offer.
5. The Letter of Offer concluded with the following, in bold typeface, under the heading "The Borrowers Financial Obligations": Unless otherwise specified the only upfront fee charged by Interim Finance is the valuation fee. The Borrower(s) will incur no financial obligation by signing the letter of offer. However, in the event that Interim Finance Pty Ltd proceeds to instruct, have prepared and issue loan documents and the loan subsequently fails to proceed due to one of the following occurrences: I/we elect not to proceed with this offer of finance I/we are unable to satisfy Interim Finance Pty Limited's requirements for whatever reason Interim Finance Pty Limited discovers or is otherwise made aware of any item or issue which changes its decision to provide the Loan Amount Then I/we acknowledge that I/we are liable to Interim Finance Pty Limited for the following fees ("Fees"): a) The Loan Application/Line Fee as set down in this Letter of Offer; b) The legal costs and disbursements incurred by Interim Finance Pty Limited for the preparation of loan documents; c) An administration fee of $1,650.00 (incl.GST). The Fees referred to herein are payable within 5 days of Interim Finance Pty Limited issuing an invoice. Should payment not be made the Mortgagor grants Interim Finance Pty Limited an equitable interest and charge over the Security Property for the Fees together with all legal costs and disbursements associated with the preparation, stamping and registration of a caveat and all recovery costs incurred by Interim Finance Pty Ltd. I/We give consent for Interim Finance Pty Ltd to register a caveat over the Security Property until such time as all of the Fees and expenses described herein are paid in full. [Emphasis added.]
6. The Letter of Offer was signed by the Ibrahims on 22 June 2016 and the valuation fee of $660 required under the Letter of Offer was paid on the same day.
7. On 28 June 2016, solicitors acting for the mortgagee (there identified as L&B Company Pty Ltd ATF L&B Super Fund and Minani Pty Ltd) prepared a letter addressed to "[t]he Director", Bright Beginnings, enclosing a package of documents including a First Mortgage to be registered over the Guildford property and a Guarantee and Indemnity to be executed by the Ibrahims. The letter noted the requirement that the borrower and guarantor obtain independent legal advice and strongly recommended that each obtain independent financial advice.
8. It appears that the letter was not sent by the mortgagee's solicitors to the borrowers' solicitors (OneGroup Legal, to which I will refer as OGL). Rather, Mena Ibrahim deposes that he was contacted on about 28 June 2016 by Interim Finance's solicitor, who advised that the loan documents had been prepared. Mena Ibrahim deposes that he arranged to collect them and delivered them to OGL. (See his affidavit sworn 4 November 2016 at [9]-[10].)
9. On Friday, 1 July 2016, following an email communication from Mena Ibrahim to Trent Littleford, an Operations Manager in the employ of Interim Finance, requesting that the valuation report for the Guildford property be sent to him, Trent Littleford emailed Mena Ibrahim to enquire as to the status of the mortgage documents. (This query was only three days after the loan documents had been prepared.) Mena Ibrahim's response to that query was: We are now waiting for the okay from my solicitor, he wanted to amend something on the contract.
10. Pausing there, Interim Finance notes that this was before the time at which Mena Ibrahim has deposed that he and his brother attended the offices of OGL (4 July 2016) and their solicitor (Mr Abdallah) reviewed the loan documents and provided them with legal advice in respect of the loan (see at [12] of Mena Ibrahim's affidavit). That discrepancy was not explained in Mr Ibrahim's evidence.
11. At 7.22am on Monday, 4 July 2016, Mr Abdallah sent an email to the lender's solicitors requesting an amendment to the security documents to include "a carve out clause prohibiting the Lender [i.e., Interim Finance] from registering any interest on the PPSR" (i.e., the Personal Property Securities Register under the Personal Property Securities Act 2009 (Cth)). (Unless it was a very early meeting, and quick review of the documents, the timing of this email might be consistent with the initial meeting/advice from Mr Abdallah having taken place earlier than 4 July 2016 but that is not consistent with the timeline to which Mr Ibrahim deposed and again, this was not clarified in the course of the evidence.) Interim Finance's solicitors responded a short time later that the lender would not hold an interest registrable on the PPSR.
12. Mena Ibrahim has deposed that after the meeting with their solicitor on 4 July 2016 he took the original loan documents with him (at [15]). He has also deposed (in a part of his affidavit which was read over objection for the fact of the communication not the truth of the communication) that his solicitor contacted him on about 6 July 2016 to say he had received a response from the lender's solicitors and "he to arrange an appointment to execute the loan documents with a solicitor at OGL" (at [17]). In his affidavit, Mena Ibrahim asserted that an appointment was made for 12 July 2016 (see at [17]). (There was no evidence from Mr Abdallah to confirm this, nor any documentary record of any such appointment.)
13. Meanwhile, Interim Finance's managing director, Andrew Littleford, apparently became concerned that the borrower was "shopping around" for finance. I say this because, in his affidavit affirmed 6 September 2017, Andrew Littleford sets out his recollection of a conversation which he says took place with Mr Ibrahim (there seemingly referring to Mena), subsequent to a call he had received from a third party (a finance broker) on about 5 July 2016 and prior to Interim Finance's email on 8 July 2016. Andrew Littleford says that in that conversation he told the Ibrahims that he had received a call from a finance broker who had put their deal to him seeking a larger amount than Interim Finance had offered and said to Mr Ibrahim, "I would be pretty distressed to find out that after all the work we have done, the deal was being shopped around" (at [13]). Andrew Littleford deposes that Mr Ibrahim said he did not know what Andrew was talking about and that "[o]ur solicitor says he's waiting on your solicitor for some amendments to the documents". Andrew Littleford says that he responded that that had been fixed up within a couple of hours on Monday morning (i.e. on 4 July 2016). In that telephone conversation, Andrew Littleford says that Mr Ibrahim asked whether he (Andrew) would be prepared to substitute the securities in the loan documents for another property and says that he (Andrew) said "we would not do that" and that "the only transaction we are prepared to move ahead with is the one we have already documented".
14. Mena Ibrahim, in his affidavit of 4 November 2016, also refers to a conversation in which reference was made to the deal being "shopped around", but places this conversation as occurring on 12 July 2016 (see [26] below). However, that timing seems unlikely since by then Interim Finance had already claimed payment from the borrowers of the disputed fees on the premise of the stated assumption that Bright Beginnings (or the Ibrahims) no longer wished to proceed with the deal (see [18] below).
15. On 8 July 2016, Trent Littleford sent an email to the Ibrahims, referring to the commercial loan application and the Letter of Offer accepted on 22 June 2016, stating that: Our records indicate mortgage documents were instructed and prepared on the 28th June 2016 with a 'sense of urgency'. Our firm and its lawyers have attempted to make contact with you and/or your lawyer to ascertain the status of this matter. We take it from the lack of communication and the fact loan documents have not been executed or returned, that you do not wish to proceed with this matter. In accordance with the signed Letter of Offer and Acceptance (attached) you are liable for all costs associated with the preparation of loan documents, less registration and transfer costs, together with this firm's Line fee and Administration Fee. (Emphasis added.)
16. As to the "sense of urgency" referred to in this communication, this appears to be based on the impression that Andrew Littleford said he had gained from earlier conversations with Mena Ibrahim that the loan was a fairly urgent matter (see his affidavit at [4], [11]).
17. The amounts claimed (totalling $8,100 inclusive of GST) were specified in the 8 July 2016 email and an invoice for those amounts was attached. Payment was required no later than 15 July 2016. The email noted that the lender may exercise its right to register a caveat over the proposed security property to secure the outstanding debt and advised that it was the policy of Interim Finance to list any defaulting accounts with a named credit reporting entity and that this listing would remain on the credit file for a period of five years and may affect any future credit application.
18. Instructions were given by Interim Finance on the same day (8 July 2016) to its solicitors to prepare and lodge a caveat over the Guildford property.
19. There was no response to the 8 July 2016 email. Instead, Mena Ibrahim seems to have attempted (notwithstanding the tenor of Interim Finance's 8 July 2016 communication) to progress the transaction.
20. The solicitors for Bright Beginnings emailed Interim Finance's solicitors at about 11.05am that day, asking if they were able to "send through a scanned copy of the docs for signing". The response from Interim Finance's solicitor, at about 11.23am, was that: I would rather not, as your clients are required to sign and initial the mortgage documents in various locations throughout the documents. The mortgage documents were collected by your clients from our office over a week ago. The documents were marked with " Sign Here" stickers to ensure your clients signed where required. Please liaise with your clients who have a full copy of the mortgage documents.
21. By email at 12.23pm, a fresh copy of the loan documents was requested by OGL on the basis that "[i]t seems the original given to our client has been misplaced". Interim Finance's solicitors queried this on the basis that they were under the impression that the solicitor at OGL had been given the loan documents (referring to the query that had been made by him in relation to the PPSR). Bright Beginnings' solicitor responded by email at 12.35pm that "[y]es they were then given back to the client who has now misplaced them", which is consistent with Mena Ibrahim having told his solicitors that he had misplaced the original loan documents, whether or not that was in fact the case. (In this regard, I note that Mena Ibrahim has deposed that, on the morning of 12 July 2016, in preparing for his appointment with OGL, it "came to [his] attention that [he] had misplaced the original loan documents" ([19]) but that Andrew Littleford gave evidence - to which I refer in due course - that Mena Ibrahim denied this in a telephone conversation later that day, which Mena in turn denies.)
22. The email from OGL went on to state: "He's asked for a fresh copy this morning so he can sign them as soon as they arrive so I'd kindly ask you express post them to our Po Box". The response to that, from Interim Finance's solicitor, was that he would seek instructions. Those instructions were presumably not to proceed with the loan, since Andrew Littleford deposes to a telephone conversation with both of the Ibrahims in the early afternoon of 12 July 2016 (admitted subject to relevance) in which he says Mr Ibrahim (presumably Mena) told him that their lawyer had lost the loan documents and that, when Andrew told him that the lawyer said that he had misplaced the documents, Mr Ibrahim had said that their lawyer was a liar. Andrew Littleford then says that he said: Well, that's not something I particularly want to hear. We are uncomfortable with the way this matter has evolved. We will not be funding the loan (at [14]).
23. Mena Ibrahim does not dispute that a conversation took place over the speaker phone between he and Romany with Andrew Littleford on 12 July 2016. He says that in that conversation Andrew Littleford said words to the effect: I have heard that you have been shopping around for a better rate because two other brokers have approached me with the same security. Mena deposes that he denied this and said "[w]e are definitely proceeding", referring to the request for the loan documents to be sent again "so that we can sign them straight away". (Pausing there, it seems more consistent with the timetable of events that this statement was made at an earlier time, as Andrew Littleford suggests, but ultimately nothing really turns on the timing of this statement.)
24. Mena Ibrahim then says that in that conversation Andrew Littleford said he had "given your money to another client now" and that he was not funding the deal anymore; they would both walk away and "you won't be charged anything else". (Andrew does not accept that this was said.) Mena Ibrahim says he asked Andrew not to "pull the deal" and said "[j]ust have the loan docs sent to our solicitor so that we can sign them straight away", but that Andrew Littleford said "No. We are not going ahead with the deal" (at [26]).
25. Romany Ibrahim has sworn an affidavit on 7 November 2016, deposing to the same speaker phone conversation to which his brother had deposed. His recollection was to similar effect. He says that he said to Andrew Littleford, "Andrew, we want to go ahead with the loan" (at [3]).
26. What followed the 12 July 2016 telephone conversation between the principals on both sides was an email that same day from Mena Ibrahim to both Andrew Littleford and Trent Littleford, stating: Please confirm that despite the fact that Romany and myself would like to proceed with the this [sic], you have now rejected this deal as informed to me today by Andrew.
27. Annexed to Mena Ibrahim's affidavit is a copy of an email message to his solicitor at 3:28pm on 12 July 2016, telling him that "the prick called me and pulled the pin on the funding …". That and the email referred to at [29] above are both consistent with there having been a telephone conversation between Mena Ibrahim and Andrew Littleford on 12 July 2016 in which Andrew Littleford confirmed that Interim Finance would not be funding the loan.
28. Meanwhile, a caveat had been lodged by Interim Finance on the title to the Guildford property. A lapsing notice was then issued on the application of the Ibrahims and served on Interim Finance, care of its lawyers, by letter dated 9 September 2016. These proceedings were then commenced.

Circumstances in which loan transaction did not proceed

1. The circumstances in which the loan did not proceed are in dispute between the parties and are critical to the issue as to whether any indebtedness arose in relation to the invoiced amounts. The evidence given by the principal players on this issue in cross-examination may be summarised as follows.

Andrew Littleford

1. As between Andrew and Trent Littleford (who are father and son), the decision to withdraw from the Loan Agreement was made by Andrew Littleford, though in consultation with Trent Littleford. Relevantly, both the 8 July 2016 email (from Trent Littleford) and Trent Littleford's recollection of what he was told by Andrew Littleford proceed on the basis of an understanding that the Ibrahims had rejected the deal.
2. In cross-examination, Andrew Littleford was pressed as to the assertion made by Trent Littleford in his 8 July 2016 email (an email that Andrew Littleford did not draft but that he thought had been the subject of consultation between he and Trent Littleford) as to attempts by "our firm and its lawyers" to make contact with the Ibrahims and the lack of communication from them. He did not recall seeing the email of 1 July 2016 from Mena Ibrahim before 8 July 2016 (T 16.19). He also did not recall seeing the email communications on 4 July 2016 between the respective lawyers concerning the possible application of the Personal Property Securities legislation (T 16.29). He said he had had no conversation with Trent Littleford as to whether or not he (Trent) had a recollection of seeing email communications between the solicitors over the period (T 16.46).
3. Andrew Littleford described the 8 July 2016 email from Trent Littleford as being, in effect, a pro forma communication: … generally a template that we would use from time to time, so aside from the numbers, the general dialogue is generally consistent with what we put in a situation such as this. [T 17.24]
4. However, he accepted that the statement that "[w]e take it from the lack of communication and the fact that the loan documents have not been executed or returned, that you do not wish to proceed with this matter" was not a part of the standard template. Rather, he said that it was: a general form of what we have used. I mean from time to time a template is modified to suit a particular circumstance and this may be the situation here. [T 17.39]
5. As to the complaint made in the email regarding attempts at communication with, and lack of communication from, Bright Beginnings or its lawyers, Andrew Littleford's understanding was that his solicitor, Mr Theos, had spoken to the borrowers' lawyers on a number of occasions and attempted to get some clarification on the matter, but he was not aware whether there had been written communications in the relevant period; he said he had this understanding "[f]rom conversations with the borrowers and from discussions with our lawyer and the conclusions that we draw" (T 19.20). (Pausing there, the assertion as to lack of communication from the Ibrahims cannot be sustained having regard to the communications that took place between the parties between 1 July and 4 July 2016.)
6. The crux of Andrew's complaint about delay, having regard to his evidence, may best be gleaned from the following exchange in cross-examination: Q. But, you see, your complaint is that there hadn't been conversations with the borrowers? A. Well, that's not the case. The ‑ I guess the position would be that we'd issued loan documents. We were given to understand that the matter had a sense of urgency about it. There were some legal matters that we were trying to resolve in relation to the GSC or the appropriateness of it, or we never sought one in the first instance. There was the delay getting the documents back. We weren't getting ‑ I don't believe Mr Theos or ourselves were getting the appropriate responses from either the borrowers or the borrowers' lawyers, and we were, I guess, trying to draw a line as to where the matter was heading. [T 19.23]
7. As to the 5 July 2016 conversation to which he had deposed, in which he says Mena Ibrahim said they were "keen to get it done", Andrew said: A. Saying you are keen to get something done and doing something positive about it are two distinct matters, in my view. … A. Yes, we've had conversations since the 15th [sic; query 15 June?], but having conversations doesn't necessarily mean the matter is moving along.
8. Andrew agreed that he gave instructions on 12 July 2016 that the security documents should not be (re)issued and accepted that, as far as he was concerned, the transaction was at an end and had been at an end since 8 July 2016 (T 24).

Trent Littleford

1. In his affidavit affirmed 27 September 2016, Trent Littleford has deposed that he was informed by Andrew Littleford that something (presumably the signing of the mortgage documents referred to in the 12 July 2016 email to which he there refers) did not take place "and that Interim considered the loan to be rejected by the Defendants" (see at [18]). The timing of this conversation was left unclear.
2. Trent Littleford did not recall that in the 1 July 2016 email he had asked as to the status of the mortgage documents, but accepted that he had done so and that he had received the response that the borrowers were "waiting for the okay from the solicitor" (that being on a Friday, only a couple of days after the security documents had been collected from Interim Finance's solicitors). He did not believe he was made aware of the exchange of emails between the solicitor from OGL and Interim Finance's solicitor and says he was not aware of any conversation between Andrew Littleford and the prospective borrowers on 5 July 2016.
3. As to the period between 5 and 8 July 2016, Trent Littleford said that he had had discussions with Andrew Littleford about the conversations that Andrew Littleford had had with the prospective borrowers around that time. As to the email communications between the solicitors concerning the security documents, he could not recall "specifically" that he had been told by his solicitors about the receipt of that email traffic.
4. Trent Littleford accepted that the statement in his 8 July 2016 email that "Our firm and its lawyers have attempted to make contact with you" was to convey the idea that there had been an unsuccessful attempt to make a communication. He accepted that there had been no unanswered communication from him as to the status of the matter; though he seemed to suggest that there might have been some such unanswered enquiry "from the office or perhaps from our lawyers"; he was aware that conversations had taken place between Andrew Littleford and the Ibrahims between 5 and 8 July 2016, but not aware of the subject matter of those conversations. He did not accept that the communications had indicated that the transaction was being progressed by Bright Beginnings.
5. Trent Littleford ultimately agreed that it was not correct to say that there was any lack of communication between Interim Finance and Bright Beginnings in the period between 28 June and 8 July 2016. There was then the following exchange: Q. One of the matters that you discussed [with Andrew] was the suggestion by Bright Beginnings of substituting a different security from the one originally submitted? A. Yes, I believe that was raised. Q. What I want to suggest to you is by the time you come to write your email of 8 July the information that has come to you is that Bright Beginnings is giving active consideration to this transaction, isn't it? A. Well, they put forward a different transaction. Q. Which was rejected without objection; is that not right? A. Yes, that's true; but there was nothing to say that they were progressing the matter under the original regime. [T 32]
6. Trent Littleford said he did not make the decision not to proceed and that most likely that decision was made by Andrew Littleford. Nevertheless, he also said: We drew the assumption that the matter was no longer progressing and we terminated our offer. [T 33.13]
7. Pressed as to whether the 8 July 2016 email set out the whole of the reasons upon which Interim Finance wished to rely in terminating the lending, he said "I think my letter set out a specific reason" but was not able to answer whether or not it was the whole of the reasons. He did not suggest in his oral evidence that there was some other reason arising from conversations with Andrew Littleford that he had not set out in the letter.
8. In re-examination, Trent Littleford explained the position as follows: A. Well, this transaction, and transactions in our space, are often turned around very quickly. Usually, for first mortgage matters such as this one, we see as a guide five business days. We were under the assumption that there was a strong sense of urgency with this particular matter, as there are with a lot of little things we deal with. There was a significant delay between the time ‑ well, loan documents were instructed and issued and they were not returned, and there was a ‑ I can't work out how many business days passed, but it was based, on our assessment, a significant delay, which would be a little unusual given the fact that everything up until that point in time had come together very, very quickly. [T 39.12]
9. The reference to "in our space" was meant by him to mean "the short‑term lending space in our particular area of the market". What he said he meant by the loan transaction being progressed was: A. It would be moving from one stage to another. It would be seeing the items returned that we've called for. It would be seeing loan documents executed and returned that we had produced or our lawyers had produced. It would mean satisfying the list of requirements that we sent out, all within a timely fashion. Q. What does "timely fashion" mean? A. Well, yeah, so it's my wording. Given that we can turn these things around within five business days, we'd put "timely fashion" down as the average time it takes to turn around a transaction of this nature. [T 40.31]
10. He nevertheless accepted in further cross‑examination by Senior Counsel for Bright Beginnings that the only reference to a five‑day turnaround in the documents produced by Interim Finance was in an email as to how long it would take for Interim Finance to respond to an invitation to quote on providing finance, there being nothing in the Letter of Offer or loan documents providing that the finance would be drawn down by any particular date (T 41). He also accepted that the solicitor's letter that sent out the security documents for consideration and execution provided for a number of things to be done by the borrower in order to satisfy the requirements of Interim Finance "which might take a wide variety of times according to how well set up and how conveniently located and so forth the borrower was".
11. In further cross-examination, Trent Littleford said his letter of 8 July 2016 was: … based on the view that our office arrived at, based on the fact that loan documents were not returned and there was no communication about the progress of those documents. [T 42.9]

Mena Ibrahim

1. Mena Ibrahim was cross-examined as to the chronology of events that had taken place in early July 2016 after he had collected the loan documents and delivered them to his lawyer. In cross-examination he had a tendency to give lengthy answers, to emphasise how busy he was and to emphasise his view that Interim Finance had not behaved in a normal commercial way. See, for example, the following exchanges: Q. So would you agree that means [the 1 July email requesting an update] you knew that Interim were wondering when you were going to get the signed loan documents back to them? A. And it was responded to. Q. Yes, and then I asked you whether you had ever said anything about having an appointment to sign the documents on 12 July, and you said to the effect that you never knew that Interim wanted to know? A. Well, the question was asked and it was responded to. If they had another question - we're talking from Friday to Friday, within one week, okay. Now, I don't understand what kind of company, okay, expects to issue loan documents and get it back within so quickly, but these things take time, okay. Now, I've been in business. I'm a young person, but I've been in business for many, many years, okay. And in the course of my businesses, doing loans, doing deals, doing property transactions, these things take time, okay. So from Friday to Friday, it's absolutely absurd, okay, what has happened … Q. So 12 July you asked Mr Abdullah [sic] to get more documents or another copy so you can sign them? A. That's correct, because I did not realise that that 8th letter had been withdrawn. I did not realise that. I thought it was kind of, you know, "We would like your documents. We have until the 15th." I did not understand. Obviously, I am not a lawyer. I had just spoken to him previously. I had no idea what was happening. I am not a lawyer. Q. You thought the email had some kind of legal effect though, didn't you? A. I'm not sure exactly. I get a lot of emails every day, hundreds. Q. I am not asking about those ones, I am asking about Mr Littleford's, Trent Littleford's. A. Yes. Look, at this stage now, going back over the documents, I understand, but at the time, no, I did not realise what was happening at all. Q. Did you seek any clarification from either Andrew or Trent Littleford about the email? A. At that stage I did not think much of it. I thought we were signing on the Wednesday. I ‑ like I said, I thought that was ‑ had I not signed. I'm not a lawyer. Q. You said earlier in answer to one of my questions you did property development? A. That's correct, and I've never been dealt like this before. … Q. Well, then, in that case‑‑ A. And I had booked it in from the 6th. So, you know what I mean, from my point of view I thought they were just ‑ whatever. I thought everything was ready to go. I'm ready to sign on the 12th. You know, I get emails, like I said, I can't explain to you how many emails I get in a day. I might have had a bad day. No, in all seriousness. Q. I am laughing, sorry. I feel for you. A. It is very serious. I do really get a lot in my head sometimes and by that stage in my head everything had been finalised and on the 6th, you know, I had an appointment booked in for the 12th. Q. So on the 6th everything had been finalised in your head? A. That's correct, yes. Q. And on the 8th you got the Trent Littleford email that says‑‑ A. I thought nothing more at the time. Obviously, going back now, I realise how important it was, but at the time I thought nothing of it at all and I doubt I even opened it on the 8th. I opened it a few days later. Q. So it wasn't all that important at the time despite telling in an earlier answer to an earlier question yes, it was important? A. No‑‑ Q. Now you say you didn't even open it until a few days later? A. That's correct. Well, look, like I said, I get so many emails a day and had I thought it was important, I would have forwarded that on to Alan immediately. I would have done something. I didn't even think twice about it at that stage. Like I said, in my mind everything was finalised, ready to go for the 12th. Q. Just return to you saying‑‑ A. Yes. Q. ‑‑you thought what the email was doing was giving you until the 15th to sign the documents. Doesn't that seem to you to be an important deadline? A. I had it booked in for the 12th. I was executing on the 12th. Q. And doesn't it seem to you that before lunch when you were telling me that there was never any deadlines given, that that might be inconsistent with what you just told me now, that the 8th email seemed to you to be a deadline? A. Well, look, like I said, I am talking now in hindsight, you know what I mean. In hindsight, I realised the 8th was important, okay. At the time I didn't think any of it, okay. I had it booked in for the 12th. I've got a million things to worry about. I've got nearly a hundred employees. I have got so much on my mind. I don't have time, you know, to do things. I was booked in for the 12th. I had in my mind ‑ I thought the deal was done, everything was gone. It was a done deal, you know. I had absolutely nothing in my head at all, thinking, you know, at the time it was going to get signed on the 12th and that's it. Q. Okay. So you say everything was done‑‑ A. Yes. Q. ‑‑what was it you say that you had done that was the everything? A. I'd spoken to Alan, he said it was all good. We booked a time. I was going to go in there on Wednesday, on the 12th. It was going to get executed and that was it. There was nothing more to it. Obviously, now in hindsight, sitting here listening, it is totally different and I realise the 8th was totally important, but at the time it was nothing for me. It was literally I had booked in on the 6th, two days before, you know. I assumed all the documents were in order. It was ready to be executed on the 12th. Q. But it wasn't at the time, it was a couple of days later that you actually opened the email that you made the decision about whether or not it was important, was it? A. Look, honestly, to be completely honest with you, even when I looked at it I didn't even think anything of it. There is a lot of stuff in there and everything. I trust. Alan told me it was ready to be executed on the 12th and I was going there on the 12th, okay. I thought had it been something important, you know, it would have come from the solicitors. Q. Okay. So on the 12th‑‑ A. Mmm. Q. ‑‑which was after you read the 8th email, I think is what you said to me earlier, is that right? A. I ‑ look, no. Like I said, on the 8th, I didn't even look at that email. It is going back in hindsight and reading everything is when I realised how important that was. I thought I was going in there on the 12th to execute those documents. … Q. Why did you not say anywhere in your affidavit about that email on the 8th that you didn't look at it on the day, that you didn't open it until later? A. Well, I'm not a lawyer. I write ‑ I ‑ my lawyer's obviously sat me down and asked me, you know, what I thought and that's what I thought. Like that actually shows that I didn't even think that the 8th was really important at the time. I said what was important and that's what's been written, okay. Had I thought the 8th would have been really important, I would have, you know, I would have made a big deal with it. I didn't even call up anyone. I didn't do anything. You know what I mean? I did not ‑ in my head, you know, it's a Friday, I'm going ‑ you know, drinking, okay. I've got the weekend planned. I've got everything. I'm executing this deal on the 12th, okay. Q. Which is a Tuesday? A. Yeah. Q. So you have got quite a while to get over your drinking? A. It is not about getting over your drinking, it is the fact that, you know, like I said previously, had I thought it was important, I would have done actions. I would have done things. I would have made phone calls. I would have called Andrew or Trent. I would have done a million things, okay. I didn't think it was important. I didn't think anything of it at the time. Going back now, here, now, I realise it was important. Okay, at the time I didn't think anything of it. I was going to execute it on the 12th and that's it. Okay, I had nothing else in my head, nothing else ever, even a shadow of a doubt that this deal was not going to go ahead.
2. Some of Mena's evidence raised obvious inconsistencies - for example, on 1 July 2016 he had informed Andrew Littleford by email that his lawyer wanted something amended but, on his account of events, the advice given by Mr Abdallah as to the letter of offer was at a conference on 4 July 2016. He also did not give a cogent explanation as to why, if the documentation had been agreed on 4 July 2016 and everything was in his opinion finalised by 6 July 2016, and he knew Mr Abdallah was going overseas on his honeymoon on 8 July 2016, an appointment to sign the documents was not made before then (his answer in essence being that he dealt with a lot of different solicitors over the years and that he did not appreciate there was any urgency to do so), though I accept that there was nothing in the loan documents that required the signed documents to be returned within a particular time.
3. Mena's affidavit did not include an account of the 5 July 2016 conversation to which Andrew Littleford deposed, but in cross-examination he accepted that it had occurred (though did not agree with Andrew Littleford as to its contents).
4. Mena Ibrahim denied that he was going to see other brokers (and there was no evidence from the broker in question to corroborate Andrew Littleford's account of the query from her). He denied that he had called his solicitor a liar. His explanation for seeking to substitute the securities was simply that this was to consider the options. His evidence in relation to his reaction on receipt of the 8 July 2016 email (that he may not even have opened it and that he thought it was saying that he had until 15 July 2016 to sign the documents, and only later realised its importance) was not plausible.
5. The longer his cross-examination went, the more argumentative Mena Ibrahim became. See, for example, the following: Q. Why did you wait so long to sign the documents? A. So long? Q. Yes. A. Look, I choose not to answer that question. I completely disagree with you on that. Q. Well, the documents have been with your lawyer since the 28th, and then the 12th, that's about fourteen days, do you agree? A. Look, it takes time to get appointments. I have already detailed this previously okay and we are going around in circles. Q. But now you are telling me you urgently needed the funds? A. I did urgently need the funds, okay. To get ‑ look, I feel like I'm just repeating the same thing and we are going around in a circle. If you would like to ask me a different question I would like to answer that. and Q. ‑‑that's the complete letter? A. Thank you. You see, once again, when I read this I'm still thinking in my head: Well, okay, they have sent me the letter but if I execute the documents it's going to be all fine. That's how I still read it. Like, you know, like as long as the documents get executed I'm going to be fine. That's all I need to do is just execute the documents and I had it booked in for the 12th. Now my biggest, probably, thing was that I should have made it very clear to my solicitor to let them know that I was going there on the 12th, which I thought had already happened, okay. Now I think that's the only wrong thing I ever did, okay, is not let them know exactly the date. But that's not even, you know, that ‑ that's the only thing I can think of. Everything else we were communicating we were talking, everything was fine. I was completely shocked on the 12th when that phone call happened. Even the morning of the 12th I thought nothing of it. I thought by the afternoon, you know, the documents would be reissued and I would be signing again. … A. From the 5th to the 8th is three days, okay. Three days. It is nothing. It is nothing. I, I don't - I'm sorry, but like I said previously, had I been given a timeframe on the letter of offer, had I been given a date, an expiry date of this, you know, document, I had nothing like that. From my point of view when I was ready to execute the documents, okay, when I could execute the documents, which was the 12th, it was going to happen, okay. Had I been given the timeframe, had I been given instructions, had I been told anything that the deal was going to be expiring on the 8th had it not been received by then, it would have been a different story and I would put more urgency on it, okay. From my understanding, okay, and, you know, I can read a letter of offer, okay, it said very clearly nothing about a timeframe, okay. Had there been a timeframe I totally agree what happened would have been totally acceptable. Q. Just to make it clear, because I don't want it later suggested that this is something else, in the timeframe you mean the timeframe to sign up the mortgage and loan documents? A. I'm talking about the timeframe that I heard from Trent Littleford [in the witness box] saying, you know, we expect to have this wrapped up within five working days. I'm still completely shocked that that could even be possible, because by the time you call up a solicitor and get a meeting, I don't know what kind of clients they normally have, but I know my solicitors, it seems very highly fanciful that anything could be executed that quickly. Q. You had an urgent need for the funds, you say? A. I had an urgent need, yes. See, you are talking for instance, you are talking three business days, like it's ‑ I don't understand your timeframe and what you think is acceptable or not acceptable. What I'm telling you is that I think the timeframes that have been put on me are completely unacceptable. Just to get an appointment with a solicitor takes days. That's what I'm saying, okay. There's no timeframes, no explanation, no timeframes in the letter of offer, no timeframes in the conversations, even by their own accounts they never gave me a timeframe when they spoke to me. I have no emails with the timeframe, no nothing. No execution date by, okay. Even in the correspondence that I have read between the solicitors no documents saying that they needed to be executed by a certain date. Had that been presented to me things would ‑ I would have made a point to bring this more forward

Romany Ibrahim

1. Romany Ibrahim's evidence in the witness box was much shorter. He said that Mena Ibrahim handled all the financials and all the matters in relation to the loan transaction. He obviously left it to Mena Ibrahim to deal with Interim Finance. Other than insofar as his evidence corroborates that of Mena Ibrahim in relation to the 12 July 2016 conversation there is little to note in relation to his evidence.

Interim Finance's submissions

1. Unsurprisingly, Interim Finance submits that its witnesses should be accepted and that the evidence of the defendants should be approached with caution and, on contentious matters requiring determination, not accepted unless corroborated by reference to documents.
2. As to Andrew Littleford, Interim Finance points to his evidence in the witness box, among other things, to the effect: that Interim Finance's solicitor spoke to the borrowers' lawyers on a number of occasions and attempted to get some clarification (T 18.46) - this of course is inconsistent with the statement in the 8 July 2016 email as to a lack of communication; that the 8 July 2016 email was written based on the conclusions Interim had drawn from conversations with the borrowers and from discussions with Interim Finance's lawyer (T 20.19); and that the complaint in the 8 July 2016 email was not that there had not been conversations with the borrowers but, rather, that Interim Finance had issued loan documents in respect of a transaction that had a sense of urgency about it; that there was a delay getting the documents back; and that Interim Finance did not believe either it or its solicitor was getting the appropriate responses from either the borrowers or the borrowers' lawyers, and Interim Finance was trying to draw a line as to where the matter was heading (T 19.25). Reference is made to the distinction he drew between the borrowers saying they were keen to get something done and doing something positive about it (T 19.43); that having conversations did not necessarily mean the matter is moving along (T 24.9); and that, so far as he was concerned, the transaction was at an end and had been at an end since 8 July 2016 (T 24.25).
3. Reference is also made to Andrew Littleford's evidence as to the conversation with Mena Ibrahim on 5 July 2016; to the fact of the telephone conversation with the other finance broker (Ms Lam) on 5 July 2016; and to his evidence that, after receiving Ms Lam's call and before the 8 July 2016 email, he had a telephone conversation to the effect set out in his affidavit at [13].
4. As to Trent Littleford, Interim Finance points, among other things, to the conclusion both he and Andrew reached as to the "sense of urgency"; to his evidence that he did not consider all the information that he had either from Andrew or from Bright Beginnings' people indicated that the transaction was being progressed by those people to be a correct proposition and that the issue of security swap did not suggest that the matter was progressing (T 31.25; and see T 29.40; T 32.48).
5. Interim Finance submits that its witnesses gave their evidence in a frank and forthright manner, whereas Mena Ibrahim's evidence should be described as prevarication. A schedule was prepared by Interim Finance of instances in which it was said that Mena Ibrahim gave inconsistent evidence in the course of cross-examination (Annexure B to the submissions), and which it was said demonstrated that his evidence lacked reliability. Reference was made to the argumentative nature of Mena Ibrahim's evidence (and his emphasis that he was not a lawyer). Reference was also made to the shift in his evidence as to the importance of and what he understood was conveyed by the 8 July 2016 email.

Determination

1. I accept that each of the Littlewoods gave his evidence in what has been described by Interim Finance as a frank and forthright manner. As to Romany Ibrahim, as already noted, there is little to be drawn from his brief cross-examination in the witness box.
2. As to Mena Ibrahim, overall, the impression I had of his evidence was that he was quick to justify his position and argue his case; and, in effect, to attribute blame to Interim Finance. How reliable his account of events was on various matters (particularly the chronology of events) is open to doubt. However, on balance I consider that his contemporaneous reaction to the 12 July 2016 conversation in which Andrew Littleford told him Interim Finance would not be proceeding (as conveyed by him in his email to his lawyer on 12 July 2016) is one that indicates that (for whatever reason) he did not appreciate the 8 July 2016 email as bringing an end to the loan transaction.
3. In any event, nothing ultimately turns on whichever account of the disputed conversations is the more accurate since, whether or not he was "shopping around" for other loans or was making excuses when he said he had misplaced the documents, and even whether or not his conduct might reasonably have been perceived as 'stringing Interim Finance along' (to use the vernacular), I am not persuaded on the evidence that Bright Beginnings had elected as at 8 July 2016 not to proceed with the transaction (or should be taken as having conveyed such an impression to a reasonable lender in the position of Interim Finance). On the Littlefords' own accounts the reason that Interim Finance did not proceed was the conclusion they drew from the delay in documentation of the transaction that Bright Beginnings was not proceeding with the loan.

Issues

1. At the hearing, the defendants handed up a document in which the following were posed as the issues for determination in the proceedings (to which I have added my conclusions on those issues, to the extent that they arise at all, for the reasons set out shortly): 1. Liability for Fees: 1.1. Was there any election by Bright Beginnings not to proceed with the loan the subject of the Offer before 8 July 2016? [No] 1.2. Was there any proper requirement of Interim, communicated to Bright Beginnings by Interim, that Bright Beginnings was unable to satisfy? [No] 2. If Q1 and 2 are answered "no": 2.1. Did Bright Beginnings become liable to Interim to pay the Fees described in the Letter of Offer and the administration fee in the total amount of $8,100? [No] 2.2 Is there any other basis on which Bright Beginnings became liable for the Fees? [Not as contended for in these proceedings] 3. Did Interim withdraw any offer to lend, by its letter of 8 July 2016? [Yes, by claiming fees only payable in the event that the offer to provide the Loan Amount was withdrawn] 3.1.1 In the events which happened, by that withdrawal did Interim repudiate any contract formed by the acceptance of the Letter of Offer? [No] 3.1.2 Did Interim lose any contractual rights it may have had to any charge? [Does not arise] 4. Did any agreement in the Letter of Offer to charge property depend on: 4.1. the existence of an anterior debt for the Fees described in the Letter of Offer; and 4.2 a failure to pay that debt for 5 days? [Does not arise - but had it arisen, yes on the terms of the Letter of Offer] 5. Could a caveat in support of a charge be lodged by Interim in the absence of a properly payable sum under the Letter of Offer? [Does not arise - but had it arisen, no on the terms of the letter of offer] 6. Could Interim seek to charge Bright Beginnings with the costs of preparation or enforcement of its caveat, and secure that expense by a charge under the Letter of Offer, in the absence of an anterior debt for Fees under the Letter of Offer owing to Interim and secured by the charge? [Does not arise - but had it arisen, no on the terms of the Letter of Offer] 7. In any event, was the caveat lodged in breach of the Letter of Offer, by reason of being lodged within 5 days of the issue of an invoice? [It was not lodged pursuant to an entitlement under the Letter of Offer, so in that sense yes, but the question presupposes a contractual obligation not so to lodge] 8. Is the caveat liable to be discharged by that reason alone? [Does not arise] 9. By the conduct of 12 July 2016, did Bright Beginnings attempt performance of the borrowing? [Does not arise - but had it arisen, yes on the terms of the Letter of Offer] 10. By the conduct of 12 July 2016, did Interim confirm its withdrawal of its offer to lend of 8 July? [Yes]
2. Ultimately, the fundamental issues, as they emerged in the course of oral argument (which are subsumed in the above list), were: first, as to whether, on the proper construction of the agreement constituted by acceptance of the Letter of Offer (the Loan Agreement) and in the events which transpired, any liability of the part of Bright Beginnings to pay the invoiced fees had arisen; and, second, whether Interim Finance had repudiated the Loan Agreement by its email of 8 July 2016 and if so, whether that repudiation was accepted by Bright Beginnings before any liability to pay the invoiced fees had arisen.
3. Counsel for Interim Finance, Mrs Young, took the position that the crux of the case was that the Letter of Offer provided for the lender to withdraw only in certain circumstances so that the lender did not have absolute discretion to withdraw at any time for any reason whatsoever (and hence it could not be said that the consideration for the agreement was illusory) (T 8). Mrs Young confirmed that Interim Finance relied on 8 July 2016 as the date that it exercised the right to "withdraw"; submitted that the reasons for the withdrawal were not "necessarily all set out in detail and at length in the 8 July email"; and argued that, if 8 July 2016 were not the date that Interim Finance exercised its right to withdraw and it was in fact the 12 July 2016 date, then the withdrawal (having given no reasons on 12 July 2016) was nevertheless in accordance with the right Interim Finance had under the Letter of Offer.
4. Interim Finance maintains that, in circumstances where it has relied upon and acted in accordance with the terms of the Loan Agreement to withdraw, its action in withdrawing cannot amount to repudiatory conduct. Mrs Young confirmed that Interim Finance's case "rises and falls with the 22 June letter of offer and the conduct and the surrounding circumstances" (T 9).

Issue 1 - On the proper construction of the Letter of Offer did a liability to pay the invoiced fees arise?

Interim Finance's submissions

1. There was no dispute as to the applicable principles of contractual construction, which do not here need to be restated (see Electricity Generation Corp v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7).
2. Interim Finance emphasises that the Loan Agreement is a commercial agreement, Interim Finance providing short-term commercial finance facilities in a market in which there is often a quick turnaround (see Trent Littleford's evidence at T 40.16).
3. Interim Finance accepts that the three conditions that must be satisfied for the defendants' liability to pay the invoiced fees to arise are that: loan documents had issued; at some later time, the loan failed to proceed; and that failure is due to one of the three occurrences I have referred to above. It argues that in the present case the loan failed to proceed due to a relevant occurrence, and that liability for the fees was incurred, and the commensurate debt came into existence, when the loan failed to proceed.
4. As to the first of the relevant occurrences, Interim Finance contends that an "election" refers in a lay sense to "the intention or effect of the defendants' acts or omissions which, when taken separately or together, sufficiently indicate to a reasonable lender in the position of Interim, the defendants do not wish to proceed with this loan". It contends that such an occurrence is not restricted to circumstances where the doctrine of election arises. It says this because, among other things: the necessary co-existing yet inconsistent right with which the elector must be confronted does not appear to arise under the Loan Agreement; such a restriction would be inconsistent with the obvious intention that the defendants be liable for the fees if the failure of the loan to proceed is attributable to acts or omissions of or in respect of the defendants; and it would be inconsistent with the non-technical expression of terms used in the Loan Agreement as a whole. It contends that the evidence establishes that there was an occurrence of this kind.
5. It also argues that there was a relevant occurrence of the second kind, in that Bright Beginnings did not comply with the requirement to return the signed loan documents to it.
6. Third, it contends that there was an occurrence of the third kind, which it says reflects the reservation contained in the Loan Agreement of a right to withdraw or amend the Letter of Offer. It says that this would be the case even if the reason that the lender withdrew was in circumstances where it would not have the funds to lend even if it believed it could access them at the time the offer was made (though not conceding this is the case) (referring to what was said by Davies J in Perpetual Trustee Company Ltd v Montpensier Pty Ltd [2010] NSWSC 1354 at [24]).
7. Interim Finance further argues that it is entitled to support the validity of the termination of the Loan Agreement by reference to circumstances in existence at the time of termination which could have justified termination, even though not put forward as a ground for termination at the time, and whether or not Interim was aware of their existence (Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359; [1931] HCA 21; Concut Pty Ltd v Worrell (2000) 176 ALR 693; [2000] HCA 64). It points to the evidence as to the circumstances in existence at the time the 8 July 2016 email was sent and says that, as the only matter to be completed to settle the transaction was Interim Finance receiving signed Security Documents, the Ibrahims' conduct between 28 June 2016 and the 8 July 2016 email was wholly inconsistent with: the Littlewoods' understanding there was a "sense of urgency" to the defendants' need for the finance; and Mena Ibrahim's claimed urgent need for the funds (T 74.6).
8. It says that, in addition to those set out in the 8 July 2016 email, circumstances in existence at the time of termination which could have justified termination included: that the different transaction the defendants had put forward had been rejected by Interim Finance without objection, and there was nothing to say the defendants were progressing the matter under the original regime; and that there was a distinction between the borrowers saying they were keen to get something done and doing something positive about it (T 19.43, T.24.8), which it is submitted reflected borrowers who were not doing what they said they would do, tainting their reliability.
9. It argues that the combination of: conduct inconsistent with urgency juxtaposed to conduct prior to 28 June 2016; approaches from brokers seeking finance on the same property for the same borrowers (evidence that I interpose to note was not read for the truth of what was communicated to the Littlewoods by the broker but as to the fact of such a communication); the failure to return signed loan documents and no communication about the progress of those documents; and the proposal for a different transaction was sufficient for Interim to terminate the Loan Agreement, and constituted an "occurrence".
10. It is said that, when taken separately or together, this sufficiently indicated to Interim Finance that the defendants did not wish to proceed with this loan; or that the defendants, in failing to return signed loan documents to Interim, had been unable to satisfy Interim's requirements (for whatever reason); or that Interim Finance's decision to provide the Loan Amount had changed after it discovered or became aware of the said items or issues.

Defendants/cross-claimants' submissions

1. At the outset, I note that the defendants/cross-claimants say that Perpetual Trustee Company Ltd v Montpensier Pty Ltd is not authority for the proposition that a contractual right to cancel an agreement to lend for want of money to lend, could trigger a liability of the disappointed borrower to pay money by way of fees and charges to the lender who is bereft of funds to lend; and that it did not concern such a liability. They argue that this is the proposition that was rejected in Memery v Trilogy Funds Management Limited [2012] QCA 160 at [23]. (Accepting that proposition, it nevertheless is not the scenario that occurred in the present case. Here, the question is whether the borrower incurred a liability to pay the fees in question because the loan did not proceed on the happening of an occurrence of the kind specified in the Loan Agreement.)
2. The defendants/cross-claimants argue that, here, Interim Finance is insisting upon a unilateral right to withdraw performance but seeking to invoke the provisions of the contract to visit "a penal result on the, effectively, innocent party".
3. They maintain that the idea of a "turnaround" of five days was a reference to Interim Finance's response to a request for finance (which actually took seven days, between 15 and 22 June 2016, when the Letter of Offer issued), noting that another six days passed before the loan documents issued. They emphasise that it is common ground that no time was ever stipulated for the return of the finance documents.
4. As to the matters relied upon by Interim Finance as amounting to an "occurrence", they respond as follows. They say that there was nothing to say that the original regime had been rejected or that anyone from Interim Finance thought that was the case as a result of the conversation that is said to have occurred before the 8 July 2016 email. They say that the accusation that their reliability was tainted is meaningless. They argue that the conduct said to be "inconsistent with urgency" is only that signed documents had not been sent back - pointing to the fact that no time for their return had been stipulated and arguing that this was something as to which no sensible expectation could be held given the vagaries as to when borrowers could organise the matters required by the lender (such as obtaining independent legal advice and sign-off on the certificates required).

Conclusion

1. Whatever may have been the understanding between the parties as to the urgency of the application for loan finance, there was no term in the Loan Agreement requiring that the loan and security documentation be executed and returned within any particular time; nor was there any timeframe specified within which the loan was required to be drawn down. Whatever Interim Finance's expectations as to the turnaround time for a loan such as this, and whether or not there was a reasonable basis for Interim Finance to conclude that Bright Beginnings was delaying the execution of the loan documents, ultimately take the matter nowhere.
2. The circumstances in which, under the terms of the Loan Agreement, Bright Beginnings acknowledged that it would be liable for fees of the kind that Interim Finance ultimately invoiced were that: Interim Finance had proceeded to instruct, have prepared and issue the loan documents (which certainly had happened by 28 June 2016) and that the loan subsequently failed to proceed due to one of three specified "occurrences".
3. The first of those occurrences was that Bright Beginnings had elected not to proceed with the offer of finance. There was nothing to evidence an election by Bright Beginnings at any stage not to proceed with the offer of finance. Even accepting, for the purpose of argument, that Bright Beginnings had been contacting other finance brokers in an attempt to secure a better offer, that does not amount to an election by it not to proceed with Interim Finance's offer of finance. Its request for a substitution of security properties in effect amounts to no more than a request for an amendment to the Loan Agreement. (Nor can the assertion as to lack of communication from its lawyers be supported.)
4. The second of those occurrences was that Bright Beginnings was unable to "satisfy Interim Finance Pty Limited's requirements for whatever reason". The requirements were not there specified but it is reasonable to infer that they were the requirements set out earlier in the Loan Agreement (such as the requirement for particular documents prior to settlement, obtaining of independent legal advice and the like). There is no evidence that any "requirement", as such, of Interim Finance had not been met as at the time that Interim Finance demanded payment of the invoiced fees (8 July 2016). I cannot accept the submission that it was a requirement made known to the borrower that the loan documents be turned around within a particular time (let alone a five day period that was not stipulated for in any of the documents submitted to the borrower), since there was nothing in the Loan Agreement or the loan documents imposing such a requirement. If Interim Finance required loan documents to be executed and returned within a particular time then it was open to it to make such a requirement a condition of the loan. It did not do so.
5. The third of those occurrences was that Interim Finance "discovers or is otherwise made aware of any item or issue which changes its decision to provide the Loan Amount". This is more problematic. There were a number of events which, on the evidence before me, may have led or contributed to a decision by Interim Finance not to proceed. One is the enquiry Andrew Littleford says he received on about 5 July 2016 from a finance broker that led to his accusation that Bright Beginnings had been "shopping around". However, that was not the basis on which the claim for the invoiced fees in the email of 8 July 2016 was predicated. Another was the enquiry that Andrew Littleford says was made by one or other of the Ibrahims in a telephone conversation after the conversation with the finance broker on 5 July 2016 and prior to the 8 July 2016 email being sent for substitution of the securities set out in the loan documents for another property. Again, however, that was not the basis on which the claim for the invoiced fees was predicated in the 8 July 2016 email. Yet another possibility is that Andrew Littleford was "uncomfortable with the way this matter has evolved" (as he says he told one of the Ibrahims when Mr Ibrahim called his own lawyer a "fucking liar" - an accusation Mr Ibrahim denies) but that conversation was in the early afternoon of 12 July 2016, after the claim for the invoiced fees had already been made.
6. The 8 July 2016 email does not identify any of the above matters as an occurrence falling within the Loan Agreement that would entitle it to charge the invoiced fees. Rather, it proceeds on the basis that: We take it from the lack of communication and the fact that loan documents have not been executed or returned, that you do not wish to proceed with this matter …
7. It is accepted by Interim Finance that the 8 July 2016 email was sent prior to the telephone calls on 8 or 12 July 2016 to which the various deponents refer. Interim Finance's position was that the deal was over on 8 July 2016 but that at least by 12 July 2016, whichever version of the 12 July 2016 conversation is accepted, "[t]he essence of it is by that stage nobody thinks it is ever going to be on" (T 7.32).
8. Apart from the problem that there had been at least some communication between 28 June 2016 and 8 July 2016 (both between the legal representatives and the parties directly) in relation to the loan documents and/or the transaction in general, and the fact that that there was no requirement stated in the Loan Agreement for the loan documents to be executed or returned within a particular timeframe, and thus the factual premise for the assumption or understanding is misconceived, the email is squarely relying on an occurrence of the first kind - namely, an election by the borrowers not to proceed with the offer of finance. I am unable to conclude that there was any such election. Even if the concept of an "election" for the purposes of the Loan Agreement is as the lender contends, I do not accept that there were acts or omissions by the borrower which, when taken separately or together, would sufficiently have indicated to a reasonable lender in the position of Interim Finance that Bright Beginnings did not wish to proceed with the loan. I do not suggest that particular formality was required for the "election" to be made, but there was not a sufficiently clear indication for a conclusion reasonably to be drawn that the borrower did not wish to proceed with the transaction.
9. Even if it would have been open to Interim Finance to have relied upon other circumstances at that time to terminate the Loan Agreement, that does not lead to the conclusion that (prior to any decision having been made to withdraw from the agreement at that stage for that other reason) it can be said that the loan did not proceed as a result of such other occurrence. The fact is that the reason the loan did not proceed at the time Interim Finance took the position that the transaction was at an end (i.e., 8 July 2016) was that Interim Finance withdrew from the Loan Agreement on the basis of its assumption (stated in the 8 July 2016 email) that the borrower did not intend to proceed with the transaction. (That assumption was almost immediately proven to be incorrect when requests were made on 12 July 2016 for provision of another set of the security documents for signing.)
10. This case is not in my opinion analogous to the situation where a party having terminated a contract for a particular alleged breach is able to support its termination of the contract based on another available ground for termination of the contract at that stage (even if not known to it at the relevant time) (see, for example, Shepherd v Felt & Textiles of Australia Ltd). Rather, this is a case where the entitlement to the claimed fees was one that would have arisen only if the loan did not proceed "as a result of" one of the specified occurrences. If it did not proceed for another reason then no obligation to pay the fees would be triggered (as is the result in the present case).
11. As at 8 July 2016 I do not accept that there was a basis on which Interim Finance could reasonably have concluded that Bright Beginnings did not intend to proceed with the loan transaction. (In hindsight, it can safely be inferred that a simple query to that effect might have avoided the litigious saga that has now eventuated, one way or the other - by prompting either the signing and return of the documents or the confirmation of an intention not to proceed.)
12. Accordingly, as at 8 July 2016, I find that no liability to pay the invoiced fees could have arisen. Hence the basis on which Interim Finance claimed an entitlement to an equitable interest and charge (which depended under the terms of the Loan Agreement on payment of the invoiced fees not being made within five days of issue of an invoice) could not then have arisen.

Further submissions as to timing of alleged obligation to pay the fees

1. Interim Finance made submissions as to the time at which the fees became payable and as to the basis on which it claimed to be entitled to lodge a caveat. These do not arise for determination on the basis of the finding reached above. However, for completeness, I note the following.
2. As to the time at which the fees became payable (the Loan Agreement providing that the fees are "payable within 5 days of Interim Finance Pty Limited issuing an invoice"), Interim Finance has identified three possible times: immediately upon the defendants incurring liability for the fees, when the loan fails to proceed; or upon Interim Finance issuing an invoice; or upon expiry of five days after Interim Finance issues an invoice. It argues that the fees are payable, and the commensurate debt becomes due and payable, upon Interim issuing an invoice, in respect of which five days is provided to the defendants as a reasonable opportunity to comply (referring to authorities to the effect that there is an obligation to pay immediately where there is a simple contract which does not provide a time for payment of a debt (such as Ogilvie v Adams [1981] VR 1041; Gleeson v Gleeson [2002] NSWSC 418 at [44]), but accepting that if the debt is expressed to be payable at a specified time after a demand is made (see Ogilvie, at 1052), or if the underlying contract prescribes formalities for making a demand, then the debt becomes payable (and a cause of action in debt arises) only when the demand is made in accordance with the requirements of the contract - see Gray v O'Donnell [2009] NSWSC 259.)
3. Thus Interim Finance argues that since the issuance of an invoice is expressly a condition precedent to the payment obligation arising, then despite liability for the fees crystallising when the loan fails to proceed, the fees only become payable by the defendants (and the defendants become indebted to Interim for the fees then due and payable), upon Interim Finance issuing an invoice.
4. Interim Finance submits that on their proper construction the words "payable within 5 days" embody the requirement to allow the debtor a reasonable opportunity to comply before the creditor can enforce or realise the security (referring to Bunbury Foods Pty Ltd v National Bank of Australasia Ltd (1984) 153 CLR 491 at 504; [1984] HCA 10).
5. As to the charging clause under the Loan Agreement, Interim Finance argues that, properly construed, the charge does not depend upon establishing that at the time the caveat was lodged, there was in fact money owing under the Loan Agreement - rather, it says that it creates a proprietary interest which Interim Finance is entitled to protect by lodging a caveat against the possibility that moneys would become due and owing and enforceable under the charge in the future. Interim Finance submits that the Charging Clause created a charge and a caveatable interest, immediately upon the defendants becoming liable for the fees, even though no moneys were then due under the Loan Agreement, with the intention that Interim Finance be secured against the possibility that money will become enforceable under the charge at some future time (referring to Graham H Roberts Pty Ltd v Maurbeth Investments Pty Ltd [1974] 1 NSWLR 93; CJ Redman Construction Pty Ltd v Tarnap Pty Ltd [2005] NSWSC 1011; (2005) 12 BPR 23,395 at [28], [29], [30]; Nigam v Divjakoski [2010] WASC 185; Moloney v Coppola [2012] NSWSC 728 at [25], [31]). Reference is also made to Capital Finance Australia Ltd v Struthers [2008] NSWSC 440; (2008) 14 BPR 26,179 at [28], as to the distinction between the existence and the operation of a charge.
6. Interim Finance submits that to construe the Loan Agreement such that the charge springs into existence only when the fees are unpaid for longer than five days after Interim Finance issues an invoice, in circumstances where Interim Finance and its competitors conclude transactions for short-term loans within five days, is inconsistent with: the intention to secure payment of the fees to Interim, when liability for the fees is attributable to acts or omissions of or in respect of the defendants; the fact that the words of the agreement do not limit or make conditional Interim Finance's 'registration' of a caveat on the fees being a debt unpaid for five days after becoming due and payable; and protection of Interim Finance's interest to be secured by the charge, which may lose priority if it is unable to lodge a caveat until after five days have elapsed since it issued an invoice.
7. Alternatively, Interim Finance submits that if the charge is not created immediately upon the defendants becoming liable for the fees when the loan fails to proceed, then the charge and a caveatable interest are created at the time that Interim Finance issues its invoice.

Observations as to those timing issues

1. Even had the invoice been validly issued, the grant of an equitable interest and charge was expressed to be dependent on payment not being made within five days of the issue of the invoice. I do not accept that there was an agreement to grant an equitable charge unless, by the end of those five days, the fees were not paid (assuming the fees to have been due because the loan had not proceeded due to a specified occurrence). Accordingly, even on Interim Finance's case, I am of the view that it would not have been until the expiry of those five days (i.e., until 13 July 2016) that the agreement to grant a charge (and hence an equitable interest) came into force and only then that the consent to register a caveat would have become operative.
2. Accordingly, as at the time Interim Finance notified Bright Beginnings that it would not be funding the loan (in the early afternoon of 12 July 2016 according to Andrew Littleford, which is consistent with Mena Ibrahim's recollection (at [26]) and with the email he sent to Mr Abdallah at OGL - Annexure "O" to his affidavit), not only had no liability to pay the fees arisen but in my opinion even if the claim for fees had been properly made no entitlement to lodge a caveat had arisen.

Issue 2 - Was there a repudiation?

1. As to the claim by Bright Beginnings that Interim Finance had repudiated the Loan Agreement, again this does not arise in light of my finding on Issue 1.
2. The repudiatory conduct which Bright Beginnings relies upon is the conduct of Interim Finance in "unilaterally and wrongfully" asserting that the lending transaction was at an end due to the conduct of the borrower. Bright Beginnings accepts that it did not immediately accept that repudiation (indeed, by requesting the issue of fresh loan documents it might well be concluded that Bright Beginnings had elected to affirm the Loan Agreement) but says that the repudiation was confirmed on 12 July 2016 when Interim Finance confirmed the position it had taken on 8 July 2016.
3. Bright Beginnings contends that there is no evidence that Interim Finance was ever in a position to make the advance sought and says that (even apart from its contention that no debt and hence no caveatable interest had arisen), any authority given to Interim Finance to lodge a caveat was lost by the alleged repudiatory conduct.
4. In response to the allegation of repudiation, Interim Finance points to the express acknowledgement and agreement in the Letter of Offer that, in the event that Interim Finance discovers or is otherwise made aware of any item or issue which changes its decision to provide the Loan Amount, then Interim Finance "may withdraw or amend this Letter of Offer" and is not required to provide any reason for its decision to withdraw or amend the Letter of Offer and that no claim will be made as a result thereof. (Pausing here, the curiosity of this provision is that what appears to be contemplated is withdrawal or amendment of the Letter of Offer after it has been accepted and a binding agreement has come into existence. That can only sensibly be understood as being an agreement that, notwithstanding that a binding contract to provide the Loan Amount had come into existence, it was open to Interim Finance in effect to rescind the contract if it discovered or was otherwise made aware of an item or issue which changed its decision to provide the Loan Amount; that being the construction of the right of withdrawal for which Interim Finance has contended.)
5. I have difficulty with the proposition that the formation (and communication) of an understanding by Interim Finance (mistaken or otherwise) that Bright Beginnings did not wish to proceed with the loan, coupled with the claim for fees, of itself amounted to repudiation of the agreement. It is conduct consistent with Interim Finance acting on the basis that the agreement remained on foot and invoking its (perceived) rights under the agreement. Certainly there are occasions when a party acting on a mistaken construction of the relevant agreement may be held to have repudiated the agreement but I am not persuaded that the 8 July 2016 email was a repudiation by Interim Finance of the Loan Agreement.
6. It was open at any time for Interim Finance to withdraw from the deal without any reason for that decision if it discovered something which changed its decision to provide the loan. That gave it a very broad discretion not to proceed with the loan. The 8 July email, however, in its terms expressed an understanding that it was Bright Beginnings that did not wish to proceed with the transaction. In that sense, it was not a withdrawal by Interim Finance so much as an acceptance by Interim Finance of what it understood or took to be Bright Beginnings' desire no longer to proceed with the transaction.
7. As to the communication on 12 July 2016 that Interim Finance would not be proceeding with the loan, by that stage the controlling minds of Interim Finance were treating the deal as at an end. Insofar as this amounted to an election by Interim Finance (as at 12 July 2016) not to proceed with the loan, then that would not have amounted to a repudiation of the Loan Agreement if it resulted from discovery of an issue that led it to change its decision to provide the Loan Amount (since that was expressly provided for under the Letter of Offer). However, by that stage the fees in question had already (incorrectly) been charged to the borrower on a different basis.
8. In any event, it is not necessary to form a concluded view on the issue of repudiation, given the finding on Issue 1 above.

Relief

1. As to the declaration sought by Bright Beginnings that the Loan Agreement is at an end, it does not appear to me that this is necessary. Both parties have clearly proceeded on the basis (since at least the commencement of the proceedings if not earlier - from 8 July 2016 on Interim Finance's case or 12 July 2016 on Bright Beginnings' case) that the agreement is at an end.
2. Interim Finance's summons should be dismissed and the caveat lodged by Interim Finance on the title to the Guildford property should be removed.

Costs

1. There then arises the issue of costs. Ordinarily costs will follow the event and hence if the general rule applies there would be an order that lnterim Finance pay the defendants/cross-claimants' costs. Although the cross-claimants did not succeed on their repudiation argument, that was in effect responsive to the claim made by Interim Finance.
2. However, parties and legal practitioners have an obligation in this Court to bear in mind the proportionality of costs to the dispute(s) between them. This is a matter where the costs of the interlocutory application for an extension of the caveat and the hearing of the substantive issues in dispute must vastly have exceeded the amount in dispute ($8,100). But for the lodgement of the caveat, this would have been a small money claim in the Local Court. It is most unsatisfactory that the parties in these proceedings appear not to have paid heed to the need to keep in mind the proportionality of the dispute (particularly since I understand this was drawn to their attention by Darke J at a very early stage in the proceedings). There might well be an argument that each should pay its own costs in those circumstances. That said, as I am not aware of what, if any, attempts were made to resolve the proceedings at an earlier stage, I will invite submissions as to costs.
3. There is a reason to seek submissions on the costs issue in any event. That is because the cross-claimants have claimed an order for costs, in the event that the cross-claim succeeds, on an indemnity basis from 9 October 2016 as claimed in the cross-claim. The relevance of the 9 October 2016 date is not apparent (but may be due to an Offer of Compromise or Calderbank offer that, quite properly, was not before me at the hearing). I will make directions for brief submissions to be filed and served on the indemnity costs issue with a view to dealing with that issue on the papers.

Orders

1. For the above reasons, I make the following orders: 1. Dismiss the plaintiff's summons. 2. Declare that the plaintiff/cross-defendant does not have a caveatable interest in the property known as 66 Cross Road, Guildford NSW 2161, Folio Identifier 3/4907. 3. Order the plaintiff/cross-defendant to take all necessary steps for the removal of the caveat registered dealing number AK 586478 lodged by it on the title of the Guildford property referred to in order 2 above. 4. Reserve the question of costs. 5. Direct that the parties file brief written submissions on costs within 7 days with a view to the issue being determined on the papers.

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: 02 February 2018