Metro Waterloo Pty Ltd v HWL Ebsworth Lawyers [2022] QCA 195

SUPREME COURT OF QUEENSLAND

CITATION: Metro Waterloo Pty Ltd v HWL Ebsworth Lawyers [2022] QCA 195

PARTIES: METRO WATERLOO PTY LTD / ACN 168 276 828 / (appellant) / v / HWL EBSWORTH LAWYERS / ABN 37 246 549 189 / (respondent)

FILE NO/S: Appeal No 69 of 2022 DC No 1235 of 2020

DIVISION: Court of Appeal

PROCEEDING: General Civil Appeal

ORIGINATING COURT: District Court at Brisbane – [2021] QDC 295 (Barlow QC DCJ)

DELIVERED ON: 7 October 2022

DELIVERED AT: Brisbane

HEARING DATE: 4 May 2022

JUDGES: Morrison and Mullins JJA and Mellifont J

ORDERS: Appeal dismissed.The appellant pay the respondent’s costs of and incidental to the appeal.

CATCHWORDS: APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – INTERFERENCE WITH JUDGE’S FINDINGS OF FACT – OTHER MATTERS – where the appellant retained the respondent to negotiate and draw a contract for sale of lots in an apartment complex – where the appellant intended to include a clause requiring the appointment of a particular letting agent – where the clause was not included in the final contract due to the respondent’s negligence – where the appellant was aware the clause was not in the final contract of sale – whether failure to include the clause caused loss to the appellant – whether the decision of the appellant to proceed with the contract broke the chain of causation – where the learned trial judge found that a conversation between the appellant and the respondent had occurred – whether the finding that the conversation had occurred denied the appellant procedural fairness / APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – INTERFERENCE WITH DISCRETION OF COURT BELOW – IN GENERAL – GENERAL PRINCIPLES – OTHER MATTERS – where the appellant retained the respondent to negotiate and draw a contract for sale of lots in an apartment complex – where the appellant intended to include a clause requiring the appointment of a particular letting agent – where the clause was not included in the final contract due to the respondent’s negligence – where the appellant was aware the clause was not in the final contract of sale – whether the respondent’s negligence and breach of retainer caused the loss by the appellant of a valuable commercial opportunity – whether the learned trial judge erred in his assessment of the loss – whether the decision to execute the call option deed was informed by the respondent’s negligent advice given in breach of its’ retainer / Allianz Australia Insurance Ltd v Waterbrook at Yowie Bay Pty Ltd [2009] NSWCA 224, cited / Building Insurers’ Guarantee Corporation v The Owners – Strata Plan No 57504 [2010] NSWCA 23, cited / Chand v Commonwealth Bank of Australia [2014] NSWSC 708, considered / Chand v Commonwealth Bank of Australia [2015] NSWCA 181, considered / Mallesons Stephen Jaques v Trenorth Ltd [1999] 1 VR 727; [1998] VSCA 15, considered / Medlin v State Government Insurance Commission (1995) 182 CLR 1; [1995] HCA 5, considered

COUNSEL: D P O'Brien QC, with B W Wacker, for the appellant R A Perry QC, with S M Derrington, for the respondent

SOLICITORS: McInnes Wilson Lawyers for the appellant HWL Ebsworth Lawyers for the respondent

1. MORRISON JA: The appellant (Metro) is a special purpose company, incorporated by its parent company Metro Property Development Pty Ltd (MPD) for the purpose of carrying out a high-rise residential development called “Capri”.

2. Metro engaged the respondent (HWLE) to act for it in respect of the Capri project and appointed Mr Warat as its attorney to sign sale contracts on its behalf. Ms Leacy undertook most of the work under that retainer but, at the times relevant to this appeal, she was away and Mr Warat stepped in to advise and to act for Metro.

3. MPD’s strategy with its developments was to create a special purpose company to carry out the development, and to engage a specified managing and letting agent to manage and let any remaining units, and any others that had been sold but wished to be managed. The management and letting company was called Tessa, and was associated with former employee of MPD, Mr Tutt. The arrangement was that Tessa would pay Metro a fee of $14,286 (plus GST) per unit for each appointment from a unit owner to act as the managing and letting agent.

4. Tessa would create a special purpose company for each development, each bearing a combination of the name of the building and Tessa. So, for the Capri development the management and letting company was “Tessa at Capri”.¹

5. When Capri was completed there were about 62 unsold units. Metro wished to sell most of them in one block to an unrelated company, Forum Australia Residential Partnership Pty Ltd (Forum).

6. Mr Hartman, a director of Metro, negotiated with Forum over some months to sell 54 units. They signed several expressions of interest, each superseding the previous one. As with other previous Metro developments, Mr Hartman negotiated for the inclusion of a clause designed to ensure Tessa was appointed as managing and letting agent. That was known as a “Tessa provision”.

7. One of Forum’s expressions of interest did not have a Tessa provision in it, but the first and third ones did, as did the last one (the Final EOI). Metro instructed HWLE to draw up a contract reflecting the terms of the Final EOI. It contained a Tessa provision in these terms:

“The Purchaser will have full discretion as to whether Forum Units will be offered for rent. If Forum Units are rented (“Rented Forum Units”), management is to be conducted by the current on-site manager being Tess at Capri …, for the period of [12] months following exchange of contracts. Management fees will be capped at 5.0% p.a. of gross rental receipts.

The Purchaser will retain full discretion as to whether Rented Forum Units will be offered for sale by a sales agent appointed by the Purchaser at any time following settlement.”

8. The contract of sale to Forum² was drafted by Mr Warat. It did not contain a clause reflecting the Tessa provision in the Final EOI. Before it was executed, on 8 May 2019 Mr Warat told Mr Hartman³ that there was no Tessa provision in it because the Final EOI provided that the appointment of a managing agent by Forum was in Forum’s entire discretion. That was not correct. Mr Hartman instructed Mr Warat to sign the contract notwithstanding that it did not contain a Tessa provision.

9. The contract was signed and settled. Forum did not appoint Tessa as the managing and letting agent. As a result, Metro said it lost all the fees it would otherwise have received from Tessa’s appointment.

10. Metro sued HWLE for damages in negligence and breach of contract. The learned trial judge dismissed the claim on the basis that causation had not been proved. Metro now appeals against that decision.

Grounds of appeal

11. The grounds of appeal focussed on four areas:(a)the learned trial judge erred in finding that a conversation, asserted by Mr Warat to have occurred with Mr Hartman, occurred at a date later than 8 May 2019, or occurred at all;(b)in finding that the conversation occurred later than 8 May 2019, the learned trial judge denied procedural fairness to Metro;(c)it should have been found that the decision by Mr Hartman to instruct Mr Warat to execute the call option deed was not Metro’s independent and informed decision, but rather a decision informed by HWLE’s negligent advice given in breach of the duties under its retainer;(d)it should have been found that HWLE’s negligence and breach of its retainer caused the loss by Metro of a valuable commercial opportunity; and(e)the learned trial judge erred in his assessment of the loss, and should have assessed that loss at $408,579.60 (inclusive of GST).

12. For the reasons which follow that appeal must be dismissed.

Unchallenged factual findings

13. The negotiations between Metro and Forum for the sale of the unsold units in Capri started in January 2019. Metro, through Mr Hartman, sought confirmation from Forum that the units would be managed by Tessa.⁴

14. On 14 February 2019, the first expression of interest was executed. It recorded the proposed sale of 58 residential units in Capri and 11 residential units in another development.⁵ It commenced with the following words:⁶

“The terms set out in this offer document are for reference only and do not in any way constitute a legally binding offer, agreement or a commitment to enter into any transaction. … The actual terms and conditions upon which Forum … might undertake the transaction are subject, in the sole discretion of Forum, … to satisfactory completion of due diligence, credit approval and satisfactory review of documentation”.

15. That EOI contained a Tessa provision.⁷ The Tessa provision was drafted by Forum in response to Metro’s request that Forum appoint the onsite manager.

16. A few days later Metro asked Forum to separate the first EOI into two EOIs, one dealing with Capri and one for the other development. That was done and Forum provided, and the parties signed, an EOI relating solely to Capri (Capri EOI). The Capri EOI included the non-binding statement but did not include a Tessa provision.⁸ Metro instructed Ms Leacy of HWLE to prepare contract documents. That was done and, consistently with the Capri EOI, the contract did not include a clause reflecting the Tessa provision.⁹

17. On about 1 April 2019, Forum informed Metro that it would no longer proceed with the purchase. However, on 18 April 2019 it provided another expression of interest to Metro in respect of Capri. That document (Revised EOI) included a non-binding statement and a Tessa provision.¹⁰

18. Mr Hartman forwarded the Revised EOI to Ms Leacy and Mr Warat, but did not instruct them to do anything at that stage. The Revised EOI led to further negotiations.¹¹

19. On 29 April 2019 Forum provided another expression of interest, the final EOI. It was to purchase 49 units. It included the non-binding statement and a Tessa provision.¹²

20. On 30 April 2019 Mr Hartman sent an email to Mr Warat and Ms Leacy attaching a copy of the executed final EOI. In the email he instructed Mr Warat to “provide contract ASAP for execution on terms as agreed.”¹³ Mr Hartman sent a message to Mr Warat informing him that he (Mr Hartman) was to fly to the USA three days later and expressing his eagerness to have the contract signed within two days.¹⁴

21. Mr Hartman travelled to the USA on 3 May 2019, returning on 10 May. No contract was ready to be executed by 3 May, as there were negotiations between the opposing solicitors on a range of issues. Some of the issues concerned whether the contract would be a straight sale, or a call option deed as opposed to a put and call option deed, and as to the terms of special conditions. Mr Warat emailed some of the draft documents to Mr Hartman, though Mr Hartman said he did not review them. There was no evidence of any mention of a Tessa provision in the course of the negotiations between the solicitors.

“(a) At 5:54pm (3:54am United States Eastern time), Mr Hartman received an email from Mr Warat that:

(i)attached a copy of the execution page (only) of the call option deed;

(ii)identified the “main conditions” of the call option deed, which were limited to the call option period, settlement date, deposit, buyer, nominee, price, GST and guarantees; it did not refer to a Tessa provision; and

(iii)sought instructions to sign the call option deed under the Power of Attorney.

(b)At 5:58pm (3:58am United States Eastern time), Mr Hartman responded to Mr Warat’s email seeking confirmation that the call option deed included a provision consistent with the Tessa provision. Mr Hartman deposed that he asked this because:the issue of the management rights, and specifically receiving the Appointment Amounts under the management rights and business procurement agreement between Metro and Tessa (MRBPA), was important to the plaintiff for the reasons he outlined [in] his affidavit; andit was, for that reason, the most crucial part of the Forum deal (aside from the purchase price itself).

(c)At 6:01pm (4:01am United States Eastern time), Mr Warat replied to Mr Hartman stating that the call option deed did not include a provision consistent with the Tessa Provision because the Final EOI provided that the appointment by Forum of Tessa was in Forum’s entire discretion.

(d)At 6:02pm (4:02am United States Eastern time), Mr Hartman responded ‘OK. Please sign under PoA’;

(e)At 6:06pm (4:06am United States Eastern time), Mr Warat sent an email to Mr Hartman attaching the Final EOI and asked, ‘Please approve signing under POA.’

(f)At 6:11pm (4:11am), Mr Hartman responded ‘Please proceed to sign under PoA’.”

24. Late in the evening of 8 May 2019, Mr Warat received, from Forum’s solicitors, a copy of the call option deed executed by Forum. He executed the deed under his Power of Attorney from Metro and returned it to Forum’s solicitors.¹⁸ Forum exercised its call option and signed the sale contract on 30 May 2019. Settlement occurred on 7 June 2019, when Forum acquired 54 units in Capri.¹⁹

25. The final contract as executed contained a provision stating:²⁰

“The Buyer acknowledges that, as at the Contract Date, … there is no obligation on a buyer of an apartment to make their apartment available to the Seller or Letting Agent for letting to prospective tenants.”

Forum appointed McGrath as letting agent

26. On 6 June 2019, Mr Hartman was informed that Forum had appointed “McGrath” as its national portfolio manager and that McGrath would reach out to Tessa post settlement to discuss the units going into the pool.²¹

27. On about 6 June 2019, Forum entered into a “services agreement” with McGrath Sales Pty Ltd, a real estate agent. The agreement dealt not only with units in Capri, but also with units in two other buildings. It anticipated that Forum and McGrath would enter into a separate rental management agreement for any lot that Forum decided to lease after acquiring it. For leased lots, McGrath would charge a letting fee of one weeks rent for securing each tenancy, and a management fee of 5% of the weekly rent collected by it.²²

28. The agreement anticipated that Forum would appoint McGrath as letting agent in respect of lots to be acquired by Forum. It did not prevent Forum appointing another agent instead of McGrath. The parties agreed that, subject to any relevant sales agency agreement or management agency agreement between them, McGrath would provide the services under each agreement in consideration of Forum paying the fees set out in the services agreement. Those fees included the management fee of 5% of the weekly rent.²³

29. A schedule to the services agreement showed that Forum’s intention, in late June 2019, was to let out only 32 of the 54 units it was about to acquire from Metro. It intended to sell the remaining 22.²⁴

30. On 23 September 2019 Forum actually appointed McGrath as its letting agent for the units in Capri. Until then it had been open to Forum to appoint a different letting agent, including Tessa.²⁵

Arrangements between Metro and Tessa

31. In January 2018 Metro and Tessa entered into the MRBPA under which Metro agreed to procure, and Tessa agreed to accept, the engagement of Tessa by the body corporate as the manager and letting agent for Capri. The body corporate for Capri later appointed Tessa as the manager and letting for the building.²⁶

32. Under the MRBPA Tessa agreed to pay Metro $14,286 plus GST for each appointment it received from a unit owner to act as the owner’s letting agent in relation to a lot. By clause 9.10, Tessa was prohibited from seeking appointments that charged owners a combined commission and management fee of more than 8% plus GST of the rental payable. Otherwise, the terms of a letting appointment were within Tessa’s discretion.²⁷

33. Tessa’s normal rental management fee was 8% of the gross rent received. On three occasions, where it was appointed (by one owner at a time) as letting agent (for 8 units, 5 units and 5 units respectively), it agreed to reduce that rate to 5%.²⁸

Would Tessa have accepted appointment at 5%?

34. The learned trial judge made a number of findings which were relevant to whether Tessa would or would not have accepted an appointment from Forum at a commission rate of 5%. Those findings are below.

35. In October 2018, Mr Hartman and Mr Tutt exchanged emails where Mr Hartman was proposing a discussion concerning the balance of 62 units in Capri, and a management rate of only 5%.²⁹

36. Then in March 2019 Mr Hartman sent an email to Mr Tutt and others in relation to the question of leasing up to 58 available units. He asserted a position by Mr Tutt that Mr Tutt would assist with the transaction by managing the units for 5%.³⁰ By way of response, Mr Tutt emailed Mr Hartman on 14 March 2019, in which he advised that his bank (the CBA) “cannot fund purchase of management rights to one buyer and need rate to be a minimum of 7% plus GST.”³¹

37. A discussion followed between Mr Hartman and Mr Tutt, evident in another email by Mr Tutt on 14 March 2019, in which he said:³²

“… The key issue we have is CBA and the fact they won’t fund multiple lots of this volume to one owner. What the value is now verse what the value was when we agreed to buy these lots is very different. …

As per below we are not able to take agreements below 8%, I believe I can get them to agree to 7 plus GST% but we will need to submit. For smaller deals eg 3 or 4 lots we can do special deals like we have done before. If they buy in smaller entities or spread out vehicles of ownership this could be a solution.”

38. Eventually Mr Hartman responded acknowledging “You are unable to pay for balance appointments if a bulk sale … You also can’t offer 5% management fees”.³³

39. The following day Mr Tutt sent an email to Mr Hartman seeking to know the best solution, and Mr Hartman emailed his fellow directors, advising them:³⁴

“[Mr Tutt] … has rung and advised that CBA his bank won’t fund him to pay for appointments of a bulk buyer in one line for balance stock.

No problems if individual buyers.

–I have advised him agreement is clear that if appointments are as per contract that he has to pay Metro.

–He disagrees and saying is a substantial risk as one buyer would walk out door and he loses 55 managements.

…

Lack of funding/finance is no doubt causing this issue.”

40. A day or so later Mr Tutt advised Mr Hartman “There is zero value to any management sold to a bulk buyer”.³⁵

41. There was no commitment, nor even a preliminary indication, that Tessa would accept a 5% commission to manage a large number of units “in one line”.³⁶ However, as a result of advice received from Ms Leacy, Mr Hartman believed that Tessa was obliged to accept appointments from Forum, even at a commission rate of 5%.³⁷

42. On 24 April 2019 Mr Woodley (a director of Metro) sent an email to his fellow directors saying:³⁸

“Tessa has spoken to [Mr Hartman] about the problem he could have with his bank arranging finance on the balance of the units because of the bulk buyer being involved in the purchase. I am aware that [Mr Hartman] has spoken to [Mr Tutt] regarding this and was adamant that Tessa must settle. However, a question mark hovers over this issue whether Tessa can’t settle or alternatively Forum might elect to place the Management rights elsewhere.”

43. By 20 March 2019 it was clear to Mr Hartman that, if Forum were to buy the remaining units in Capri, it was unlikely that Tessa would agree to take on management of any substantial number of those units at a 5% commission. Therefore, it was, at most, only at remote possibility that Tessa would be able to accept appointments and to pay an appointment amount for so many appointments by one owner.³⁹

44. By March 2019 Tessa was clearly not interested in being appointed to manage a large number of units for one owner, especially at a rate of 5%.⁴⁰ The value of appointments for multiple units at 5% was much less than that of one or a few appointments at Tessa’s normal fee of 8%.⁴¹

45. Tessa’s obligations under the MRBPA did not oblige it to accept appointments in numbers and at commission rates that would be inadequate for its commercial purposes. In particular, they did not require Tessa to offer or to accept appointments at a commission rate of 5%, nor to offer or accept appointments for multiple units owned by one person.⁴²

46. Tessa would not have been in breach of its obligations under the MRBPA by not accepting any appointment offered to it by Forum for multiple units, especially at a commission rate of 5%. Forum was looking to appoint a letting agent at a 5% commission, as had been proposed in the Tessa provision in the final EOI: see paragraph [7] above. Ultimately it appointed McGrath at that rate.⁴³

47. Even if the actual appointments were staggered over, say, 12 months (in accordance with McGrath’s letting schedule), for Tessa to be appointed as agent for all those units over that period would result in Tessa being the letting agent of many units held by one owner, and therefore at risk of losing the agency of all those units over the following 12 months (as the appointments were only required to be for 12 months). That risk, which was the predominant factor in the reluctance of Tessa and its bank to accept a large number of appointments from one owner, would therefore still arise.⁴⁴

48. It was inevitable that if Forum had offered a letting agency to Tessa for all its units, Tessa would have declined. There is a reasonable possibility that Tessa would have offered to accept appointments for a few of the units. Tessa had been willing to accept appointments for up to 8 units at 5% commission in the past and appeared to accept that such an arrangement had sufficient value, whereas above 10 units was too risky a proposition. Forum would not have agreed to appoint Tessa at a higher commission rate than 5%. Forum may have considered letting out 32 units at most, and that was the practical limit on the number of possible appointments of Tessa by Forum. However, Tessa would not have accepted an appointment to more than 10 units, given its view and that of its financier of the uncommercial risk and value of taking more than that number of appointments from one owner.

Ground 1 - the disputed conversation

49. Metro attacked the findings by the learned trial judge concerning a conversation which Mr Warat said he had with Mr Hartman on 8 May 2019. Mr Warat said that the conversation was “during, or around the time of, the exchange of emails” (which took place between he and Mr Hartman on 8 May 2019). The terms of the conversation were stated in Mr Warat’s affidavit:⁴⁷

“Sometime during, or around the time of, the exchange of emails discussed in paragraph 32 above, I received a telephone call from Mr Hartman during which:

(a)we discussed the fact that the Tessa Provision had not been included in the Sale Documents; and

(b)he stated words in substance of which were:he was prepared to continue on and execute the Sale Documents without the Tessa Provision, because Metro’s priority was getting the Forum Lots sold;receiving any payments from [Tessa] under the MRBPA concerning the lots being sold to Forum would be a ‘bonus’.”

50. Mr Hartman denied that there was such a phone call, saying that he only used his mobile telephone to make and receive telephone calls and his mobile phone records showed that he did not make a phone call to Mr Warat’s office or mobile number on 8 May 2019.⁴⁸

51. The learned trial judge gave separate consideration as to whether the call occurred, and whether it was as Mr Warat said. That required a determination about whether to accept some or all of Mr Warat’s evidence, or that of Mr Hartman.

52. His Honour reviewed the evidence of each witness, looked at the significance of the fact that Mr Warat did not have a file note of the conversation, examined the state of the pleadings with respect to the allegation of the conversation, and the nature of the evidence given orally by each of Mr Warat and Mr Hartman. The learned trial judge found Mr Warat to be a forthright and apparently honest witness. Further, his Honour considered it was unlikely that Mr Warat would lie or exaggerate in giving his evidence, nor could he see any reason for him to have made it up. Finally, his Honour did not consider that Mr Warat had inadvertently reconstructed his evidence about the conversation.⁴⁹

53. On the other hand, the learned trial judge made adverse findings concerning the reliability of Mr Hartman’s evidence. Specifically, his Honour concluded that Mr Hartman’s evidence generally demonstrated that he had no recollection of conversations with anyone about matters the subject of the proceedings.⁵⁰ The principal basis for that conclusion was an assessment of Mr Hartman’s evidence concerning the email exchanges with Mr Tutt, and Tessa as to Tessa’s willingness or otherwise to accept a management fee of only 5%.⁵¹ In that respect the learned trial judge rejected Mr Hartman’s evidence, finding that it was the fact that:

(i) he could not recall any relevant discussions with Mr Tutt between October 2018 and March 2019;

(ii) he did not mention (presumably because he could not recall) any discussion between them on 14 March or around 19 March 2019; and

(iii) he could not recall any discussions with his fellow directions about that issue; and

(iv) Mr Hartman had no recollection of any discussions but rather had relied upon emails to which his attention was drawn when preparing his affidavit and his oral evidence.⁵²

54. Whilst an attack was mounted upon the finding in paragraph [83] of the reasons below, there was an ample evidentiary basis for the learned trial judge to make the findings he did. His Honour’s assessment was based upon the evidence given by Mr Hartman, both in his affidavit and orally. Given that the trial was in 2021, and the events being discussed were some two to three years prior to that, it is unsurprising to find that a witness’s recollection was drawn from the written record, rather than an independent recollection. The learned trial judge’s conclusion that Mr Hartman’s evidence rejecting the call could not be relied upon, was one open to his Honour.

55. Ultimately the learned trial judge accepted Mr Warat’s evidence that he and Mr Hartman had a conversation to the effect described in paragraph [49] above.

56. However, whilst his Honour concluded that Mr Warat and Mr Hartman had a conversation to that effect, the learned trial judge was not satisfied it took place on 8 May 2019. In that respect his Honour pointed to the absence of any telephone records which demonstrated, on the balance of probabilities, that it did not occur in that timeframe.⁵³

57. His Honour went on to find that it was likely that a conversation to that effect occurred after Mr Hartman returned from the United States of America, and probably in the context of Forum having told Metro that it had appointed McGrath as its national portfolio manager. That led to his Honour’s ultimate conclusion that the conversation did occur, but at a later date than 8 May 2019.⁵⁴

58. In my view, it was open to the learned trial judge to make a finding that the conversation did occur. It involved a resolution of the competing versions of two witnesses, with Mr Warat saying there was such a conversation, and Mr Hartman denying it. The resolution of that contest involved findings by the learned trial judge based upon the reliability and credibility of the evidence. It was open to his Honour to reject Mr Hartman’s denial, and consequently accept that such a conversation occurred.

59. Contrary to the submissions of Mr O'Brien QC and Mr Wacker, appearing for Metro, the disputed conversation was not the foundation for his Honour’s finding that Mr Hartman did not consider the existence of the Tessa provision to be of great importance.⁵⁵ It was part of the basis for that finding but other matters were at the heart of the finding. They include Mr Hartman’s alacrity in directing Mr Warat to sign without a Tessa provision, Metro’s assessment of its risk in a falling market for the sale of units, and what Metro saw as the urgent need to sign Forum up as quickly as possible.

Ground 2 - denial of procedural fairness?

60. Metro contended that it had been denied procedural fairness because the learned trial judge had not foreshadowed that he might find that the conversation occurred, but not on 8 May 2019. That contention must be rejected for a number of reasons.

61. First, the pleadings made such a conclusion possible. Metro’s pleading set out the email exchanges on 8 May 2019 and the allegation that Metro relied upon Mr Warat’s advice when it authorised the signing of the deed.⁵⁷ The defence admitted that the emails were sent as pleaded but asserted that Metro knew that the Tessa provision had not been included in the final documents.⁵⁸ Further, paragraph 31(d) alleged that on 8 May 2019 Mr Hartman told Mr Warat, in a telephone call, that he knew the Tessa provision was not included in the documents, but he was prepared to continue with them because the sale of Forum units was of primary importance.⁵⁹

62. In response to that, paragraphs 21 and 22 of the Amended Reply⁶⁰ admitted that Metro knew that the Tessa provision had not been included in the documents and affirmatively pleaded that Metro’s knowledge that it was not in the documents “was informed by” Mr Warat’s erroneous advice that the appointment of Tessa was in Forum’s entire discretion. It was also pleaded that part of the reason why Mr Hartman was prepared to have Mr Warat execute the sale documents was because of Mr Hartman’s erroneous belief that the Tessa provision as contained in the final EOI “was a binding obligation” between Metro and Forum.⁶¹

63. Paragraph 3 of the Rejoinder,⁶² pleaded, inter alia, that Mr Hartman knew that there was no Tessa provision in the sale documents and made a deliberate, freely made and informed decision to instruct Mr Warat to execute the contract notwithstanding that knowledge.

64. Therefore, whether Metro, through Mr Hartman, made a deliberate, freely made an informed decision was in issue. Though the conversation was not admitted, it was but part of the evidence going to that issue.

65. Secondly, Mr Warat’s affidavit containing his evidence as to the conversation, and that it occurred “during, or around the time of, the exchange of emails” on 8 May 2019 was filed on 7 July 2021. Mr Hartman responded with his own affidavit on 26 July 2021, in which he denied that the phone call deposed to by Mr Warat had occurred.

Attack on the findings against Mr Hartman

71. Metro criticised the learned trial judge’s findings that Mr Hartman demonstrated that he had no recollection of conversations with anyone about matters the subject of the proceeding and appeared to accept that a conversation occurred only if it was clearly referred to in a note or email.⁶⁹

72. The contention was that, in making that finding, the learned trial judge impermissibly relied upon evidence adduced in that part of the cross-examination which was subsequently ruled irrelevant and excluded.⁷⁰

73. In my view, this contention must be rejected. There are several reasons for that conclusion.

74. First, the learned trial judge expressly directed attention to the evidence upon which he relied for his finding in footnote 65 to the reasons. That gave, as an example, the discussion in paragraphs [35]-[46] of the reasons below, concerning the email exchanges between Mr Hartman and Mr Tutt. When one turns to those paragraphs, one finds a faithful recitation of the email exchange, then followed by a reference to Mr Hartman’s evidence by affidavit. In that affidavit he said that he could not recall any discussions with his fellow directors on the particular issue in the email chain, following the final email.⁷¹ Further, paragraph [35] of the reasons refers to evidence by Mr Hartman of his inability to call discussing a critical issue with Mr Tutt. That issue was whether Tessa was prepared to accept appointments at a rate of 5% commission.

75. The learned trial judge made it plain in paragraph [45] of the reasons that he rejected Mr Hartman’s evidence to the effect that he believed that Tessa had committed to accepting appointments at 5% commission. Having explained why, his Honour went on to make the finding that it was “clear, from the facts that he could not recall any relevant discussions with Mr Tutt between October 2018 and March 2019, he did not mention (presumably because he did not recall) any discussion between them on 14 March or on 19 March 2019 and he could not recall any discussions with his fellow directors about this issue, that Mr Hartman has no recollection of any discussions, and in preparing his affidavit and in his oral evidence, he relied solely on the emails to which his attention was drawn”.

76. That is the evidentiary basis referred to for the finding in paragraph [83] of the reasons. In none of that evidence does one find any reference to that part of the cross-examination which was ruled irrelevant.

77. Secondly, it is incorrect to say that the only evidence where Mr Hartman sought to rely on emails to recall conversations was during the struck-out irrelevant evidence. That might be the case in oral evidence, but it was not the case in his affidavit evidence, which is the basis for the learned trial judge’s finding. It is therefore wrong to say that once the irrelevant cross-examination was excluded, there was no evidence regarding conversations which Mr Hartman could not recall.

Ground 3 – break in the chain of causation

80. The learned trial judge found that HWLE was negligent and in breach of its duties under its retainer to Metro in two ways: (a)in failing to include a Tessa provision in the agreement with Forum, contrary to Metro’s instructions;⁷⁵ and(b)when asked by Mr Hartman, “Can you confirm clause for management rights/can we put Tessa or equivalent manager”, Mr Warat negligently advised Metro that he did not include a “clause for management rights” because “the letter of offer said it was in their entire discretion”.⁷⁶

81. Mr Warat’s reference to the “letter of offer” was a reference to the Final EOI. Mr Warat acknowledged that the advice he gave was incorrect, and said it resulted from his misreading the Tessa provision in the Final EOI.

82. However, the learned trial judge found that Metro entered into the option deed with Forum as a result of Mr Hartman’s conscious decision to do so, knowing that: (i) the contract contained no Tessa provision, and (ii) Forum had no obligation to appoint Tessa. The decision by Mr Hartman, despite the incorrect advice and knowing that the sale contract did not include a Tessa provision, was Metro’s own considered decision and thus the chain of causation was broken.⁷⁷

83. In order to assess this ground of appeal certain aspects of the factual background must be recalled: (a)since 2014 Metro had used a Tessa provision in its contracts to ensure that Tessa was engaged as the managing and letting agent for units;(b)on each occasion where Metro completed a development, Tessa and the relevant Metro special purpose company entered into a management rights and business procurement agreement, under which Metro’s company agreed to arrange for the body corporate to appoint the Tessa company as the building manager and letting agent;⁷⁸(c)the first EOI executed by Forum contained not only a Tessa provision but also the non-binding statement: see paragraph [14] above.(d)the final EOI contained a Tessa provision and the non-binding statement;⁷⁹(e)by March 2019, Mr Tutt was in the position that his bank would not fund the purchase of management rights where it involved multiple lots to one owner, nor would the bank fund such a purchase if the management rate was below 7% plus GST;⁸⁰(f)Metro, through Mr Hartman, knew the matters above;(g)by March 2019, Mr Hartman did not have a belief that Tessa was committed to taking appointments from Forum at 5% commission;(h)however, Mr Hartman believed that Tessa was obliged to accept appointments from Forum, even at a commission rate at 5%, if a contract was made with Forum that contained a Tessa provision at 5%;(i)when Mr Warat sent the documents to Mr Hartman in the USA, Mr Hartman did not read them, but asked “can you confirm clause for management rights/can we put Tessa or equivalent manager”;(j)Mr Warat answered by email:

“No clause for management rights.

I did not include one as the letter of offer said it was in their entire discretion”.⁸⁴

(k)one minute later Mr Hartman responded, “Ok. Please sign under PoA”;⁸⁵

(l)four minutes later Mr Warat sent an email to Mr Hartman attaching the final EOI; he said, “See attached EOI letter … Please approve signing under POA”;⁸⁶ and

(m)five minutes later Mr Hartman responded, “Please proceed to sign under PoA”.⁸⁷

84. Sometime around 10 May 2019, Mr Warat and Mr Hartman had the conversation in which they discussed the fact that the Tessa provision had not been included in the sale documents and Mr Warat said:(a)he was prepared to continue on and execute the sale documents without the Tessa provision, because Metro’s priority was getting the Forum lots sold; and(b)receiving any payments from Tessa under the MRBPA concerning the lots being sold to Forum would be a “bonus”.

85. Metro challenged the findings by the learned trial judge on causation, contending that the inclusion of the Tessa provision was plainly of importance to Mr Hartman, as it was the only provision he queried when provided with a list of the “main conditions” by Mr Warat. The learned primary judge did not find that Mr Hartman disregarded the advice as to why the Tessa provision was not in the contract nor was there a finding that Mr Hartman’s enquiry was not genuine. Further, it was contended that if HWLE had acted in accordance with Metro’s instructions, and without negligence of breach of its retainer, there would have been no opportunity for any discussion about the inclusion or effect of the Tessa provision, nor any occasion for Mr Hartman to have to consider whether he would instruct Mr Warat to proceed even though the Tessa provision had not been included. Then it was contended that if Mr Warat had not given the erroneous advice, but instead had simply said that he had not included the Tessa provision, Mr Hartman would have told him to include the provision in the sale documents.

86. It was also submitted that the decision by Mr Hartman to proceed with the transaction was one informed by the erroneous advice given by Mr Warat, and therefore was neither free nor informed. There was no challenge to the fact that Mr Hartman relied on Mr Warat to advise him, and no evidence that Mr Hartman knew that Mr Warat’s advice was negligent, or that Mr Warat was negligent in not including the Tessa provision.

87. It was said that it was an exception to the general rule that a free, deliberate and informed act negatives a causal connection, where the defendant’s duty was to guard against the very act that occurred.⁸⁸

88. Finally, it was said that there was no evidentiary basis to find that Mr Hartman did not raise any concerns about the Tessa provision not being in the sale contract and did not consider the existence of a Tessa provision to be of great importance. The contention was that Metro’s decision to execute the transaction documents was not a free and informed decision, but rather a decision that resulted in the negligent acts in breach of duty under the retainer.

89. In my view, these contentions must be rejected. I explain below why that is so.

90. First, the Final EOI contained the non-binding statement, as did all the others. The learned trial judge specifically rejected Mr Hartman’s evidence to the effect that he had a belief that the Final EOI was binding. Therefore, Metro could not compel Forum to agree to the inclusion of a Tessa provision. Notwithstanding that the learned trial judge found that if such a clause had been included in the draft contract Forum would have agreed to it. The basis for that finding, it seems, was simply that Forum had previously agreed to the inclusion of a Tessa provision in the EOI’s.

“If, in such a case, it can be seen that the necessary causal connexion would exist if the intervening act or decision be disregarded, the question of causation may often be conveniently expressed in terms of whether the intrusion of that act or decision has had the effect of breaking the chain of causation which would otherwise have existed between the breach of duty and the particular loss or damage. The ultimate question must, however, always be whether, notwithstanding the intervention of the subsequent decision, the defendant’s wrongful act or omission is, as between the plaintiff and the defendant and as a matter of commonsense and experience, properly to be seen as having caused the relevant loss or damage. Indeed, in some cases, it may be potentially misleading to pose the question of causation in terms of whether an intervening act or decision has interrupted or broken a chain of causation which would otherwise have existed. An example of such a case is where the negligent act or omission was itself a direct or indirect contributing cause of the intervening act or decision.”

107. In the present case there were two negligent acts found by the learned trial judge. The first was that the clause was left out of the draft contract. The second was when Mr Hartman asked, “can you confirm clause for management rights/can we put Tessa or equivalent manager”, Mr Warat answered that there was no clause in the contract because the Final EOI said it was in Forum’s entire discretion.

108. That the clause was left out was not an act of which Mr Hartman was aware or about which he was concerned when he asked the question. The Final EOI contained such a clause and instructions had been given to HWLE to prepare contracts on that basis. Mr Hartman had not looked at the contract when it was sent to him on 8 May 2019 and was therefore unaware that the clause had been left out. Therefore, his question to Mr Warat was not out of some concern, but more importantly it was not in response to a negligent act.

109. The answer from Mr Warat contained two parts. The first was that there was no such clause in the contract. The second was to explain why that was so. Mr Warat said the reason there was no clause in the contract was because the Final EOI “said it was in their entire discretion”. Whether that be characterised as advising what the words said, or alternatively how the words should be construed, the advice was wrong, as the learned trial judge found.

110. The intervening act was Mr Hartman’s subsequent direction to proceed without the clause. Mr Hartman had a choice once he knew that the clause was not in the contract. He could insist that it be put in or go ahead without it.

111. Whatever the characterisation, Medlin establishes that the ultimate question must always be whether, notwithstanding the intervention of the subsequent decision, the negligent act is properly to be seen as having caused the relevant loss or damage, as a matter of common sense and experience. That is where, for the reasons expressed above, Metro’s case fails. Given the findings about Mr Hartman’s experience, acumen and understanding of the nature of the Final EOI, as well as the nature of the Tessa provision, Mr Hartman’s decision to proceed without attempting to have the clause inserted in the contract prevented its omission from being seen, as a matter of common sense and experience, as having caused the loss. Knowing the clause was not there, Mr Hartman elected to proceed. As the learned trial judge found, there were compelling reasons for him to take that course. Those reasons were reflected in findings of fact about the commercial judgment Metro made in relation to the necessity to get Forum signed up before the market dropped and Metro’s risk increased. Mr Hartman’s decision was, therefore, taken on the basis of Metro’s own considerations and despite what Mr Warat had told Mr Hartman.

112. In Allianz Australia Insurance Ltd v Waterbrook at Yowie Bay Pty Ltd. The New South Wales Court of Appeal said:

“[106] Traditionally, it is generally accepted that the free, deliberate and informed act or omission of a human being negatives causal connection: … The rule was expressed by Lord Sumner in his speech in Weld-Blundell v Stephens [1920] AC 956 as follows: (at 986):

‘In general … even though A is in fault, he is not responsible for injury to C which B, a stranger to him, deliberately chooses to do. Though A may have given the occasion for B’s mischievous activity, B then becomes a new and independent cause’.

A case where the plaintiff knowingly and deliberately decides to act in a way that causes himself or herself injury, is an a fortiori situation.

[107] There are exceptions to this rule. The intervening act will not break the chain of causation if the contractual duty of which the defendant is in breach was to guard against the very act that occurred: Alexander v Cambridge Credit Corporation Ltd at 361 per McHugh JA …”.”

113. In my view, Allianz does not assist Metro. There was no alleged retainer on the part of HWLE to guard against Mr Hartman deciding to proceed without a Tessa clause in the contract. That is the relevant intervening act that would be the subject of what was said in Allianz. Here the retainer and duty was to prepare a contract in accordance with the Final EOI, not to take steps to prevent Metro deciding to proceed even in the face of full knowledge that such a clause was not in the contract.

114. I do not consider that the decision in Mallesons Stephen Jaques and Trenorth is of assistance to Metro in the present case. The passage referred to at 737 was a consideration of the principles applicable where there was one wrongful act and a supervening deliberate wrongful act. That is not the case here. What followed Mr Warat’s advice was the act of Metro, deciding to proceed in full knowledge that the Tessa provision was not in the contract.

115. Before this court HWLE placed reliance upon the decisions, at first instance and on appeal, in Chand v Commonwealth Bank of Australia.¹⁰⁹ The facts in Chand can be summarised relatively simply. Mr Chand, who had previously invested in similar investment products, lodged an application to invest money in particular wholesale investment funds. On 25 September 2007 he lodged an application to redeem the entirety of his investments because he believed that the highly geared stock was no longer a safe investment option. He did not receive a response from the bank to his redemption request. When he finally contacted the bank on 5 November 2007, he was told there was no record of the redemption request in the bank’s system. That is the date upon which he knew, for the first time, that the redemption had not been processed. Following that contact, Mr Chand had to decide how to deal with his investments. He made a positive decision to remain in the market, on risk, and to select another exit date, notwithstanding that he had earlier reached the view that highly geared stock was no longer a safe investment option. The redemption value of the stock steadily fell until it reached a negative redemption value.

116. At first instance it was held that the chain of causation had been broken. Commenting upon whether conduct can break the chain of causation, and expressly considering Building Insurers’ Guarantee Corporation v The Owners – Strata Plan No 57504,¹¹⁰ Robb J said:¹¹¹

“[298] There may be a question whether the principle stated by the Court of Appeal [in Allianz] requires that the plaintiff deliberately accept a known existing loss. In my view the Court of Appeal expressed a principle of more general application, which may be distilled from the observations made by Ipp JA at [106]. In the case of breaches of contract that give rise to a prospective loss, where the plaintiff has knowledge of the breach and the prospective loss, and where the plaintiff has a ready means to avoid the loss by the plaintiff’s own action, a deliberate decision by the plaintiff not to terminate the risk, but to continue it, is capable of absolving the defendant of legal responsibility for the actual loss, when it occurs.

…

[302] The reasoning in the two cases is consistent, in the sense that they fit together. If, once it is established that the defendant’s wrongdoing has caused the plaintiff to suffer loss in fact, it is then necessary to identify and articulate an evaluative judgment as to whether the loss should be held to fall within the scope of the defendant’s responsibility for the loss, a proper basis for making the evaluative judgment must be found. There may be many such bases, and the identification of the relevant one may be sensitive to the facts and circumstances of the particular case. One relatively obvious basis for deciding that a defendant should not be held responsible for a loss caused by the defendant’s breach, is that the facts justify a finding that the plaintiff could have avoided the loss entirely, but instead has freely, deliberately and knowingly decided not to prevent the loss occurring, but instead to maintain the situation that gives rise to the risk of the prospective loss become real.”

117. The Court of Appeal upheld the decision, commenting:¹¹²

“[168] In County Ltd v Girozentrale, Hobhouse LJ said that conduct which is undertaken without an appreciation of the existence of the earlier causal factor will normally only suffice to break the causal relationship if the conduct was reckless and that ‘[i]t is the character of reckless conduct that it makes the actual state of knowledge of that party immaterial’ (see 857c-d). Here, however, Mr Chand was aware of the facts giving rise to the breach and was well aware that absent a fresh redemption request his investments would not be redeemed and he would remain on risk.

[169] Here, Mr Chand’s decision was freely made (he said it was “the easiest decision to make”) and was an informed one (having regard to his knowledge as to the nature of the investments and the market generally).

[170] His Honour therefore did not err in concluding that Mr Chand’s decision was a novus actus interveniens that had the effect that Mr Chand was the author of his own misfortune.

[171] Mr Chand next submits that insofar as his Honour effectively found… that the chain of causation had been broken, his Honour fell into error because he failed to consider whether or not the actions of the Bank were a cause of the damage, even if the actions of Mr Chand were also a cause, and hence compensable (referring to what was said in Simonius Vischer & Co v Holt & Thompson [1979] 2 NSWLR 322 by Samuels JA at 346E). However, it is clear from his Honour’s reasons that his Honour had concluded that the failure to redeem at a point between 5 November and 13 December 2007 was the sole effective cause of Mr Chand’s loss because, had he not made the decision to stay in the market and had he instead made a fresh redemption request, Mr Chand would have suffered no loss at all.”

118. The position in Chand is, in my view, similar to the position in the present case. On 8 May 2019 Mr Hartman knew that his instructions had not been followed, in that the draft contract did not contain a Tessa provision. Knowing that, he did not take steps to ensure that a Tessa provision was put into the draft. That decision was not affected by Mr Warat’s statement of what the Final EOI said, because Mr Hartman had negotiated the various EOIs, was fully aware of the nature of a Tessa provision, and that he could insist (as he had done before) on having such a provision in the contract. Had he directed HWLE to do so the learned trial judge’s findings are that Forum would have agreed to the clause and therefore Metro would have received all that it wished in that respect. For reasons to do with Metro’s assessment of its risk and the need to have Forum signed up to a deal, Mr Hartman chose to proceed without the clause in the contract. In that sense, as with Chand’s case, his decision was the sole effective cause of any loss.

119. In my view, this ground of appeal must be rejected.

Ground 4 – Assessment of loss

120. This ground contends that the learned trial judge’s assessment of loss was faulty in a number of respects. First, it is said that limiting the assessment of loss to 10 units and not the “practical limit” of 32 units was an error. For the purpose of assessment of damages, the opportunity to be paid for Tessa’s appointment was to be assessed at the practical limit of 32 units. It was contended that the evidence before the learned trial judge was not that Tessa or its financier would not have accepted appointment to more than 10 units, but rather, that there was a high degree of certainty of funding 10 units, and a lesser certainty thereafter.

121. The second error concerned a discount applied by the learned trial judge. In its closing submissions, Metro contended for a particular calculation of loss based on 27 units. It noted that that figure represented 50% of the total number of units that were potentially available for Forum to appoint Tessa. The contention is that the learned trial judge applied a 50% discount when that was not being urged.

122. Ultimately Metro submitted that the learned trial judge should have found:(a)that there was a high degree of certainty that Forum would appoint Tessa to at least 10 units;(b)there was a real possibility that Forum could appoint Tressa to the balance of the practical limit of 32 units; that possibility should have been assessed at least at 50% of the extra 22 units; and(c)therefore assess damages at $330,006.60.

123. Consideration of this ground can commence with noting a number of already canvassed findings. They are:(a)if the Tessa provision had been included in the contract, Forum would have agreed to its inclusion;¹¹³(b)the clause that Forum would have agreed to was one which capped the commission rate for management of a unit at no more than 5%;¹¹⁴(c)the absence of such a provision meant that Metro had lost the chance to be paid for appointment amounts;¹¹⁵ and(d)if Forum had been obliged by a Tessa provision to appoint (or to offer to appoint) Tessa as its letting agent at a commission rate of 5%, it would have done so.¹¹⁶

124. As Metro contends, the remaining issue following those findings is an assessment of the number of units to which Forum may have appointed Tessa. An integral part of that assessment was one issue which the learned trial judge addressed, namely: was there a prospect that Tessa would have agreed to manage units?

125. The learned trial judge made a number of findings which, ultimately, were not contested. By that I mean that the only contest was mounted by argument, and not matched by evidence. Since this issue concerned what Tessa might have done, the best evidence of that could have been given by Mr Tutt. The learned trial judge correctly concluded that Mr Tutt was in Metro’s camp, and it was natural to expect that Metro would have called him. His Honour also correctly held that in the unexplained absence of Mr Tutt, it was more easily open for his Honour not to draw inferences in support of Metro’s case, or to draw inferences from the direct evidence that are contrary to that case. However, his Honour did not need to go so far as most of his findings were drawn from direct evidence.

“[195] I consider it inevitable that, if Forum had offered a letting agency to Tessa for all its units, Tessa would have declined. On the other hand, there is a reasonable possibility that Tessa would have offered to accept appointment for a few of the units, as I discuss below. Tessa had been willing to accept appointments for up to eight units at 5% commission in the past. Tessa appeared to accept that such an arrangement had sufficient value, whereas above ten units was too risky a proposition. Given the content of the Tessa provision, I doubt that Forum would have agreed to appoint Tessa at a higher commission rate than 5%, but it may well have agreed to appoint Tessa to let only some of its units. This is especially so given that, under the McGrath letting plan, Forum proposed to stagger the letting of its units over some months.”

131. Metro’s submission about the adoption of the 32 units as a “practical limit” is, in my view, misplaced. It is true to say that the learned trial judge noted that the best evidence was that Forum may have looked at letting out 32 units at most, rather than all of the units available.¹²⁵ His Honour then expressed the view that that was “a practical limit, based on the best evidence, of the number of possible appointments of Tessa by Forum”. But he went on to qualify that statement. That involved the following findings:(a)it was unlikely that Tessa would have accepted appointment to more than 10 units, given its view and that of its financier of the uncommercial risk and value of taking more than that number of appointments from one owner;¹²⁶ and(b)there was a sound evidentiary basis for that conclusion.¹²⁷

132. The learned trial judge characterised Metro’s submission that more than 10 units might have been accepted as “pure speculation that does not come near the realm of ‘probabilities and possibilities that arise on the evidence’”.¹²⁸ Then his Honour made an important finding spanning the possibilities concerning Forum, Tessa and Tessa’s bank:¹²⁹

“[201] I consider that there is some possibility that Forum would have agreed to appoint Tessa, which would have accepted its appointment, as agent for up to ten of the units … Had that occurred, Tessa would have paid Metro up to ten appointment amounts. Despite its bank’s concerns about value, those concerns appear to have arisen where more than eight or ten units were owned by one person, as that gave rise to the risk that Tessa would lose a substantial income stream. I consider it likely that either the bank would have lent Tessa sufficient money to pay up to ten Appointment Amounts, or Tessa would likely have had the resources to pay them in any event.”

133. In my view, there is no reason to conclude that the findings to that point were affected by error.

134. The learned trial judge then moved to the next point, namely the impact of the fact that Forum would have offered appointments at a 5% commission. The learned trial judge identified Tessa’s “clear reluctance to accept Forum appointments at 5% after its bank rejected that commission rate”, as well as Tessa’s reaction when it was invited by Forum to put in a letting proposal in June 2019. The latter factor is a reference to the evidence that Forum and Tessa had some discussions in June 2019 in which Tessa was invited to make a submission for rental management but did not do so.¹³⁰ It was on the basis of those extra factors that the learned trial judge considered the likelihood of Tessa accepting a 5% commission rate for 10 units as “low”. His Honour concluded that there was a higher likelihood that it would have accepted an appointment for five units but equally some doubt as to whether Forum would have been prepared to offer such a limited number.¹³¹ The learned trial judge summarised his analysis by saying that it was unlikely Tessa would have accepted appointments for more than five units, but there was a low probability that Forum would have offered it. That was to be balanced against the possibility that Forum would have offered, and Tessa would have accepted, an appointment to 10 units.

135. It was on that basis that his Honour concluded that the loss should be assessed on the basis of an appointment to five units, rather than more. In my view, there is no demonstrable error in that approach. Indeed, it was amply supported by the evidence. The evidence, such as it was, from Mr Tutt did not go so far as to show that there was a high degree of certainty of funding up to 10 units, but a lesser certainty thereafter. That was an inference sought to be drawn from one email from Mr Tutt on 20 March 2019, at which point Tessa had not agreed to 5% commission and was resisting any appointment on the basis of a bulk buyer. Perhaps Mr Tutt could have explained it further, but he was not called. It is stretching too far, in my view, to reach the conclusion urged by Metro.

136. Further, once the reasoning of the learned trial judge is understood properly, the discount of 50% was not because of some submission made by Metro, but an assessment of such evidence as there was concerning Tessa’s willingness and ability to take appointments at a commission rate 5%.

137. This ground of appeal fails.

Conclusion

138. For the reasons I have expressed above the appeal must be dismissed. There is therefore no need to consider the cross-appeal. I propose the following orders:

Appeal dismissed.

The appellant pay the respondent’s costs of and incidental to the appeal.

139. MULLINS JA: I agree with Morrison JA.

140. MELLIFONT J: I agree with Morrison JA.

Footnotes

1. For ease of reference I shall refer to that company as “Tessa”. ↩

2. It was a call option deed, rather than a straight contract for sale, but nothing turns on the difference. ↩

3. Metro’s director handling the sale of the units to Forum. ↩

4. Reasons below [13]-[14]. ↩

5. Reasons below at [15]. ↩

6. Reasons below at [16]. I shall refer to this as the “non-binding statement”. ↩

7. Reasons below at [17]. ↩

8. Reasons below at [20]. ↩

9. Reasons below at [21]. ↩

10. Reasons below at [22]. ↩

11. Reasons below at [23]. ↩

12. Reasons below at [25]. ↩

13. Reasons below at [57]. ↩

14. Reasons below at [58]-[59]. ↩