The meeting deposed to I refer to as "the interview".
13 The male plaintiff's evidence is much more diffuse. He deposed to various conversations with Mr Capocchiano in 2002. These were to the effect that he said to Mr Capocchiano that, although he was interested in buying Lot 111, he would not be able to come up with the $255,000 and that Mr Capocchiano agreed to exchange contracts without a deposit in consideration of the plaintiffs paying interest at the rate of 7% on $245,000. As appears above, this term as to interest was included in special condition 44. In cross examination the male plaintiff adhered to the proposition that Mr Capocchiano had agreed to dispense with a deposit. The male plaintiff did not depose to being present at the interview as deposed to by Vic Cuoco.
14 Mr Capocchiano denied in his affidavit that he ever instructed the male plaintiff or Vic Cuoco that he would sell the plaintiffs a lot without the advance payment. In cross examination he denied that there was a meeting with the male plaintiff or Vic Cuoco as deposed to by Vic Cuoco.
15 As will be apparent from the foregoing, the credit of these three witnesses is of the utmost importance in determining the question of what conversations took place. None of the evidence concerning these conversations was entirely satisfactory.
16 Mr O'Sullivan, of counsel for the defendant, casts doubt on Vic Cuoco's version that there was a meeting at which Mr Capocchiano was present. He points to the absence of initials on various alterations to the contract which could have easily been obtained if he were. He claims that Vic Cuoco's recollection was vague and that his evidence was largely a reconstruction, which is likely to have created a version favourable to his own conduct in the circumstances. He draws attention to the absence of file notes relating to the interview and suggests that, if such file notes existed, they could easily have been recovered from Vic Cuoco's files that were held on subpoena in other matters in this Court or the Federal Court. On the other hand, Vic Cuoco deposed to efforts to gain access to those files, which could not be located.
17 Despite the foregoing, I was reasonably impressed with Vic Cuoco as a witness. He was responsive to questions and prepared to make concessions as to his own conduct when they seemed to be required. The level of his recollection I thought appropriate to events that took place seven years ago. Although there may have been an element of reconstruction, I thought he had a real recall of the events.
18 The evidence of the other witnesses was on a descending scale of satisfactoriness.
19 The male plaintiff talked too much, was very diffuse in his evidence and did not answer questions that were squarely put to him. I regarded his evidence as quite unsatisfactory.
20 Even less satisfactory was the evidence of Mr Capocchiano. It is true that he did face substantial difficulties in giving evidence. He has had a stroke and his speech is impaired. He gave evidence in English, but English is not his first language. But by far the least satisfactory aspect of his evidence was the manner in which he gave it. Mr O'Sullivan described his manner as vehement. I describe it as hysterical. He had fixed ideas about what had occurred and about wrongs that had been done to him. These ideas he repeated and adhered to. Even the meeting recorded in the file note he appeared reluctant to concede as having occurred, although the contents of the file note were favourable to his case. I am able to place no credit whatsoever on the evidence that he gave.
21 The question really becomes whether I am prepared to accept Vic Cuoco's account of the interview as sufficiently credible to establish that that was what occurred. Mr O'Sullivan attacked the dispensation with a deposit to be paid by the plaintiffs as inherently improbable in light of the defendant's quest for monies to be used in the development. On the other hand, I regard it as inherently improbable that Vic Cuoco would have proceeded to an exchange without deposit unless he had instructions from the defendant to that effect. In addition to my being reasonably impressed with Vic Cuoco's presentation as a witness, I regard his account of the interview as inherently probable. It is unsatisfactory that it is not directly corroborated by the male plaintiff, who is said to have been there, but my reservations as to the quality of his evidence diminish the significance of this.
22 It was pressed on me that in matters relating to a solicitor's retainer, in light of the absence of a file note, "the word of the client is to be preferred to the word of the solicitor, or, at any rate, more weight is to be given to it": per Denning LJ in Griffiths v Evans [1953] 1 WLR 1424 at 1428; and see per Young J (as his Honour then was) in AW and LM Forrest Pty Ltd v Beamish (27 August 1998, unreported) at 17. However, in my view it is not the rule that in such circumstances the client must be accepted rather than that the determination of the question must be based on a careful and objective examination of the evidence adduced: Dew v Richardson (Supreme Court of Queensland, Chesterman J, 18 August 1999, unreported) at [10]; Equuscorp Pty Ltd v Wilmoth Field Warne (No 3) [2004] VSC 164 per Byrne J at [10]. It is in accordance with this latter principle that I intend to proceed.
23 It is said that the payment of $145,000 by the plaintiffs should be taken as an indication that they regarded themselves as obliged to pay a deposit. But this payment was made some 18 months down the track. Although the word deposit was used in connection with the payment, the amount paid does not correspond with either of the sums in which the plaintiffs may have been liable to pay a deposit under the contract. Despite my difficulties with the male plaintiff's evidence in other regards, I find his account of the circumstances in which the $145,000 was paid, namely, that the plaintiffs feared the collapse of the development through lack of funds, to be inherently probable.
24 In all the circumstances I accept Vic Cuoco's evidence that the interview took place substantially as he deposed and that the requirement of a deposit under the contract was dispensed with. That evidence also supports the rectification sought. I also accept that the contract was entered into on 23 January 2003 as Vic Cuoco deposed.
25 A last objection that was taken to the establishment of the contract was that the plans that were annexed to it did not exist as at 23 January 2003. Neither Vic Cuoco nor the male plaintiff was able to say how those plans reached Vic Cuoco. Furthermore the defendant led evidence from David Yates, who was the surveyor who drew the plans. Mr Yates deposed in his affidavit that he sent the plans to Vic Cuoco on 10 March 2003. More importantly, he deposed that the plans were not created in that form before 3 March 2003. However, when he was called as a witness, he immediately said that the last piece of evidence was incorrect and that he created the plans before the end of January 2003. There are many ways other than by direct conveyance by Mr Yates the plans could have reached Vic Cuoco by the time the contract was entered into and I accept that the plans attached to the contract were attached to it at the time it was entered into.
26 Late in the day the defendant propounded defences of statutory illegality, but it turned out that the requisite statutory provisions were not in force at the relevant time. At the very heel of the hunt, during submissions after the close of evidence, the defendant attempted to propound a defence of illegality said to arise from the fact that the male plaintiff was in breach of fiduciary duties he was under towards the defendant. It does not seem to me that this was an appropriate basis for the defence of illegality at law that was sought to be put forward. It was not pleaded and the plaintiffs had no opportunity of dealing with it. I refused to allow that defence to be propounded.
27 In the result I am of the view that the plaintiffs are entitled to have the contract rectified to show a nil deposit and are entitled to specific performance of the contract as so rectified.
28 As to the claim for damages for breach of the warranty that the right of way would be removed by the time of settlement, I am prepared to order that, if it is still upon the property at that time, there should be an inquiry as to damages. I do not accept the defendant's argument that the plaintiffs' only remedy in respect of that breach is termination as provided for in the special condition: see the judgment of Palmer J in O'Sullivan v Great Wall Resources Pty Ltd [2006] NSWSC 1268.
29 I am prepared to make orders as propounded by the plaintiffs.