Jafari v 23 Developments Pty Ltd [2019] VSCA 201

TRADE PRACTICES - Misleading or deceptive conduct - Whether representation as to ease with which properties could be decontaminated was misleading or deceptive - Causation - Whether respondents were induced by representation to purchase properties - Fair Trading Act 1999 (Vic) s 9 - Trade Practices Act 1974 (Cth) s 52.

EQUITY - Vendor's lien - Whether holders of vendor's lien entitled to interest - Matter not raised before trial judge - No basis for claim to interest.

EQUITY - Trusts -Whether unit trust created by applicant - Time of creation of unit trust by the applicant - Whether company held properties as trustee of unit trust before liquidation.

1 The applicant, Kourosh Jafari ('Jafari**')[1] was the registered proprietor of 59 Buckley Street, Seddon. He was the sole director and shareholder of 63 Buckley Street Pty Ltd ('63 Buckley'), the registered proprietor of 61 and 63-67 Buckley Street, Seddon (together, 'the Properties'**).

2 Having undertaken a development at 69-79 Buckley Street, Jafari proposed to develop a multi-storey student apartment complex on the Properties ('the Development**'**) which are close to Victoria University of Technology.

3 Jafari and 63 Buckley ran into financial difficulties and on 21 April 2008 Perpetual Nominees Ltd ('Perpetual**'**) served notices of default under a mortgage that it held over the Properties to secure a loan in the sum of $840,000.[2] Perpetual also held a registered charge over the assets of 63 Buckley.[3]

4 Jafari and 63 Buckley were in financial trouble and required assistance in order to proceed with the Development. Jafari approached Mario Pizarro ('Pizarro**') and his company, 23 Developments Pty Ltd ('23 Developments'**) seeking their assistance in this regard.

5 This case concerns the relationship, arrangements and dealings between Jafari and 63 Buckley on the one hand ('the Jafari entities**') and Pizarro and 23 Developments ('the Pizarro entities'**) on the other.

6 After much discussion, the parties entered into an agreement on or about 30 April 2009 ('Original Agreement'), which contemplated a sale of the Properties to 23 Developments. Very soon thereafter, it became clear that the Original Agreement could not be implemented or performed because Jafari and 63 Buckley could not deliver clear title. At this time, and notwithstanding the Original Agreement, Perpetual as mortgagee in possession since 2008 had put the Properties out to tender.

7 23 Developments (supported by Jafari) was the successful tenderer and entered into a contract of sale with Perpetual on 26 May 2009 ('the Perpetual Contract**'**). The purchase price was $1.6 million. This was more than the amount required to discharge the indebtedness to Colonial, which was about $960,000.

8 With respect to the excess amount, and on the same day, Jafari, at the insistence of Perpetual, signed an Irrevocable Authority requiring the surplus funds to be regarded as 'vendor finance'. The surplus funds were not required to be paid to the Jafari entities.

9 Despite negotiations throughout 2009 and early 2010 the parties failed to agree on the basis as to which the Development would proceed, given the peculiar position referred to above. These proceedings were issued and the matter was heard by the trial judge in November and December 2017. Judgment was handed down on 30 July 2018. In substance, the outcome was against Jafari's interests.[4]

10 Jafari claimed that the Original Agreement created, or recorded the creation of, a partnership between Jafari, 63 Buckley and 23 Developments. Jafari contended that 23 Developments purchased the Properties from Perpetual, and held them on behalf of the partnership. As a result, the applicant asserted that Jafari and 63 Buckley held a 49 per cent equitable proprietary interest in the Properties. It was argued that the vendor's lien, and the profit share contemplated by the Original Agreement, supported this interest.

11 Jafari claimed that the Original Agreement, referred to in detail below, was varied (and not terminated or abandoned) following the Perpetual tender, so as to include the Irrevocable Authority and as a consequence the alleged partnership and consequent proprietary interest asserted by Jafari survived the execution of the Perpetual Contract and Irrevocable Authority.

12 Importantly, Jafari also sought to establish that he created a unit trust (the 'Essence Unit Trust') in 2008. Jafari contended that although 63 Buckley became trustee of the Essence Unit Trust in 2008, it was replaced by Jafari as trustee in 2009. This is critical to Jafari's claim, as 63 Buckley was the registered proprietor of the Properties,[5] and is now in liquidation having been wound up on 2 August 2013. Jafari makes claims to the Properties in his own right and as trustee of the Essence Unit Trust. That is to say, if Jafari is successful he would (albeit in different capacities) be entitled to the entirety of the claimed proprietary interest in the Properties and the vendor's lien as claimed. If he is not, he would be entitled only to a proportionate share reflecting the one property (of the seven) which he held in his own right.[6]

13 The essence of the claim made by Jafari[7] (as pleaded and relevant) is that 23 Developments and Pizarro breached their duties as partners causing the plaintiffs 'loss of their share of profits expected from the project of approximately $6 million'. (Particulars to paragraph 51 of the second further amended statement of claim ('2 FASC'). The alleged breaches are set out in paragraph 48 of the 2 FASC and include failing to obtain permits and drawings; failing to obtain construction funds; failure to market and pre-sell; failure to change the permit from student to normal residential, and failure to service the mortgage on the land thereby causing it to be sold by the mortgagee in possession. Paragraph 51 of the 2 FASC is in the following terms:

By reason of the sale of the land and the sale at an undervalue (and the continued wrongful assertion by the Defendants that the Plaintiffs had no equity in the land), the Plaintiffs have suffered loss and damage as they have lost the opportunity to develop the land, to carry out the project and realize the value of their equity in the land and the profit on the project.

14 The trial judge held that there was no partnership or joint venture otherwise giving rise to a proprietary interest in favour of the Jafari entities and that any agreement only ever entitled the Jafari entities to a profit share of 49 per cent of the net profits of the Development. He found that the Original Agreement had been terminated or abandoned (as opposed to having been varied) by the change in circumstances and conduct of the parties, and that no further agreement had been entered into. Accordingly, there was no loss of opportunity claim. The trial judge held further that the vendor's lien was still efficacious and that because the Properties had since been sold by 23 Developments, Jafari and 63 Buckley (in its own right) was entitled to a monetary sum of $581,801.47. Jafari contends, by proposed appeal ground 1, that the trial judge erred in not allowing interest on this sum.

15 By a counterclaim, 23 Developments alleged that the Jafari entities had engaged in misleading or deceptive conduct in relation to an alleged assurance that there would not be any contamination issues with the Properties. The Properties were in fact highly contaminated. The trial judge assessed the loss at $801,195.06. This sum of damages included the liability of 23 Developments for the vendor's lien in the amount of $581,801.47. This is the subject of proposed appeal ground 2.

16 The consequence of the finding in relation to the vendor's lien ($581,801.47) and the damages on the counterclaim ($801,195.06) resulted in judgment in favour of 23 Developments against both the Jafari entities in the sum of $219,393.59.

17 In summary, Jafari[8] proposes, if leave is granted, to challenge:

(a) the failure by the trial judge to allow interest on the vendor's lien amount in the sum of $581,801.47 ('Ground 1');

(b) the finding that a representation that there would not be any contamination issues with the Properties was misleading or deceptive and caused loss ('Ground 2');

(c) the finding that the Original Agreement was not a partnership or joint venture agreement ('Ground 3');

(d) the finding that the Original Agreement did not continue and was not varied to accommodate the Perpetual contract and Irrevocable Authority ('Ground 4'); and

(e) the finding that Jafari did not create the Essence Unit Trust in 2008 ('Ground 5').

18 By a Notice of Contention, 23 Developments contends that if any interest is payable on the vendor's lien (Ground 1) this would simply increase the damages awarded on the counterclaim.[9]

19 In 2001, business associates of Jafari purchased 63 to 67 Buckley Street. In April 2002, the same associates purchased 61 Buckley Street. 63 Buckley was incorporated in March 2002 and became the registered proprietor of these properties. In July 2003, Jafari purchased 59 Buckley Street in his own right. Jafari's business associates then fell out with each other. As a part of resolving the disputes, Jafari became the sole director and shareholder of 63 Buckley from 1 May 2005.

20 Consequently, by about May 2005, Jafari controlled 59, 61 and 63-67 Buckley Street, Seddon, which we have called the Properties. However, on 17 August 2005 and 18 January 2006, caveats were lodged over the Properties on behalf of Bloomingdale Holdings Pty Ltd, a company controlled by one of the abovementioned business associates of Jafari. These caveats effectively prevented Jafari from dealing with the Properties, refinancing or raising further finance.

21 Proceedings to remove the caveats and resolve other issues between the business associates were tried in the Supreme Court in early 2008. In May 2008, Hargrave J decided, amongst other things, that the caveats had been lodged without reasonable cause and ordered them to be removed.[10]

22 The duration of the caveats and legal proceedings caused significant financial hardship to Jafari. As noted, a loan in the principal sum of $840,000 was owed to Colonial secured by mortgages over the Properties to Perpetual and a charge over 63 Buckley.

23 On 21 April 2008, Perpetual served notices of default under its mortgages on Jafari and 63 Buckley. In May 2008, it appointed a controller to 63 Buckley. In June 2008, Perpetual became the mortgagee in possession of the Properties and appointed a real estate agency to sell them.

24 Throughout this time, Jafari attempted, unsuccessfully, to bring in a joint venture partner who could assist in rescuing the Development. He obtained an amended planning permit for an enlarged development. He introduced investors to purchase the Properties for a sum that was at least sufficient to pay out Perpetual. Two of these parties defaulted, successively in August and December 2008.

25 In August 2008, Jafari was introduced to Pizarro. Pizarro owned a real estate agency called Melbourne Properties Investments Pty Ltd and an accounting firm called Landmark Investments Pty Ltd. From November 2008, Pizarro was also a director and shareholder in Winteray Ltd ('Winteray').

26 From late 2008, Jafari and Pizarro engaged in discussions. Jafari sought to encourage Pizarro to participate in or assist with saving the Development. The parties gave conflicting accounts of the timing and substance of these oral discussions. The trial judge found that the operative discussion on which Jafari and Pizarro decided to proceed in late 2008 made no mention of any partnership between them or their related entities. This conclusion is disputed by Jafari and is the subject of proposed appeal grounds 3 and 4.

27 In late 2008, the possibility of contamination was raised by Pizarro and a question asked of the previous use of an old building on the Properties. The terms of the discussion were contested and the trial judge was not satisfied with either party's evidence. His Honour found that the issue of contamination was raised, that in 2008 Jafari did not assure Pizarro that there was no contamination, but rather it 'would not be problem' to decontaminate. He did not, at that point in time, disclose the prior use of the land as a dry cleaner despite his knowledge of the fact.

28 In early 2009, Pizarro obtained information about the Properties and the loan outstanding from the solicitors for Perpetual and planning documents from Jafari. Pizarro did not at that time commit to any transaction.

29 On about 26 March 2009, Pizarro emailed Jafari a draft terms sheet. The parties to that terms sheet were 'the Kourosh Group' and 'Winteray Properties'. It provided for sale of the Properties by the Kourosh Group parties as registered proprietors, and for terms governing the Development through to construction commencement. The terms sheet provided for a payment by Winteray of $850,000 and suggested the 'as is' value of the Properties was $2.5 million. On 29 March 2009, an amended draft terms sheet was sent by Pizarro to Jafari. Among other things, this terms sheet included various representations and warranties to be given by 'the Kourosh Group'. These early terms sheets contemplated that Winteray and the Kourosh Group would each have a 50 per cent interest in the Properties.

30 On 31 March 2009, the mortgagee in possession instructed its agents, Sutherland Farrelly, to proceed with a sale of the Properties by way of public tender.

31 On 4 April 2009, Pizarro sent a further terms sheet to Jafari. This terms sheet, among other things, increased the price payable to $950,000 and reduced 'the Kourosh Group's' interest to 49 per cent.

32 On 9 April 2009, Jafari emailed a further amended terms sheet to Pizarro. Although the purchase price was raised to $1.1 million, Winteray was required to pay only $950,000 and stated the balance of $150,000 'remain[ed] in the joint venture' as vendor finance.

33 In April 2009, Jafari sent Pizarro a vendor's statement together with a contract of sale. The vendor's statement included planning documentation which disclosed that the site at 59 Buckley Street had previously been used as a dry cleaners.

34 On 16 April 2009, Pizarro sent an email to Jafari, which, among other things, asked a series of questions prepared by solicitor Michael Fetter ('Fetter') concerning the proposed contract of sale and vendor's statement. On that day, Jafari replied to a query concerning contamination by stating ('the 2009 Contamination Representation'):

In the western suburb councils, EPA requirement is a part of planning permit, the site (69-79 Buckley used to be a Shell petrol station) and was decontaminated by IT [E]nvironmental, I have the reports and there were no issues. I am advised by the director Dr Wayn that the property was surprisingly clean also there won't be any issues with these properties. (Emphasis added)

35 The trial judge held that the Properties were contaminated[11] and that the level of contamination would be highly likely to represent a substantial obstacle to any residential development of the Properties and would seriously undermine their value. Jafari did not know of the precise level of contamination.

36 On 21 April 2009, Jafari and Pizarro both met with Fetter in relation to the purchase of the Properties. Also on that day, Pizarro emailed the current version of the terms sheet to Fetter, who made handwritten amendments to the document.

37 On 24 April 2009, Fetter emailed Jafari and Pizarro an amended version of the terms sheet. Amongst other changes, this version substituted Fairview Developments Pty Ltd as the proposed purchaser, included a purchase price of $1.2 million with vendor finance of $250,000, and replaced references to a 'JV' with a reference to 'profit share (if any) in the project set out below'. It stated 'Kourosh Group will retain 49% of the net profit of the project to be paid proportionately with the profits to [Fairview]'. On 26 April 2009, Jafari sent Pizarro an amended terms sheet 'as per our discussion'.

38 On 27 April 2009, the final version of the terms sheet was prepared. This version replaced Fairview Developments as proposed purchaser with 23 Developments.[12] On 28 April 2009, Jafari, Pizarro and Fetter met in a café, where this terms sheet was executed by Jafari, 63 Buckley and 23 Developments ('Terms Sheet').

39 On or about 29 April 2009, a 'side agreement' between Jafari, 63 Buckley and 23 Developments was signed ('Side Agreement'). It set out that of the purchase price of $1.2 million, $250,0000 would not be payable at settlement and would form part of vendor finance interest free and only repayable pursuant to the terms contained in the terms sheet and any subsequent development agreement entered into between the parties.

40 On or about 30 April 2009, Jafari, 63 Buckley and 23 Developments executed a contract of sale for the Properties ('First Contract of Sale').

41 The Terms Sheet of 28 April 2009, Side Agreement of 29 April 2009 and First Contract of Sale of 30 April 2009 constituted the Original Agreement between Jafari, 63 Buckley and 23 Developments. The trial judge held these to be a single transaction, to be construed as a whole.

42 However, as at 30 April 2009, the mortgagee in possession had already put the Properties out to tender, and despite representations made by Jafari to Pizarro to the contrary, Perpetual declined to accept the Original Agreement. Perpetual insisted the Properties be sold by tender. In the circumstances - and contrary to contractual warranties proffered by Jafari in the Terms Sheet ‑‑ - neither Jafari nor 63 Buckley had authority to sell the Properties.

43 With the full knowledge and co-operation of Jafari, 23 Developments dealt with Perpetual directly. To that end, Jafari obtained the tender documents for Pizarro and the two discussed and agreed that 23 Developments should offer $1.6 million for the properties. The trial judge found that this was 'a completely different course, unhindered by any previous agreement with Jafari and 63 Buckley' and that by this conduct the Original Agreement had been terminated or abandoned.[13] These conclusions are in issue on the appeal (proposed ground 4).

44 On 14 May 2009, 23 Developments submitted a tender to the mortgagee in possession, with a statement by Jafari and 63 Buckley Street to the effect that they agreed to and supported the tender. Pizarro and Jafari travelled to the agent's to lodge the tender. Before lodging it, they spoke with Fetter and added by hand to the tender document a clause 16 which provided that only $960,000 of the $1.6 million would be payable by 23 Developments in order to pay out the mortgagee in posession and other miscellaneous secured amounts. It stated that the balance of the purchase price in the contract 'will be kept as vendor finance'.

45 On 15 May 2009, the solicitors for the mortgagee in possession (Gadens) sent a letter to Fetter stating that the mortgagee in possession was prepared to accept 23 Developments' tender subject to the removal of the handwritten clause 16. Gadens suggested a separate document between Jafari, 63 Buckley and 23 Developments by which an irrevocable authority could be given that the registered proprietors did not require the proposed surplus proceeds to be paid to them at settlement.

46 On 26 May 2009, Jafari signed the Irrevocable Authority drafted by Fetter. Also on this day, a contract of sale of the Properties was signed by Perpetual as vendor and 23 Developments as purchaser (the 'Perpetual Contract'). The purchase price was $1.6 million. Neither Jafari nor 63 Buckley were parties to the Perpetual Contract.

47 After a short extension, 23 Developments settled the purchase of the Properties on 11 August 2009.

48 From July 2009, Jafari and Pizarro continued to negotiate an agreement regarding the development of the Properties.

49 However, the relationship between Jafari and Pizarro broke down by about September 2009. On 8 and 10 September 2009, Jafari lodged caveats claiming that he had an equitable proprietary interest in the Properties on the basis of him being a 'joint venture partner' on various grounds. The caveats were later withdrawn by agreement. Pizarro and Fetter contended (and the trial judge found) that Jafari's interest in the Properties and Development project was purely by way of a profit sharing arrangement. These conclusions are in issue on the appeal (proposed ground 3).

50 Further negotiations throughout 2009 and early 2010 did not result in any agreement.

51 On 10 February 2010, Jafari lodged a caveat over the Properties, asserting his interest as a 'joint venture partner'. Subsequent attempts to mediate the dispute failed, and on 25 February 2010, Jafari lodged two further caveats over the Properties on behalf of 63 Buckley. There is an assertion in one caveat that there is an interest by way of vendor finance. On 21 April 2010, Jafari and 63 Buckley commenced the proceedings in the Supreme Court of Victoria.

52 Jafari brought his claims both in his own right and as trustee of the Essence Unit Trust. There was an issue before the trial judge as to Jafari's claim as trustee. The issue is significant for this reason. 63 Buckley was the registered proprietor of most of the Properties, namely 61 and 63-67 Buckley Street. Jafari himself was registered proprietor of only 59 Buckley Street. In 2013, 63 Buckley Street was wound up. Thus, such claims as Jafari had were, on that basis, claims for the benefit of 63 Buckley Street, a company in liquidation. Jafari contended, however, that 63 Buckley had held its part of the Properties on a trust created in 2008, and that he had replaced 63 Buckley as the trustee of that trust in 2009. The relevant background facts are set out below.

53 In late July 2008, Jafari instructed a solicitor, Christopher Bolden, to prepare a unit trust deed for 63 Buckley to become trustee of a proposed unit trust. At that time, Jafari was anticipating that the Properties would be sold to a different purchaser and that Jafari and that purchaser would be equal unit holders.

54 On 11 August 2008, Mr Bolden emailed Jafari a draft unit trust deed providing for 63 Buckley as the trustee and Jafari as the first unit holder, with instructions for its execution. The deed was dated 4 August 2008. Jafari gave evidence that upon receipt of this email, he printed and signed the deed on 11 August 2008. The trial judge did not accept this evidence.

55 Jafari's signature on the document was witnessed by his cousin, who was not called as a witness at the trial. Further, he did not tell Bolden that he had executed the 2008 Deed in August 2008.

56 Jafari later executed an undated record of resolution as director of 63 Buckley recording that it held all its property on the terms of the Essence Unit Trust Deed with effect from 4 August 2008. Jafari agreed that this may have been signed in mid-2016. The August 2008 deed was stamped in late 2016.

57 In April 2009 Jafari again called on Bolden and discussed the Essence Unit Trust, which was to play a role in the transactions under discussion with Pizarro. Jafari instructed that he should be the trustee and his mother be the unitholder.

58 In May 2009, Bolden prepared a deed with the trustee and unitholder as instructed, dated 1 May 2009. On 27 May 2009, Jafari executed this deed as trustee and under power of attorney for his mother as the first unit holder. Both signatures were witnessed by Bolden and the Trust Deed was stamped on 29 May 2009, the duty paid for by Jafari. This Trust Deed was in similar terms to the Trust Deed prepared by Bolden in August 2008.

59 The proceeding below was a claim brought by way of Writ and Statement of Claim dated 21 April 2010. Jafari was the first plaintiff.

60 Originally, 63 Buckley was the second plaintiff. However, as indicated, on 2 August 2013, 63 Buckley was wound up by an order of the Supreme Court of Victoria. On the basis of Jafari's pleading dated 8 July 2016 that 63 Buckley held the Properties on the terms of the Essence Unit Trust with effect from 4 August 2008 and had been replaced by Jafari, the Court ordered on 15 July 2016 that 63 Buckley be removed as a plaintiff and be added as the fifth defendant. The liquidator of 63 Buckley has not played on active part in the appeal or sought to challenge or uphold any of the trial judge's finding. The liquidator has indicated that he will abide by any order made by this Court.

61 Accordingly, at trial, as noted, Jafari made claims in his own right and as trustee of the Essence Unit Trust, the second plaintiff (the 'Unit Trust').

62 The respondents are 23 Developments and Pizarro, respectively the first and second defendants below. The third defendant (Fetter), fourth defendant (the Registrar of Titles) and fifth defendant (63 Buckley) are not parties to this application for leave to appeal.

63 By the 2 FASC, Jafari made claims founded on a breach of contract against 23 Developments and Pizarro. The contract sued upon was the Original Agreement, as an alleged partnership agreement to fund a development of the Properties and to bring that Development to 'construction commencement'. The breach relied on various terms said to be implied into the contract, on the basis that the relationship of the parties constituted a partnership. Put another way, the breach presupposed the existence of a partnership, in the sense that if a partnership is not established, there is no scope to imply the terms said to have been breached. As noted, this is the subject of proposed ground 3 of the appeal.

64 Jafari also made alternative claims regarding a vendor's lien, estoppel and mistake.

65 Jafari made further claims for misleading or deceptive conduct and/or negligent misstatement against Pizarro leading up to the execution of the Original Agreement. Additionally, Jafari made claims for misleading or deceptive conduct and/or negligent misstatement against Fetter. These claims are not the subject of this application for leave to appeal.

66 Pizarro and 23 Developments counterclaimed on the basis of misleading or deceptive conduct. Pizarro claimed that, prior to 26 May 2009, Jafari made specified false representations to 23 Developments and Pizarro in respect of contamination of the Properties.

67 Relevantly,[14] at first instance the major issues in the case were:

(a) Did Jafari, 63 Buckley, Pizarro and 23 Developments enter into an agreement on or around 28 April 2009 (this was the Original Agreement) and, if so, what were its terms?

(b) Is the Original Agreement unenforceable, or void ab initio?

(c) Was the Original Agreement terminated in May 2009?

(d) Around the time of the Original Agreement, was there a collateral agreement between Jafari, 63 Buckley and Pizarro, and, if so, what were its terms?

(e) In or around early May 2009, did the parties to the Original Agreement vary that agreement to permit 23 Developments to purchase the Properties directly from Perpetual, and what were the terms of any such variation?

(f) Did any vendor's lien arise in favour of Jafari or 63 Buckley by virtue of either the contract entered into between Perpetual and 23 Developments on 26 May 2009 or any vendor finance provided by Jafari or 63 Buckley?

(g) On or around 26 May 2009, did the parties to the Original Agreement vary that agreement, with the effect that 23 Developments agreed to hold 49 per cent of the Properties, or a proportion of the Properties equivalent to the vendor's lien, on trust for Jafari and 63 Buckley?

(h) On or around 26 May 2009, did Jafari, 63 Buckley, 23 Developments and Pizarro enter into a joint venture agreement on the same terms as the Original Agreement (save that the purchase of the Properties was from Perpetual and not from Jafari and 63 Buckley), pursuant to which 23 Developments agreed to hold 49 per cent of its interest in the Properties, or a proportion of the Properties equivalent to the vendor's lien, on trust for Jafari and 63 Buckley?

(i) Was the Essence Unit Trust created in August 2008, or at some other time?

(a) Prior to 26 May 2009, did Pizarro and 23 Developments enquire of Jafari and 63 Buckley, and therefore have a reasonable expectation of being informed as to whether the Properties were contaminated and/or what business had been conducted on the Properties in the past?

(b) Did Jafari and 63 Buckley falsely represent to Pizarro and 23 Developments, prior to 26 May 2009, that there would be no problems with contamination of the Properties?

(c) Prior to 26 May 2009, did Jafari know or suspect, and fail to disclose, that the Properties where heavily contaminated and/or a decommissioned dry cleaners, and therefore highly likely to be contaminated?

(d) Were the above representations misleading or deceptive conduct?

69 On 30 July 2018, the trial judge delivered reasons dismissing all of Jafari's claims except for the claim for a vendor's lien.

70 His Honour found that the Original Agreement was unenforceable because, among other things, Jafari was not able to provide clear title and vacant possession of the Properties. His Honour also found that the Original Agreement had been terminated or abandoned (rather than varied) by 23 Developments entering into an agreement with Perpetual.

71 With respect to the claim for a vendor's lien, the trial judge held that 23 Developments remained indebted to Jafari and 63 Buckley, for the principal sum of $581,801.47.

72 With respect to of the Essence Unit Trust, the trial judge:

(a) found that 63 Buckley purchased 61 and 63-67 Buckley Street in its own right and upon Jafari taking ownership and control of 63 Buckley in 2005, that company continued to hold the Properties from mid-2005 in its own right and not in any other capacity (Reasons [579]);

(b) found that the Unit Trust was not created until the execution of the Essence Unit Trust Deed in 2009 (Reasons [579]); and

(c) was not satisfied that Jafari had executed any document establishing the Unit Trust in August 2008 or at any time before the execution of the Essence Unit Trust Deed in 2009 (Reasons [580]).

73 On the counterclaim, the trial judge found that:

(a) in 2008, Jafari represented that contamination of the Properties would not be a problem and did not at that time disclose the existence of an old dry cleaners despite his knowledge of that fact (Reasons [527]);

(b) in April 2009, Jafari represented in writing that there would not be any issues with contamination of the Properties (this was the 2009 Contamination Representation) (Reasons [528]);

(c) the 2009 Contamination Representation was misleading or deceptive because it was factually incorrect (Reasons [545]);

(d) the Properties were, in fact, relevantly contaminated (Reasons, [545]);

(e) Pizarro was on notice that one of the Properties was formely used as a dry cleaners (Reasons [545]);

(f) although Pizarro must have appreciated that there was some risk of contamination, Pizarro reasonably relied on the 2009 Contamination Representation (Reasons [545]);

(g) Pizarro's actual knowledge of the dry cleaner was not sufficient to break the chain of causation in respect of reliance on the 2009 Contamination Representation in proceeding on the basis that any significant contamination could be dealt with without real difficulty, both from an environmental and cost effective perspective (Reasons [545]); and

(h) The 2009 Contamination Representation caused 23 Developments to enter into the Perpetual Agreement (Reasons [545]).

74 The trial judge quantified the loss suffered by Pizarro and 23 Developments as $801,195.06. His Honour set off this amount against the effective vendor finance provided to 23 Development and in respect of which a vendor's lien was imposed, resulting in judgment in favour of 23 Developments in the net sum of $219,393.59.

75 On 30 July 2018, the trial judge made orders that:

(a) on Jafari's claims, there be judgment for 23 Developments, Pizarro and Fetter;

(b) on the counterclaim, there be judgment for 23 Developments in the sum of $219,393.59;

(c) Jafari pay the defendants' costs of the proceeding on a standard basis. This order was stayed until 4pm on 13 August 2018, with liberty to apply.

76 No parties made any further application with respect to costs.

77 The issues in the application for leave to appeal and the proposed grounds are as follows. First, whether the trial judge erred in not awarding Jafari interest on the vendor's lien amount of $581,801.47 which was found owing to Jafari and 63 Buckley by 23 Developments (proposed ground 1).

78 Secondly, whether in the circumstances of this case, the trial judge erred in finding the 2009 Contamination Representation to be misleading or deceptive conduct, and in particular whether such conduct was causative of loss in the sense that it had induced 23 Developments to purchase the Properties (proposed ground 2).

79 Thirdly, whether the trial judge erred in concluding that the Original Agreement was not a partnership agreement, and accordingly, whether his Honour erred in not having found that Jafari and 63 Buckley held an equitable interest in the Properties (proposed ground 3).

80 Fourthly, whether the trial judge erred in not holding that the Original Agreement was continued and amended (or varied) to accommodate the purchase under the Perpetual Contract (proposed ground 4).

81 Fifthly, whether the trial judge erred in holding that Jafari did not create the Essence Unit Trust in August 2008 (proposed ground 5).

82 For the reasons set out below, in our opinion Jafari's claims were rightly rejected by the trial judge.

83 For the reasons which follow, we do not consider that 63 Buckley became trustee of the Essence Unit Trust in August 2008, or indeed at any time (proposed ground 5). At all relevant times 63 Buckley acted in its own name and right. The company is in liquidation and there is no appeal by the liquidator. The company is bound by the decision of the trial judge. Jafari has no standing to make any application for leave to appeal on behalf of 63 Buckley. The consequence is substantial and we deal with this proposed ground first.

84 Further, we are not persuaded that Jafari was a partner under the Original Agreement or had any proprietary interest in the Properties (proposed ground 3). Further, there was no variation of the Original Agreement (proposed ground 4). The Original Agreement was replaced by entirely new arrangements (with new parties and new terms) and was either terminated or abandoned. The new arrangements, including the Perpetual Contract and the Irrevocable Authority, retained elements of the Original Agreement, but did not constitute the parties as partners. It provided for the purchase of the Properties by 23 Developments in its own right from a different party and the provision of a vendor's lien, in a different amount, each of which had been features of the earlier failed Original Agreement. Despite intense negotiations over many months, nothing further was agreed. Jafari was never a partner and never entitled to a profit share because there were no profits. There was no Development because the parties could not agree. Jafari's extravagant claim for loss and damage was properly dismissed.

85 In relation to interest on the vendor's lien (proposed ground 1), no such claim was made before the trial judge. The claim for interest made by Jafari for the first time on this application is without merit for the reasons which follow.

86 Finally, for the reasons which follow, there was no error by the trial judge in finding misleading or deceptive conduct on the counterclaim (proposed ground 2). The written representation to the effect that contamination would not be an issue was false. It was not to the point that Pizarro knew one of the Properties had been previously used as a dry cleaner and as a consequence knew that there must necessarily be some level of contamination. Jafari assured or comforted him that any contamination would not be an issue. This comfort was material to 23 Developments' decision to commit itself to the purchase of the Properties. We are not persuaded that the trial judge fell into error in finding that Pizarro relied on the representation and that it was a cause of 23 Developments acquiring the Properties and thereby suffering loss.

87 Accordingly leave to appeal on all grounds is refused.

Fifth proposed ground of appeal - Was the Essence Unit Trust created by Jafari in August 2008?

Decision below

88 As noted in paragraph 12, 63 Buckley was wound up on 2 August 2013. The liquidator made no claim in the proceeding. Unless Jafari is able to establish that prior to its liquidation 63 Buckley held the Properties on trust as trustee of the Essence Unit Trust and that 63 Buckley was replaced as trustee by Jafari, Jafari does not have a claim as alleged (other than a possible small claim in his own right).

89 The trial judge held that the Properties were always held by 63 Buckley in its own right and never as trustee and that the Essence Unit Trust was not created in August 2008. After a thorough analysis of the evidence his Honour concluded:[15]

Self-evidently, Jafari's evidence on this topic contained inconsistencies and, if accepted, would disclose glaring oversights and mistakes in 2009 on the part of him and his lawyers. In summary:

(1) The only evidence that Jafari executed the Purported 2008 Deed in August 2008 was Jafari's own oral evidence.

(2) There were at least 3 witnesses, Jafari's cousin, Bolden and Needham, who could have been called to corroborate Jafari's account, but were not.

(3) 63 Buckley purchased 61 and 63 to 67 Buckley Street in its own right and, upon Jafari taking ownership and control of 63 Buckley in either May or July 2005, that company continued to hold the Properties from mid 2005 in its own right and not in any other capacity.

(4) It formed no part of Jafari's case that the Trust was created other than in writing upon the execution of the Purported 2008 Deed, forwarded by Bolden in August 2008.

(5) The contemporaneous documents overwhelmingly indicate that the Trust was not created until the execution of the 2009 Deed.

(6) When cross-examined on a number of matters pertaining to this issue, Jafari was either evasive, non-responsive or contradicted himself.

In these circumstances, coupled with the fact that Jafari was, in many respects, an unsatisfactory witness more generally, I am not satisfied that Jafari executed any document establishing the Trust in August 2008 or at any time before the 2009 Deed was executed. The onus was on Jafari to establish the Purported 2008 Deed was signed by him in August 2008. For the reasons stated above, he has not discharged that onus.

...

Assessing the evidence as a whole, I find that Jafari decided in 2008 to establish the Trust and intended to finalise it upon the terms of the proposed joint venture with Kamal, and later McDonnell, also being finalised. When such proposed joint ventures did not eventuate, Jafari refrained from taking the further steps necessary to establish the Trust. However, once an agreement was signed with Pizarro, by the Original Agreement, Jafari took steps to establish the Trust (which occurred in May 2009).

What is set out above deals with the issue of the Trust as argued. However, a further point should be made. Even if, contrary to the findings made, Jafari executed the Purported 2008 Deed in August 2008 and, as a result, 63 Buckley held its interests in the Properties on trust from that point onwards, nothing Jafari signed in May 2009 would have altered this position. The 2009 Deed created a stand alone trust. If 63 Buckley were the trustee of the Essence Unit Trust from August 2008, it remained so, even though a new trust was created in May 2009 with the same name.

90 The applicant submitted that the uncontradicted evidence of Jafari should be accepted in circumstances where he intended to create a trust and had signed the Unit Trust Deed (which was prepared on his instructions and sent to him for execution). Jafari proferred the explanation that he was under no legal obligation to return the Unit Trust Deed (executed in August 2008) to his solicitor, and he did not do so because he was very busy at the time.

91 It was also submitted that the creation of the Unit Trust in August 2008 was 'inherently likely and entirely consistent with the commercial purpose that Jafari expressed'.

92 Finally, it was submitted that the Unit Trust was referred to in discussions with Fetter and Pizarro well prior to the creation of the 2009 Essence Unit Trust on 27 May 2009. Various documents were referred to. These documents, it was submitted, supported the existence of the Essence Unit Trust.

93 The respondents submitted that the trial judge's findings were open to him and compelling. It was submitted that the trial judge carefully and thoroughly considered and analysed all of the evidence and that Jafari 'has ignored and failed to grapple with' the critical factual findings of the trial judge as referred to above.

94 Further, it was submitted that Jafari's evidence was indeed challenged during cross-examination and that in addition to being uncorroborated, it was 'inconsistent with a large amount of documentary evidence'.

95 Finally, it was submitted, in accordance with established authority, that the trial judge's findings of fact were entirely open on the evidence and were not glaringly improbable or inconsistent.

96 The evidence overwhelmingly supports the trial judge's findings of fact and relevant inferences from such facts. No error has been demonstrated. We agree with the reasoning and conclusion of the trial judge. The proposed ground is not arguable and leave to appeal is refused.

97 The circumstances surrounding the asserted execution of the Essence Unit Trust Deed in August 2008, are curious and improbable and call for a proper explanation. None was given. The evidence in support of the suggested execution of the Unit Trust Deed in August 2008 was improbable and not credible.

98 First, in correspondence after receipt by Jafari of the Unit Trust Deed in August 2008, there is no reference to the execution of the Unit Trust Deed or the existence of any such Deed or the Unit Trust. In fact some of the correspondence indicates that the Unit Trust was still to be finalised. In an email to Pizarro on 6 April 2009, Jafari, after referring to a meeting with his solicitor Chris Bolden regarding the 'Essence Unit Trust', says that 'he [Bolden] advised to nominate a Trustee for the Unit Trust, maybe you can be the Trustee until we appoint a company later ...'. This clearly contradicts the suggestion that the Essence Unit Trust was established the year before.

99 Secondly, in establishing the 'new' Essence Unit Trust in May 2009, none of the correspondence and discussions suggest that there was a Unit Trust by the same name already in existence. The 2009 Essence Unit Trust with Jafari as trustee and his mother as unit holder is not in dispute. If there was an earlier trust (with the same name and the same terms) it would surely have been referred to and used.

100 The 1 May 2009 Essence Unit Trust Deed with Jafari as trustee is an entirely new trust in exactly the same terms as the suggested earlier August 2008 Unit Trust Deed by the same name. If the earlier Unit Trust Deed was executed and operative there would be no need for a new Unit Trust Deed on exactly the same terms. To suggest that this was done simply to replace 63 Buckley as trustee and appoint Jafari is contradicted by the form and extent of the document purporting to do so. We do not accept that the 2009 Essence Unit Trust Deed was executed simply to replace the trustee.

101 Further, Jafari's evidence in this regard does not assist his case.[16] In cross-examination he was asked why he had not told Bolden or Pizarro on 6 April 2009 that he already had a trust deed, a trustee and unitholders. He acknowledged not having said that to them and went on to say 'I didn't need to say that, it was already there ... everybody was aware of it'. He said that he had repeatedly emphasised that he didn't want '63 Buckley being a part of it at all' and that all involved were aware of this. This evidence was unsupported and is not credible.

102 Although it is not pleaded that on or about 1 May 2009 Jafari replaced 63 Buckley as trustee of the Essence Unit Trust, the document bringing about such a suggested change is not a supplemental deed but an entirely new Unit Trust Deed on the same terms as the asserted earlier Unit Trust Deed. Not surprisingly, the trial judge found it was an entirely new trust deed. As a consequence, if contrary to our view (and that of the trial judge) the Essence Unit Trust was created in August 2008, 63 Buckley remained as trustee and was not replaced by the 2009 Trust Deed.

103 Thirdly, in an affidavit sworn 5 May 2016, Jafari exhibited a true copy of the Unit Trust Deed. However, the execution page was missing. In a later affidavit sworn 11 July 2016 a full copy of the Unit Trust Deed was exhibited. This included the execution page. However, as pointed out by the trial judge, none of the witnesses to the execution of the Unit Trust Deed were called to give evidence on this highly contentious issue, leaving the court only with the word of Jafari. Not surprisingly, in all of these circumstances the trial judge did not consider it to be reliable.

104 Fourthly, although as sole director of 63 Buckley, Jafari resolved that all of its property be held on trust, that is the (2008) Essence Unit Trust, the resolution was admittedly signed well after the liquidation of 63 Buckley. Exhibit KJ2 of Jafari's affidavit of 5 May 2016 exhibits the resolution. It is dated 28 April 2016. It refers to an earlier resolution to like effect of 1 August 2008. The earlier resolution is exhibited to Jafari's 11 July 2016 affidavit as exhibit KJ25A. Although it purports to be a record of resolution of 4 August 2008, the document is undated. In cross-examination Jafari agreed that it was most likely executed in 2016.[17]

105 Fifthly, there is no reference to the Essence Unit Trust in any of the correspondence or documentation as between Jafari and Pizarro. Further, and more generally, there is no written evidence at all to the effect that 63 Buckley held its assets on trust.

106 In all of these circumstances it was entirely open to the trial judge to conclude, as do we, that the evidence of Jafari could not be relied on unless corroborated by other evidence, whether contemporaneous documents or witnesses to the execution of the Unit Trust Deed in August 2008. Of course the contemporaneous and later documents told an entirely different story and available witnesses were not called.

107 Finally, in view of our decision on the other grounds of appeal, it does not matter whether, contrary to our opinion (and that of the trial judge), the Essence Unit Trust was established in August 2008 with 63 Buckley and later Jafari as trustee. For the reasons given, any partnership or proprietary interest vesting in the Essence Unit Trust (and not 63 Buckley) as beneficial owner is not made out. There was no partnership. There was no proprietary interest. There was no agreement, there was no share of profits and there was no loss of opportunity. Consequently, whether or not 63 Buckley, and later Jafari, was a trustee, is effectively irrelevant.

First proposed ground of appeal - Interest on vendor's lien

108 The trial judge did not deal with this issue. It was not pleaded or argued at first instance.

109 Jafari submitted that as the vendor's lien was security for the unpaid purchase price of the Properties ($581,801.47), interest should have been allowed from the date of settlement of the Perpetual Contract (16 August 2009) to the date of judgment.

110 It was submitted that the vendor's lien extended not only to the unpaid purchase price but also to interest from the time the lien came into existence, and that such interest has long been recognised as an integral part of the lien and operated as a matter of law and apart from statute.

111 It was submitted that such interest was able to be awarded either as part of the court's inherent jurisdiction or under ss 58 or 60 of the Supreme Court Act 1986 (Vic).

112 The respondents submitted that no claim was made for interest in any pleading or prayer for relief, and further that no claim was made in closing submissions or after judgment but before orders were made. Accordingly, it was submitted that this court should not permit a new point to be raised for the first time on an application for leave to appeal.

113 Several further points were raised. First, there was no evidence as to the basis of the calculation of any loss. Secondly, Jafari failed to specify the rate of interest, and has not pointed to any evidence to support such a rate. Thirdly, equity would not award any interest to a party that has engaged in misleading or deceptive conduct. Fourthly, ss 58 and 60 of the Supreme Court Act conferred a discretion which was unlikely to be exercised in favour of the award of interest because of the misleading or deceptive conduct issues. Interest, it was submitted, represented 'the fruits of a poisoned tree' and accordingly Jafari is only entitled to the damages sum representing the vendor's lien without any interest because of such misleading conduct that induced 23 Developments to purchase the Properties.[18] Fifthly, it was submitted, by reference to authority, that there were considerable delays in the proceeding which would affect any calculation (both as to the rate and period), and in this regard evidence was required. Finally it was submitted that as 63 Buckley was not trustee of the Unit Trust, it was the company itself (in liquidation) that would be entitled to about 6/7[19] of the interest payable[20] and Jafari would, in any event, only be entitled to about 1/7 of any interest.

114 The ground is entirely new and should not be entertained for the first time on an application for leave to appeal. It is not a simple arithmetic calculation that can be made with ease without evidence. Jafari still has not suggested a particular rate of interest, although the Penalty Interest Rate from time to time was suggested during the hearing of the application. It is readily apparent that evidence is necessary given the matters raised by the respondents. It is too late and, for this reason, we would refuse leave to appeal on this ground.

115 In this respect, we adopt the observations of Gleeson CJ, McHugh and Gummow JJ in Whisprun Pty Ltd v Dixon which are directly on point:

[51] It would be inimical to the due administration of justice if, on appeal, a party could raise a point that was not taken at the trial unless it could not possibly have been met by further evidence at the trial. Nothing is more likely to give rise to a sense of injustice in a litigant than to have a verdict taken away on a point that was not taken at the trial and could or might possibly have been met by rebutting evidence or cross-examination. Even when no question of further evidence is admissible, it may not be in the interests of justice to allow a new point to be raised on appeal, particularly if it will require a further trial of the action. Not only is the successful party put to expense that may not be recoverable on a party/party taxation but a new trial inevitably inflicts on the parties worry, inconvenience and an interference with their personal and business affairs.[21]

116 In any event, we do not consider that, in the circumstances, there is a sufficient basis for an award of interest.

117 First, like the trial judge, we reject the submission that 63 Buckley was trustee of the Trust and was replaced by Jafari.[22] It is 63 Buckley that is entitled to the majority of the amount comprising the vendor's lien (6/7) and therefore, any interest on that amount. This is the respondents' final point referred to above. In our opinion, although the point relates to the amount of interest, it has merit in relation to why we should not exercise our discretion to entertain this new point or award interest. On the same analysis, Jafari is only entitled to about 1/7 of the amount of the vendor's lien.

118 Secondly, if the issue of interest had been pleaded and argued, it is unlikely that in the exercise of the court's discretion interest would have been awarded given the conduct of Jafari and 63 Buckley (that is, both the misleading conduct and their delay). We accept the third and fourth points raised by the respondents.

119 Finally, as the respondents contend in their notice of contention, unless Jafari succeeds in establishing that he and 63 Buckley did not engage in misleading or deceptive conduct, any interest payable on the vendor's lien would increase the amount awarded to Jafari under the lien but would also increase the damages awarded to the first respondent for the misleading or deceptive conduct by the same amount. We turn then to the proposed ground concerning the misleading or deceptive conduct.

Second proposed ground of appeal - Misleading or Deceptive Conduct

120 The trial judge found that the 2009 Contamination Representation, being a written representation made by Jafari and 63 Buckley that there would not be any issues with contamination with respect to the Properties was misleading or deceptive for the purposes of s 9 of the Fair Trading Act 1987 (Vic) and s 52 of the Trade Practices Act 1974 (Cth).[23] The representation was as follows:

In the western suburb councils, EPA requirement is a part of planning permit, the site (69-79 Buckley used to be a Shell petrol station) and was decontaminated by IT [E]nvironmental, I have the reports and there were no issues. I am advised by the director Dr Wayn that the property was surprisingly clean also there won't be any issues with these properties. (Emphasis added)

121 The trial judge gave the following reasons for his conclusion:[24]

(1) The 2009 Contamination Representation was factually incorrect. Jafari positively represented contamination would not be a problem. This representation necessarily included a representation that the Properties were not heavily contaminated and that any contamination could be dealt with in a cost-effective manner. The evidence disclosed that the Properties were 'heavily contaminated' and that the level of contamination would be highly likely to present a substantial obstacle to any residential development of the Properties, and would seriously undermine the value of the Properties.

(2) Although Pizarro must have appreciated there was some risk of contamination (so much being evident from his enquiries of Jafari, and also information available to him), it does not follow that Pizarro and 23 Developments did not rely on the 2009 Contamination Representation in deciding that 23 Developments would purchase the Properties. I find they did. Pizarro's enquiries demonstrate, not surprisingly, that he was keen to be assured contamination would not present a substantial problem to the Development.

(3) Further to (2) above, the fact that Pizarro had notice of the dry cleaners, and, therefore, on his own evidence knowledge of a real risk of significant contamination, does not break the chain of causation with respect to reliance. Even with this knowledge, Pizarro and 23 Developments were not precluded from relying on the 2009 Contamination Representation and proceeding on the basis that any significant contamination could be dealt with without real difficulty, both from an environmental and a cost-effective perspective.

(4) Jafari made the 2009 Contamination Representation intending that Pizarro and 23 Developments would rely upon it in deciding to proceed with the purchase of the Properties. Further, Jafari gave no disclaimer with respect to his advice and did not suggest that Pizarro or 23 Developments needed to get any other advice before proceeding.

(5) In circumstances where Jafari made such a clear and unequivocal representation as to contamination and purported to have the experience and knowledge to make such a representation, Pizarro's (and 23 Development's) reliance on the 2009 Contamination Representation was reasonable.

(6) The 2009 Contamination Representation caused 23 Developments to enter into the Perpetual Agreement. But for Jafari's assurances about contamination, 23 Developments would not have proceeded to purchase the Properties. The evidence disclosed that Pizarro required a level of comfort in this regard before he was willing to cause 23 Developments to purchase the Properties. Considering the matter objectively, Pizarro's financial position was seriously stretched by reason of him committing 23 Developments to purchase the Properties. He did not have the financial means to accommodate the delay and expense that would accompany any contamination issues that were materially beyond being 'not a problem'.[25]

122 Accordingly, the trial judge awarded compensation for loss suffered by 23 Developments, being the loss on the purchase and sale of the Properties, together with related costs, totalling $801,195.06. This amount included, and was set off against the vendor's lien ($581,801.47), leaving a balance of $219,393.59 in favour of 23 Developments.

123 Jafari submitted that the trial judge erred in finding that the 2009 Contamination Representation representation was misleading or deceptive. Jafari further submitted that 23 Developments had not relied upon the representation in tendering to purchase the Properties from Perpetual, and as such the representation did not cause the loss ultimately suffered by 23 Developments. [26]

(a) Jafari did not represent that the property was free of contamination;

(b) before entering any contract, Pizarro was on notice of the fact that a dry cleaner had operated on the property;

(c) Pizarro, on his own evidence, acknowledged that such knowledge put him on notice of a real risk of significant contamination;

(d) there was no evidence at trial that 23 Developments or Pizzaro would have withdrawn from the transaction had they known that contamination would present a substantial problem to the development, despite their knowledge of the above;

(e) Jafari offered at most a non-expert opinion about the capacity to manage any contamination by reference to his experience with the neighbouring property;

(f) likewise, Pizarro himself, when seeking to sell the property subsequently, assured a prospective buyer to the effect that any contamination could be managed for a fraction of the usual cost;

(g) the Properties were to be sold by a mortgagee in possession after 23 Developments ceased to make interest payments. This was a stratagem to remove Jafari's caveats and claim to the property, not a decision that the development project was so affected by contamination that it could not proceed; and

(h) in fact, the development project was not abandoned or delayed due to any contamination, but continued. Pizarro continued to manage the development project even after 23 Developments ceased to be registered proprietor, giving evidence that he had an arrangement with the new purchaser, for a share in the project and engagement to market residual units, which were to be developed.[27]

125 The respondents submitted that there was no error in the trial judge's analysis.

126 In our opinion, the 2009 Contamination Representation was misleading or deceptive. It was not necessary for Jafari to explicitly state that the properties were free of contamination or that they were contaminated only to an insignificant degree. Jafari represented that contamination was 'not a problem', and this 'necessarily included a representation that the Properties were not heavily contaminated'.[28]

127 The 2009 Contamination Representation conveyed the position that the Properties could, to the extent of any contamination, be decontaminated with relative ease, in a cost-effective manner and would not otherwise be a problem. Therefore, even though Jafari did not make an explicit representation as to the existence or level of contamination, by stating that contamination would not be a problem, he made a representation, which clearly conveyed the level and ease with which the Properties could be decontaminated. That representation was false.

128 Ultimately, the critical issues relating to this ground are reliance and causation. That is, whether 23 Developments relied on or was induced by the 2009 Contamination Representation to purchase the Properties from Perpetual and whether that representation was otherwise causative of the loss it ultimately suffered?

129 Jafari sought to demonstrate that 23 Developments' reliance was unreasonable on various grounds. The result of such unreasonableness, it was submitted, was that Pizarro's decision to purchase the Properties was a break and not a link in the chain of causation.[29] The first was that before entering any contract for the purchase of the Properties, Pizarro and 23 Developments knew that a dry cleaner had operated on the premises of 59 Buckley Street, and that Pizarro had acknowledged in his evidence that such knowledge put him on notice of a real risk of significant contamination. Specifically, Pizzaro gave evidence during cross-examination that he had been given, though had not looked at,[30] an A3 set of plans for the Properties which stated that '[e]xisting single storey commercial building, dry cleaners, [were] to be demolished'.[31] The second ground was that Jafari offered, at most, a 'non-expert opinion' about the capacity to manage or clean any contamination. It was unreasonable for the respondents to rely on this lay opinion.

130 Jafari contended that the respondents adduced no evidence at trial to demonstrate that 23 Developments would have withdrawn from the transaction had it been known that contamination would present a substantial problem to the Development. Rather, it was submitted that the respondents would have continued with the purchase of the Properties irrespective of the contamination, had its extent been known.[3] Jafari pointed to the fact that the Development was not abandoned or delayed due to any contamination, but had in fact continued. In addition, Jafari submitted that Pizarro continued to manage the Development even after 23 Developments ceased to be registered proprietor of the Properties. He had arranged with the new purchaser for a share in the project and engagement to market residual units, which were to be developed.

131 Apart from an explicit finding of reliance or inducement based upon evidence, the court may in certain circumstances draw a 'fair inference' of reliance. In Gould v Vaggelas, Wilson J (with whom Gibbs CJ and Murphy J agreed) set out the following in the context of a common law action for deceit, but equally applicable to the statutory causes of action:

1. Notwithstanding that a representation is both false and fraudulent, if the representee does not rely upon it he has no case.
2. If a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into the contract there arises a fair inference of fact he was induced to do so by the representation;
3. The inference may be rebutted, for example, by showing that the representee, before he entered into the contract, either was possessed of actual knowledge of the true facts and knew them to be true or alternatively made it plain that whether he knew the true facts or not he did not rely on the representation.
4. The representation need not be the sole inducement. It is sufficient so long as it plays some part even if only a minor part in contributing to the formation of contract. [32]

An inference of inducement may be drawn when a party enters into a contract after a material representation has been made to him, but it is no more than an inference of fact and it is settled law that such an inference may be rebutted by the facts of the case. [33]

133 Ultimately, however, the critical question is whether loss or damage is caused 'by' (or 'because of') the contravening conduct and, when it comes to causation, that question may be answered in the affirmative even if the representee did not rely on the misrepresentation in the strict sense of the word.[34] In Campbell v Backoffice Investments Pty Ltd, Gummow, Hayne, Heydon and Kiefel JJ referred to observations made by Giles JA in the court below, and said:

Giles JA was right to point out that reliance is not a substitute in the context of the Fair Trading Act for the essential question of causation. Moreover, it is also right to observe, as Giles JA said, that '[i]t may be artificial to speak of reliance in determining what action or inaction would have occurred if the true position had been known.' [35]

134 In a positive misrepresentation claim, causation may be established by demonstrating that the representee would have acted differently if they had known that the representation conveyed to them was false. If, for instance, by having known of the truth concealed by a misleading representation, the representee would not have entered into a transaction, contract or investment opportunity which resulted in them suffering a loss, the court can hold that the representation was a necessary factor in the representee's decision to enter into that transaction.[36] In Smith v Noss, Giles JA said:

Even where the misleading or deceptive conduct lies in disclosing something - making a representation which is false - the notion of reliance must be used with care. Causation will be established if there would have been inaction or some other action had it been known that the representation was false. Since the representee did not know the falsity of the representation, again there is a hypothetical question, and in such a case the scope for the representee to give evidence of thought processes at the time may be quite limited and 'reliance' may mean no more than that the representee would have acted differently had it been known that the representation was false. To speak of a need for explanation or for specific evidence of reliance, or for evidence of a decision-making process, can lead to error; the question is one of causation.

Secondly and more fundamentally, specific evidence of reliance is not essential for proof of causation. Such evidence may be one strand, perhaps an important one, in the factual skein, but causation may be found without it.[37]

135 Here, a material misrepresentation had been made to Pizzaro, and that representation was calculated to induce 23 Developments to enter the Perpetual Contract. The trial judge recognised the intention behind Jafari's misrepresentation, and drew an inference of the kind discussed in Gould.[38] But in any event, this inference merely fortified the direct evidence that permitted the trial judge to make a factual finding of reliance, independent of that inference.[39] That finding was entirely open and appropriate.

136 For the reasons that follow, the evidence clearly establishes that 23 Developments required and took comfort from the 2009 Contamination Representation, which operated as a factor in the company's decision to purchase the Properties from Perpetual. Put another way, we are satisfied that 23 Developments would not have purchased the Properties had it known the true extent of contamination or the ease with which it could be contaminated.

137 Evidence in relation to Jafari's first ground, to the effect that Pizarro was on notice as to the previous use of 59 Buckley Street as a dry cleaners, goes to the existence of contamination. It does not go to the level or extent of that contamination, or how costly, difficult and time-consuming it would be to decontaminate the Properties. This is significant and Pizzaro's evidence was unequivocal. During cross-examination, he said that he would not buy 'anything to do with laundry, ever'.[40] He required comfort as to the insignificance of the level of contamination and the ease with which it could be decontaminated. This was needed by Pizarro so as to assure him that the Development would be viable. As the trial judge observed, his financial position was strained by reason of him committing 23 Developments to the Properties - and he did not have the financial means 'to accommodate the delay and expense that would accompany any contamination issues that were materially beyond being "not a problem".'[41] The 2009 Contamination Representation made by Jafari clearly provided Pizzaro with the necessary level of comfort, as he proceeded to purchase the Properties irrespective of his knowledge that a dry cleaner had previously operated on the premises (and therefore, according to his evidence, contrary to the instincts or practice that he would have otherwise followed).

138 Jafari's second contention is that Pizarro's reliance was unreasonable. This goes nowhere. Notwithstanding that Jafari gave a 'non-expert opinion', he indicated that he was experienced in decontaminating properties. This experience and knowledge was said to have derived from decontaminating the neighbouring property. Further, he expressed his opinion as having been supported by the advice received from Dr Wayn, adding to its apparent correctness and reliability. The trial judge identified that Jafari did not offer a disclaimer to his advice, and nor did he suggest Pizzaro and 23 Developments make their own enquiries or undertake their own investigations.[42] In fact, he advised against that. The comforting nature of his conduct, coupled with these other matters points to Jafari having hoped and intended that the respondents would accept his assurances that contamination would not be a problem, so that the prospective purchase and Development would not fall through. The trial judge's finding 'that he consciously withheld this information as he did not want Pizarro to be deterred by reason of any concerns about contamination', namely the laundry,[43] was not only open to him but entirely appropriate.[44] It was reasonable for Pizzaro to have relied on the 2009 Contamination Representation to purchase the Properties.

139 Jafari has failed to rebut the inference or finding of reliance that flowed from the evidence referred to above by either showing that Pizarro was possessed of actual knowledge of the true facts and knew them to be true or alternatively made it plain that whether he knew the true facts or not he did not rely on the representation. Jafari sought to rely on Pizarro's knowledge of the prior use of the premises as a dry cleaner, but Pizarro did not know the extent of the contamination, or the ease or cost to decontaminate the Properties. These were the matters to which the misrepresentation was directed, and in respect of which, Pizarro took comfort.

140 There can no argument of carelessness (of the kind described by McHugh J in Hennville v Walker[45] which is sufficient to break the chain of causation) on the part of Pizarro or 23 Developments. As referred to above, they did not have knowledge of the true state of affairs and otherwise acted reasonably. Pizarro can hardly be blamed for relying on Jafari's assurances which provided the much needed comfort and in turn persuaded Pizarro to not undertake his own enquiries and investigations. Indeed, this was Jafari's aim.

141 The primary judge's estimate of damages, being the loss on the purchase and sale of the Properties, together with related costs, was correct.

142 We would refuse leave to appeal on this ground.

Third proposed ground of appeal - Whether the trial judge erred in concluding that the Original Agreement was not a partnership agreement, which gave Jafari and 63 Buckley a proprietary interest in the Properties

143 The Original Agreement was entered into on or about 30 April 2019. The parties were Jafari, 63 Buckley and 23 Developments. It comprised the Terms Sheet, the Side Agreement and the First Contract of Sale,[46] which represented a single transaction to be construed as a whole.[47] These findings are not in issue.

144 At first instance, Jafari alleged that various terms should be implied into the Original Agreement. The terms relevant to this appeal include the following:

(a) the interests in the 'partnership' would be held in proportions of 51 per cent for Pizarro's entities and 49 per cent for Jafari's entities - being Jafari and 63 Buckley;[48]

(b) 23 Developments would become the registered proprietor of the Properties, but it would hold the title for the 'partners', in proportion to their interests in the Development; and[49]

(c) the parties would enter into a subsequent development agreement with the intention for this agreement to more fully set out the terms of the 'partnership'.[50]

145 The trial judge referred to these terms as depending entirely or partially upon Jafari establishing that the Original Agreement gave rise to a partnership between the parties.[51] This is the critical issue on the proposed ground of appeal. Jafari contends that the Original Agreement gave rise to a partnership, so that he can assert an equitable proprietary interest in the Properties (notwithstanding that they have since been on-sold) and make the loss of opportunity claim.

146 The following aspects of the Terms Sheet were submitted by Jafari as being indicative of a partnership:[52]

(1) The general tenor of the document, and in particular the first section of the Terms Sheet headed 'KOUROSH Group Asset'. This was said to contain terms creating an 'ongoing business relationship' beyond a simple conveyancing of the Properties.

(2) Under the heading 'Transaction', the reference to 23 Developments entering into a contract for the sale and purchase of the Properties. This was said to be 'a step as part of a whole further plan or project or agreement' beyond the sale of the Properties.

(3) The reference to 'the 49% Kourosh Group profit share in the project'. This was said to connote an ownership interest in the Development.

(4) The reference to 'profit share'. This term was said to constitute a 'badge of partnership'.

(5) The stipulation that 23 Development would 'contribute its funding' to buy the Properties. It was said that the notion of contribution was 'suggestive of a joint endeavour', and therefore characteristic of a partnership.

(6) The reference to 'loans to the project'. This was said to refer to loans to the business of the parties, which would have been unnecessary to record if all that was contemplated was a sale of the Properties.

(7) The reference to 23 Developments being entitled to repayments and to register a mortgage in respect of its loans to the Development. This was said to regulate 'between the partners' the means by which the registered proprietor would receive payments from the Properties.

(8) The use of the words 'in addition to the above, the following also forms part of the agreement'. This was said to demonstrate, again, that the Terms Sheet went beyond a simple sale and purchase.

(9) The use of the term 'development project' throughout the Terms Sheet. This was said to define the business to be undertaken by the parties.

(10) The reference to fees being 'deducted against the profit of the project'. This was also said to define the business.

(11) The reference to interest being paid to 23 Developments on 'fees and money and finance contributed or paid for [or] on behalf of the project'. The words 'for [or] on behalf of' were said to be 'classic words' of fiduciary obligation, trusteeship or agency and a recognition that 23 Developments was undertaking tasks and steps, and assuming obligations, on behalf of others.

(12) The stipulation that 'the Kourosh Group will retain a percentage of the net profit of the project'. The word 'retain' was said to link the nature of Jafari's interest in the Properties prior to signing with his interest after signing, suggesting he was to retain a beneficial interest in the Development.

(13) Further, the notion of Kourosh Group retaining an interest in the 'net profit of the project' was said to constitute an acknowledgement that Jafari was to retain a 'proprietary interest in the land'.

(14) The reference to the Kourosh Group having the right to register an 'interest free third mortgage for it's (sic) 49% interest in the project'. This was said to constitute an 'absolute recognition' of Jafari's interest in the Development.

(15) Under the heading 'Further Assurance/Binding', the 'undertaking' by the parties to enter into a 'development agreement between [23 Developments] and Kourosh Group (with the 51%:49% profit split)'. The reference to the proposed development agreement was said to provide an acknowledgement of the 'existing relationship' between the parties and the need for regulation of that relationship moving forward.

(16) Under the heading 'Assignment', the stipulation that the parties were prevented from assigning their rights or obligations under the Terms Sheet 'without the consent of the other Parties'. This was said to be supportive of the 'personal relationship' of 'mutual trust and confidence' that is often present in partnerships.

(17) Under the heading 'Costs', the reference to conveyancing and legal costs forming 'part of the project costs'. This was said to connote a business relationship being carried on with a view to profit.

147 The trial judge considered that while 'a number of express terms of the Terms Sheet were consistent with a partnership,[53] no aspect of it definitively indicated a partnership was intended.' Each factor identified and relied upon by Jafari was also entirely consistent with a contractual profit share agreement.[54]

148 The trial judge referred to the following facts, circumstances and contractual terms that he considered relevant to determining whether a partnership had been intended by the parties:

[414] It is trite to state that whether or not a partnership came into existence must be determined from the intention of the parties objectively ascertained from the whole of the contract, construed in light of the facts and circumstances relevant to the relationship of the parties. In my view, the following objective facts are relevant to determining whether any of the terms can be construed in a manner consistent with a partnership having been intended:

(1) Nowhere was the term 'partner' or 'partnership' used, in contrast to a much earlier proposal from Jafari.

(2) The terms of both the Terms Sheet and the First Contract of Sale expressly provided that 23 Developments would purchase the Properties in its own right.

(3) The Terms Sheet did not provide, either expressly or implicitly, that Jafari or 63 Buckley would have any ownership of 23 Developments.

(4) No express term provided for Jafari or 63 Buckley to retain any interest in the Properties after they had been acquired by 23 Developments, as opposed to an interest in any net profit of the Development.

(5) If it had been intended that Jafari or 63 Buckley were to have some beneficial interest in 23 Developments or retain some proprietary interest in the Properties, it would have been very simple to state that expressly.

(6) There was no binding agreement between the parties as to how the Development might proceed; 23 Developments simply agreed to fund it 'to construction commencement'.

(7) There was no term, nor any discussion in April 2009 preceding the Original Agreement, which suggested Jafari or 63 Buckley would be liable for any losses that might eventuate.

(8) There was no term, nor any discussion in April 2009 leading up to the Original Agreement, indicating that any transactions entered into by 23 Developments (or Pizarro) in connection with the Development would give rise to Jafari and 63 Buckley being liable (as partners or otherwise) for the obligations arising from such transactions.

149 Concluding that the Original Agreement and surrounding circumstances did not support the contention that the parties had intended to create a partnership, the trial judge said:

[416] First, the mere fact that the Terms Sheet provided that 23 Developments would be paid 51 percent of any net profits and 'Kourosh Group' would 'retain' 49 percent of any net profits does not, of itself, indicate a partnership was intended. Agreements for profit shares are equally consistent with a mere contractual relationship. Further, the use of the word 'retain' does not, of itself, suggest that 23 Developments agreed that Jafari or 63 Buckley would hold some underlying ownership in the Properties or the Development beyond a profit share. The use of that word is consistent with the retention occurring only upon any profits materialising.

[417] Secondly, there was no express term of the Terms Sheet which suggests that 23 Developments was taking ownership of the Properties 'for the partners'. On the contrary, the Terms Sheet provided for the sale of the Properties to 23 Developments, subject only to certain obligations with respect to a proposed Development. None of the obligations specified that 23 Developments was to acquire or hold the land other than in its own right.

[418] Thirdly, with respect to the alleged term that the development agreement would 'more fully set out the terms of the partnership', the Terms Sheet only required any development agreement to provide for the '51%:49% profit split', and for 'the second mortgage, third mortgage and loan agreements associated with these 2 mortgages'. Indeed, if a partnership were intended, it might be expected that the clause concerning the proposed future development agreement would have also made reference to the possibility of further terms referable to the alleged partnership.

[419] In summary, each of the terms contended for goes well beyond what was contained in any written document forming part of the Original Agreement. There is no basis upon which such terms may be implied or construed as contended by reason of the 'surrounding circumstances'.

150 Jafari contends that the trial judge erred in finding that the Original Agreement did not create a joint venture or partnership.

151 The Original Agreement, it was submitted, satisfied the definition of a partnership - a relationship which subsists between persons carrying on a business in common with a view of profit.[55] Jafari, after referring to the Terms Sheet, as referred to above, emphasised the following matters:

(a) The parties, the business, its goal of profit, and the shares of the parties' respective entitlement to that profit was clearly defined. His Honour erred in holding that the references to a 'profit share' were a departure from the contended basis for the partnership when they are, it was submitted, 'a badge of the partnership.'[56]

(b) The fact that the parties did not use the term 'partnership' as a label of their relationship is not determinative.[57] The label used by the parties - a 'joint venture' or 'profit share arrangement' - is in these circumstances, a partnership.[58]

(c) The law has recognised that:

(i) parties may be in partnership for a single project, rather than for some ongoing business venture;[59] and

(ii) even where a concluded agreement has not been reached, fiduciary obligations may be created by parties who are in the process of negotiation towards a joint venture or partnership.[60]

152 The respondents relied on the findings of the trial judge, submitting that Jafari has not demonstrated error in the decision of the trial judge.

153 Although the 'receipt by a person of a share of the profits of a business is prima facie evidence that that person is a partner in the business',[61] it is not determinative or conclusive.[62]

154 Just as a profit share arrangement may provide a sound basis for a joint venture or partnership, it may also be consistent with a mere contractual arrangement pursuant to which the parties have agreed to share profits. Regard must be had to the parties' contractual arrangements as a whole, as well as the admissible surrounding circumstances from which their true intention is to be ascertained.

155 In Franks v Equitiloan Securities Pty Ltd, Brereton J said:

[67] While there are undoubtedly many contexts in which an agreement to share profit can evidence a partnership or joint venture, that is not always so. Consideration of the terms of the Profit Share Agreement as a whole does not suggest that these parties intended to assume the fiduciary obligations inter se of joint venturers. In this case, the profit share was simply a different means of remunerating the financier for the risk it was assuming, and empowering it to control the project to protect its interests. The powers which were conferred on the financier in respect of the project were by way of securing its position, rather than by way of distributing responsibilities between joint venturers. I do not accept that this Profit Share Agreement imported relevant obligations of a fiduciary character. [63]

[75] Mr Gakas (on his own account) accepted Ms Salib's request for a percentage profit share arrangement as an indicator that there was a partnership - I would have been more inclined to see this as a preparedness to link remuneration to profits at a time when the business was still being established and hence perhaps more economically advantageous than a straight out salary arrangement. [64]

157 The sharing of profits is merely one of the indicia - albeit a strong one - to be taken into account. This factor may be displaced by others demonstrating that a partnership had not been intended. Within the parties' contractual arrangements, there may be, for instance, no provisions which deal with co-ownership of property, indemnity from that property, sharing of losses, rights of participation in management, the rendering of accounts, or which govern the composition of the partnership.[65] The absence of these provisions are contra indicators of a partnership. Likewise, the presence of a no partner, agency or fiduciary clause is also a contra indicator.[66]

158 The label used by parties may be indicative or supportive of a particular legal characterisation of their relationship, but is by no means determinative.[67] The true characterisation of the parties' relationship does not boil down to giving primacy to a single factor or the label they have adopted. Rather, substance is preferred to form, and as both the trial judge and Jafari identified, the question 'is determined by reference to the true contract and intention of the parties as appearing from all of the facts and circumstances relevant to the relationship of the parties.'[68]

159 The trial judge did not misapprehend these principles and did not err in their application. Jafari contends that although the trial judge had regard to the profit share arrangement, he did not attribute it sufficient weight as against the other factors that his Honour identified. His Honour erred, it was submitted, in concluding that the profit share was consistent with a mere contractual arrangement.[69] In support of this submission, Jafari highlighted a number of isolated words and phrases in the Original Agreement that possess an inherent partnership-type quality - such as 'profit share', 'contribute', 'on behalf of the project' and 'retain' - and took them out of context to then submit that a partnership had been intended. We do not accept this submission.

160 It is tolerably clear that the Original Agreement contemplated more than just a simple conveyance of the Properties. There would be, as the trial judge rightly accepted and identified, an ongoing relationship (in one form of another) envisaging the Development as its goal.

161 The profit share arrangement supported this goal as well as the contention that the parties intended to create a partnership. The trial judge recognised this, and after considering the profit share arrangement in detail concluded that, in the circumstances, it was more consistent with a mere contractual arrangement.[70]

162 We do not consider that there is any error in the trial judge's analysis. A profit share, in these circumstances, should not automatically be equated with the existence of a partnership. As both Brereton J in Franks,[71] and Ward J and Salib[72] illustrate, a profit share may be agreed for a great many reasons. It may be (as it was in those cases) used to remunerate an individual when a salary or lump sum payment is undesirable. It may also, as it is in this case, be (in part) a means of deferring the repayment of finance over an extended period of time, pending a particular event, in this case the Development.

163 Of the $1.2 million purchase price, $250,000 was to be 'paid' by way of 'vendor finance' to the Kourosh Group entities (that is, Jafari and 63 Buckley). This vendor finance was to be included in the 49 percent 'interest' in the net profit of the Development. The evidence does not establish that the profit share arrangement entitled the Kourosh Group entities to a proprietary interest in the Properties. Rather, that interest was in the net profit from the Development, if such profits ever eventuated. To secure that interest, Kourosh Group was entitled to register a third-ranking mortgage. That mortgage was the extent of any proprietary interest.[73] The profit share arrangement was not a 'badge of the partnership'. One of its purposes was to defer part of the purchase price of the Properties to a point in time when funds might be available. This is made clear by cl 2 of the Side Agreement which states, 'For clarity, this $250,000.00 amount is only repayable within any 49% net profit that Kourosh Group ... is entitled to under the [D]evelopment on the [Properties] if there is any profits.'[74]

164 Further, this particular factor, namely a share of the net profit, was balanced and considered against many others that indicated a partnership had not been intended.

165 First, there was no express term to the effect that 23 Developments would take ownership of the Properties on behalf of the partners. The Terms Sheet and First Contract of Sale stated that 23 Developments would hold the Properties in its own right and there is absolutely no qualification or reservation in that prospective holding or capacity.[75]

166 Secondly, the trial judge referred to the foreshadowed development agreement and opined, logically and correctly, that if a partnership had truly been intended the 'Further Assurance/Binding' clause could reasonably have been expected to contain further terms referable to that partnership.[76] If the parties had the foresight to require their future agreements to conform to the profit share, and that agreements be entered for the purposes of instituting the second and third-ranking mortgages, why was it that they could not require each other to negotiate a conclusive partnership agreement?

167 Thirdly, as identified by the trial judge, there were no provisions which dealt with the liability of one partner for his co-partner's dealings,[77] or for the sharing of losses.[78] Each of these is a significant matter, and their absence is indicative of a partnership not having been intended.

168 Fourthly, as to the express language used by the Terms Sheet, including terms such as 'retain', an interest 'in the project', or 'on behalf of the project' - the trial judge correctly identified that this did not support Jafari's contention. Retaining a 'profit share in the project' does not, as noted above, refer to an interest in the Properties.[79] Likewise, the reference to 'on behalf of the project' should not be construed or equated with 'on behalf of the partnership.' This is a matter that, given its significance and if intended, would have been expressly stated.[80]

169 Finally, there is also particular force in the fact that the parties' earlier proposals included references to the terms 'partner' and 'partners' whereas the final version did not. The earlier proposal was rejected by Pizarro. Jafari acceded to that rejection and removed all references to those terms. This is a very strong indication of an intention contrary to the formation of a partnership.[81]

170 Finally, the trial judge found that, in any event Jafari had failed to establish any loss for his breach of contract and other claims.[82] That finding is not sought to be appealed.

171 No error has been demonstrated and leave to appeal is refused.

Fourth proposed ground of appeal - Whether the learned trial judge erred in not holding that the Original Agreement was continued and amended to accommodate the purchase under the Perpetual Contract

172 The trial judge found that Jafari and 63 Buckley did not have 'any ability to provide clear title and vacant possession of the Properties, being the fundamental obligation under the Terms Sheet.'[83] Consequently, the Original Agreement was unable to be performed by either Jafari or 63 Buckley.[84] These findings are not in dispute.[85]

173 On 26 May 2009 the Perpetual Contract was entered into as between 23 Developments and Perpetual. The trial judge found that the Original Agreement had been terminated or abandoned. His Honour said:

[441] Shortly after the Original Agreement was executed, it became apparent that Jafari and 63 Buckley were unable to perform their obligations under that agreement. Jafari's attempt to salvage the situation came to nothing. Not only were Jafari and 63 Buckley not in a position to give clear title and vacant possession of the Properties to 23 Developments, but for the reasons set out above, material representations and warranties were untrue.[86]

[442] Because of Jafari's and 63 Buckley's inability to perform, 23 Developments was unable to purchase the Properties at the agreed sum of $1.2 million. The Original Agreement gave 23 Developments no rights as against Perpetual and no ability to acquire the Properties. Accordingly, 23 Developments was required to enter into fresh negotiations with Perpetual to have any opportunity to acquire the Properties.

[443] 23 Developments, with the full knowledge and co-operation of Jafari, chose to deal directly with Perpetual. As 23 Developments wanted to purchase the Properties, it had no choice but to adopt a completely different course with Perpetual, unhindered by any previous agreement with Jafari and 63 Buckley. By this conduct, the underlying transaction of the Original Agreement (being the sale of the Properties for $1.2 million) was terminated or abandoned. The fact that Jafari was involved in discussions with Pizarro in proposing a purchase price of $1.6 million, with that amount including 'vendor finance' from Jafari and 63 Buckley, does not alter the proper characterisation of the parties' treatment of the Original Agreement.

174 The trial judge referred to Pizarro's evidence to the effect that the new agreement was 'pretty much' a continuation of the Original Agreement and dealt with that evidence as follows:

[444] A discussion on this issue would not be complete without reference to evidence given under cross-examination by Pizarro to the effect that the lodging of the tender with Perpetual was 'pretty much' a continuation of the agreement reached by way of the Original Agreement. Pizarro agreed with the suggestion that there was an adjustment to the 'nominal price' to be paid by 23 Developments and that that 'part ... would be payable, as part of profit share, if any'. However, in giving this evidence, Pizarro also stated that at the time he realised 'I didn't have that agreement any more' and that 'the agreement we had done was not the agreement'. A short time later, when referred to the Terms Sheet, Pizarro gave evidence that 'the essence was there', but he had no agreement with Jafari as his agreement was with the mortgagee in possession. Reading the evidence fairly, Pizarro made no concession that he had reached a legally binding variation of the Original Agreement by a further agreement with Jafari, Plainly, any such concession would have been contrary to the objective evidence.

175 The trial judge concluded that these new arrangements could not merely constitute a variation:

[454] For the reasons stated in paragraphs 441 to 444 above, the Original Agreement was not varied. Rather, the parties terminated or abandoned the Original Agreement. Further, subsequent events demonstrate that any later attempts to 'vary' the (terminated or abandoned) Original Agreement to create a new agreement for the Development never resulted in a meeting of the minds.[87]

176 Jafari submitted that the Original Agreement continued after the Perpetual Agreement had been executed, with the changes necessary to accommodate the different means by which the Properties were to be and were in fact purchased. It was submitted that the trial judge had erred in:

(a) not finding that 23 Developments had elected to affirm the Original Agreement, once it learnt that Perpetual was in possession of the Properties and was exercising its power of sale. This, it was submitted, was not addressed by the trial judge.

(b) finding that the Original Agreement was terminated or abandoned, rather than amended or varied.

(c) not accepting the evidence of Pizarro to the effect that the purchase of the Properties from Perpetual was a continuation of the Original Agreement.

(d) not finding that the parties, despite not agreeing on the later detailed agreement for the development of the Properties, were bound by the Original Agreement as varied in May 2009_._

177 Jafari submitted that the parties had continued to plan and work together to achieve the object of the Original Agreement - which remained unchanged - in accordance with the subsisting planning permit and agreed amendments.

178 There was, it was submitted, no formal abandonment of the Original Agreement. Jafari obtained the tender forms, he and Pizarro discussed them and an offer price, 23 Developments completed them, and Jafari and 63 Buckley consented to the balance of the purchase price being retained as vendor finance. Further, Pizarro confirmed in evidence that the tender in May 2009 was, in effect, a continuation of the Original Agreement. Having learnt that Perpetual would not accept the First Contract of Sale, 23 Development and Pizarro did not raise an issue. Rather, they worked in co-operation with Jafari and simply adjusted the nominal price and then proceeded to lodge a tender together - as an alternative means of carrying out the agreement. It was to be inferred that 23 Developments and Pizarro acted with full knowledge of the facts and no assertion of a right to terminate. Their conduct, it was submitted, affirmed the agreement.

179 Jafari relies, in particular, on an email sent by Pizarro to Jafari on 10 September 2009. That email referred to a conversation the day before during which Jafari expressed 'fears and concerns about [his] 49% profit share in the project'. In that email, Pizarro said:

you do have an agreement which we have signed and this is enforceable in any court in this state.

180 Jafari also referred to the portions of Pizarro's evidence given during his cross-examination, to the effect that the lodging of the tender with Perpetual was 'pretty much' a continuation of the agreement reached by way of the Original Agreement.

181 The respondents submitted that Jafari has not identified the contended variation with any degree of particularity. Jafari, it was submitted, did and does not rely (either in its pleading at trial, and written case on this appeal) on any specific conversation that would constitute a variation to the effect alleged. The pleading is in the following terms:

[30] In or about early May 2009, the parties to the Joint Venture Agreement agreed to vary the agreement to the extent necessary for 23 Dev to purchase the land directly from PNL on behalf of the partnership.

Particulars

The variation was agreed orally between Jafari and Pizarro and is evidenced by the actions of the parties consistently with that variations, [sic] in jointly preparing and submitting a tender to PNL, negotiating and amending the tender; and proceeding to settle the purchase.

[30A] In or about early May 2009, the parties to the Joint Venture Agreement as varied met with Fetter to formulate their tender to PNL. On the recommendation of Fetter to the parties, the price of the land, to be offered under the tender, was reduced from the agreed value of the land to a nominal figure of $1,600,000 plus GST.

182 The respondents highlighted material differences between the Original Agreement and the Perpetual Contract - being the purchase price and vendor in each - both fundamental matters. Further, it was submitted, that the Perpetual Contract was to be read together with the Irrevocable Authority through which the vendor's lien was agreed to. When taken as a whole, there was a fundamental departure from the Original Agreement, such that the Original Agreement was no longer operative or binding on the parties.

183 The respondents also submitted that Jafari was required to overcome the trial judge's findings the subject of proposed ground 3 of this application for leave to appeal. That is, even if Jafari established that there was a variation or amendment (rather than a termination or abandonment) he would still need to establish a partnership to be entitled to the relief sought, as that relief was predicated on a partnership or joint venture.

184 The question raised by this proposed ground of appeal is whether the events, correspondence and conduct of the parties following the execution of the Original Agreement is properly characterised as a variation or as a termination or abandonment of that agreement.

185 The events following the Original Agreement evidence parties working together following their inability to complete or perform their agreed bargain comprising the Original Agreement, to progress the Development and their relationship after the setback. They clearly wanted the Development and their relationship to continue.

186 Jafari and Pizarro continued to talk, argue and negotiate but, unlike the Original Agreement, they never formally entered into or executed any further agreement notwithstanding several offers and counter offers. The proposed ground of appeal exposes the need to properly characterise this conduct. Although there is no doubt that the Original Agreement could not be performed or implemented, the question is whether the Perpetual Contract and the Irrevocable Authority effectively constitute a variation of the Original Agreement or a new arrangement or dispensation going forward unencumbered by the Original Agreement, which ceased to have any further relevance, the agreement (between different parties and containing different terms) having effectively been abandoned or terminated.

187 For reasons that follow, we are not persuaded that the Original Agreement was varied as contended. Its essential nature and critical terms could not be implemented. Jafari and 63 Buckley were not authorised to sell and were in breach of the representations and warranties they had given. The Original Agreement was at an end and new arrangements needed to be put into place. It was not envisaged that the new arrangements would exclude Jafari and 63 Buckley, but their rights and obligations were the subject of continuing discussions and negotiations.

188 It is not surprising that the new arrangements, comprising the Perpetual Contract, the Irrevocable Authority and the continuing negotiations between the parties, retained some features of the Original Agreement. However, this does not mean that there was a variation of the Original Agreement. In our view, there was not. Rather, given the changed circumstances, the parties embarked upon fresh and further negotiations in recognition of the new reality.

189 23 Developments acquired the Properties from Perpetual and not 63 Buckley and Jafari. Like the Original Agreement, the Properties were acquired by 23 Developments in its own right. Further, like the Original Agreement, vendor finance was to remain but in a higher amount. Finally, committed to the Development, the parties endeavoured to negotiate an agreement, but they never succeeded in doing so. The fact that the proposed (but never finalised) arrangements contained and retained features of the defunct Original Agreement is both unremarkable and insufficient to constitute a variation of the Original Agreement.

190 A variation is, by its very nature, a new contract which changes or extinguishes particular terms contained within an existing contract. In determining whether a variation has been effected, it is necessary to identify the ordinary requirements of contractual formation, being offer, acceptance, consideration, intention to create legal relations and certainty and completeness as to its terms.[88]

191 Parties may expressly agree to terminate or abandon a contract. Abandonment can also be inferred from conduct of the parties that makes it 'plain' that neither intends to perform the contract. They are regarded as having conducted themselves in a manner so as to abandon the contract.[89] Abandonment commonly arises from a period of time having elapsed, 'during which neither party to the contract manifests any intention to perform the contract, leading to the inference that the contract has been abandoned.'[90] By inferring abandonment, the court infers that the arrangement has been discharged as between the parties, with 'each party being entitled to assume from a long-continued ignoring of the contract on both sides that ... "the matter is off altogether"'.[91] Whether the parties have abandoned a contract is a question of fact, inferred from an objective assessment of the conduct of the parties.[92]

192 While commonly inferred by the lapse of an inordinate period of inactivity as between the parties, this is not always necessarily so. The doctrine rests on the objective intention of the parties to abandon or abrogate the contract, ascertained from their conduct and the surrounding circumstances. Accordingly, abandonment can be inferred where parties have either agreed or sought to agree on an entirely new bargain which constitutes a fundamental departure from their original bargain.[93]

193 Where a new agreement is formed, there must be a 'distinct abandonment of the old understanding so that the new agreement is to be taken as the contract irrespective of what might have been earlier agreed.'[94] While it is not limited only to circumstances in which a new agreement has been reached, the inference is more readily drawn in such circumstances.[95] Ultimately, through their conduct, the parties must have manifested an objective intention to the effect that they intended to no longer perform, and have abandoned their rights pursuant to, that original contract. There must be, in short, conduct that evidences an expression of intention by the parties that the original contract is no longer on-foot and that they are no longer bound by it.[96]

194 In Koh v Pateman, Simmonds J found that a Deed of Sale and Co-Ownership had not been abandoned and replaced by a later oral agreement between the parties.[97] His Honour concluded that while there had been a departure from the course contemplated by that Deed, it was, at most, a variation. Outlining the relevant principles, Simmonds J said:

[78] It has been said that a contract in writing, whether or not required to be in writing, may be abandoned or terminated by an oral agreement between the parties ... However, it is not clear that a contract to abandon or discharge is required ... In any event, it is clear that an abandonment or rescission of a contract may be implied where 'the parties have effected such an alteration of its terms as to substitute a new contract in its place': ['Chitty on Contracts', 29th ed (2004)] at 22-028. As that passage explains, abandonment or rescission is to be distinguished from a 'variation which merely qualifies the existing rights and obligations'. In determining which is the correct characterisation, one looks to the intentions of the parties 'to be gathered from an examination of the terms of the subsequent agreement and from all the surrounding circumstances'. The passage in Chitty (22-028) goes on (footnotes omitted):

Rescission will be presumed when the parties enter into a new agreement which is entirely inconsistent with the old, or, if not entirely inconsistent with it, inconsistent with it to an extent that goes to the very root of it. The change must be fundamental and 'the question is whether the common intention of the parties was to "abrogate", "rescind", "supersede" or "extinguish" the old contract by a "substitution" of a "completely new" or "self-subsisting" agreement".'

[79] However, while the inference of an intention to replace the former agreement with a new one will be more readily drawn where 'the new terms are so far inconsistent with the original contract as to destroy its substance', this will not invariably be drawn in such circumstances...

[80] Abandonment or termination will also be made out when a party can show that the other parties so conducted themselves as to entitle her to assume, and she did assume, that the contract was abandoned or terminated sub silentio (Chitty (supra) at 22-027)). [98]

195 In Concut Pty Ltd v Worrell,[99] the High Court (Gleeson CJ, Gaudron and Gummow JJ) confirmed that where parties to an existing contract enter into another contract, dealing with the same subject matter, the question is whether that second contract discharges or merely varies the first contract. That question is answered by discerning the objective intention of the parties. Thus in this case, the issue is whether the evidence establishes that it was the intent of the parties to simply effect a variation of the Original Agreement, or whether through their conduct, their intention was to abandon the Original Agreement, and in its stead, form (or more precisely, attempt to form) a new agreement with new rights and obligations.

196 In our opinion, the trial judge was correct in his determination that the events following the execution of the Perpetual Contract constituted an abandonment or termination of the Original Agreement, and not a variation thereof.

197 Following the execution of the Perpetual Contract, Jafari and Pizarro engaged in negotiations relating to the Development. These discussions came to nought. The following matters informed the trial judge's finding that the parties were negotiating on a completely new basis, which negotiations did not lead to a concluded agreement:

(a) On 4 September 2009, Fetter met with Jafari and Pizarro. Further amendments and proposals were discussed in relation to a new Terms Sheet. On 7 September 2009, Jafari recorded in an email to Fetter that 'you have been (for months!!!) preparing an agreement between [Pizarro] and [I] regarding the Joint venture', and suggesting that Fetter 'cut the crap' and send him the agreement.[100]

(b) On 10 September 2009, Pizarro sent an email to Jafari attaching a new proposed agreement. It included clauses entitling Jafari to a profit share[101] and to register a caveat (only after development had commenced) to secure that profit share.[102] This agreement was not executed. This was the email in which Pizarro assured Jafari as to the enforceability of the Terms Sheet. It is discussed in more detail below.

(c) Also on 10 September 2009, and despite earlier that day saying that Jafari could enforce the Term Sheet, Pizarro sent a further email to Jafari. That email attached a draft agreement which included clauses relating to the 49 per cent profit share, and for the registering of caveats by Jafari once construction had commenced. The trial judge commented on that email as follows:

[268] The covering email stated that Jafari had raised the possibility of taking money reflecting the expected profit in the Development 'to walk away now. Pizarro expressed his dissatisfaction with their ongoing arguments, including the way they spoke to each other. He invited Jafari to state an amount that he would be 'happy to walk away with if [Pizarro were] to find someone that will come in and pay you an amount that will represent part of the expected profit if the [Properties were] to be built and settle[d]'. Pizarro suggested this 'as a resolution to our differences'.

[269] Jafari did not respond in writing to Pizarro's emails. No resolution as to their differences was reached.[103]

(d) Negotiations continued into November 2009. On 25 November 2009, Jafari emailed Pizarro describing their negotiations as going 'back and forth with the agreement.'[104] He asserted that the agreement provided on 10 September 2009 did not confirm his 49 per cent interest 'in the project', his desire to retain some of the apartments, his right to lodge a caveat prior to development having commenced.[105]

(e) Around 26 November 2009, the parties disagreed on the nature of Jafari's 'interest'. Jafari maintained that he had an interest in the properties, which ought to be reflected, whereas Pizarro maintained that it was a 49 per cent interest in whatever profit resulted, after all expenses were paid.[106]

(f) On 8 December 2009, the parties engaged in an informal mediation. A 'Profit Share Agreement' with marked up changes and a further version of the Terms Sheet had been provided by Fetter the day prior and was then discussed at the meeting. A signed or concluded agreement did not result.[107]

(g) On 15 December 2009, Melbourne Legal sent an email to Fetter attaching a copy of a new agreement. This was an amended version of an agreement provided by Fetter on 7 December 2009. That agreement included clauses entitling Jafari to a profit share and to lodge caveats subject to certain conditions.[108] This agreement was not executed or agreed to as between the parties. On the same date, Pizarro sent an email to Oriti, copied to Jafari describing proposed cl 6.5 of that agreement[109] as 'totally irrational and ridiculous'. Pizarro suggested that Jafari was 'delaying the process of this unnecessary agreement' and accused him of having some unknown agenda.'[110] That email further stated:

As far as I am concerned I do not need this agreement, I know what we agreed and you as a witness know that I purchased the [Properties], based on me selling the units, [Jafari] will build it and we do the profit splits, simple.

[Jafari] needs this agreement to show someone, however this is something that came out of left field and not previously discussed or even mention[ed] and not of any concern to me. [111]

(h) On 18 December 2009, Fetter sent Needham a further agreement. Pizarro considered this to be the 'final agreement' and said that there should be no further changes.[112] Fetter invited Jafari to sign that document. He did not.[113]

(i) On 12 January 2010, Jafari, through Melbourne Legal, requested that certain amendments be made. These were rejected by Fetter.[114]

(j) The position did not change until around 16 February 2010.[115] In an email from Fetter to Needham, sent on behalf of 23 Developments, Fetter referred to Jafari having failed to execute the agreement provided on 18 December 2009 and then having sought to change the terms. Fetter stated that, accordingly, 23 Developments had 'no relationship with [Jafari] in any respect'.[116] The email referred to an earlier offer for Jafari to acquire the Properties, and said that if the offer were not accepted, the Properties would be 'sold in the open market'.

(k) On or around 24 February 2010 a letter from Fetter came to Jafari's attention. It recorded that the negotiations had broken down, no agreement had been reached and asserted that Jafari had no interest whatsoever in the Properties.[117]

(l) On 25 February 2010 Jafari personally lodged 2 caveats over the Properties, pursuant to a joint venture agreement dated 27 April 2009 - that is the Terms Sheet or Original Agreement.[118]

(m) On 3 March 2010, Fetter sent Needham an email which challenged those caveats. The trial judge described that email as follows:

[303] Fetter stated that the document (being the Terms Sheet) was a draft on the basis that Jafari and 63 Buckley were 'actually the vendor[s]'. He noted the Properties had been 'lost' to the financier and asserted that Jafari 'was never the owner or a joint venturer'. He further noted the Terms Sheet was a profit share agreement, which was succeeded by various drafts and negotiations with respect to a possible profit share (not a joint venture) 'if all the terms had been agreed'. In short, he stated there was no agreement of any kind in existence entitling 63 Buckley to register a caveat, and demanded the 2 caveats be removed by 5.00 pm the following day. [119]

198 We are satisfied that the appropriate characterisation for what occurred was a termination or abandonment of the Original Agreement and not a variation.

199 First, the terms of the Original Agreement could not be performed. The subsequent arrangements comprising the Perpetual Contract and the Irrevocable Authority represented a substantial and fundamental departure from the Original Agreement on fundamental matters. The purchase price was different. The vendor was different. The parties to the agreements were different. The nature of the profit share was still being discussed after the Original Agreement had been executed. The Irrevocable Authority was executed in recognition of this new course. In these circumstances there was to be a complete departure from the contemplated basis of the Original Agreement in order to purchase the Properties and to then get the Development on foot.

200 Secondly, Jafari has not identified, with the necessary degree of precision when or how the variation was agreed to, or its scope and ambit. Rather, it is alleged in vague terms that the new arrangements arose and simply conformed to or were superimposed upon the Original Agreement in one way or another. It is entirely unclear which terms remained, which had been superseded by subsequent agreements, and which had been jettisoned. It is not the function of the Court to engage in a term-by-term analysis of which terms could still potentially be performed, and those which were now factually irrelevant. The First Contract of Sale was, of course, wholly replaced by the Perpetual Contract. The Irrevocable Authority reflected the change in circumstances and superseded the terms of the Terms Sheet that dealt with 'vendor finance'. The Side Agreement was entirely predicated on Jafari and 63 Buckley being the vendor of the Properties. It could not be performed. Likewise, fundamental terms of the Terms Sheet were simply no longer relevant,[120] or were contingent on the critical transaction referred to in the Terms Sheet proceeding, that is the specified and contemplated sale. Other terms assumed implementation and completion of the contemplated sale on the identified terms - which sale did not take place and which assumptions turned out to be wrong.

201 Thirdly, it is difficult to consider, conceptually speaking, how a variation could be the proper characterisation for what in fact transpired. The parties to the Original Agreement were Jafari and 63 Buckley and 23 Developments. On 13 May 2009, despite Jafari's attempts, Colonial declined to accept the Original Agreement. Only Perpetual and 23 Developments (and not Jafari or 63 Buckley) were parties to the Perpetual Contract. By declining to accept the Original Agreement, Colonial (and therefore, Perpetual) unequivocally advised that it neither desired nor intended to enter legal into relations with Jafari.[121] Instead, Perpetual required the Irrevocable Authority from Jafari and 63 Buckley.

202 Fourthly, we do not consider that the email of 10 September 2009, or the evidence of Pizarro to similar effect, affects the position.

203 The evidence of Pizarro under cross-examination, to the effect that the lodging of the tender with Perpetual was 'pretty much' a continuation of the Original Agreement was adequately dealt with by the trial judge.[122] As the trial judge observed, such statements and observations are not consistent with the totality of the evidence.[123] It is entirely fair to say that 'Pizarro made no concession that he had reached a legally binding variation of the Original Agreement by a further agreement with Jafari'.[124] This is consistent with the emails from Fetter dated 16 February 2010[125] and 3 March 2010.[126] These emails adequately describe the position.

204 If, as at 10 September 2009, the parties (erroneously)[127] considered themselves bound, in some not clearly articulated or identified way, by the Original Agreement, as time went on, it was clear that the 'deal was off'. Their discussions proceeded on an entirely new basis, with proposals and counter-proposals suggested and rejected. Those discussions - which led to nothing - resulted in the parties cutting their ties and commencing proceedings in this Court.

205 The Original Agreement, as contemplated, was no longer on foot. However, the parties continued to discuss and negotiate terms that encompassed the end-goal of developing the Properties and Jafari's profit share (that is, in terms of his entitlement, rather than the precise form and formalities thereof). It is clear from the contemporaneous documents that the parties had not reached a concluded agreement with respect to the Development. This included the first stage of the Development, as contemplated by the original Terms Sheet. While the parties had arguably agreed in principle to Jafari's entitlement to a profit share, it was not on the basis originally contemplated. The parties endeavoured to formulate the precise nature and extent of the profit share - but ultimately the discussions broke down. Likewise, Jafari continued to assert a proprietary interest, a position rejected by Pizarro. The parties were unable to agree on various other matters, consisting of, inter alia, issues of valuation, Jafari's right to lodge a caveat on the Properties and remuneration for his services. The fact that Jafari continued to negotiate the profit share evidences an assumption on his part that the Original Agreement, and the profit share mechanism contained therein, was no longer performable. Pizarro considered the deal to be off and that was communicated through Fetter.

206 We are satisfied that the fundamental departure from the Original Agreement, referred to above, coupled with the course of negotiations between the parties evidences that they had, in effect, abandoned their rights and obligations under the Original Agreement. They were both acutely aware that the Original Agreement, incapable of performance, was no longer on foot.

207 In any event, as the respondents submitted, if we are wrong and a variation to the Original Agreement had been effected, the ultimate outcome does not change. Jafari's claim relies on the Original Agreement constituting a partnership thereby granting him and 63 Buckley a proprietary interest in the Properties. As found by the trial judge, and on this application, it did not.

208 In our opinion, the proposed ground is not arguable and leave to appeal is refused.

(on his own behalf and as trustee of the Essence Unit Trust)

63 Buckley Street Pty Ltd (in liq) (ACN 099 836 361)

[1] The applicant and Jafari are used interchangeably.

[2] The loan was made by Colonial First State Investment Ltd ('Colonial') as manager of a pooled wholesale fund. Perpetual was trustee of that fund.

[3] 63 Buckley was wound up on 2 August 2013. The liquidator makes no claim and did not participate in the trial. There is however an issue as to whether 63 Buckley was trustee of a trust, prior to being wound up.

[4] Jafari v 23 Developments Pty Ltd [2018] VSC 404 ('Reasons')

[5] Other than the property located at 59 Buckley Street, which was held by Jafari in his own right.

[6] The trial judge rejected the contention that 63 Buckley ever acted as trustee of the Essence Unit Trust and that it was replaced by Jafari. This finding is challenged by proposed appeal ground 5.

[7] Both in his own right and as trustee of the Essence Unit Trust.

[8] As noted, the applicant makes the claims and challenges the findings of the trial judge on his own behalf and as trustee of the Essence Unit Trust, having replaced 63 Buckley as trustee (since 2008) in 2009, well prior to its liquidation. These assertions were rejected by the trial judge.

[9] See paragraph [15].

[10] Bloomingdale Holdings Pty Ltd v 63 Buckley Street Pty Ltd [2008] VSC 168 (Hargrave J). Affirmed on appeal: Bloomingdale Holdings Pty Ltd v 63 Buckley Street Pty Ltd [2009] VSCA 297 (Nettle, Mandie and Harper JJA).

[11] The pleaded allegation in the counterclaim was 'heavily contaminated', particularised as contamination of a kind warranting further investigation as specified in a preliminary assessment undertaken by an expert (summarised at Reasons [331]-[334]): Reasons n 478.

[12] The full terms of the Terms Sheet is set out in the Reasons at [168] and is referred to in detail later in these reasons.

[14] Leaving to one side the claims made by Jafari against the third defendant, Michael Fetter (which are not relevant to this application). The issues were embodied in a list framed by the Court and agreed by the parties.

[15] Reasons [579], [580], [582]-[583].

[16] Transcript of Proceedings (21 November 2017) 223-4 ('Transcript').

[17] Consequently, even if established in 2008, there is no evidence that from that date 63 Buckley held the assets on trust rather than in its own right.

[18] See Ground 2 and paragraph [15] above.

[19] Based on the number of titles (and the proprietorship thereof) together comprising the Properties. Of course, this is a rough and ready calculation and analysis but there is no need to be more precise.

[20] A claim not made by the liquidator.

[21] [2003] HCA 48; (2003) 200 ALR 447 (Gleeson CJ, McHugh and Gummow JJ)(footnotes omitted). See also Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Market Ltd [2008] NSWCA 206; (2008) 252 ALR 659, 740-1 [464]-[466] (Giles, Ipp and Hodgson JJA); Bibby Financial Services Australia Pty Ltd v Sharma [2014] NSWCA 37 [2]-[10] (Beazley P).

[23] Reasons [544]-[545]. This was the applicable legislation at the relevant time.

[25] Reasons [545] (citations omitted).

[29] See Henville v Walker [2001] HCA 52; (2001) 206 CLR 459, 493 [106] (McHugh J); Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; (2013) 250 CLR 640, 651-2 [39] (French CJ, Crennan, Bell and Keane JJ); Westpac Banking Co v Jamieson [2015] QCA 50; [2016] 1 Qd R 495 [102] (Applegarth J). In an exceptional case, and even where the misleading conduct was a factor in the plaintiff's decision to do or refrain from doing something, or was a condition necessary for the loss to occur, the court may nonetheless refuse recovery. This may occur, for instance, where the plaintiff acts unreasonably, such that their loss falls outside of the appropriate scope of legal responsibility for the consequences of the misleading conduct undertaken by the defendant. In such a case, the defendant ought not bear responsibility for that loss because it was not 'caused' by their conduct.

[32] (1984) 157 CLR 215, 236 (Wilson J) ('Gould').

[34] See Re HIH Insurance Ltd [2016] NSWSC 482; (2016) 335 ALR 320, 334 [42], 338 [50] (Brereton J).

[35] [2009] HCA 25; (2009) 238 CLR 304, 351 [143] (Gummow, Hayne, Heydon and Kiefel JJ).

[36] The court then takes into account various normative considerations (the purpose of the statute, remoteness, intervening cause and the like) in the second stage inquiry into the attribution of legal responsibility: see, eg, Westpac Banking Co v Jamieson [2015] QCA 50; [2016] 1 Qd R 495 [99]-[103] (Applegarth J).

[37] [2006] NSWCA 37 [26]-[27] (Giles JA) (emphasis added).

[38] Reasons [545(4)], nn 504, 506, see generally Gould (1984) 157 CLR 215.

[45] [2001] HCA 52; (2001) 206 CLR 459.

[47] Reasons [178]. The terms of the Terms Sheet were set out at Reasons [168], the Side Agreement at [172], and the First Contract of Sale at [176]-[177].

[52] Reasons [412] (emphasis in original).

[53] The trial judge referred to the factors listed at [146] (1), (3), (4), (5), (9), (10), (11), (12), (13), (14), (15), (16), (17) above as examples.

[55] Partnership Act 1958 (Vic) s 5.

[56] Ibid s 6(3); Erlistoun Gold Pty Ltd v Worth Investments Pty Ltd [1999] WASCA 3 [10]-[14] (White J) ('Erlistoun Gold').

[57] United Dominions Co Ltd v Brian Pty Ltd [1985] HCA 49; (1985) 157 CLR 1, 11 (Mason, Brennan and Deane JJ) ('United Dominions').

[58] It was further submitted that in the context of the property development industry, '"joint venture" is a synonym for a partnership' - which is to be contrasted with the use of that term in the resources industry where it does not necessarily signify a partnership structure. No evidence was adduced in support of this contention at first instance. It is, in our opinion, inappropriate for it to be raised here for the first time. In any event, this submission leads nowhere, as industry practice cannot override the conclusion drawn from the Original Agreement and the admissible surrounding circumstances.

[59] Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd [1974] HCA 22; (1974) 131 CLR 321 (McTiernan, Menzies and Mason JJ); United Dominions [1985] HCA 49; (1985) 157 CLR 1, 15.

[60] United Dominions Co Ltd [1985] HCA 49; (1985) 157 CLR 1, 16 (Mason, Brennan and Deane JJ); Ravinder Rohini Pty Ltd v Krizaic [1991] FCA 318; (1991) 30 FCR 300; Erlistoun Gold [1999] WASCA [10]-[14] (White J).

[61] Partnership Act 1958 (Vic) s 6(3). See Liquor National Wholesale Pty Ltd v Redrock Co Pty Ltd [2007] NSWSC 392 [38] (Brereton J).

[62] Salib v Gakas [2010] NSWSC 505 [230]-[232] (Ward J) ('Salib'); Chickabo Pty Ltd v Zphere Pty Ltd [2019] VSC 73 [121] and n 71 (Sifris J).

[63] [2008] NSWSC 33 [67] (Brereton J) ('Franks') (emphasis added). Appeal allowed on other grounds: Equititrust Ltd v Franks [2009] NSWCA 128; (2009) 258 ALR 388 (Ipp, Macfarlan and Handley JJA). See also Smith v Wikramanayake [2007] NSWSC 136 [117] (Hammerschlag J).

[64] [2010] NSWSC 505 [75] (Ward J) (emphasis added).

[65] Geoffrey Egert, 'Defining a Partnership: The Traditional Approach Versus an Innovative Departure - Do Queensland Appeal Court Decisions Point to the Need for a Review of the Traditional Approach to Interpretation Adopted by Australian Courts' [2007] BondLawRw 5; (2007) 19(1) Bond Law Review 99, 112 citing The Duke Group Ltd (In Liq ) v Pilmer [1999] SASC 97; (1999) 73 SASR 64, 77 (Doyle CJ, Duggan and Bleby JJ). See also ASIC v Citigroup Global Markets Australia Pty Ltd (No 4) [2007] FCA 963; (2007) 160 FCR 35, 77 [280]-[281] (Jacobson J).

[66] Rozenblit v Vainer [2019] VSC 366 [235] (Sifris J).

[67] Chickabo Pty Ltd v Zphere Pty Ltd [2019] VSC 73 [93] (Sifris J). It is clear that the trial judge had regard to the label - and correctly so, did not place undue upon it. It was merely one of the indicia that he referred to. See Reasons at [414(1)].

[68] Applicant's Written Case at [11(b)] quoting Amadio Pty Ltd v Henderson [1998] FCA 823; (1998) 81 FCR 149, 172 (Northrop, Ryan and Merkel JJ). See also Reasons [414].

[69] Although, the applicant does not articulate how it is that the indicia is consistent with a partnership and not consistent with only a profit share arrangement.

[71] [2008] NSWSC 33.

[72] [2010] NSWSC 505.

[74] This further supports the conclusion reached. The phrase 'if there is any profits' demonstrates that the 'interest' was solely in the net profit, and payable only if there was a profit. Plainly, if it were a proprietary interest in the Properties, it could not be an interest that depended on profit. A 49 per cent proprietary interest is a proprietary interest regardless of the extent or degree of profit generated.

[75] Reasons [413(2)]. Further, 23 Developments was to solely contribute to pay all other agreed costs to bring the Development to construction commencement. There is no provision for an indemnity in favour of 23 Developments, either as against the 'partnership' assets or the Kourosh Group. Rather, 23 Developments was entitled to register a second-ranking mortgage over the Properties.

[79] See above [146(3), (12) and (13)]. It is, as it expressly states, a (contractual) interest in the profits only. It should be read consistently as meaning that Koroush Group would retain or be paid a profit 'arising from' the project.

[81] Reasons [413(1)], [91]-[92].

[82] Reasons [514]. Further, given our findings in relation to proposed appeal ground 5, the claim in his own right is very limited.

[85] See Written Case of the Applicants at [12].

[86] Those representations and warranties included, inter alia, Jafari's knowledge that Perpetual was entitled to exercise its power of sale as mortgagee and that Jafari and 63 Buckley had been in default under their mortgages since at least April of 2008. Neither Jafari nor 63 Buckley had 'full power and lawful authority' to execute and perform their obligations under the Terms Sheet. See Reasons [439] and n 357-9.

[87] His Honour referred to his Reasons at [258]-[298].

[88] GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50; (2003) 128 FCR 1, 63 (Finn J).

[89] Ryder v Frohlich [2004] NSWCA 472 [135] (Ipp JA).

[91] Ibid [135]. See, eg, Summer v Commonwealth [1918] HCA 33; (1918) 25 CLR 144, 151-2 (Isaacs J) referring to De Soysa v De Pless Pol (1912) AC 194.

[92] Ryder v Frohlich [2004] NSWCA 472 [136] (Ipp JA).

[93] See, eg, Paal Wilson & Co A/S v Partenreederei Hannah Blumenthal [1983] 1 All ER 34 (Lord Diplock); Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) 41 NSWLR 329; Filmana Pty Ltd v Tynan [2013] QCA 256 [49]-[67] (Muir JA); Leslie v GE Commercial Corp (Australia) Pty Ltd [2007] WASCA 65 [40] (McLure JA); Hudson Investment Group Ltd v Australian Hardboards Ltd [2005] NSWSC 716 [354]-[366] (Einstein J); Johanson v Johanson [2018] FamCA 355 [56]-[58]; Slzlasa v Provident Capital Ltd [2009] SADC 104 [49]-[53], [59]-[60] (Burley J); Provident Capital Ltd v Szlasa [2010] SASCFC 65; Barons Property Co Pty Ltd v Hughes Bros Pty Ltd (Unreported, 15 March 1990, Supreme Court of New South Wales, Cole J); Hannpost Pty Ltd v Mita Copiers Pty Ltd (Unreported, 17 May 1994, Federal Court of Australia, von Doussa J) Vanmeld Pty Ltd v Cussen (Unreported, 25 November 1994, Federal Court of Australia, Einfeld J); Jabuna Pty Ltd v Hartley (Unreported, 31 March 1994, Federal Court of Australia, Beazley J); Marmax Investments Pty Ltd v RPR Maintenance Pty Ltd [2015] FCAFC 127; (2015) 327 ALR 45, 78-80 (Middleton, Foster and Gleeeson JJ); Dickson v Gribble [2017] SADC 123 [210] (Slattery J).

[94] Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) 41 NSWLR 329, 342 (Sheller JA).

[95] A similar situation arises where the terms of the later contract operate to expressly supersede the former, or the later contract is inconsistent with the former and must necessarily rescind or terminate the former. See Hillam v Iacullo [2015] NSWCA 196; (2015) 90 NSWLR 422 [51] (Leeming, Basten and Ward JJA); Balanced Securities Ltd v Dumayne Group Pty Ltd (2017) 53 VR 14, 31-2 [78] (Whelan, Ferguson JJA and Cameron AJA).

[96] Cf Filmana Pty Ltd v Tynan [2013] QCA 256 [55]-[58], [64] (Muir JA).

[97] [2007] WASC 172 ('Koh'). Appeal allowed on a separate ground: Pateman v Koh [2007] WASCA 85 (Roberts-Smith, Pulls and Buss JJA).

[98] [2005] WASC 172 (Simmonds J) (emphasis added). Appeal allowed in Pateman v Koh [2007] WASCA 85. Referred to in Marmax Investments Pty Ltd v RPR Maintenance Pty Ltd [2015] FCAFC 127; (2015) 327 ALR 45, 78-80 [186] (Middleton, Foster and Gleeson JJ**)**.

[99] (2000) 176 ALR 693, 698-9 [19].

[101] The profit share was 'concluded' in the Original Agreement. If the parties had completed this aspect, why was it the subject of continuing negotiations and new proposed agreements.

[103] Reasons [268]-[269] (emphasis added).

[109] Cl 6.5 of the proposed agreement provided: 6.5 In the circumstances that [23 Developments] is unable to provide the necessary construction finance, then [Jafari] shall be entitled to pay to [23 Developments] the amount expended by them (sic) as detailed in the Recitals herein, together with agreed interest in complete satisfaction of [23 Developments'] right to the [Properties].

[116] Reasons [298] (emphasis added).

[119] Reasons [303] (emphasis added_)_.

[120] On a review of the Terms Sheet, the following terms could not be performed and the parties cannot, on any view, have possessed an intention (other than an erroneous subjective intention) to carry them out: those terms under the heading, 'Kourosh Group Asset,' 'Transaction,' 'Conditions Precedent', each being entirely unenforceable and fundamental to the bargain.

[121] Reasons [186], [227]. See also Reasons [223]-[224], n 147.

[127] It is entirely unclear what each of the parties thought they were bound by and in what respect, if any, consensus had been reached. Read in context the email is no more than confirmation that the parties were committed to the Development with precise terms still to be negotiated. Further, the erroneous opinion of a party as to whether there is a binding agreement is clearly not determinative and is probably irrelevant in relation to that issue.