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[2023] VSC 721
General information, not legal advice.
Supreme Court of Victoria
2023-12-05
Tsalamandris J
Original judgment source is linked above.
REAL PROPERTY - Property dispute - Co-owners of land - Settlement agreement to subdivide and partition land - Alleged prior deed agreement - Proposed orders of consent - Alleged repudiation of settlement agreement - Attempt to rely upon termination notices - Remedies available - Judicial sale of land considered - Specific enforcement of settlement agreement ordered - Gunns Limited v Balani Pty Ltd [2011] FCA 451 - Balani Pty Ltd v Gunns Limited [2011] FCAFC 153 - Siemens Gamesa Renewable Energy Pty Ltd v Bulgana Wind Farm Pty Ltd [2020] VSC 126 - Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; (2007) 233 CLR 115 - Roberts v Gippsland Agricultural & Earth Moving Contracting Co Pty Ltd [1956] VicLawRp 21; [1956] VLR 555 - Bell v Knight 34 Langdon Road Pty Ltd [2022] VSC 497 - Hycenko v VHY Enterprises [2020] VSC 834.
1 In 2006, the plaintiff, Mr Rose, and the defendant, Mr Cwalina, became the registered proprietors of a property situated at 1 Geofrey Street, Frankston South, as tenants in common in equal shares (the Geofrey Street property). This property was a vacant block of land at the time of purchase. The following year, they acquired a small strip of land (the revenge strip) at the back of the property, which faced on to Helen Street, Frankston South, and enabled legal access from the rear of the property. Two houses were subsequently built - the Geofrey Street house and the Helen Street house. In 2019, the Geofrey Street property and the revenge strip were consolidated (the land) and, at that time, subdivided into two lots**,** with separate certificates of title issued for the Geofrey Street lot and the Helen Street lot.
2 Proceedings in relation to the land were first issued in this Court in December 2016. The original plaintiff to the proceeding, Ms Zofia Majak (Ms Majak), sought, amongst other things, declarations relating to part ownership of the land against Mr Rose and Mr Cwalina. However, in August 2017, Ms Majak's claim against Mr Cwalina was dismissed, and her claim against Mr Rose (with whom she had been in a de facto relationship) was transferred to the Family Court of Australia (the Family Court referral). By that time, Mr Rose had filed a counterclaim against Mr Cwalina which, by order of this Court, was treated as the initiating document, with Mr Rose regarded as the plaintiff in this proceeding. In addition, Mr Cwalina's response to the counterclaim was ordered to stand as his defence.[1] Mr Cwalina subsequently filed his own counterclaim.
3 Mr Rose claims that on 5 October 2017 the parties reached a settlement agreement in this proceeding, under which the land was to be subdivided and partitioned. As part of the partition, the Geofrey Street house was to be registered solely in the name of Mr Rose, and the Helen Street house registered solely in the name of Mr Cwalina. Further, it was agreed that Mr Cwalina pay Mr Rose 50% of the difference in value between the properties. The proposed consent orders provided to this Court, which reflected the terms of the settlement agreement, for reasons unknown, were never made. The proceeding, therefore, remained on foot. Mr Rose claims that Mr Cwalina has not complied with the terms of the settlement agreement. As Mr Rose submits there is no prospect of co-operation between the parties, he seeks an order for judicial sale of both lots of land, or alternatively, an order for specific enforcement of the settlement agreement.
4 Mr Cwalina claims that a deed agreement was executed between himself and Mr Rose on 5 May 2006. As Mr Rose denied signing this document, I shall refer to this as the alleged deed agreement. As best I could understand the claim Mr Cwalina advanced at trial, he asserts that Mr Rose repudiated the settlement agreement as Mr Rose had no immediate capacity or prospect of raising funds that would allow him to discharge his loans, and therefore was not able to comply with its terms at the time the settlement agreement was reached. Further, Mr Cwalina submits that Mr Rose failed to perform his obligations under the alleged deed agreement, which entitles Mr Cwalina to have the settlement agreement set aside, and the parties rights be determined in accordance with the alleged deed agreement.
5 Finally, Mr Cwalina made numerous allegations in respect of Mr Rose's solicitor, Mr Russell Byrnes, which he said prevented compliance with the settlement agreement.[2] In Mr Cwalina's counterclaim he seeks, amongst other things, an order that Mr Cwalina buy out Mr Rose's share of the land for $150,000 in accordance with the alleged deed agreement.
6 The trial proceeded before me over 3 days, commencing on 7 August 2023. Mr Rose, Mr Cwalina and Ms Majak gave evidence, and numerous documents were tendered. The parties subsequently provided written closing submissions.
7 The pleadings relevant to my determination of this proceeding are as follows:
(a) Mr Rose's amended counterclaim, filed 25 November 2021;[3]
(b) Mr Cwalina's defence to Mr Rose's counterclaim, filed 11 January 2022;
(c) Mr Cwalina's counterclaim to amended claim, filed 1 July 2022; and
(d) Mr Rose's defence to Mr Cwalina's counterclaim, filed 13 July 2022.
8 The following facts, derived from the tendered documents and oral evidence, are relevant so as to understand the issues to be determined in this proceeding. Unless otherwise stated, the facts below are either agreed, or not in dispute between the parties.
9 Although not strictly relevant to this dispute, to provide context to the agreement between Mr Rose and Mr Cwalina to purchase and develop the land, and so as to understand the transfer of Ms Majak's claim against Mr Rose to the Family Court, I note the following:
(a) At the time of the purchase of the Geofrey Street property:
(i) Mr Rose was in a romantic relationship with Ms Majak; and
(ii) Mr Cwalina was married to, but separated from, Ms Majak.
(b) Mr Rose and Ms Majak commenced cohabiting in about 2009.
(c) Mr Cwalina relocated to Ireland from Australia in 2009. After he left Australia, Ms Majak held Mr Cwalina's power of attorney and acted on his behalf in relation to the development of the land.
(d) Mr Rose said his romantic relationship with Ms Majak ended in October 2012.
10 Shortly prior to purchasing the Geofrey Street property, the parties orally agreed to purchase the property, with a view to building two houses on it in equal shares. It was also agreed that each would contribute 50% of the costs to acquire the land and to construct the houses.
11 On or about 7 April 2006, Mr Rose and Mr Cwalina became the registered proprietors of the Geofrey Street property as tenants in common, in equal shares. The purchase price of the property was $300,000. Mr Rose and Mr Cwalina each contributed $150,000 towards the purchase price.
12 Mr Rose paid $15,000 for his share of the deposit, and obtained a personal loan from the Commonwealth Bank of Australia (the CBA) to fund the balance of his share of the purchase price (the Rose personal loan). The account number for this loan ended in the numbers 1809. Mr Cwalina was the guarantor of this loan.
13 On 27 March 2006, the CBA registered a mortgage over the Geofrey Street property (the CBA Mortgage). On 12 April 2006, a caveat was lodged in respect of this interest (the CBA caveat).
14 Mr Cwalina claims that Mr Rose signed the alleged deed agreement on 5 May 2006. In this document, Mr Cwalina was stated to be 'the active owner', and Mr Rose, 'the passive owner'.
15 The interpretation and definitions section of the alleged deed agreement included the following terms:
"The Active Owner" means the owner that provides the conceptual aspects of developing the land including but not limited to: providing a bank guarantee for the purpose of obtaining the loan, paying architect fees, engineer fees, surveyor fees, council fees, application fees, legal fees, land clearing, council rates, land and other taxes and government duties.
"The land" means the vacant block of land at 1 Geofrey St, Frankston South in the State of Victoria.
"The partnership" means joint venture that involves "the land" as a single real estate asset together with the investment of skills and knowledge offered to put that asset into profitable use.
"The Passive Owner" means the owner that provides funds to buy 50% share of the land.
"The development" means construction of 2 single dwellings and dealing with tasks arising in the process leading towards the construction that includes but is not limited to:
(a) developing architectural plans; meeting with planners, architects, engineers, government officials, solicitors.
(b) resolving all issues constraining the development such as restrictive easements : stormwater easement - restricting construction; "revenge easement" - restricting access to the back lane.
(c) obtaining building permit, constructing the dwellings, obtaining occupancy certificate, subdividing the title and registering separate titles in the land titles office of the State of Victoria - 'Land Victoria''.
16 The terms of the alleged deed agreement relevant to Mr Cwalina's claim included:
2. BENEFITS AND LIABILITIES
2.1 Both owners accept that the land was purchased with intention to develop and neither of the owners will seek to sell the land before enough time has elapsed to obtain a Building Permit, or before completion of the construction to realise any capital growth that the land may attract.
2.2 Before commencement of the construction both owners will create a common account, depositing 50% of the cost of construction as specified on the builders contract.
2.3 After completion of the construction the title will be separated and each owner will be liable to paying his own stamp duty on transfer and 50% share of the legal costs that will arise.
2.4 Before subdividing the land the Passive Owner will release the Active Owner from his duty as a guarantor by transferring the loan onto the part of the property that will be registered in his name and reimburse the Active Owner with any fees related to obtaining the Building Permit.
2.5 The Passive Owner acknowledges the benefits of entering into the partnership with the Active Owner who is offering experience in property development matters as well as undersigning a loan guarantee for the benefit of the Passive Owner. In return the Passive Owner accepts limited rights to disposal of the land:
2.5.1 That in case the development can not be carried out as planned due to unforeseen circumstances and for reasons that are outside the control of the two partners, such as non-approval of the Development Proposal, then the Passive Owner agrees not to make any claim on capital growth that the land may attract and agrees to sell his share to the Active Owner at the price paid on the transfer of the land in the amount of one hundred and fifty thousand dollars ($150,000).
2.5.2 That if the Passive Owner is not ale to fulfill his commitment to carry out the development he should accept that he will sell his share at the price paid on the transfer of the property ($150,000) minus any expenses incurred in the process of obtaining the Development Application approval and issuing of the Building Permit.
3. TERMINATION
3.1 The parties agree that a partnership will be ended upon completion of the construction and registration of separate titles.
3.2 If either of the partners breaches the term of the partnership agreement then the withdrawing partner will be liable for any damages suffered by the other partner.
....
17 Mr Rose accepted that he was shown this document, but denied that he signed it.[4]
18 In February 2007, the revenge strip was acquired for a nominal sum of $1, and held by the parties as tenants in common in equal shares.[5] This was a small parcel of land located at the rear of the Geofrey Street property, and the purchase of it enabled public road access and services from Helen Street.
19 In or about December 2013, the parties entered into a loan agreement with the CBA (the construction loan), under which:
(a) the CBA agreed to advance the parties the sum of approximately $660,000; and
(b) the advanced sum was secured by the existing CBA mortgage.
20 Mr Rose and Mr Cwalina agreed that they were each liable to repay 50% of the monies owing under the construction loan.
21 The construction loan was paid into a bank account provided by the CBA, and maintained in the name of Mr Rose and Mr Cwalina (the construction loan account). The account number for the construction loan ended in the numbers 1808.
22 On 18 November 2013, the parties entered into an agreement with Couperwood Homes Pty Ltd for the construction of two houses on the land (the construction contract).
23 The parties subsequently drew down on the construction loan, as well as some of their own funds, to make payments to Couperwood Homes under the construction contract.
24 In the second half of 2013, Couperwood Homes com‑‑menced construction of the Geofrey Street house and the Helen Street house. An occupancy permit was issued in respect of both houses on 23 April 2014.
25 On 2 December 2014, a planning permit was issued by the Frankston City Council in respect of the proposed subdivision of the land.
26 On 23 December 2014, the parties engaged a real estate agent to manage the properties as the leasing agent (the agent). From that time until November 2021, rental income from the houses was applied towards outgoings for both houses, together with the monthly instalment payments due under the construction loan. If there was any balance from the rental income, it was paid in equal shares to the parties.
27 On 17 June 2015, Ms Majak lodged a caveat over the Geofrey Street property (the Majak caveat).
28 On 22 December 2016, Ms Majak issued this proceeding against the parties. In her originating motion, Ms Majak sought declarations that Mr Rose held 50% of his share of the land, and that Mr Cwalina held 5% of his share of the land on trust for her. In addition, Ms Majak sought an order that, following partitioning of the land (which she claimed was agreed between Mr Rose and Mr Cwalina), she be granted an indefinite right of residence in the lot to be registered in the name of Mr Rose.
29 In Ms Majak's statement of claim dated 9 March 2017, Ms Majak alleged that she had introduced the defendants to each other, and proposed that they purchase and develop the Geofrey Street property. Ms Majak claimed that she had procured the revenge strip, and resolved an issue regarding an easement on the property. Ms Majak also made allegations in relation to financial contributions she claimed to have made in respect of the development of houses on the land.
30 Ms Majak claimed the parties had verbally agreed that in the event Mr Rose and Mr Cwalina decided to sell the development site without constructing, they would pay a 10% project management fee to her.
31 Ms Majak alleged 'fraud' against Mr Rose on the basis that he failed to comply with a duty of care to protect her interest in the land, and sought a declaration that he held his share of the land on trust for her.
32 The statement of claim also included particulars of a claim by Ms Majak against Mr Rose in respect of her financial contributions towards the purchase of land and construction of two residential units with Mr Rose in Ettalong Beach, New South Wales (the Ettalong Beach property). Ms Majak claimed rental income for a unit at that property where Mr Rose's father had resided. It also contained allegations that Mr Rose and Ms Majak pooled their resources whilst living together, including for the maintenance of the Ettalong Beach property, and referred to a property settlement application which Ms Majak had filed in the Family Court.
33 In addition, the statement of claim referred to a dispute between the parties in respect of an amount of $25,000,[6] and legal costs arising from that dispute, including the involvement of Mr Byrnes. There are further allegations about Mr Byrnes in the statement of claim involving a lapsing notice filed by Mr Byrnes in relation to removal of the Majak caveat.
34 Ms Majak also claimed that Mr Cwalina had agreed to sign a declaration that he held 5% of his share of the land on trust for her.
35 In Mr Rose's defence and counterclaim dated 5 April 2017, he claimed that his intention was to use the Geofrey Street property as an investment property, and eventually sell it. Mr Rose claimed that in respect of the Geofrey Street property Ms Majak acted at all times for and on behalf of Mr Cwalina. Mr Rose claimed that he acquired the revenge strip with Mr Cwal‑‑ina as tenants in common. Mr Rose claimed that he discovered the easement and made representations to the local council for its removal. He denied that there was a verbal agreement to pay a 10% project management fee to Ms Majak in the event that he and Mr Cwalina decided to sell the Geofrey Street property without constructing. Further, Mr Rose did not admit that he had pooled his resources with Ms Majak; denied that a trust arose in respect of Ms Majak; and denied that he owed her a duty of care which gave rise to her having an interest in the land. Mr Rose also pleaded that there was no proper basis for Ms Majak to make any allegation of fraud against him.
36 Mr Rose claimed that his co-ownership of the Geofrey Street property with Mr Cwalina was governed by a partly oral and partly implied agreement between them. Mr Rose alleged the terms of the agreement included that each would contribute 50% towards the purchase price of the land and construction of the two houses, and, upon completion, the land would be subdivided.
37 By way of counterclaim, Mr Rose claimed that since 29 August 2016 he had requested Mr Cwalina join with him in subdividing and selling the land. As Mr Cwalina had failed or refused to do so, Mr Rose sought orders that the land be subdivided and sold. Further or in the alternative, Mr Rose sought an order for specific performance of his purported oral agreement with Mr Cwalina to subdivide and partition the land following completion of construction, with each to receive the house previously agreed.
38 Mr Rose sought an order that Mr Cwalina compensate or reimburse him for additional time and costs spent by Mr Rose on the land, as well as for loss and damage caused by Mr Cwalina's refusal to join Mr Rose in renting out the houses.
39 Mr Rose also sought a declaration that Ms Majak had no estate or interest in the land, and an order for the removal of the Majak caveat.
40 In her reply dated 25 April 2017, Ms Majak maintained that she had an interest in the land by virtue of her contributions, and stated that if orders were made to sell the Geofrey Street property, she would seek an injunction in the Family Court against the execution of such orders.
41 At that time Mr Cwalina had not filed a defence to Ms Majak's proceeding or Mr Rose's counter claim. The dispute between Ms Majak and Mr Cwalina was resolved with Mr Cwalina agreeing to a declaration of trust to the effect that Ms Majak had a 5% interest in his share of the land.
42 On 18 August 2017, Riordan J made orders dismissing Ms Majak's claim against Mr Cwalina and transferring Ms Majak's claim against Mr Rose to the Family Court pursuant to s 5(1) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Vic). His Honour also ordered that the proceeding continue as if commenced by Mr Rose's counterclaim against Ms Majak and Mr Cwalina.
43 In August 2017, the parties agreed to retain Davis Lawyers to undertake the following legal work:
(a) Preparation and lodgement of the plan of subdivision including obtaining mortgagee's consent;
(b) Attending to partition of the land, including preparation and execution of transfers of land and ancillary documents; preparation of documents required to obtain an exemption from duty on the transfers of land; and lodgement of the transfers of land at the Titles Office.
44 In September 2017, Mr Chris Mason of Mason's Valuation Office provided valuations of 1 Geofrey Street and 17 Helen Street. In Mr Mason's report dated 2 October 2017, he opined that the value of the Geofrey Street lot was $695,000 and the value of the Helen Street lot was $725,000.
45 On 18 September 2017, the Court granted Mr Cwalina leave to file a defence to Mr Rose's counterclaim by 9 October 2017, and adjourned the matter to a date to be fixed.
46 As previously stated, on 5 October 2017, the parties reached the settlement agreement to dispose of the matters in dispute between them in this proceeding. The settlement agreement was set out in the proposed consent orders, which were as follows:
47 The proposed consent orders were signed by Mr Cwalina and Mr Byrnes (on behalf of Mr Rose).
48 Whilst the proposed consent orders were sent to the Court's Prothonotary, there is nothing to indicate those proposed orders came to the attention of a judge, and no orders were made.[8]
49 On 12 October 2017, Davis Lawyers wrote to the parties and informed them of the steps necessary to register the plan of subdivision. These steps included obtaining a Statement of Compliance from the Frankston City Council (and liaising with a surveying company), and obtaining consent from the CBA and Ms Majak, both of whom had a caveat over the land.
50 On 27 October 2017, Ms Majak provided her consent to the registration of the subdivision.
51 On 22 February 2018, Mr Cwalina wrote to Mr Rose's solicitor, Mr Byrnes, 'requesting termination' of his partnership with Mr Rose (the first termination notice). The notice sought confirmation that Mr Rose was 'ready and willing' to pay in accordance with the terms of the settlement agreement. Mr Cwalina also stated that he proposed to buy Mr Rose's share of the development by paying 50% of the value of the whole development based on Mr Mason's valuation. He further stated that unless he received a satisfactory reply that 'could establish' Mr Rose's readiness to complete within seven days, Mr Cwalina would issue a proceeding seeking enforcement of the 'orders', plus costs.[9]
52 On 6 April 2018, Davis Lawyers emailed Mr Byrnes and advised that they would seek clarification from the Council as to whether only one title was needed to register the plan of subdivision.
53 In November 2018, Mr Cwalina and Mr Rose paid Davis Lawyers' legal fees in equal shares.
54 In or around this time, the parties were unable to locate the original certificate of title in respect of the revenge strip. Numerous steps were subsequently required for a new certificate to be issued. Once these were complete, on 7 March 2019, the Land Titles Office provided Davis Lawyers with a new certificate of title.
55 On 25 March 2019, Davis Lawyers informed the parties that due to the time taken to obtain the new certificate of title, the consent previously obtained from the CBA for the subdivision of the land had expired, and thus a fresh consent was required. In addition, Davis Lawyers provided advice in respect of the steps to be taken to partition the land, together with an estimate of the stamp duty, and legal costs.
56 On the same day, in reply, Mr Byrnes sent an email to Davis Lawyers, in which he stated:
... So far as the partition is concerned there is an issue with the mortgagee in that there are two loans secured by the Commonwealth bank over the current title. The parties are only 50/50 in one of the loans (the larger one) and Mr Rose is 100% responsible for the other loan himself.
To do the subdivision is not an issue, but to do a partition will require the bank to sort out its position as to how it wants to do it.
I suggest we get the bank to re -produce the CT for the subdivision then raise the next step as to how they see the partition working.
57 On 29 March 2019, Davis Lawyers emailed the parties and Mr Byrnes. Amongst other things, they stated that:
The Land Title's Office recently released a bulletin stating that petitions must be lodged at the same time as lodging a plan of subdivision. Despite this, we are happy to proceed with your instructions and lodge the plan and partition separately, however, we may face some resistance from the Land Title's Office.
Please advise if our mutual clients are willing to proceed in light of the above.
... I don't understand why [Mr Byrnes] is suggesting that the bank needs to sort out it's position. The position is simple, the loans need to be repaid or re-financed for the bank to release the title for partitioning. It is [Mr Rose] that has to sort himself out.
I can't see any purpose for lodging the subdivision and partitioning separately. I ask that both be done at the same time. I have clear funds to repay my share of the construction loan and will be expecting to get the title to my property at 17 Helen Street, as per consent orders, unencumbered.
I expect that [Mr Rose] is able to refinance his loan as soon as the bank makes the title available for registration of the subdivision and for partitioning.
I have been asking for more than 2 years that [Mr Rose] gets his funds ready. If he is not ready to refinance, what will be the chance of him getting funds at a later time?
59 On 15 April 2019, the CBA informed Davis Lawyers that it required the parties to execute a new mortgage due to an increase in the land size as a result of the adjustment to the boundary upon subdivision.
60 On 30 April 2019, Davis Lawyers wrote to Mr Byrnes and informed him of the need for the parties to execute a new mortgage, and that the CBA would not consent to the subdivision of land until this was done.
61 On 2 May 2019, Mr Byrnes wrote to the CBA (copying in Davis Lawyers and Mr Cwalina) and stated that:
...there are orders of the Supreme Court which provide for the registration of the plan of subdivision AND THE PARTITION OF THE PROPERTY INTO the separate names of the current registered proprietors with Cwalina taking one lot and Rose the other lot.
The way you are proposing to do it at present will involve this proposed mortgage and then two separate mortgages one for Cwalina over his new lot and one for Rose over his new lot. Can we shorten the process by having two new separate mortgages prepared now over the proposed lots in the subdivision and then the plan of subdivision can be lodged with the two new transfers transferring one lot to each of them with the two new mortgages over each lot?
62 On 3 May 2019, the CBA responded that it was not aware of the court orders, and sought a copy of such orders, together with a copy of the transfers. The CBA stated that it would 'look' at having two separate mortgages prepared as suggested by Mr Byrnes.
63 Email correspondence passing between Davis Lawyers and the CBA in August and September 2019 indicated that mortgage documentation sent to the CBA had been misplaced and needed to be resent to Davis Lawyers for signing.
64 On 8 October 2019, the CBA sent Mr Byrnes a new mortgage for execution by Mr Rose. The new mortgage was executed by Mr Rose on 10 October 2019, and subsequently sent to the CBA.
65 The original version of Mr Cwalina's executed mortgage was delayed as it was sent from Ireland. Email correspondence also indicated a delay due to the executed mortgage being misplaced by the CBA.
66 On 5 December 2019, Davis Lawyers sought an updated Abstract of Field Records, as the previous one had expired.
67 On 18 December 2019, two certificates of title were issued in respect of the Geofrey Street lot and the Helen Street lot.
68 On 24 December 2019, judgment in the Family Court proceeding between Ms Majak and Mr Rose. Relevant to this proceeding, Ms Majak was ordered to remove the Majak caveat.
69 On 15 January 2020, Mr Byrnes informed Davis Lawyers that the Majak caveat was still registered on both lots of land.
70 Also on this date, Mr Rose signed a client authorisation form to enable Davis Lawyers to act on his behalf in the conveyancing transaction.
71 On 17 January 2020, Davis Lawyers emailed the parties and advised as to the steps to be taken to settle the properties on 17 February 2020, including State Revenue Office Transferee and Transferor statements for the parties' approval and signature in respect of the two lots of land.
72 Between 15 and 23 January 2020, Mr Cwalina and Mr Byrnes corresponded with each other via email regarding the partition of the land. Mr Cwalina claimed that the bank would not split the loan to enable partitioning of the land; contended that 'there must be 4 settlements done at the same time'; and sought confirmation that Mr Rose had obtained approval to refinance a new loan. In an email to Mr Cwalina dated 23 January 2020, Mr Byrnes stated that Mr Rose had signed the documents as requested by Davis Lawyers, and claimed that the outstanding delay was due to Mr Cwalina not signing and returning the equivalent documents.
73 On 23 January 2020, Mr Rose paid his half of the further legal costs requested by Davis Lawyers.
74 On 30 January 2020, Davis Lawyers advised Mr Byrnes that the following steps were required:
1. We will need a recent copy of a valuation report or rates notice which shows the value of the respective properties. This is required before the parties sign the SRO Duties Online forms. If the second valuation is different to the first valuation, we will need to amend the SRO forms to reflect this.
2. We will also need to amend the SRO Duties Online forms to change the Intended Settlement Date and Intended Transfer Date to a date approximately one (1) month after both [Mr Rose and Mr Cwalina] sign and return the forms. As previously advised, this is because the SRO will take up to one (1) month to assess the application.
3. Once we have a copy of the new valuations and [Mr Cwalina] agrees to sign and return the forms immediately upon being provided with such, we will then apply to the SRO for a duty assessment.
4. Once the SRO have assessed the application, we will then complete the partition.
75 On 5 February 2020, Mr Byrnes contacted the agent and informed them that pursuant to orders of this Court (that is, the proposed consent orders which, at that time, were understood to have been authenticated), the land had been subdivided in December 2019, and it was thereafter to be partitioned. Mr Byrnes stated that, subject to the Geofrey Street lot being registered in Mr Rose's sole name in accordance with those orders, Mr Rose instructed that he wanted to immediately put the Geofrey Street house on the market. Mr Byrnes then stated that:
...
8. Davis and Co lawyers are acting for both [Mr Rose and Mr Cwalina] in completing the partition and Mr Rose intends to instruct them to act on his behalf on the sale of Geoffrey St.
9. Mr Rose has signed all papers required by Davis Lawyers and paid their requested costs to proceed with and complete the partition.
10. Mr Cwalina has not yet signed and returned the paperwork to the solicitors nor paid his 50% of their fees.
11. Mr Rose has given him until 5pm this Friday to comply with the requirements of Davis lawyers otherwise I have been in structed to immediately commence Court proceedings again to implement the Court orders.
12. Please complete and forward to Mr Rose the appropriate listing agreement to be in his name only as the sole owner of Geoffrey St (subject to the partition) wso that the property can be immediately put on the market.
76 In February 2020, valuations were obtained from Mr Mason in respect of both lots of land. In reports dated 25 February 2020, Mr Mason valued the Geofrey Street lot at $735,000 and the Helen Street lot at $760,000. The coversheet of both valuation reports stated that the valuation was prepared for Byrnes Legal. In June 2020 both reports were paid in full by Mr Byrnes, on behalf of Mr Rose.
77 I note that correspondence between the parties in February 2020 suggests that a complaint to the Legal Services Commissioner was either made or contemplated by Mr Cwalina, in respect of what he considered to be Mr Byrnes' 'negligent' conduct. However, any such complaint was not tendered. In its absence, I must not speculate as to its relevance to the issues to be determined.
78 On 15 June 2020, Mr Cwalina served Mr Byrnes with a 'final notice' giving Mr Rose 21 days in which to comply with the (proposed) consent orders, failing which he would seek to reopen the proceeding.
79 In or around July 2020, the parties discovered orders had not been made by this Court in accordance with the proposed consent orders.
80 Also in July 2020, Mr Cwalina obtained pre-approval for an investment loan of $319,000, which he claimed was in accordance with the proposed consent orders.
81 On 26 August 2020, Davis Lawyers advised Mr Byrnes that they could not continue to act in the matter (to effect removal of the caveat and transfer the respective interests in the properties to Mr Rose and Mr Cwalina) until an invoice dated 9 January 2020 for outstanding legal fees was paid.
82 Also on this day, Mr Byrnes wrote to the CBA and stated as follows:
I continue to act on behalf of Mr Rose in this matter and Shaun Nolan of Davis lawyers in Melbourne continue to act on behalf of both parties for the actual registration of the transfers and the partition.
...
Davis lawyers have prepared transfers to partition the property but Cwalina refuses to sign them.
Cwalina believes/asserts that the loans need to be split/refinanced BEFORE he will sign.
We need to clarify this once and for all.
The agreement between Rose and Cwalina is contained in [the proposed consent orders].
Those orders (5 (c)) provide that the [personal loan] be solely secured over Geoffrey St (which will be in the sole name of Rose) and that the [construction loan]...be divided equally and that 50% be secured over Geoffrey St and 50% be secured over Helen St.
Everyone agrees to this. What we need to clarify is how do we achieve this in the process of the partition?
Can you please advise what does the Bank require to achieve this?
83 On 31 August 2020, the CBA advised Mr Byrnes that 1 Geofrey Street secured the construction loan, and was under the names of Mr Rose and Mr Cwalina. Further, the CBA stated that if Mr Rose wished to split the loan, he should contact his personal lender for advice.
84 On 1 October 2020, Mr Cwalina filed a summons in which he sought to re-open the proceeding, and to be given leave to file a response to Mr Rose's counterclaim and any other applications as required. This was initially listed for 7 October 2020, but subsequently adjourned until 12 February 2021.
85 On 11 October 2020, Mr Cwalina emailed Mr Rose a document entitled 'Termination of partnership with Alan Rose formed by the deed agreement from 5/5/06' (the second termination notice). In this document, Mr Cwalina alleged the following:
Since the construction commenced, you failed to participated in doing all things and taking all steps that were required to complete the construction and to subdivide the property at the time of completion of the construction, which occurred in March 2014.
As per deed agreement from 5/05/06, Clause 3.1, we agreed to terminate the partnership upon a completion and registration of separate titles.
As to the separation of titles, we agreed verbally that the house built at the rear of the land was to be registered in your name, under a condition that the name of Zofia Majak was to be included on the title at the time of consolidation with the revenge strip purchased by Zofia Majak.
According to Clause 2.4 of the Deed Agreement, you agreed that before subdividing the land you will release me from being a guarantor for your loan.
...
I was ready, willing and able to complete the settlement as agreed in the consent order.
Your solicitor interfered with the process of registration of the titles in our sole names, which was to be completed by Davis Lawyers, without having a valid reason for such intervention.
By forcing the subdivision to be carried out without taking sole liability for your loans as agreed in the Consent Orders, you repudiated the Consent Orders from 5/10/17 and Clause 2.4 of the Deed Agreement from 5/05/06.
86 The second termination notice requested that, within 14 days, Mr Rose provide Mr Cwalina with a spreadsheet showing the mortgage repayments made by Mr Rose towards the construction loan. At trial, Mr Cwalina gave evidence that Mr Rose failed to respond to this notice or his request contained therein.
87 On 30 October 2020, Davis Lawyers advised Mr Byrnes that a balance of $2,147.27 remained outstanding in legal fees, and they were 'unable to assist' further until the invoice was paid. Mr Cwalina gave evidence that he had paid some of the Davis Lawyers' fees, however, he had not paid the balance of the invoice as he was of the view that the additional legal fees had been incurred due to the conduct and interference of Mr Byrnes, and therefore Mr Rose was responsible for such costs.
88 On 4 November 2020, Davis Lawyers advised Mr Byrnes that Ms Majak had 'consented to the registration of the plan of subdivision but not the partition of the properties.'
89 On 20 November 2020, a Deputy Registrar of the Family Court provided consent on behalf of Ms Majak to the registration of the partition of the properties, pursuant to Family Court orders made on 24 December 2019.
90 On 12 February 2021, Mr Cwalina's summons was returnable before Efthim AsJ. In a judgment delivered on 26 March 2021, Efthim AsJ refused to validate the proposed consent orders, as Mr Cwalina had withdrawn his consent prior to the entry of the orders being made.[10] A subsequent appeal was dismissed by Keogh J on 21 September 2021.[11]
91 As at 9 November 2021, the balance owing on the construction loan was $603,097.52. On that day, Mr Rose paid the sum of $302,554.06 into the construction loan account, to pay down his portion of the construction loan. Immediately thereafter, the balance of the construction loan was $300,543.46.
92 At around the same time, Mr Rose paid off the Rose personal loan in full (that being a sum of $52,350.22).
93 On 10 November 2021, Mr Byrnes advised Mr Cwalina of the above payments, and that Mr Rose was no longer responsible for the construction loan.
94 On 17 January 2022, Mr Cwalina emailed the agent and advised:
...the previous number related to the [construction] Loan account does not exist anymore.
Please transfer all proceeds from my share of rental income into this account (below) which is linked to the loan account.
95 Bank statements of the construction loan account were tendered in the proceeding. There were dishonour payments of $3,648.09 on a monthly basis from 13 January 2022 through to 13 June 2023. In his evidence, Mr Cwalina accepted that these references to dishonour payments indicated that credit had been reversed as a direct debit had not gone through.
96 At some time in 2023, as Ms Majak had not removed the Majak caveat, the receiver in her bankruptcy removed it.
97 On 2 August 2023, Mr Byrnes wrote to the CBA and informed it of Mr Rose's intention to seek an order for judicial sale of both lots. In addition, Mr Byrnes requested the payout figure as at the first date of trial.
98 On the same day, the CBA replied and advised that, as at 7 August 2023, the indicative payout figure to discharge the construction loan with the CBA was $318,570.66. The parties agreed that if this sum is paid out, the mortgage on the titles will be discharged. Mr Cwalina also agreed that (notwithstanding his opposition to an order for judicial sale) the value of both properties is such that if sold, the proceeds will be sufficient to satisfy the money owed under the construction loan.
99 Title searches dated 7 August 2023 indicate that the CBA is the sole caveator in respect of both properties. This interest arises solely from the construction loan, and as indicated above, would be discharged upon payment of the balance of the construction loan.
100 Both parties gave evidence at trial that neither wanted to remain a tenant in common with one another, and that they wished to cease both their personal and business relationship.
101 On or about 1 September 2023, the tenant to the Helen Street house (after giving notice to the agent) vacated those premises. On 31 August 2023, I heard an urgent ex parte application by Mr Rose for an interim injunction. On that day, I ordered that Mr Rose, Mr Cwalina and Ms Majak, be restrained from entering, occupying or taking possession of either the Helen Street property or the Geofrey Street property (the injunction). I also adjourned the summons to a later date to enable Mr Cwalina to file material and be heard in respect of the injunction. At that time, Mr Rose provided an undertaking to abide by any order that the Court may make if satisfied that Mr Cwalina sustained damages by reason of the injunction.
102 On 13 September 2023, after hearing from both parties, I extended the injunction until 5pm on the day judgment is delivered in this proceeding. At that hearing, Mr Rose renewed his undertaking as to damages.
103 Mr Cwalina's expansive pleadings were fairly described by Mr Rose as embarrassing and vague.
104 Under Rule 23.02 of the Supreme Court (General Civil Procedure) Rules 2015 (the Rules), a party to a proceeding may apply to the Court for a pleading to be struck out (in whole or in part) if it discloses no cause of action or defence, is scandalous, frivolous or vexatious, may prejudice, embarrass or delay the fair trial of the proceeding, or is otherwise an abuse of process. I note that Mr Rose made no such application and instead elected to proceed to trial despite the state of the pleadings. I surmise that this was a forensic decision by counsel in order to avoid delays in the proceeding, in the context of a lengthy history of litigation and enmity between the parties. Irrespective, the consequence was that the pleadings were in a state which made it difficult to distinguish the real issues in dispute - both at the hearing of the trial and, in particular, in writing this judgment.
105 In Mr Cwalina's pleadings and written submissions to the Court, as well as during the course of the trial, he sought to refer to matters pertaining to Ms Majak. This included matters relevant to Ms Majak's claimed interest in the land and the Family Court referral. In addition, Mr Cwalina asserted he would shortly issue High Court proceedings regarding that referral.[12] During the hearing, I reminded Mr Cwalina that such matters had been determined in the Family Court proceeding and were irrelevant to what I was required to determine in this proceeding.
106 In Mr Cwalina's counterclaim he pleaded an implied joinder of issues in relation to the construction of the houses on the land the subject of this claim, and the Ettalong Beach property. In addition, Mr Cwalina pleaded equitable fraud, and unjust enrichment of Mr Rose. Such pleadings pertain to Ms Majak's involvement with the financial arrangements for the development of the land, and were a further impermissible attempt to indirectly rejoin Ms Majak to the proceeding (or at least reagitate her claims which were the subject of the Family Court proceeding).
107 Mr Cwalina sought to make complaints that both Mr Rose and Mr Byrnes had contravened their duties under the Civil Procedure Act 2010 (Vic) (the CPA). He alleged that Mr Rose's pleadings were made without a proper factual and legal basis.[13] I ruled that I would hear from the parties in respect of any alleged contraventions of the CPA after the delivery of this judgment.
108 In Mr Cwalina's counterclaim, he alleged that he had been pressured into the settlement agreement due to the 'risk of being forced to get involved' in 'protracted Family Court proceedings, that were estimated to last up to 10 days.' Mr Cwalina also pleaded that the services of his then solicitors were not effective, due to communication failures with Mr Byrnes. In Mr Rose's defence he asserted that such pleadings were vague and embarrassing. I note that no evidence was adduced by Mr Cwalina in respect of his former solicitor, and how this purported to impact upon his decision to enter into the settlement agreement. Instead, in his oral evidence, Mr Cwalina stated he was under duress when the settlement agreement was reached, as he was living in Poland, and he felt that if he did not agree, there was a risk he would have a judgment in default against him. I note this allegation was not the subject of a pleading.
109 In Mr Cwalina's prayer for relief he sought an order pursuant to s 233(1) and 233(2)(d) of the Property Law Act (1958) (the PLA) for compensation or reimbursement for damage caused by failing to complete the landscaping in a timely and efficient manner, which was said to have prevented the leasing of the properties following the issue of the occupancy permits. However, save for making an allegation that the Geofrey Street and Helen Street houses 'were not able to be rented out, because there was no landscaping, no fences and [Mr] Rose claimed that he had no money to complete such works', there was insufficient particulars or evidence to justify consideration or determination of this proposed order.
110 Further, in his written closing submissions Mr Cwalina alleged that Mr Rose was in breach of an implied duty 'to do all things as necessary' in accordance with the settlement agreement to enable Mr Cwalina 'to take residence in the house'. Further, he alleged that Mr Rose had engaged in unconscionable conduct for making a claim without a proper factual and legal basis. In Mr Cwalina's counterclaim, his allegations of unconscionable conduct included an allegation that Mr Rose acted deceitfully demanding that Mr Cwalina sign a transfer of his interests to Mr Rose without Mr Rose intending to repay his loans. This was not put to Mr Rose and there is no apparent basis for this pleading.
111 Mr Cwalina also claimed that when Mr Rose signed the construction contract, he pretended he was still in a relationship with Ms Majak, but shortly after denied having a relationship with her. Mr Cwalina claimed that this was an act of 'dishonesty towards Ms Majak' that constituted repudiation of the alleged deed agreement. Once again, this is a further impermissible attempt to reagitate Ms Majak's interests in the proceeding, and is irrelevant to the matters which I must determine.
112 In Mr Cwalina's written submissions reference was made to the factual background provided by Ms Majak in an affidavit sworn 17 September 2020, including her involvement in the procurement of the revenge strip. This, too, is irrelevant to the issues in dispute in this proceeding.
113 In Mr Cwalina's reply submissions he contended that Ms Majak should be joined as a party to the proceeding. Mr Cwalina also made submissions in relation to aspects of Mr Rose's amended counterclaim that were no longer relied upon.[14] Given that Mr Rose narrowed the issues in dispute regarding that aspect of his claim, it is not necessary for me to consider Mr Cwalina's submissions in respect of those abandoned pleadings.
114 Mr Rose adopted the contents of his witness outline of evidence dated 23 February 2023. Mr Rose was cross-examined by Mr Cwalina. Much of Mr Rose's evidence was in respect of matters referred to above, and was not in dispute.
115 Mr Rose gave evidence that, prior to the purchase of the land, the parties reached a verbal agreement in respect of the arrangements for the purchase of the Geofrey St property and construction of the houses. Mr Rose said that following the purchase of the Geofrey St property there was an attempt to formalise those arrangements in writing as between the parties, being the alleged deed agreement. Mr Rose gave evidence that the document was drafted by Ms Majak approximately six months after the purchase of the Geofrey St property. He said that Ms Majak and Mr Cwalina asked him to sign the document, however, as he could not make sense of the document and it was prepared by Ms Majak who had no legal skill or training, he refused to sign it. He gave evidence that he was asked to sign the document on a further occasion in or around 2007 but, again, refused to do so.
116 The version of the alleged deed agreement tendered in the proceeding contained the signatures of both Mr Rose and Mr Cwalina, witnessed by Ms Majak. In cross-examination, Mr Rose accepted that the signature on the copy of the alleged deed looked very similar to his own, but maintained that he had not signed the document. Mr Rose said further that he had a 'very clear recollection' of the document being put to him by Ms Majak and Mr Cwalina, and of his refusal to sign it.
117 Mr Rose was cross-examined by Mr Cwalina in relation to an unauthorised withdrawal of $25,000 from the construction loan account. Mr Rose gave evidence that he had taken $25,000 out of the construction loan account in response to Ms Majak withdrawing the same amount from a separate account he held jointly with Ms Majak. In re-examination, Mr Rose explained that this issue had been litigated in the Gosford Local Court, and that he was ordered to repay Mr Cwalina $12,500 (that being his half of the monies), together with costs. Mr Rose tendered a document evidencing payment of the $12,500 to Mr Cwalina on 17 June 2015. Mr Rose said that Mr Cwalina had not had the costs assessed.[15]
118 In addition, Mr Rose was cross-examined in respect of his capacity to comply with the terms of the settlement agreement, and in particular his capacity to obtain finance to enable him to pay off his portion of the loans. Mr Rose gave evidence that he believed he would be able to comply with the terms of the loan as: he had a well-paid job; jointly-owned an apartment in Sydney with his then partner; had his interest in the land in Frankston; and also had an interest in the Ettalong Beach property. Mr Rose stated he had anticipated that, in late 2017, the Family Court would have allowed him to settle his interest in the Ettalong Beach property and use his equity in the property to repay his share of the loans. However, Mr Rose conceded that delays in the Family Court proceeding prevented him getting access to his interest in the Ettalong Beach property for two years, and that this had 'thwarted' his capacity to settle on the loans in late 2017.
119 Mr Rose gave evidence that, notwithstanding several delays, the parties cooperated with Davis Lawyers to register the plan of subdivision. His evidence was that 'everything was going along well until December of 2019 when the final determination was handed down by the Family Court'. Mr Rose said that, after that time, Mr Cwalina and Ms Majak did not cooperate further with the terms of the settlement agreement, refused to pay outstanding fees to Davis Lawyers, and refused to assist in the signing of the necessary documents for partition of the lots of land.
120 Mr Rose said that Mr Byrnes gave him advice that under the settlement agreement he was not required to pay off the construction loan at a 'particular time suitable' to Mr Cwalina.
121 Mr Cwalina adopted the contents of his witness outline of evidence dated 14 March 2023 as true and correct.[16] He was thereafter cross-examined by Mr Rose's counsel.
122 Mr Cwalina said that prior to the acquisition of the Geofrey street property, he entered into an oral agreement with Mr Rose and Ms Majak to develop the property on the following terms:
(a) Mr Rose and Mr Cwalina would contribute 50% of the costs to acquire the land;
(b) two houses would be built;
(c) Mr Rose and Mr Cwalina would each contribute 50% of the costs to construct the two houses; and
(d) on completion of the development, the land would be subdivided into two, and Mr Rose and Ms Majak would take one property and Mr Cwalina would take the other.
123 Mr Cwalina was challenged in respect of the alleged deed agreement, and whether he had witnessed Mr Rose sign it. The following exchange occurred:
Q: You did not witness Mr Rose physically signing this document, did you?---Well, it was long time ago, but I would say yes, I must have witnessed that one because there are both signatures on this one and Ms Majak, so must have been done at the same time.
Q: Let me ask my question a different way. You do not specifically recall seeing Mr Rose physically sign this document, do you?---Well, if I didn't see - yes, I saw.
Q: Where did you - where do you say - - -?---That's his signature. Well, I would say of course I must have seen it. You know, it was some time ago, so as I say, you know, it was signed by both parties, so - -
Q: Yes. Mr Cwalina, if you could just focus on the question I'm asking. I'm not asking you to make assumptions or inferences?---Yes.
Q: I'm asking you to confirm that you cannot specifically recall Mr Rose signing this document, can you?---Not in details for sure.
Q: And you can't say where Mr Rose was when you allege he signed this document, can you?---M'mm. Well, for me to say now, it's, ah - it's rather difficult to confirm 100 per cent.
Q: In which case, coming back to my question, you cannot recall, can you?---Well, we were always meeting together with Ms Majak, so, ah, it must have been at the time when we met together with Ms Majak, and then there was of course it was a signature from - from both of us on the document.
Q: But you can't say where Mr Rose was when you allege he signed this document, can you?---Well, he must have been in Ettalong at the time when it was signed.
Q: But you cannot recall that specifically, can you? Your reasoning - - -?---Ah, well, when was it signed, the document? How many years ago?
Q: Well, this is your evidence, Mr Cwalina?---Okay. So the document was signed about, ah, 2006, so it was about, ah, 17 years ago. Just remember exactly what happened 17 years ago with the details of - of the, ah, situation it was something was done, it's rather difficult to say for sure that was just the situation.
124 In respect of the settlement agreement, Mr Cwalina said that he signed it under duress. Mr Cwalina said he was living in Poland at the time. He explained his reason for consenting to the settlement agreement was as follows:
...[I] wasn't aware of the proceedings going against me to be honest, that there was going to be a claim made against me. And I was in a very awkward situation myself, you know, privately and so on, and it just came out so, ah, I wasn't able to provide the reply and defend myself. And because Mr [Byrnes] came with the idea of the ]settlement] agreement, I was basically forced I must say to sign their agreement.... because if I didn't sign, I would pay the default that they - I would be, ah - I will lose, ah I would lose the case by default if I didn't sign it. There was a condition, because I wasn't able to - to, ah - to appear in court at the time and to defend my case.
125 In addition, Mr Cwalina gave evidence that the settlement agreement was reached based upon a proceeding which he alleged was commenced without proper factual or legal basis.
126 Notwithstanding such evidence, Mr Cwalina accepted that it had been his desire that the parties comply with the terms of the settlement agreement. Mr Cwalina accepted that the plan of subdivision was registered in accordance with the terms of the settlement agreement, as reflected in the proposed consent orders. He gave evidence that he had not signed the relevant forms to give effect to the partition of the land as he was not satisfied that Mr Rose had the capacity to pay out his share of the loans.
127 Mr Cwalina confirmed that in respect of the Rose personal loan, he did not make any repayments towards that, and he accepted that it was paid off in November 2021. Mr Cwalina accepted that since November 2021, Mr Rose's 'indebtedness' was not a reason preventing the partition of the land.
128 Mr Cwalina agreed that if the properties were both sold, the balance of the construction loan would be capable of being paid out from the moneys paid under the sale of both properties. Further, he said that he did not wish to remain a tenant in common with Mr Rose, and that he wanted to separate his personal relationship with Mr Rose.
129 Ms Majak adopted the contents of her witness outline dated 7 February 2023 as true and correct.[17] Thereafter, Ms Majak's oral evidence was limited to matters relevant to the facts in issue between the parties.
130 Ms Majak gave evidence that she had prepared the alleged deed agreement, and that she witnessed Mr Rose sign it. Ms Majak said that Mr Cwalina was also present when the document was signed by Mr Rose. Ms Majak accepted that the version of this deed agreement provided to the Family Court had not contained Mr Rose's signature, and that the signed version of the alleged deed agreement had only been discovered in this current proceeding. Ms Majak claimed that Mr Cwalina and Mr Rose each had a signed copy of the alleged deed agreement. Ms Majak stated that she held Mr Cwalina's copy of this document as she had stored documents belonging to him from the time he left Australia in 2009.
131 In respect of the alleged deed agreement, Mr Rose specifically denied ever signing it. However, he said that even if the agreement was valid, it could not now operate to override the terms of the settlement agreement.
132 Mr Rose submitted that the relevant provisions of the alleged deed agreement relied upon by Mr Cwalina did not operate in the manner contended. In particular, it was put that clause 2.5.1 of the alleged deed only applied if 'the development can not be carried out as planned'. It was submitted that as the development of the land had been carried out, this provision had no application.
133 Similarly, Mr Rose submitted that clause 2.5.2 applied in circumstances where one party was 'not [able] to fulfil his commitment to carry out the development.' Again, he submitted that was not the case here, as the development had been carried out. Therefore, even if I was satisfied that the deed agreement had been signed, it was put that it had no application to the present circumstances.
134 Mr Rose submitted that irrespective of what had occurred between the parties prior to 5 October 2017, the settlement agreement constituted an enforceable agreement between Mr Rose and Mr Cwalina. He submitted that it was clear on the face of the agreement that the parties had intended to be immediately bound by it. It was put that, as the parties had intended the settlement agreement to operate as proposed orders of consent to dispose of the proceeding, the agreement was 'an accord and conditional satisfaction'.[18] That is, a type of settlement agreement which became a binding contract when it was made, but did not have the effect of discharging Mr Rose's cause of action unless, and until, Mr Cwalina had complied with his obligations under the settlement agreement. It was put that the only real question for the Court to determine was whether that settlement agreement should be specifically enforced.
135 Mr Rose submitted that specific performance of the settlement agreement was problematic, because it required the ongoing cooperation of the parties. That is, it would require them to cooperate to bring about the partition of the land and to discharge the construction loan. Mr Rose submitted that the parties would need to reach an agreement as to the current values of each property. Further, in the event that the parties were unable to do so, it would require the obtaining and payment of two valuations for each property to ascertain the difference in value as required under the settlement agreement. It was put that given the enmity between the parties such cooperation was unlikely, with the 'undesirable result' that the Court would need to continually supervise performance of the agreement. Mr Rose submitted that a more pragmatic solution to the dispute was an order for judicial sale of both lots of land.
136 Mr Rose submitted that the sale proceeds should be divided equally between the parties, but on the basis that Mr Cwalina be required to discharge the construction loan and the CBA mortgage from his proceeds only, in circumstances where Mr Rose had previously discharged his 50% share of the construction loan in accordance with the terms of the settlement agreement.
137 Mr Rose submitted that he had given notice to the CBA of his intention to seek a judicial sale, and therefore, for the purposes of r 55.03 of the Rules, the requisite notice had been provided. He submitted that as the CBA had provided Mr Rose with a payout figure[19] to discharge the construction loan and the CBA mortgage, it could be taken that the CBA had approved the proposed judicial sale.
138 In the event that the Court is not minded to order a judicial sale, Mr Rose seeks specific performance of the remaining steps to be undertaken pursuant to the settlement agreement. Those steps require an order compelling Mr Cwalina to:
(a) pay to the CBA the balance of the construction loan debt that is owing;
(b) sign any forms necessary to obtain two updated valuations of the property;
(c) pay 50% of the cost of any valuations;
(d) sign any form necessary to give effect to the partition of the land, such that the Geofrey Street lot is registered solely in the name of Mr Rose and the Helen Street lot registered solely in the name of Mr Cwalina;
(e) pay the outstanding costs of Davis Lawyers, together with 50% of any further costs required by Davis Lawyers to complete the partition;
(f) pay to Mr Rose 50% of the difference between the value of the Geofrey Street lot and the Helen Street lot.
139 Mr Rose submitted that 'justice can clearly be done'[20] by this Court making an order for specific performance of the settlement agreement.
140 Mr Rose submitted that Mr Cwalina's counterclaim did not establish or identify any cause of action related to the relief sought, and that his counterclaim should therefore be dismissed. In respect of Mr Cwalina's reliance upon the alleged deed agreement, it was submitted that I should accept Mr Rose's evidence that he did not sign that agreement, and that claim should also be dismissed.
141 Mr Cwalina's pleadings, closing submissions and reply submissions were convoluted and contained many irrelevant matters. As best I could understand, Mr Cwalina submitted that there were two primary issues to be determined in this proceeding. First, whether the alleged deed agreement was signed by Mr Rose. Second, whether Mr Rose failed to comply with the settlement agreement, such that in all the surrounding circumstances, Mr Cwalina was entitled to terminate the partnership with Mr Rose in accordance with the terms of the alleged deed agreement. Mr Cwalina submitted that in order for me to determine those matters, it was necessary for me to answer the following questions:
a) What was the intention of the [alleged deed agreement]?
b) What was the intention of the [settlement agreement]?
c) Whether the [settlement agreement] was bona fide considering the advice given to [Mr Rose] by [Mr Byrnes], "that was not necessary" for [Mr Rose] to repay his loans according to specific terms of the [settlement agreement]?
d) Whether the terms of the [settlement agreement] would make a reasonable person to believe that [Mr Rose] had to release [Mr Cwalina] from the joint loan and his liability as a guarantor, before the partitioning of properties could be registered?
e) Whether [Mr Rose] was in breach of an implied duty to do all such things as necessary according to the [settlement agreement], to enable [Mr Cwalina] to take residence in the house that was to be registered in his sole name?
f) Whether the breach was premeditated and/or anticipated?
g) Whether [Mr Byrnes] had the authority to interfere with the work of Davies Lawyers to change the terms of the "[settlement agreement]", without [Mr Cwalina's] consent?
h) Whether [Mr Rose] and [Mr Byrnes] acted in contravention of the overarching obligations, filing a claim alleging that [Mr Cwalina] breached the [settlement agreement], considering anticipatory breach induced by [Mr Byrnes] and erroneous interpretation of the terms of the agreement to force [Mr Cwalina] into "assistance" in selling one of the properties without partitioning?
i) Whether making a claim without proper factual and legal basis, to disguise or camouflage the fact that [Mr Rose] breached the [settlement agreement], amount to unconscionable conduct?
142 Mr Cwalina referred me to the Federal Court decision (at first instance) of Gunns Limited v Balani Pty Ltd,[21] which he submitted supported his proposition that the Court is entitled to take account of the surrounding circumstances in construing contractual terms, even if the words in issue are not ambiguous or susceptible of more than one meaning.[22] Thereafter, Mr Cwalina's submissions outlined some of the surrounding circumstances which he claimed 'governed the contractual relations' between Mr Rose, Mr Cwalina, and Ms Majak at the time of the purchase of the land. It was thereafter submitted that there was no oral agreement to develop the land which required Mr Cwalina to cooperate to partition and sell the land. He submitted that such an agreement would contradict the terms of the alleged deed agreement, under which Mr Rose accepted limited right of disposal of the land.
143 Mr Cwalina also submitted that clause 2.4 of the alleged deed agreement was consistent with clause 3 of the settlement agreement.[23] Mr Cwalina contended that under clause 2.5 of the alleged deed agreement, Mr Rose had accepted limited rights to disposal of the land. Further, it was stated that under clause 3.1 of the alleged deed agreement Mr Rose had accepted that the partnership would end upon completion of the construction and registration of separate titles.
144 Mr Cwalina submitted that 'the demise' of the relationship between Mr Rose and Ms Majak provided a 'full explanation' as to why Mr Rose denied signing the alleged deed agreement.
145 In relation to the settlement agreement, Mr Cwalina urged me to accept his evidence as to why he had agreed to sign it. Mr Cwalina alleged that the settlement was based upon false pleadings. He also submitted that the evidence of Mr Rose demonstrated that Mr Rose had not intended to comply with the settlement agreement at the time he entered into it, as he did not have sufficient funds to comply with its terms. In view of those matters, Mr Cwalina submitted that the settlement agreement was unenforceable and void, or otherwise voidable from the beginning.
146 Mr Cwalina submitted that Mr Byrnes had 'unauthorised communication' with Davis Lawyers, which unilaterally changed the conditions of the settlement agreement. That is, it was put that the forms which Davis Lawyers required Mr Cwalina to sign were incorrect, as they were to enable subdivision to occur before partitioning, and this was not in accordance with the terms of the settlement agreement.
147 It was submitted that Mr Byrnes knew (or should be taken to have known) that Mr Rose was indebted beyond his capacity to seek further credit, and could not take ownership of the loan, as required under the settlement agreement. It was also submitted that, at trial, Mr Rose conceded that he had no funds to comply with the settlement agreement, even four years after signing it.
148 Mr Cwalina alleged that, as at October 2017, the difference in value between the two properties was minimal, and the cost of obtaining a further valuation at that time would have been greater than the amount of stamp duty payable. Further, he alleged that it was unreasonable to acquire a second valuation in circumstances where Mr Rose was not able to repay his loans and settle in accordance with the settlement agreement.
149 Mr Cwalina referred me to the decision of Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd[24] in which the High Court outlined the test for repudiation of a contract. Applying that test to Mr Rose's conduct detailed above, Mr Cwalina submitted that I should find there had been an anticipatory repudiation as well as an actual repudiation by Mr Rose on the basis that he was unable and unwilling to comply with the settlement agreement.
150 Mr Cwalina submitted that Mr Byrnes' conduct and dealings with Davis Lawyers in March 2019 (as well as the actions taken by him on behalf of Mr Rose in the family law proceeding and the current proceeding) caused delays, increased costs and frustrated the terms of the settlement agreement. Further, it was submitted Mr Byrnes had advised Mr Rose that it was not necessary for him to repay the loan, and this demonstrated that repudiation of the settlement agreement was anticipatory. Mr Cwalina also alleged such conduct by Mr Rose and Mr Byrnes was unconscionable as the proceeding was based on false allegations and then later there was an abandonment of the main issues so as to disguise such oppressive conduct.
151 It was submitted that following the registration of the subdivision, the delay in partitioning was due to Mr Rose not doing 'all things reasonably required' of him by the CBA to give effect to clause 3.
152 Mr Cwalina also relied upon his two termination notices to contend that Mr Rose had repudiated the settlement agreement. Mr Cwalina submitted that Mr Rose failed to respond to those notices and did not attempt to reconcile the construction loan account in accordance with his request contained in the second termination notice.
153 In addition to his submissions that the settlement agreement was repudiated by Mr Rose, Mr Cwalina asked me to find that the termination notices sent by him were valid, and that he was entitled to exercise his 'right to terminate' his partnership with Mr Rose.
154 In respect of Mr Rose's application for remedies of either judicial sale or specific enforcement, Mr Cwalina submitted that this should be refused, as it was Mr Rose (not Mr Cwalina) who had who had failed to comply with the terms of the settlement agreement, and 'justice could not be done' if either order was made. Further, Mr Cwalina submitted that an order for specific performance would not resolve the main issues in the proceeding.
155 In his closing submissions, Mr Cwalina conceded that his counterclaim had been made with a view to re-join Ms Majak as a party to the proceeding. He submitted that the refusal to allow this to occur[25] prevented the admission of 'all relevant evidence' in support of his counterclaim. Mr Cwalina contended this then made it 'impossible' for him to make submissions in support of his claim.
156 Notwithstanding the breadth of issues Mr Cwalina urged me to consider, for the reasons given below, I consider that in order to determine this proceeding I am only required to answer the following questions:
(1) What is the relevance, if any, of the alleged deed agreement?
(2) Does the settlement agreement constitute an accord and satisfaction between the parties?
(3) If yes, has Mr Rose repudiated the settlement agreement?
(4) If no to question 3, should Mr Cwalina be permitted to rely upon the first and/or second termination notice?
(5) If yes to question 2 and no to questions 3 and 4, should the court order specific enforcement of the settlement agreement, or judicial sale of the land?
(1) What is the relevance, if any, of the alleged deed agreement?
157 At the outset, I note that the original signed version of this document was not produced, and only a copy of the alleged agreement was tendered at trial. Although Mr Cwalina claims that it was signed on 5 May 2006, there is no date on it to indicate when the parties are said to have signed the document.
158 Mr Rose gave clear, credible evidence that he had seen this document approximately six months after the purchase of the Geofrey Street property. I also considered as credible his evidence that, despite being asked to sign the agreement on more than one occasion, he did not do so as he did not understand its contents. I do not accept Mr Cwalina's submission that it was the demise of Mr Rose's relationship with Ms Majak that explained Mr Roses' denial of signing this document.
159 Mr Cwalina gave vague and unconvincing evidence as to whether or not he had witnessed Mr Rose sign the alleged deed agreement. Mr Cwalina did, however, frankly concede that he was unable to recall when or where Mr Rose signed it.
160 Ms Majak gave evidence that she had witnessed Mr Rose sign the alleged deed agreement. However, in giving her evidence, Ms Majak failed to adequately explain how a signed version of the document had not been previously produced in the Family Court proceeding, and had only been discovered in this current proceeding.
161 For the following reasons, it is not necessary for me to reconcile the above evidence, and determine the authenticity or validity of this alleged deed agreement.
162 First, the settlement agreement was reached at a time when the parties were in dispute as to the termination of their partnership following the development of the land. I accept that by entering into the settlement agreement, the parties agreed that its terms would resolve the differences they had in respect of the proceeding.
163 Second, I accept Mr Rose's submission that those parts of the alleged deed agreement relied upon by Mr Cwalina, namely clauses 2.5.1 and 2.5.2, were expressed to apply only in the event that the land was not developed. Given the houses were constructed on the land, those clauses have no work to do in respect of the current dispute between the parties.
164 In view of those reasons, the alleged deed agreement is of no relevance to my determination of this proceeding.
(2) Does the settlement agreement constitute an accord and satisfaction between the parties?
165 Mr Cwalina's focus on Keogh J's refusal to make orders in terms of the proposed consent orders, was misguided. In this appeal of a decision of Efthim AsJ,[26] Keogh J upheld the associate justice's decision on the basis that it was not appropriate for the Court to make final orders where there had been apparent material non-compliance with the terms of the proposed consent orders, and Mr Cwalina had withdrawn his consent.[27] That issue, however, was different to the issue which is before me now - whether the settlement agreement, upon which the proposed consent orders were based, is binding between the parties.
166 Mr Cwalina alleged that he had entered into this settlement agreement under duress. There is insufficient evidence to support this allegation. It is also inconsistent with Mr Cwalina's evidence that he wished for the parties to comply with the settlement agreement, and that he was at all times ready, willing and able to do so. This aspect of Mr Cwalina's counterclaim must therefore fail.
167 Further, Mr Cwalina's claim that his circumstances (namely living overseas and his belief that judgment in default would be entered against him) motivated him to consent to the settlement agreement, is not a valid basis to set aside the agreement.
168 For those reasons, I am satisfied that an accord was reached between Mr Rose and Mr Cwalina at the time they entered into the settlement agreement and signed the proposed consent orders.
169 On the evidence before me, it is apparent that there has not been satisfaction of the settlement agreement. There has been only part performance of it - namely the parties instructed Davis Lawyers to procure the registration of a plan of subdivision, and the land was subsequently subdivided in accordance with the settlement agreement. The questions arising therefore are what further is required under the settlement agreement, what is the consequence of non-compliance, and what remedies, if any, should the Court order.
170 In Zivkovic v Parke,[28] the Court of Appeal considered the consequences of a failure of a party in a defamation proceeding to comply with terms of a settlement agreement reached, following acceptance of a Calderbank offer. The settlement agreement required the applicants to the appeal to: perform multiple obligations, including to remove the defamatory publications from the internet; to publish apologies in agreed terms; to undertake to desist from republishing or disseminating the defamatory publications; and to pay a sum of money to the respondent by a given date. Some of these obligations were done in accordance with the settlement agreement, however not in the time required under the agreement, and the money was not paid at all. In a joint judgment of Beach and Walker JJA, in allowing the appeal and holding that the agreement was an accord and conditional satisfaction, it was stated that:
The settlement agreement must be construed as a whole, with regard to its full context and purpose. It is not to be construed piecemeal or by reference to individual terms, or individual phrases within individual terms.[29]
171 Having undertaken that task, Beach and Walker JJA considered that:
Construed as a whole, in our view the chronological obligations imposed on the respondent by the settlement agreement suggested that full and final settlement (in the sense of the discharge of the respondent's claims against the applicants) was only to occur upon the performance of each of those obligations, culminating in the payment of the settlement sum.[30]
172 The Court also observed that there was no apparent reason for the respondent to have given up his existing rights for a series of promises, with the attendant risk of non-compliance, such that he was left only with an agreement which he would have to take legal action to enforce.[31]
173 In a dissenting judgment, Kyrou JA outlined the principles relating to the construction of settlement agreements.[32] His Honour explained that:
At common law, the settlement agreement is known as an 'accord' and the discharge of the plaintiff's claim by the provision of the consideration set out in the accord is known as 'satisfaction.'
If the parties fully comply with their settlement obligations under their accord, the relief the plaintiff receives under the settlement replaces the relief he or she claimed in the proceeding and the cause of action being pursued is discharged or satisfied. Commonly, consent orders are made which have the effect of terminating the proceeding. Unless the consent orders incorporate, and give effect to, the terms of settlement, the plaintiff's cause of action is resolved by the settlement agreement rather than by a judgment of the court. The settlement agreement becomes the repository of the parties' rights, which are enforceable in contract.[33]
174 His Honour then described three categories of settlement agreements recognised by the common law: an accord executory; an accord and satisfaction; and an accord and conditional satisfaction:[34]
An accord executory describes a settlement agreement under which no binding contract arises until there is compliance with the obligations it sets out. Until then, the plaintiff's cause of action subsists and can be pursued. Thus, if the plaintiff claims $1,000 and under the settlement agreement the defendant promises to pay $100 within 30 days, a binding contract does not arise until the defendant makes that payment. If the defendant fails to comply with his or her obligations under the settlement agreement, neither party can enforce it because it is not a binding contract. In that situation, the settlement agreement does not preclude the plaintiff from pursuing his or her claim for $1,000. If the defendant complies with his or her obligations under the settlement agreement, it becomes a binding contract and the plaintiff's cause of action is discharged.
An accord and satisfaction describes a settlement agreement which becomes a binding contract when it is made and has the effect of discharging the plaintiff's cause of action at that time, irrespective of whether the defendant complies with his or her obligations under the agreement. Thus, in the above example, the plaintiff is treated as accepting the defendant's promise to pay $100 within 30 days, rather than the actual payment of that amount, as the consideration for settling his or her claim for $1,000. That promise has the effect of discharging the plaintiff's claim for $1,000 as soon as the settlement agreement is made. From that time, the only right the plaintiff has against the defendant is to receive the amount of $100. If the defendant does not pay that amount in accordance with the settlement agreement, the only remedy available to the plaintiff is to enforce the defendant's contractual obligation to pay $100. The plaintiff can no longer pursue his or her claim for $1,000 against the defendant.
An accord and conditional satisfaction describes a settlement agreement which becomes a binding contract when it is made but it does not have the effect of discharging the plaintiff's cause of action unless and until the defendant complies with his or her obligations under the agreement. If the defendant's failure to do so constitutes a repudiation of the contract, the plaintiff may bring the contract to an end by accepting the repudiation, and pursue his or her original cause of action. Alternatively, the plaintiff may treat the contract as subsisting and seek specific performance of the defendant's obligations under it.[3]
175 Relevant to this proceeding, Mr Rose submitted that the settlement agreement was of the third category, that is an accord and conditional satisfaction. Mr Cwalina described Mr Rose's submissions in respect of Zivkovic to be convoluted, misleading and unintelligible. He did not thereafter engage in which of the three categories described by Kyrou JA applied to the settlement agreement.
176 When considered as a whole, the settlement agreement reached between Mr Rose and Mr Cwalina is better categorised as an accord and satisfaction. Clause 6 of the settlement agreement provided for the dismissal of Mr Rose's claim against Mr Cwalina, to take effect upon the making of the agreement, and was not expressed to be contingent on performance of the parties' obligations set out in clauses 1-4. Further, clause 5 required the parties to perform the obligations set out therein 'to give effect to' clauses 1-4, that is, only after the parties' obligations set out in clause 5 had been complied with. The context and purpose of the settlement agreement are such that it can be construed as resolving Mr Rose's cause of action against Mr Cwalina as pleaded in his counterclaim filed at that time.
177 The settlement agreement between Mr Rose and Mr Cwalina is different from the settlement agreement considered by the Court of Appeal in Zivkovic. In that case, the Court found that three of the promises might not have been enforceable by specific performance. Further, non-compliance with those promises involved the risk of further reputational harm and damage to the respondent. For the reasons given later, the promises in the settlement agreement the subject of this proceeding are capable of being subject to an order for specific performance. Further, as the agreement is concerned with the partitioning of land, consequences of non-compliance with the terms of the settlement agreement would not ordinarily give rise to any damages.
178 It is not necessary for me to definitively decide if the settlement agreement between Mr Rose and Mr Cwalina was an accord and satisfaction, or an accord and conditional satisfaction. Put simply, it is either one or the other. Mr Rose does not seek to pursue his original claim against Mr Cwalina, and therefore it is irrelevant whether or not his cause of action was discharged at the time the parties entered into the settlement agreement. Instead, Mr Rose seeks enforcement of Mr Cwalina's contractual obligations under the settlement agreement, as he is entitled to, irrespective of whether that agreement is categorised as an accord and satisfaction, or an accord and conditional satisfaction.
(3) Has Mr Rose repudiated the settlement agreement?
179 Having so found, it is next necessary to consider Mr Cwalina's counter claim and his defence to Mr Rose's claim, in which he contends that Mr Rose repudiated the settlement agreement..
180 In Koompahtoo, Gleeson CJ, Gummow, Heydon and Crennan JJ explained the two ways in which the term repudiation may be used:
First, it may refer to conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party's obligations. It may be termed renunciation. The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it. (In this case, we are not concerned with the issues that arise where the alleged repudiation takes the form of asserting an erroneous interpretation of the contract. Nor are we concerned with questions of inability as distinct from unwillingness.) Secondly, it may refer to any breach of contract which justifies termination by the other party. It will be necessary to return to the matter of classifying such breaches. Campbell J said this was the sense in which he would use the word "repudiation" in his reasons. There may be cases where a failure to perform, even if not a breach of an essential term (as to which more will be said), manifests unwillingness or inability to perform in such circumstances that the other party is entitled to conclude that the contract will not be performed substantially according to its requirements. This overlapping between renunciation and failure of performance may appear conceptually untidy, but unwillingness or inability to perform a contract often is manifested most clearly by the conduct of a party when the time for performance arrives. In contractual renunciation, actions may speak louder than words.[35]
181 In order to determine whether Mr Rose has repudiated the settlement agreement, it is helpful to consider the following:
(i) Which clauses of the settlement agreement have been complied with, and which remain outstanding?
(ii) If there was delay in compliance of a clause, the reason of such delay?
182 The land was subdivided on 18 December 2019, approximately two years and two months after the settlement agreement was reached. This occurred after the following steps were taken:
(i) Davis Lawyers undertook legal work to procure the registration of the subdivision, including communicating with the Council, a surveying company and seeking consent from the caveators, the CBA and Ms Majak.[36]
(ii) Both parties paid legal fees relating to the subdivision.
(iii) The original certificate of title in respect of the revenge strip was unable to be located and a new certificate of title needed to be obtained from the Land Titles Office. This did not occur until 7 March 2019. Due to this delay, Davis Lawyers advised the parties that a fresh consent was required from the CBA in respect of the subdivision.
(iv) The CBA advised the parties that as the inclusion of the revenge strip at the time of subdivision would increase the size of the land, it required the execution of new mortgages. There were then delays caused in the execution of these documents, in part due to the CBA misplacing the documents, and also due to the time taken to obtain the original document sent by Mr Cwalina from Ireland.
(v) An updated Abstract of Field Records was required from the surveyor, as the previous one had expired.
183 The land has not yet been partitioned and therefore clauses 2 and 3 have not been complied with.
184 Since the settlement agreement was entered into, there has only been one set of sworn valuations in respect of both lots of land. This valuation was obtained from Mr Mason in February 2020 and is now outdated. In any event, clause 4 required the parties to obtain a second valuation in respect of each lot of land, in order to calculate the difference in value between the two lots (for the purpose of Mr Cwalina paying Mr Rose 50% of the difference).
185 Davis Lawyers were instructed to jointly act for the parties to register the plan of subdivision and to partition the property.
186 As noted above, to date only Mr Mason has provided sworn valuations of the Geofrey Street lot and the Helen Street lot.
187 The Rose personal loan has now been repaid in full. However, the construction loan remains outstanding. The parties were required to 'do all things and sign all documents reasonably required' by the CBA so that the balance of the construction loan could be secured equally over both lots at the time of partition. The parties are in dispute about who was required to sign such documents and the time by which this should have occurred under the settlement agreement.
188 Both parties were to pay all costs of the subdivision, partition, valuations and refinancing of the construction loan, in equal amounts, and inclusive of associated fees and legal costs. An invoice of Davis Lawyers remains outstanding. There will likely be other costs arising on or before the partition of the land.
189 For the sake of completeness, I note that Mr Rose has complied with the additional term of this clause, being that he has paid all costs associated with his personal loan.
190 This clause required each party to pay his own respective costs of the counterclaim filed by Mr Rose. Clause 6 is not relevant to the issues in dispute.
191 In short, the parties have not complied with clauses 2, 3, 4, 5b, 5c and 5d of the settlement agreement. It therefore follows that the question to be determined is whether non-compliance with those clauses is due to acts or omissions of Mr Rose, and, if so, whether such acts constitute repudiatory conduct.
192 Before doing so, I note Mr Cwalina submitted that in interpreting the clauses contained within the settlement agreement, I should have regard to the surrounding circumstances, even in the absence of ambiguity in the contract. In support of this proposition, Mr Cwalina relied upon the decision, at first instance, of Gunns Limited v Balani Pty Ltd. However, this decision was subsequently appealed, and in Balani Pty Ltd v Gunns Limited,[37] the Full Federal Court concluded that the text and subject matter of the relevant agreement were sufficient for it to interpret the terms of the agreement without recourse to the surrounding circumstances. Having so held, the Court stated that it was unnecessary for it to consider whether it was permissible to have regard to surrounding circumstances in the absence of ambiguity.[38]
193 More recently in Siemens Gamesa Renewable Energy Pty Ltd v Bulgana Wind Farm Pty Ltd,[39] the principles of construction in commercial contracts were helpfully summarised by Riordan J as follows:
To construe the terms of a commercial contract, the Court asks 'what a reasonable businessperson would have understood those terms to mean'. To answer that question, 'the reasonable businessperson [is] placed in the position of the parties', and the Court applies the following principles:
(a) The terms are construed objectively and the subjective intentions of the parties are irrelevant.
(b) The objective approach requires reference to the text and its ordinary meaning, together with:
(i) the context, being the entire text of the contract including matters referred to in the text; and
(ii) the purpose.
These matters will ordinarily be identified by reference to the contract alone, but evidence of mutually known objective background circumstances relevant to the purpose is admissible 'no matter how clear the "ordinary meaning" of the words'. Identification of purpose may allow admission of evidence of the genesis of the transaction, the background, the context and the market in which the parties are operating.
(c) Unless a contrary intention appears in the contract, the court is entitled to approach the task of interpretation on the assumption that the parties intended to produce a commercial result, and should construe it so as to avoid a commercial nonsense. However, the court does not weigh the commerciality of the agreement, and business commonsense is a topic on which reasonable minds may differ.
(d) If, after completion of this process, the language used in the contract 'is ambiguous or susceptible of more than one meaning', then evidence of surrounding circumstances external to the contract ('surrounding circumstances') is admissible to assist with interpretation of the contract ('the ambiguity requirement').
events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating.
(f) However, 'evidence of the parties' statements and actions reflecting their actual intentions and expectations' is inadmissible. Although evidence of prior negotiations is admissible to establish objective background facts known to both parties and the subject matter of the contract, evidence of negotiations reflective of actual intentions and expectations is not receivable.
(g) Post contractual conduct is inadmissible to construe the terms of the contract. However, the parties' subsequent communications may be relevant to determine whether the parties intended to enter into a binding contract.[40]
194 Applying those principles to the construction of the settlement agreement, I am satisfied that the terms of the settlement agreement are sufficiently clear that I ought not have regard to the surrounding circumstances.
195 Contrary to Mr Cwalina's submission, the terms of the settlement agreement did not require that the subdivision and partition occur at the same time. Whilst the partition was dependent upon the land being subdivided, the subdivision was able to occur with, or without, partitioning. Further, there were different requirements in respect of each obligation. In short, to enable the land to be subdivided in accordance with clause 1, pursuant to clauses 5a and 5d, the parties were required to instruct Davis Lawyers to act for them in registering the subdivision, and to pay all costs associated with the subdivision. To enable the land to be partitioned in accordance with the terms contained in clauses 2, 3, and 4, pursuant to clauses 5a, 5b, 5c, and 5d, the parties were required to instruct Davis Lawyers to act for them, obtain two sworn valuations, sign all documents reasonably required of them by the CBA to transfer security for the loans in accordance with the terms of the settlement agreement, and pay all costs associated costs with the subdivision. The construction of such terms makes it clear that the subdivision and partitioning did not need to occur simultaneously. Therefore, there was no repudiation of the settlement agreement by the subdivision occurring first.
196 I also observe that the delay in the subdivision was not a consequence of Mr Rose's unwillingness or inability to comply with the terms of the settlement agreement. The dominant cause for delay at that time was the misplaced certificate of title for the revenge strip, for which neither party was blameworthy.
197 Having registered the subdivision, Davis Lawyers then proceeded to take steps to progress the partition of the land. As noted in the previous paragraph, in order to ensure compliance with the clauses pertaining to the partition of the land, numerous steps were required under the settlement agreement.
198 There is no evidence before me as to why a second valuation was not obtained in accordance with clause 5b. I am therefore not convinced that the failure to do so was the fault of either party. In Mr Cwalina's defence to the counterclaim, he contended that it was unreasonable to acquire a second valuation for the purpose of calculating stamp duty, which Mr Mason had assessed as being only $210 on the differential between the two lots. This allegation appeared to overlook that the need for two valuations was not solely for the purpose of stamp duty, but was required to ensure compliance with clause 4, under which Mr Cwalina agreed to pay to Mr Rose 50% of the difference between the two properties.
199 Mr Rose paid his share of the additional legal fees on 23 January 2020 in accordance with his joint obligations under clause 5d. Mr Cwalina admitted in his oral evidence that he had not paid his share of the additional fees. It is apparent from the tendered documents that numerous factors led to the increase in legal fees charged by Davis Lawyers. Contrary to what Mr Cwalina submitted, this was not due to the unauthorised interference of Mr Byrnes. In circumstances where Davis Lawyers were aware from the outset that they were to be acting for both parties, and that Mr Rose was represented separately by Mr Byrnes, it was permissible for Mr Byrnes to communicate with Davis Lawyers in respect of the steps to be taken to subdivide and partition the land. Such communications were not unauthorised in the manner Mr Cwalina contended.
200 I am satisfied that the misplaced certificate of title for the revenge strip, the need for renewed consent forms and fresh mortgage documents, together with extensive acrimonious email communications between the parties, contributed to these additional legal costs. I am also satisfied that the outstanding legal fees owed to Davis Lawyers is one of the reasons why Davis Lawyers have not proceeded with the partition of the land.
201 Clause 5c required the parties to 'do all things and sign all documents reasonably required by the CBA', to enable:
(i) Mr Rose to be solely responsible for the Rose personal loan and for the Geofrey Street lot to be the sole security for it; and
(ii) The construction loan to be divided equally between the parties, such that50% of the balance as at the date of partition be secured over the Geofrey Street lot and the remaining 50% be secured over the Helen Street lot.
202 This clause did not specify how the transfer of security on the Rose personal loan, nor the division of the construction loan, would be effected. However, this clause contemplated that the CBA may require Mr Rose and/or Mr Cwalina to pay out their respective shares of the two loans or refinance same, and if so requested, the parties were obliged to do all things and sign all documents reasonably required by the CBA.
203 There is no evidence before me that the CBA required Mr Rose to pay out his respective share of the loans, nor that his refusal or inability to do so contributed to noncompliance with clause 5c. Instead, the correspondence between the parties and the CBA in May 2019 was to the effect that the CBA was considering preparing two separate mortgages. Then in August 2020, the CBA informed Mr Byrnes that if Mr Rose wished to split the construction loan, he should contact his personal lender for advice. Subsequent to this, in November 2021, Mr Rose paid out his personal loan in full, as well as his share of the construction loan.
204 In his closing submissions, Mr Cwalina urged me to find that Mr Byrnes' advice to Mr Rose that he did not need to repay the loan at a particular point in time[41] amounted to repudiatory conduct. However, Mr Cwalina's submission misconstrued Mr Rose's evidence and the terms of the settlement agreement. As previously explained, there was no requirement that the subdivision and partition occur at the same time. Under clause 5c of the settlement agreement, it was for the CBA to identify the requisite documents to be signed by the parties to give effect to the terms of the settlement agreement. Whilst clause 5c contemplated the CBA requesting that the parties either pay out their respective share of the loans or otherwise obtain finance, this was not a pre-condition to the partition of the land.
205 In view of such matters, I reject Mr Cwalina's submission that Mr Rose was not ready, willing and able to comply with the settlement agreement due to lack of finances. Whilst Mr Rose conceded in his evidence that his financial situation was compromised for a period of time due to delays in the Family Court proceeding, on the evidence before me, I am not persuaded that the conduct of Mr Rose evinced an unwillingness or inability of Mr Rose to perform his obligations under the settlement agreement. Further, Mr Rose's evidence that he was not required to pay off his share of the construction loan at a 'time suitable' to Mr Cwalina, was not repudiatory conduct as this was not inconsistent with the terms of the settlement agreement.
206 A further factor which contributed to the delay in the partitioning of the land was the refusal of Ms Majak to remove her caveat. It was not until 20 November 2020 that the Registrar of the Family Court provided this consent on her behalf.
207 It would appear that the application by Mr Rose before Efthim AsJ, and the subsequent appeal of that decision, caused a further delay in either party performing the balance of their obligations under the settlement agreement. Whilst those two applications by Mr Rose were unsuccessful, such conduct demonstrated his desire to enforce the settlement agreement - in stark contrast to conduct which could be said to demonstrate an intention to no longer be bound by (or fulfil his obligations in a manner inconsistent with) the settlement agreement.
208 Mr Cwalina conceded that he had not signed the forms required to give effect to the partition.
209 Having found multiple factors responsible for the parties' delay in complying with the terms of the settlement agreement which required partition of the land, I am not satisfied that Mr Rose's conduct was such as to convey to a reasonable person, in the position of Mr Cwalina, renunciation of the settlement agreement, as a whole or of a fundamental obligation under it. For the sake of completeness, I also reject Mr Cwalina's submission that Mr Byrnes' actions constituted repudiatory conduct on behalf of his client. For those reasons, this aspect of Mr Cwalina's defence and counterclaim must fail.
(4) Should Mr Cwalina be permitted to rely upon the first and or second termination notice?
210 Mr Cwalina sought to rely upon these notices to justify termination of the settlement agreement. For the reasons given below, neither termination notice is capable of setting aside the settlement agreement.
211 The first termination notice[42] requested termination of the 'partnership' and not the settlement agreement. Mr Cwalina claimed this partnership was based upon the alleged deed agreement. In Mr Rose's initial counterclaim,[43] Mr Rose denied the alleged deed agreement and instead claimed that he had entered into an oral agreement with Mr Cwalina to develop the land. Irrespective of the agreement which had previously governed the parties' dealings in respect of the land, as at 5 October 2017, the settlement agreement was the operative contract by which the parties were thereafter subject to.
212 In the first termination notice, Mr Cwalina sought to vary the terms of the settlement agreement by proposing to buy Mr Rose's share of the property. There was no obligation for Mr Rose to respond to this proposal.
213 Further, in this notice, Mr Cwalina stated that he would issue proceedings to enforce the settlement agreement if Mr Rose did not provide him with a 'satisfactory reply' as to his 'readiness to complete' within 7 days. There is no evidence before me as to what response, if any, Mr Rose provided to this demand. In any event, no such proceedings were issued. As explained above, separate to Mr Rose signing all documents reasonably required of him by the CBA, other steps were required at this time which prevented satisfaction of the accord reached between the parties.
214 On the material before me, I am not satisfied that the first termination notice justifies the grant of an order to set aside the settlement agreement in favour of Mr Cwalina.
215 Mr Cwalina's second termination notice[44] referred to termination of the partnership entered into by the parties in accordance with 'verbal agreements' and the alleged deed agreement. Even if I accept that the parties validly entered into any such prior agreements, these agreements were superseded at the time the parties entered into the settlement agreement. Therefore, it is not necessary for me to consider Mr Cwalina's submissions in respect of those prior agreements.
216 Mr Cwalina also made allegations that Mr Byrnes interfered with the process of partition, without a valid reason. I do not accept this allegation. Mr Byrnes, as Mr Rose's solicitor, communicated with Davis Lawyers as to the steps required to progress the terms of the settlement agreement. Davis Lawyers also received communications from Mr Cwalina. It is apparent from the tendered documents that Davis Lawyers was cognisant that it was instructed by both parties. I am not satisfied that there was impermissible intervention by Mr Byrnes over the period in which Davis Lawyers was retained.
217 Next in his second termination notice, Mr Cwalina alleged that Mr Rose repudiated the settlement agreement by 'forcing the subdivision to be carried out without [Mr Rose] taking sole responsibility for [his] loans as agreed in the [settlement agreement].' However, as stated above, I do not accept that the settlement agreement required the subdivision to occur at the same time as the partition of the land. Further, the subdivision was not subject to Mr Rose arranging his finances or transferring security for the loans.
218 Finally, as to Mr Cwalina's request for a statement of account showing Mr Rose's construction loan repayments, I was not taken to any authority to support Mr Cwalina's contention that Mr Rose's alleged failure to do so gave rise to an entitlement to terminate or rescind the settlement agreement.
219 For the aforementioned reasons, I am also not satisfied that the second termination notice provides justification for Mr Cwalina to now seek an order setting aside the settlement agreement.
220 In view of the above, it also follows that I reject Mr Cwalina's submission that the second termination notice entitled him to buy out Mr Rose's interest in the land for the sum identified in clause 2.5 of the alleged deed agreement.
(5) Should the Court order specific performance or judicial sale of the properties?
221 Having found that Mr Rose has not repudiated the settlement agreement, and that Mr Cwalina is not able to rely upon the notices of termination, it is now necessary for me to consider what orders should be made to enforce the terms of the settlement agreement. Mr Rose sought an order for judicial sale, but in the alternative, sought an order for summary enforcement of the settlement agreement. Mr Cwalina opposed the making of either order.
222 In Roberts v Gippsland Agricultural & Earth Moving Contracting Co Pty Ltd,[45] the Full Court considered an appeal concerning an application for summary enforcement of a settlement agreement in an existing proceeding. In Roberts, Smith J reviewed numerous authorities, and outlined the 'certain rather vaguely defined rules of practice' relevant to a court's exercise of its discretion to order specific performance.[46] The analysis undertaken by Smith J in Roberts has been widely adopted and approved in this State.[47] Both parties referred me to a recent decision of Daly AsJ in Bell v Knight 34 Langdon Road Pty Ltd[48], which contains a helpful summary of the guidance provided in Roberts.
223 At the outset, AsJ Daly relevantly noted that, according to Smith J in Roberts:
... the critical question is whether the Court can be satisfied that justice can be done by ... enforcement of the settlement agreement.[49]
224 In determining whether justice can be done, the Court must consider a variety of matters involving questions of degree, which include:
... the extent to which extraneous matters are involved, how substantial are the questions to be determined, to what extent questions of credibility are likely to arise, and whether pleadings and discovery are desirable.[50]
225 A summary of the factors relevant to whether a court should grant (or entertain) an application for the enforcement of a settlement agreement, as identified by Smith J in Roberts, were set out in Bell as follows:
(a) if the settlement agreement for which enforcement was sought involved matters extraneous to the proceeding in which the application for summary enforcement was made, it would generally be necessary for the applicant to issue a separate proceeding; and
(b) matters "extraneous to the suit" might include:
(v) where the settlement agreement concerned property which was not referred to in the proceeding;
(vi) enforcement of the settlement agreement would involve granting remedies beyond which a court would ordinarily order
(vii) enforcement of the settlement agreement involved giving effect to different equities with which the original proceeding was concerned; and
(viii) if there were parties to the settlement agreement which were not parties to the original proceeding.[51]
226 Her Honour observed, and I respectfully agree, that the following factors are also relevant to a court's consideration of whether justice can be done by the enforcement of a settlement agreement:
(a) whether the settlement agreement concerned included a term allowing the reinstatement of the proceeding and the entry of judgment upon default;
(b) whether all interested parties were before the court;
(c) whether the facts were uncontested and/or whether there was any dispute about quantum, and, to the extent there were such disputes, whether the resolution of those disputes turned upon the credibility of witnesses;
(d) whether requiring the issue of a new proceeding would cause further delay and expense; and
(e) whether there has been any unexplained delay on the part of the applicant for summary enforcement in seeking relief.[52]
227 In Bell, purchasers of an off the plan apartment (the plaintiffs), sought specific performance of a settlement agreement reached with the property developers and builders (the defendants). The plaintiffs were dissatisfied with defects in the apartment and sought to rescind the contract of sale. The settlement agreement had resolved a civil proceeding between the parties in relation to the underlying dispute. Thereafter, the parties did not comply with all terms of the settlement agreement, in particular a term which required the apartment to be transferred into the plaintiffs names. The plaintiff then sought specific enforcement of the settlement agreement.
228 In considering whether the remedy of specific performance was available to enforce the terms of the settlement agreement, Daly AsJ relevantly stated that:
... for any contract involving the disposition of an interest in land, the presumption is, given the unique quality of land, that damages would not be an adequate remedy for breach of any such agreement.[53]
229 Her Honour was ultimately satisfied on the evidence before her that she ought exercise her discretion to order the enforcement of the settlement agreement.
Inherent power, Rules, legislation and principles relevant to judicial sale
230 The Court has inherent power to order a judicial sale of land.[54]
231 Order 55 of the Rules provides the mechanism for a judicial sale. It allows the Court to make orders for sale in any proceeding relating to land,[55] where it is necessary or expedient for the purposes of the proceeding,[56] provided that notice has been given in writing to every person interested in the land, whether or not a party.[57]
232 If the Court orders judicial sale of land, the Court may:
(i) appoint a party or other person to have the conduct of the sale;[58]
(ii) permit that person to sell the land in such manner as that person thinks fit;[59]
(iii) give further directions as to -
(a) fixing the manner of sale, whether by contract conditional on approval of the Court, private treaty, public auction or tender or otherwise;
(b) fixing a reserve or minimum price;
(c) requiring payment of the purchase money into court or to a trustee or other person;
(d) for settling the particulars and conditions of sale;
(e) for obtaining evidence of value; or
(f) fixing the remuneration to be allowed to any auctioneer, estate agent or other person.[60]
233 In Hycenko v VHY Enterprises,[61] Derham AsJ considered the requirements for judicial sale of two properties pursuant to s 91 of the PLA and the inherent jurisdiction of the Court. The plaintiff had an equitable charge over the properties, owned by the first defendant, and sought judicial sale to satisfy a judgment debt the plaintiff had against that defendant. His Honour noted:
Subject to specific rules of court to the contrary, it is a fundamental requirement for the exercise of a court's power to order a judicial sale that a person whose rights will be affected by the order should be a party to a proceeding.[62]
234 In addition, Derham AsJ identified the following matters relevant to the exercise of the discretion whether or not to order a judicial sale:
(a) A sale will usually not be ordered where there is no evidence of value of the property, although there are instances where that has happened. The reason is that without some evidence of the value of the property, it would not be possible to fix a reserve price for any sale, it would not be possible to form a view about whether it was appropriate to give the mortgagor time to pay before a sale could be made (and if so how long), and there would be serious difficulties in deciding who should have the conduct of the sale, and what conditions ought be imposed for the protection of the first mortgagee.
(b) If the Court is authorising the sale, it should exercise some control over the terms and manner of conduct of the sale, including the fixing of a reserve price, the timing of the sale, who has the conduct of the sale and whether there should be conditions for the protection of the first mortgagee.
(c) It is also usually important to know how much debt is secured by the property, before the order for sale is made.[63]
235 In VHY Enterprises, having considered the parties submissions, and applying the principles referred to above, Derham AsJ was satisfied to exercise his discretion and ordered judicial sale of the properties.
236 The Court appointed the plaintiff to have conduct of the sale, as the indicated values of the properties were insufficient to cover all the monies secured, and thus the plaintiff, as chargee, was found to have the greatest interest in maximising the sale price. I also note that Derham AsJ considered the 'evident animosity' between the parties as a relevant factor in determining which party should have conduct of the sale.[64]
237 Further, so as to enable the Court to exercise some control over the terms and manner of conduct of the sale, Derham AsJ required the plaintiff to select two independent real estate agents, carrying on business in the locality of the properties, to prepare proposals for the marketing and sale of the properties (covering the commission, advertising expenses, recommended reserve price, method of sale and the like). His Honour also required that, once the proposals were available, a preferred selling agent would be appointed and orders made by the Court relating to the sale of the land (including setting the reserve price, prescribing the form of the contract, and appointing a particular solicitor to conduct the sale).[65]
238 In view of the above, I accept that specific enforcement of the settlement agreement and judicial sale of the land are remedies both open to me. Before exercising my discretion to order either, I consider it appropriate that I first determine whether justice can be done in ordering specific enforcement of the settlement agreement. Relevant to this determination are the following considerations:
(i) Mr Cwalina has offered no satisfactory reason as to why he should not be required to comply with the settlement agreement. For the reasons outlined above, I am not satisfied that Mr Rose has repudiated the agreement, nor am I satisfied that Mr Cwalina is entitled to terminate or rescind the agreement. I also reject Mr Cwalina's contention that an order for specific performance would not resolve the main issues in the proceeding. As explained above, many of the issues which Mr Cwalina seeks to agitate in this proceeding are not open on the pleadings.
(ii) The settlement agreement was between two parties - Mr Rose and Mr Cwalina - the same two parties to this proceeding.
(iii) There is no third party who will suffer prejudice from the enforcement of the settlement agreement. Despite Ms Majak's desire to rejoin the proceeding, she is not a party to it. Further, Ms Majak is not a party to the settlement agreement and is not an owner of the land. Save for Mr Cwalina agreeing to hold 5% of his share of the land on trust for Ms Majak, she does not have a further entitlement to claim an interest in the land.
(iv) There are no matters identified by Mr Cwalina which are extraneous to the suit. Mr Cwalina's reference to Mr Rose's failure to reconcile accounts in respect of the construction loan is not a matter which arises under the settlement agreement. I am satisfied from the evidence before me that from the time the houses were rented out until the time Mr Rose repaid his share of the construction loan, rental monies from the houses satisfied repayments due under the construction loan.
(v) Mr Rose has paid the Rose personal loan and his share of the construction loan, and is ready, willing and able to perform his obligations under the settlement agreement.
(vi) Mr Cwalina has failed to produce evidence of hardship in the event specific performance is ordered. In his evidence he accepted that the value of his share in the land would exceed his liability under the construction loan.
(vii) Damages would be an inadequate remedy given that the settlement agreement involves the partitioning of real property.[66]
239 Whilst all of these considerations may support the making of orders to enforce the settlement agreement, Mr Rose submitted that this would be problematic, as it would require cooperation between the parties. Mr Rose sought an order for judicial sale as a 'pragmatic solution' to the resolution of this proceeding.
240 In furtherance of this submission, Mr Rose contended that co-operation between the parties was required in respect of the following matters:
(a) agreement by Mr Cwalina to pay the outstanding fees to Davis Lawyers so they can take further action as necessary to partition the land;
(b) agreement between the parties as to the current value of both lots of land or, in the absence of such agreement, agreement to obtain and pay for two valuations from Mason's Valuation and BMT Valuers, in respect of each lot of land;
(c) agreement by Mr Cwalina to discharge the construction loan, in circumstances where Mr Rose discharged his 50% share of the loan as at November 2021.
241 I note that Mr Rose did not refer me to any authorities in support of his proposition that judicial sale should be preferred over an order for specific enforcement of a settlement agreement between co-owners on the basis that it was a more pragmatic solution.
242 Whilst the evidence of the parties, tendered documents and submissions in this proceeding demonstrate the depth of animosity between the parties, I am not satisfied that co-operation between the parties is essential to the enforcement of the settlement agreement. Specific orders can be made, consistent with the terms of the settlement agreement, that will require compliance by both parties. I am satisfied that I should exercise my discretion in this way to enable justice to be (finally) be done in this proceeding.
243 Whilst I will hear from the parties on the precise form of the orders, I consider the following orders, in general terms, appropriate:
(i) Within seven days (on a date to be specified), Mr Cwalina pay the outstanding costs of Davis Lawyers;
(ii) Within seven days (on a date to be specified), Mr Rose engage Mason's Valuation and BMT Valuers to provide sworn valuations of the two lots of land;
(iii) Mr Cwalina and Mr Rose each pay 50% of the costs of both valuations, by the due date contained in the respective invoices;
(iv) Mr Rose and Mr Cwalina each pay 50% of any further costs incurred with Davis Lawyers to complete the partition, by the due date contained on the account rendered;
(v) Mr Rose and Mr Cwalina each pay 50% of any other fees, stamp duty, bank fees and all other costs to give effect to the partition of the land, in accordance with any accounts rendered;
(vi) Within 28 days (on a date to be specified), Mr Cwalina pay to the CBA the balance of the construction loan debt;
(vii) Within 28 days (on a date to be specified), Mr Cwalina sign any necessary forms to give effect to the partition of the land, such that the Geofrey Street lot is registered solely in the name of Mr Rose, and the Helen Street lot is registered solely in the name of Mr Cwalina;
(viii) Within 14 days of the day upon which the later of the two valuations is received, Mr Cwalina pay to Mr Rose 50% of the difference between the value of the Geofrey Street lot and the Helen Street lot, with such payment to be held in the trust account of Davis Lawyers and released to Mr Rose upon registration of the partition;
(ix) In the event that Mr Cwalina seeks and is awarded any damages for the injunction, such damages to be offset from the monies owed to Mr Rose in accordance with (viii);
(x) That Davis Lawyers, upon proof of satisfaction of payment in accordance with (i), (iv), (v), (vi), (viii), file the signed partition documentation with the Land Titles Office;
(xi) Liberty to apply.
244 Whilst the settlement agreement did not have time periods stipulated for the performance of such steps (save for clauses 5a and 5b), it is appropriate for the Court to specify exact dates by which compliance with the orders is required. In the event of non-compliance, the parties have liberty to apply.
245 If Mr Rose's concerns about Mr Cwalina being uncooperative eventuate, that may justify reconsideration of his application for judicial sale. Nevertheless, as things stand at present, for the reasons given, the parties should be required to comply with the terms of the settlement agreement.
246 At the trial and in his closing submissions, Mr Cwalina sought to agitate as an issue, Mr Roses's abandonment of his claim that he had made greater contributions to the development of the houses than Mr Cwalina, and that Mr Cwalina initially delayed in renting out the houses, which caused Mr Rose financial loss. Mr Cwalina alleged there was no proper basis for this claim by Mr Rose, and it had been made dishonestly. In circumstances where the claim was not persisted with, and I received no evidence in relation to this, I do not accept Mr Cwalina's submissions in respect of this.
247 Mr Cwalina also made allegations against Mr Byrnes. For the reasons given above, I am not satisfied there is any substance to these allegations.
248 For the sake of completeness, in addition to the proposed orders foreshadowed at [243], I also formally dismiss Mr Cwalina's counterclaim.
249 Within seven days the parties are to submit proposed orders of consent, including proposed orders in respect of costs. In the absence of agreement, written submissions on appropriate orders should be provided to my chambers, limited to five pages.
250 In the event that Mr Cwalina seeks damages arising from the injunction, also within seven days, Mr Cwalina should provide written submissions as to the quantum of such damages, and why these should be awarded. If this claim is made, Mr Rose has seven days thereafter to provide his written submissions in reply. Such submissions, for both parties, shall be limited to five pages.
[1] Pursuant to an Order of Matthews AsJ (as she was then) on 27 May 2022.
[2] In addition, Mr Cwalina alleged that Mr Rose and Mr Byrnes had contravened overarching obligations under the Civil Procedure Act 2010 (Vic). I ruled that I would hear from the parties and consider such allegations after I delivered this judgment.
[3] Filed pursuant to an order of Keith JR on 12 October 2021. At trial, Mr Rose did not rely upon [55]-[62] of his amended counterclaim. That is, he abandoned his claim that he had made greater contributions to the development of the houses than Mr Cwalina, and that Mr Cwalina initially delayed renting out the houses.
[4] See Mr Rose's evidence on this at [115]-[116].
[5] Mr Cwalina claimed that Ms Majak acquired the revenge strip and transferred it to Mr Rose and Mr Cwalina on certain terms. This was disputed by Mr Rose. However, it is not necessary for me to make findings in respect of this conflict in the evidence, as it is not relevant to the issues in the present proceeding.
[7] I note there is no clause 6(a) under the settlement agreement. I infer this should read clause 5(a).
[8] Majak v Rose [2021] VSC 599, [10]-[11].
[9] At that time, Mr Cwalina erroneously believed the proposed consent orders had been made.
[10] Majak v Rose & Anor (Supreme Court of Victoria, Efthim AsJ, 26 March 2021), [21].
[12] A Notice of Constitutional Matter dated 8 September 2023 was provided by Mr Cwalina to my chambers, via email, on 11 September 2023. The other recipients of this email appeared to be offices of the Commonwealth Attorney-General, and Attorneys-General from Australian States and Territories. This Notice stated that Mr Cwalina alleged that the Family Court referral was inconsistent with s 78B of the Judiciary Act 1903 (Cth). On 20 October 2023, Mr Cwalina filed an application in the High Court for removal of the whole of the cause in this proceeding to the High Court, pursuant to s 40(2) of the Judiciary Act.
[13] By way of summons dated 15 December 2022. On 31 March 2023, Matthews AsJ (as she then was) ruled in relation to proposed order 12 of that summons, and dismissed Mr Cwalina's application to restrain Mr Byrnes from continuing to act for Mr Rose in the proceeding. On 8 August 2023, I ruled that proposed orders 1-11 of Mr Cwalina's summons be heard and determined at a time to be fixed after delivery of my judgment in the proceeding.
[15] In Mr Cwalina's defence to Mr Rose's amended counterclaim, Mr Cwalina pleaded that these costs were assessed by June McPhie on 13 December 2016 but had not been paid by Mr Rose. This assessment was not tendered, nor was it put to Mr Rose in cross-examination.
[16] Mr Rose's counsel indicated that in the interests of proceeding efficiently he did not object to all of the evidence being admitted and would instead make closing submissions in respect of what evidence was irrelevant.
[17] Mr Rose's counsel adopted the same approach as outlined above (n 16).
[18] Citing Zivkovic v Parke [2022] VSCA 43, [83].
[20] Citing Roberts v Gippsland Agricultural & Earth Moving Contracting Co Pty Ltd [1956] VicLawRp 21; [1956] VLR 555; Seachange Management Pty Ltd v Pital Business Pty Ltd [2009] VSCA 139; (2009) 23 VR 396; and Bell v Knight 34 Langdon Road Pty Ltd [2022] VSC 497.
[24] [2007] HCA 61; (2007) 233 CLR 115, [44].
[25] See Cwalina v Rose [2023] VSC 34.
[32] Beach and Walker JJA adopted those principles relating to the construction of settlement agreements, but unlike Kyrou JA concluded that the settlement agreement was an accord and conditional satisfaction and thus dismissed the appeal.
[34] Ibid [81]-[83] (citations omitted).
[35] Koompahtoo (n 24), [44] (citations omitted).
[36] As required by s 22 of the Subdivision Act (1988).
[43] The relevant pleading at the time the settlement agreement was entered into.
[47] See, for example, Barrett v Rees [2014] VSCA 327 at [12]; Mark Simon Laszczuk v Bendigo & Adelaide Bank Letd [2020] 61 VR 1 at [12]; and Seachange Management (n 20).
[51] Bell (n 20), [49]. The numbering of subparagraphs (v)-(viii) although appearing incorrect, reflects those in Bell.
[54] Hycenko v Badge & Ors [2023] VSC 19, [39]; Hycenko v VHY Enterprises Pty Ltd & Ors [2020] VSC 834, [35].
[57] Rule 55.03, or except for special reason.
Rose
Cwalina [2023] VSC 721
(2007) 233 CLR 115
(2009) 23 VR 396