Plaintiff v First Defendant

TORT - Trespass, conversion and detinue - Whether curtains, carpets and chandeliers chattels or fixtures - Whether plaintiff had right to possession of the items - Ownership of the items - Pleadings - Appropriate relief

For the First Defendant (up to and including 26 August 2015)

1 The plaintiff, Mrs Amanda Jane Thompson, sues Geminder Holdings Pty Ltd and Mr Raphael Geminder, the second and third defendants (to whom I will generally refer as 'the Geminders'), for damages for breaches of contracts or for equitable compensation arising from estoppels. She also seeks damages in tort for trespass, conversion of detinue of chattels left in her family home in Toorak and for their delivery up. Mrs Thompson leased her home to Mr Geminder from January 2013. Mrs Thompson also sues Mr David Anthony Heffernan and Mrs Sharon Lee Heffernan ('the Heffernans'), the fourth and fifth defendants, for delivery up of the chattels. The Heffernans purchased Mrs Thompson's home from the National Australia Bank Limited ('the NAB') acting as mortgagee in November 2013, while Mr Geminder and his family were still living in it as tenants.

2 Mrs Thompson's claims against the Geminder are not established. No contract was formed between Mrs Thompson and the Geminders other than the agreement to lease and the lease. Mrs Thompson has not established any breach of any contract. Nor has Mrs Thompson established any claim in estoppel against the Geminders. Her claims against Mr Geminder in tort for trespass, conversion or detinue have not been established. In respect of Mrs Thompson's claims against the Heffernans for an order for delivery up of chattels, I find that the chandeliers are chattels, but not the carpets, carpet squares or curtains. I will hear the parties as to the appropriate order that follows from that finding. There are issues about the possible interest of Mr Thompson's trustees in bankruptcy in the chandeliers and the terms of Mrs Thompson's pleadings against the Heffernans on which I will invite the parties' submissions.

3 The evidence establishes that the Thompsons and the Geminders needed each other. The Thompsons needed Mr Geminder and his tenancy of their family home to help by their lease and presence stave off the NAB from repossessing their home. Mr Geminder needed the Thompsons' home to provide them with the luxury accommodation that he and his family desired met their family's requirements, while their own home was being renovated and extended.

4 The plaintiff, Mrs Thompson is a psychologist. She and Mr Thompson have three teenage daughters.

5 Mr Warren Thompson is a business man with substantial experience in property development.[1] He has been a director of over 50 companies and over many years has been involved in property transactions worth millions of dollars. He has been involved with many leases and is familiar with their terms and concepts.[2] In the late 1980s, 18-20 of his companies were placed into liquidation with debts of $160m.[3] He was declared bankrupt in 1992, owing his creditors $105m.[4]

1. The proceeding concerns a property at 607 Toorak Road, Toorak, which Mr and Mrs Thompson purchased in November 1998. It is a substantial property and was agreed as having a current market value of $10m.[5] In and about 2005 and 2006, the Thompsons undertook substantial renovations to the property, which cost about $4m and took about six years to complete.

7 On 10 September 2007, Mrs Thompson gave a mortgage of her interest in the property to the NAB to support her husband's businesses. In March 2008, Mr Thompson paid out the debt, however in July 2010, Mrs Thompson again mortgaged her interest in the property to the NAB.

8 On 4 March 2011, Mrs Thompson gave a guarantee and indemnity to the NAB to secure the borrowings of her husband's company, Sunshine Retail Investments Pty Ltd ('Sunshine Retail'), in the sum of $8.55m.[6]

9 In May 2011, Mr and Mrs Thompson signed a Memorandum of Agreement recording agreements that had been made between them, that:

1. On or about the 23rd day of November 1998, Amanda and Warren acquired the property known as 607 Toorak Road, Toorak (the Home).

1. On about 6 July 2010 Amanda agreed to allow Warren to further increase the business borrowings of Sunshine Retail which were secured against the Home upon the basis that:

(a) those further borrowings would, as between Warren and Amanda, also come out of Warren's 50% interest in the Home; and

(b) Warren would indemnify Amanda, and hold her harmless against, any loss that she might suffer as a consequence of Warren's 50% interest being inadequate to discharge in full any claim the NAB might have against the Home.[7]

10 In May 2012, the Thompsons placed the property on the market for sale with Kay & Burton estate agents, but it was not sold. On 5 June 2012, Sunshine Retail was placed into liquidation.[8] On 12 June 2012, the NAB issued notices of default and demand to the Thompsons for a debt totalling $8.3m secured by its mortgage over the property. On 8 August 2012, the NAB commenced proceedings in the County Court of Victoria to recover possession of the property. On 15 August 2012, Mr Thompson was declared bankrupt upon his own petition with debts of at least $100m.[9]

11 Mr Thompson instructed Mr Michael Champion, a legal practitioner of 30 years' experience, to act on Mrs Thompson's behalf. Mr Champion began negotiating with the NAB about a Deed of Forbearance.

12 Mr Raphael ('Ruffy') Geminder, the third defendant, is also a very experienced business man and is the sole director of Geminder Holdings Pty Ltd ('Geminder Holdings'),[10] which was a family holding company and held all of the share capital in Pact Group Ltd ('Pact Group'). Pact Group operates a business of packaging manufacturing and floated on the stock exchange in December 2013 and Mr Geminder is its non-executive chairman.[11] The evidence suggests that Mr Geminder is a very wealthy man.

13 In 2012, Mr Geminder and his wife, Mrs Fiona Geminder, who have four children, were planning to expand and renovate their Kooyong home on a grand scale. While this was occurring they were seeking a house to rent in the area for about two years.

14 The NAB was pressing for sale of the property to obtain repayment of Mrs Thompson's debt. On 21 September 2012, Mr and Mrs Thompson retained Abercromby's Real Estate Pty Ltd ('Abercromby's), to sell the property under an Exclusive Sale Authority.[12]

15 On 10 October 2012, the Age newspaper published an account of the Geminders' renovation of their Kooyong home reporting that the renovation had been delayed until the family could find a house to rent for two years during construction. Through a mutual friend, Mr Geminder's wish to rent a luxury home came to Mr Thompson's attention. The two men were put in touch and Mrs Geminder inspected the home with Ms Adrienne van Denderen, who is Mr and Mrs Geminders' house manager, and found it to be suitable for her family's needs. Thereafter, a lease was signed and the Geminder family moved into the Thompsons' home in January 2013. The Thompsons moved to a rented property in East Malvern.

16 The NAB as mortgagee took possession of the property in May 2013, by serving a redirection of rent notice. The Heffernans purchased the property from the NAB in November 2013.

17 The Geminders, as tenants of the Heffernans, still lived in the property at the time of the trial.

18 Mrs Thompson sued the NAB as first defendant for breach of a settlement agreement. That proceeding was settled and on the seventh day of the trial the Court made orders by consent, dismissing the proceeding against the NAB and its counterclaim without adjudication of the merits, with no order as to costs and previous costs orders between those parties being vacated.[13]

19 Mrs Thompson's case is that she leased the property to Mr Geminder following representations that, in broad terms, he would ensure that she did not lose control of the property to the NAB. Sometimes, this was referred to as agreeing to 'fix' her financial problems with the NAB. At times it was suggested that he would ensure that the debt which she owed to the NAB was refinanced. An alternative plan, that was later developed, was that he either purchase the house or the mortgage over it. If he purchased the house he would grant an option to Mrs Thompson to buy the property back at the end of the lease. In submissions, the plaintiff reformulated the Geminders' obligation as acting reasonably in the circumstances[14] to take such action as would allow Mrs Thompson to regain possession of the property after Mr and Mrs Geminders' renovations were complete and the lease of the property expired or was terminated by consent and the Geminder family had moved out.

20 Mrs Thompson claims that these representations were followed by contracts that she entered into with Mr Geminders or Geminder Holdings. They were a conditional agreement to lease dated 27 October 2012, a second agreement to lease dated 12 November 2012, a conditional lease dated 19 November 2012, an agreement to vacate the property and a purchase and buyback option agreement. Mrs Thompson alleges that these agreements contained terms requiring good faith in dealings and co-operation and also a term that the Geminders would ensure that she did not lose control of the property to the NAB. She seeks damages for the loss of the value of the option to repurchase the property which option she contends that the Geminders agreed to provide her under the purchase and buyback option agreement.

21 No breach of the conditional agreement to lease dated 27 October 2012 was pleaded against the Geminders. The second agreement to lease relied on, which was alleged to have been made on 12 November 2012, was pleaded as being that if Mrs Thompson leased the property to Mr Geminder, he would do all acts and execute all such documents as were necessary and proper to ensure that Mrs Thompson would not lose control of the property to the NAB. Such a term is pleaded to form part of the lease, which the plaintiff describes as the conditional lease, made on 19 November 2012. No reason was advanced why any cause of action that Mrs Thompson possesses for breach of that term was not properly regarded as a breach of the lease of 19 November 2012, rather than breach of the second agreement to lease. Therefore, my consideration of Mrs Thompson's claims in respect of breach of that term will focus on the lease dated 19 November 2012.

22 Mrs Thompson alleged that the terms of the conditional lease, as she called the lease of 19 November 2012, included that:

(a) Mrs Thompson and Mr Geminder would act bona fide and in good faith with each other in and about all matters concerning the Conditional Lease; ("First Obligation of Good Faith");

(b) the Conditional Lease was subject to a condition subsequent that the NAB provide its assurances, to the effect that, it would not enter into possession of the Toorak Road Property:

(i) and sell the property; and/or

(ii) terminate the Conditional Lease under the Residential Tenancies Act 1997;

(c) Mr Geminder was subject to an ongoing obligation to do all acts and execute all such documents as were necessary and proper to ensure that Mrs Thompson would not lose control of the property to the NAB.[15]

23 As the action between Mrs Thompson and the NAB was settled, I did not understand that term the contained in clause (b) was relied on against the Geminders.

24 The agreement to vacate was said to arise from conversations between Mr Geminder and Mr Thompson in late November and early December 2012, particularly on 5 December, in which Mr Thompson said that Mrs Thompson could not allow Mr Geminder to move into the property without the NAB's consent, that there did not appear to be any progress with the NAB, that is to solve the Thompsons' financial problems, and that he was concerned that Mrs Thompson would lose the property. Mrs Thompson alleged that, in reply, Mr Geminder said that he would not let that happen and that to ensure that the NAB did not sell the property as mortgagee in possession, he was prepared to buy the mortgage from the NAB, or buy the property himself and grant Mrs Thompson an option to repurchase the property at the same price at the conclusion of the construction of his new home. Mrs Thompson also alleged that the agreement was implied by law and was necessary to give business efficacy to the agreement.

25 Mrs Thompson also contended that by 16 February 2013, the parties had entered into a Purchase and Buyback Option Agreement, which required:

Geminder Holdings would buy the Toorak Road from the NAB for a sum of up to $8.5M and Mrs Thompson would contribute any amount in excess of that sum; and

Geminder Holdings would grant to Mrs Thompson an option to buy back the Toorak Road property for price paid by after the expiration of any lease of the property.

26 The terms of the PBO Agreement were alleged to be that:

(a) Mr Geminder and Geminder Holdings would do all acts and execute all such documents as were necessary and proper to cause the purchase of the Toorak Road Property by Geminder Holdings from the NAB for a sum up to $8.5M;

(b) Geminder Holdings would grant Mrs Thompson an option to buy back the Toorak Road Property for the price paid by Geminder Holdings after the expiration of any lease of the property;

(c) Mrs Thompson, on the one part, and Mr Geminder and Geminder Holdings, on the other part, would act in good faith with each other in and about the Purchase and Buyback Option Agreement ("Second Obligation of Good Faith").

1. This agreement was alleged to be partly oral and consistent with the statements made at a meeting of 31 January 2013 and also based on a conversation between Mr Thompson and Mr Geminder on about 16 February 2013. In so far as the agreement was in writing, it was said to be contained in an email from Mr Nick Perkins, General Counsel and Company Secretary of Geminder Holdings, of 1 February 2013.
2. Mrs Thompson contended that the implied obligation of good faith contained in the contracts required the parties:

(a) to cooperate in achieving the contractual objects, that is loyalty to the promise itself;

(b) to comply with honest standards of conduct;

(c) to comply with standards of conduct which were reasonable having regard to the interest of the parties.

29 Mrs Thompson's case was that the Geminders breached each of the four agreements by:

(a) refusing to do all acts and execute all such documents as were necessary and proper to ensure that she would not lose control of the property to the NAB;

(b) resiling from their obligations to purchase the property for the sum of $8.5m;

(c) challenging that there was no concluded agreement between Mrs Thompson, Mr Geminder and Geminder Holdings to the effect of the PBO Agreement; and

(d) refusing to do all acts and execute all such documents as were necessary and proper to cause Geminder Holdings to purchase the property from the NAB for the sum of $8.5m.

30 Mrs Thompson gave no evidence of any words of assurance to her that Mr Geminder would purchase the debt or arrange a refinance. Apart from a few conversations which she overhead, or parts of conversations or meetings with Mrs Geminder, her understanding of the arrangement with the Geminders was obtained from Mr Thompson.[16]

31 Mrs Thompson also relies on an equitable or promissory estoppel which she contended prevented the Geminders from departing from expectations and assumptions that they induced her to hold and on the basis of which she entered into the contracts with the Geminders. She claims equitable compensation or damages on the basis of an equitable or promissory estoppel.

32 Mrs Thompson makes an additional claim in tort in respect of items being chandeliers, carpets and curtains that she left at the property that she says are chattels that she owns, or is bailee of, and which Mr Geminder has refused to return to her. Mr Geminder disputes that the plaintiff is the owner or bailee of these items and does not agree that these items are chattels. He also dispute that they have refused to return the chattels to their rightful owners. Mrs Thompson also seeks a delivery up order in respect of the items against the Heffernans.

1. Both parties attacked the credit of key witnesses of the other side. Before setting out the evidence of the dealings between the parties, it is convenient to state my conclusions about the credit of the key witnesses. Those conclusions, in part, will be clearer once I have described the dealings between the parties.

34 In assessing the evidence of conversations given at the trial, it is important to keep in mind the valuable common sense considerations contained in the following passage:

human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious considerations of what should have been said or could have been said. All too often what is actually remembered is little more than impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.[17]

1. Unless a contemporaneous note of a conversation is kept, it will be difficult for the parties to it to recall the order in which things were said.
2. I have placed most weight on evidence of conversations that are supported by contemporaneous notes that were made in circumstances making them likely to be accurate. For that reason, Mr Perkins' notes, often contained in emails, prepared for Mr Geminder's information, are likely to record accurately Mr Perkins' recollection of, or understanding of, the important parts of conversations. Similarly, Mr Thompson's communications with Mr Champion, when recorded in notes or emails are more likely to record accurately his or Mr Champion's recollection of, or understanding of, those communications.
3. The Geminders particularly attacked the credit of Mr Thompson, describing him as a demonstrably unsatisfactory witness and relying on many individual matters that they contended impeached his credit. These matters included his previous commercial history including an earlier bankruptcy. They relied on what was described as his dishonesty, including lies, in dealings with Mr Geminder and Mr Perkins, his dishonesty, and obfuscation in dealings with the NAB and what they described generally as his unsatisfactory evidence. These included purporting to recount matters of fine detail for example of conversations when his recollection was proved wrong and the fact that he was rarely prepared to concede that he was wrong.
4. I have considered the matters raised by the Geminders and I have found the following of significance in assessing Mr Thompson's evidence. His previous commercial history suggests that he was well familiar with dealing with insolvent businesses. He agreed that the entire auction process of November 2012 was a 'ruse'. He gave Mr Geminder incorrect information about the buyers interested in the property at the auction. He was wrong about a number of the dates of conversations that he relied on. He exaggerated his recollection of conversations and in some respects was plainly wrong, for example, in the case of the telephone conversation of 16 November. He did not tell the Geminders of most of dealings with the NAB or his bankruptcy. Nor did he disclose the parlous state of his and his wife's financial affairs. He misled the Geminders about the basis of the Castran Gilbert (Aust) Pty Ltd ('Castran Gilbert') caveat. Castran Gilbert are estate agents, who had acted for one of Mr Thompson's companies and claimed that he owed them a debt. They later acted for the Heffernans. Of particular importance was that Mr Thompson attempted to distance himself from knowledge of the Heffernans' interest in the property. He denied having received notice about the NAB's rent redirection notice. All these matters have led me to exercise considerable caution before accepting Mr Thompson's evidence and in some instances have placed little weight on it.
5. However, these adverse conclusions about Mr Thompson's credit do not lead to Mrs Thompson's case necessarily failing. The objective facts of the parties' conduct and actions are particularly significant and in some instances transcends the difficulties with Mr Thompson's evidence. This includes, in particular, Mrs Thompson's commencement of the Supreme Court proceedings in July 2013, which demonstrated that the Thompsons believed that they had made an arrangement or deal with the Geminders, whereby they would purchase the property from the NAB.
6. Mrs Thompson in her statement of claim pleaded a settlement agreement between her and the NAB, a term of which was that the NAB would sell the property to Geminder Holdings for the sum of $8.5m. The pleading included the following paragraphs:

The price of $8,500,000, which Geminder Holdings would pay to purchase the Toorak Road Property, was agreed to by Mr Geminder and Geminder Holdings.

On or about a date in late April 2013, Mr Geminder and Geminder Holdings were advised of the material terms of the Settlement Agreement between Mrs Thompson and the NAB and consented to the same.

That was the case on which the Thompsons commenced proceedings against the NAB and sought injunctive relief from Elliott J. That pleading recorded the understanding that the Thompsons held in July 2013.

1. I accept that Mrs Thompson generally attempted to give accurate evidence, but she was not a party to any of the critical conversations. She had a very great desire to pursue any course that might enable her to retain the Toorak property.
2. I generally accept Mr Champion's evidence on relevant matters. I consider that he was attempting to give truthful evidence.
3. The plaintiff made detailed attacks on Mr Geminder's credit. She pointed to his lack of recollection of communications with Mr Thompson and his giving inconsistent evidence. She contended that, on a number of occasions, he gave evidence that was implausible or disingenuous. An example was his suggestion to the NAB on 1 February 2013 that one option available to it was to sell the property with vacant possession.
4. I consider that Mr Geminder and Mr Perkins were generally attempting to give truthful evidence. I do not consider that on the evidence I can draw any adverse conclusion from Mr Geminder's deletion of texts or from Mr Perkins' failure to keep notes of his conversations with Mr Heffernan. They gave an explanation for these actions and there is no basis for not accepting their evidence. The Court cannot disbelieve witnesses merely because of speculation about the reason for particular conduct, when the witness has denied the basis on which that speculation is based. Nor do I disbelieve Mr Perkins evidence because he was an employee of Mr Geminder's company. In fact, I consider that his status as an employee made it more likely that the notes and emails that he prepared for Mr Geminder, concerning his conversations with Mr Thompson and Mr Champion, were accurate.
5. But, I do consider that both Mr Geminder and Mr Perkins sought to downplay the significance of their discussion with Mr Thompson on 31 January 2013 about the grant of an option to Mrs Thompson to repurchase the property, by describing it as a concept.
6. Neither Mr Geminder nor Mr Perkins informed the Thompsons about their discussions with the Heffernans in June 2013. Nor after the NAB's notice of redirection of rent, did Mr Geminder inform them that he considered them 'irrelevant' as he gave evidence that he regarded them. In light of his close dealings with the Thompsons, Mr Geminder's failure to inform them of his contacts with, and arrangements with the Heffernans, displayed a lack of candour, which the evidence suggests was due to the fact that he no longer needed the Thompsons and was eager to proceed with his new arrangements.

The evidence of the dealings between the parties

47 Mr Thompson was introduced to Mr Geminder in late October 2012 after he learned from mutual friends that the Geminders wanted to rent a property while their home at Kooyong was being renovated and extended.[18] On 26 October 2012, Mrs Geminder inspected the property and was happy with it.[19] The Thompsons saw leasing the property to the Geminders as a way out of their financial difficulties, which included debts to the NAB of about $9m.

48 Mrs Thompson was very happy with the interest shown by the Geminders and considered that it would enable the Thompsons to keep their Toorak property. She described Mr Geminder's visit on the Saturday morning as the best birthday present she could have asked for. She told her mother that the 'fairy god family had come to save us, that we weren't going to lose the house after all because we were going to be able to lease it'.[20]

49 Mr Geminder met Mr Thompson at the property on Saturday morning, 27 October 2012. He noticed a 'for sale' sign erected at the property, which advertised an upcoming auction. Mr Geminder said that he informed Mr Thompson that he was keen to lease the property while his family home in Kooyong was being renovated and extended, which could take at least two years. He said that the lease would need to commence from 14 January 2013, when he and his family would return from an overseas holiday.[21]

50 Mr Thompson said that he told Mr Geminder of the following matters. The property was on the market for sale with Abercromby's, but that he would prefer not to sell it and that his wife would do all she could to hold onto it. Any lease needed to be subject to the NAB's approval. The Thompsons' NAB loans needed to be refinanced at a commercial rate of interest, because they had expired, otherwise Mrs Thompson would have to sell the property to repay the NAB.[22] The rent obtained from leasing the property might help in renegotiating the loans. He said that Mr Geminder told him that his company, the Pact Group, was a major client of the NAB and that Mr Thompson should let him know if they needed any assistance in dealing with the NAB.[23]

51 Mr Geminder denied that they discussed the state of any NAB loan to the Thompsons or their financial position with the NAB. He said that Mr Thompson told him that he was renting the property because it was a good opportunity for him to take a couple of years off with his wife and his children, potentially travel, perhaps live overseas and 'have an adventure'. He said that he owned two other houses which he could move into. Otherwise, Mr Thompson did not explain why the property was for sale.[24] Mr Geminder was asked about Mr Thompson's evidence that they had discussed his position with the NAB, but he said that that issue was not discussed on that day and not until his meeting with Mr Thompson on 16 or 17 February 2013.[25]

52 Later on Saturday, 27 October, Mr Geminder and Mrs Thompson signed an 'Agreement to Lease' after Mr Geminder inserted a clause providing:

Agreed between Raphael Geminder and Amanda Jane Thompson subject to the Landlord getting NAB Banks consent to proceed.[26]

The rent was agreed as $8,000 a week for an initial term of two years.

53 According to Mr Perkins, Mr Geminder agreed that the words 'subject to' be included because Mr Thompson told him that the mortgage was due to expire early in 2013, and the NAB had refused to refinance it.[27]

54 The important issue in dispute about the meeting at the property on 27 October 2012 was whether Mr Thompson told Mr Geminder of his financial difficulties and his commitments with the NAB. I prefer Mr Thompson's account to Mr Geminder's on this issue. It is supported by the fact that the Agreement to Lease was amended to include a reference to the landlord obtaining the NAB's consent to the lease. It is also supported by the text messages between Mr Geminder and Mr Thompson on 30 October 2012, which I set out below. I find that Mr Geminder did learn that the Thompsons had significant financial obligations to the NAB and needed the NAB's approval of the proposed lease was required.[28]

55 The following day, Sunday, the Thompsons visited the Geminders' Kooyong home for afternoon tea at which Mrs Geminder thanked them for allowing her family to use the home and assured them that it would be in perfect condition when returned to them.[29]

The Thompsons seek the NAB's approval of the lease

56 On 29 October 2012, Mr Thompson emailed Mr Champion asking whether the NAB officer handling their loans, Patrick Xiong, would know who the Geminders were on the basis that 'apart from the other Pratt Companies Pact owe the NAB $300m'.[30]

57 In fact, Mr Geminder's companies did not owe the NAB $300m, rather, Pact Group had a line of credit with the NAB.[31] In any event, the evidence suggests that Mr Thompson was entitled to conclude from Mr Geminder's statements that his companies' dealings with the NAB gave him significant influence with it.

58 On the same day, Mr Champion wrote to the NAB enclosing a copy of the Agreement to Lease and seeking consent to Mrs Thompson leasing the property to the Geminders.[32] The letter stated that 'unless sold beforehand, at the expiration of the lease, the property will be sold' and that 'relatives of our client will top up the rental from Mr Geminder to meet ongoing interest under the fixed rate home loan'.[33] The letter was not copied to the Geminders. Indeed, the Mr Thompson and Mr Champion did not inform the Geminders of most of their communications with the NAB.

59 Later that day, Mr Xiong of the NAB replied to the letter stating that the proposal represented a 'fundamental change' from previous proposals and he would advise them of the NAB's position in a week's time.[34]

60 On Tuesday, 30 October 2012, Mr Thompson met Mr Geminder and told him of the NAB's unfavourable response.[35] Later that day, Mr Thompson sent a text message to Mr Geminder stating that an extension of the loan for two and a half years at a home loan rate of 5.78% was unsupportable on Mrs Thompson's income and that the NAB was not interested in the lease income nor the identity of the tenant. He informed Mr Geminder that his accountant had suggested that 'a tax effective alternative' for Mr Geminder would be to take a first mortgage of $8.1m over the property at 'say 2%' and lease the property at 'say 120k pa'. They discussed how the NAB's interest in the Thompsons' proposal might be increased. Mr Geminder suggested that Mr Thompson ask the NAB to extend the loan with some debt reduction provided by the front ending of the rent of about $800,000 with some additional cash provided by him.[36] He did not respond to the suggestion that he might purchase the property.

61 On 31 October, at Mr Thompson's request, Mr Geminder provided him with a letter to send to the NAB, in the following terms:

As a follow up to our various telephone conversations, I wanted to confirm that we wish to move ahead on the rental of 607 Toorak Road.

Please advise the National Australia Bank that we are willing to front end the entire rental for the two year period so that it can be used to reduce your loan. We are very anxious for this transaction to proceed, and we would appreciate the NAB's assistance in this matter.

As soon as you have a confirmation from the bank, and we have signed our lease, we will wire two years worth of rent to the bank, or to your nominated account.

Please let us know when you wish this to occur.[37]

62 On 1 November 2012, The NAB advised Mr Champion that it was not in a position to consent to the lease proposal.[38] It seems clear that Mr Geminder learned that the NAB had not consented to the lease.[39]

63 Mr Thompson continued to attempt to persuade the NAB to agree to his proposal. On 7 November 2012, Mr Champion emailed Mr Xiong asking the NAB to review its position concerning the lease and attached an offer of assistance to the Thompsons from Mr Thompson's sister, Mrs Susan Malone, as well as Geminder Holdings' letter of 31 October.[40]

64 On 9 November 2012, Mr Xiong advised Mr Champion that the NAB's position remained the same.[41]

65 On the same day, Mr Thompson sent Mr Geminder a text message, which included the statement:

The NAB is still procrastinating, which is very frustrating. They tell us that these things take time. Although I did not want to inconvenience you, it may assist if your CFO would speak with Patrick Xiong to encourage his superiors to look favourably at this transaction.[42]

66 Mr Champion had suggested to Mr Thompson that the NAB was not procrastinating, but rather, was saying 'no' to the lease proposal. He suggested that Mr Thompson tell Mr Geminder that the officer at the NAB dealing with the matter would not consent to the lease.[43]

67 At about that time, Mr Geminder telephoned Mr Michael Woolrich, who he described as his company's account executive with the NAB, but whose formal title was Head of Industrials, Director, Institutional Banking. He told Mr Woolrich that his intention was to lease the property, that he understood that the Thompsons had a loan from the NAB, and that he would appreciate any assistance Mr Woolrich could give him to obtain the NAB's consent to the lease. Mr Woolrich in reply told Mr Geminder that it was a complicated situation and that he could not talk to him about the facts.[44] Mr Geminder informed Mr Thompson of this conversation.[45]

68 On 9 November, Mrs Thompson signed an exclusive auction authority with Abercromby's estate agents to auction the property with vacant possession on 28 November 2012.[46] Mrs Thompson had committed to the auction before meeting the Geminders.[47] However, because she had signed the Agreement to Lease, she was not intending to sell the property.[48] Mr Geminder expressed concern that the auction might pose risks to the security of his tenancy. Mr Thompson stated that, if the auction had not gone ahead, they would have been liable for agents' fees, but he assured Mr Geminder his tenancy was secure.

69 On 9 November 2012, Mr Thompson emailed Mr Champion requesting that he advise the NAB of one potential buyer for the property whose interest 'is to buy the property unoccupied' and that a 'lease to the Geminder family is obviously an attractive addition for him' and that they were 'anxious not to lose this lease offer and to use the rental to underpin the future interest cost expense'.[49]

The lease and the discussions preceding its execution

70 Mrs Thompson and Mr Geminder executed a lease of the property on 19 November 2012. Between 12 and 19 November, the terms of the lease were negotiated between Mr Geminder and Mr Thompson and their lawyers.

71 On 12 November 2012, the Geminders' lawyers sent a draft of the proposed lease to Mr Thompson, which listed both Mr and Mrs Thompson as lessors. Mr Thompson evidence was that on that day, he spoke with Mr Geminder on the telephone and told him that the deal was not going to happen because the NAB would not agree to it. He said that he told Mr Geminder:

Look, sorry Ruffy but I think this deal is not going to happen. The bank is just going nowhere. Time is passing and the bank just doesn't care that you are behind the deal or that the deal conveniences you.[50]

72 He said that in reply, Mr Geminder was 'agitated' and made a number of statements, including:

They [the Bank] will take notice of me. I have referred it to Woolrich. Furthermore, I have $300 million, my companies have on deposit with the NAB. They do what I tell them.

Warren, I can fix this. It is something that I can fix. I will take care of it.

Look, if necessary, I can get Westpac to lend Amanda the money... and if necessary, I will buy the mortgage from the NAB.

No, we are going to move forward with this. There's no doubt in my mind that this can be fixed and I will fix it for you.[51]

73 Mr Thompson said that he told Mr Geminder that his proposal to buy the mortgage was a little different and that he liked that idea.[52]

74 Mr Geminder gave evidence that he did not recall any telephone discussion with Mr Thompson on 12 November 2012.[53] His evidence was that from the end of October to December 2012, he did not discuss taking a mortgage, or buying a mortgage, over the property.[54] He said that he did not deal with the NAB in respect of the Thompsons' finances.[55] He was asked in examination in chief, if when 'thinking of 12 November', whether he recalled any particular telephone conversation that day and he replied: 'I can't say I remember any discussion'.[56] Mr Thompson's account of the 12 November conversation was not put to Mr Geminder in any greater detail in cross-examination. The Geminders submitted that the plaintiff had breached the rule in Browne v Dunn[57] by not putting Mr Thompson's version of the conversation of 12 November 2012 to Mr Geminder. That fact is relevant to the weight that I give to Mr Thompson's evidence on this point, but it is not decisive. There is no requirement that the court must accept the evidence not the subject of cross-examination, particularly if it is contradicted by other evidence.[58]

75 The cogency of Mr Thompson's evidence of this telephone call has to be assessed not just by having regard to the matters that affect his general credibility, but also other circumstances that are relevant to whether such a conversation occurred. The telephone records list four calls by Mr Geminder to Mr Thompson on 12 November, including one of 12 minutes 44 seconds. There were other matters that provide a context to Mr Thompson's evidence about this conversation, particularly that Mr Geminder was anxious to secure a lease of the property. On 31 October, he had provided Mr Thompson with a letter stating that he was very anxious for the transaction to proceed and on or about 9 November he phoned Mr Woolrich at the NAB, and sought his assistance to obtain the NAB's consent to the lease. His interest in obtaining the lease is further shown by his email to Mr Perkins of 15 November about gaining 'the high moral ground' by paying one month's rent into his solicitor's trust account and that that would make it 'one step closer'.[59] The Thompsons were concerned not just with consent being granted to the lease, but with the NAB's actions in respect of the property. There were issues between the parties about the terms of the lease and, a few days after the 12 November, Mrs Thompson was willing to sign the lease. The combination of these factors make it probable that a conversation on 12 November 2012 to the general effect of Mr Thompson's evidence, occurred. It was capable of leading Mrs Thompson to believe that Mr Geminder would act reasonably in the circumstances to ensure that she did not lose control of the property to the NAB.

76 The Geminders put a number of similar Browne v Dunn[60] submissions about other evidence that Mr Thompson gave and it is convenient to consider them in general terms at this point. The plaintiff disputed that she had not complied with the principle and contended that Mr Geminder and Mr Perkins were on notice of the allegations contained in Mr Thompson's evidence, including by affidavits filed in the proceeding and that matters did not have to be put to them when they said that they had no recollection of particular conversations. The plaintiff relied on decisions where the person being cross-examined already has notice of the particular allegation or evidence, which otherwise have to be put to him or her.[61]

77 However, I do not consider that any point about a witness already having notice of an allegation applies in most of the instances where the Geminders invoked the rule. Most of the breaches alleged of the rule in Browne v Dunn[62] upon which the Geminders relied concern circumstances in which the plaintiff had not challenged Mr Geminder's or Mr Perkins' evidence with Mr Thompson's version of events. The plaintiff was obliged to observe the rule and to challenge their evidence in that manner. It is one thing for a witness to say that he does not recall a conversation, but it is another thing for the witness not to be given the opportunity to say whether he ever made a particular statement. The rule in Browne v Dunn[63] has two significant features: first, it is a rule of procedural fairness and secondly, it relates to the weight to be given to evidence or its cogency.[64] The failure to put the plaintiff's case concerning the making of the representations to Mr Geminder or Mr Perkins weakens the cogency of her case in this respect. The plaintiff bears the onus of proof to prove that the representations were made. I will consider the significance of breaches of the requirements of Browne v Dunn[65] in individual instances where the issue was raised. In some instances, I have concluded that one reason for accepting Mr Geminder's evidence on particular matters is that he was not challenged by cross-examination that put Mr Thompson's version of events to him. In other instances, I have taken into account other surrounding circumstances in assessing the evidence and have accepted at least part of Mr Thompson's evidence. As stated, there is no requirement that the court must accept evidence that has not been the subject of cross-examination. Equally, a court is not obliged to ignore evidence that has not been put to relevant opposing witnesses.

78 On 12 November, Mr Perkins provided a draft of the proposed lease to the Thompsons by leaving it in the letter box of their home. It listed both the Thompsons as joint lessors.

79 On 13 November, Mr Thompson spoke to Mr Perkins, whose note of the conversation recorded Mr Thompson as stating that his name should not be on the lease because he had transferred all his interest in the property to his wife. But, he was prepared to provide a letter of consent to the lease because the title recorded him as joint owner. He was not proposing to include the lease in the s 32 statement for the auction of the property, although Mr Perkins said that he should. Mr Perkins stated that they compromised and agreed that a copy of the lease would be included in the s 32 statement, with all the commercial details including the identity of the lessee, redacted.[66]

80 Mr Perkins also recorded Mr Thompson as stating that the property was not going to sell, unless there was a Chinese buyer willing to pay a fortune, and therefore the lease was not relevant and that he had to go through the sale process to avoid paying the agent's commission on a withdrawn sale.[67] He referred to the two caveats that were recorded on the property's title. He said that Castran Gilbert's caveat was in error and was being removed or that there were plans in place to have it removed. He said that Mr Geminder did not have to worry about Mrs Malone's caveat, which was a 'family related matter' and was part of a reorganization of finances.[68] Following the conversation, Mr Perkins sent an email to Mr Thompson at 3:25pm to which he attached amended special conditions of the lease together with a power of attorney because the lease at that point only recorded Mrs Thompson as the lessor.[69]

81 After further discussions between them, Mr Perkins sent Mr Thompson a further draft lease and Mr Perkins forwarded it to Mr Thompson that evening.[70] It contained a revised special condition 12(a) stating:

On the written request of the tenant, the landlord must procure that the first mortgagee of the land (National Australia Bank) and the holder of any charge over the assets of the landlord (Castran Gilbert (Aust) Pty Ltd) has consented to the landlord entering into this lease and to the grant of the lease on terms and conditions acceptable to the tenant, and provide the tenant with such a consent, within 30 days of the date of such request. This is an essential term of this lease and if the landlord does not satisfy the requirement under this special condition within the applicable time, the tenant may (until such time as the requirement has been satisfied) terminate this lease upon written notice to the landlord.[71]

I have discussed the consent provisions with Ruffy - he agreed that we should make it only on our request that consent from NAB should be sought, rather than an obligation for you to seek[it] now. I have made this change accordingly. It means that hopefully, at a point in time, a sensible discussion can be held with NAB and their consent forthcoming when new arrangements are struck. I have left in that consent will be obtained from the second mortgagee.

I have also made the amendment to the advance payment of rent.

Hopefully you can now confirm the documents are agreeable and I can have final versions delivered for execution.[72]

83 By letter of the same day, Mr Perkins sent Mr Thompson the final form of the lease together with a power of attorney for signing.[73]

84 On 14 November, Mr Perkins spoke with Mr Thompson and made a note that Mr Thompson although 'happy with all the documents', considered that special condition 12 should not name Castran Gilbert as a caveator whose consent was required for the lease.[74]

85 During cross-examination, Mr Thompson gave evidence that he consistently objected to the inclusion of the revised special condition 12 and wanted the lease to be subject to the NAB's consent.[75] Mr Perkins admitted that he did not discuss with Mr Thompson the 'optionality' of special condition 12, namely that only Mr Geminder had the right to terminate the lease if the NAB did not consent.[76] The requirement that the NAB consent to the lease was important to the Thompsons and Mrs Thompson considered that discussion about that consent was, in effect, code for the NAB agreeing to revised arrangements about their debt.[77] But, Mr Thompson was clearly aware of the terms of the revised clause 12(a) and Mr Champion was available to advise him about its inclusion.

86 On 15 November 2012, Mr Geminder learned that Mr Thompson was bankrupt. He said that he telephoned him the following day and asked him to come to his office. Mr Perkins gave evidence that he was in the room when Mr Geminder called Mr Thompson to arrange their meeting and listened to the telephone conversation on a speaker phone. He recalled the phone call being brief with Mr Geminder simply stating words to the effect: 'Warren, you need to come to my office. We need to meet about the lease'.[78]

87 According to Mr Geminder's and Mr Perkin's evidence they met with Mr Thompson later that day and discussed the consequences of his bankruptcy.

88 Mr Thompson's evidence was that the telephone conversation was significant and dealt with much more than arranging a meeting. He conceded that although he had initially said that it occurred on or about 14 November, he could not recall precisely when it, or the subsequent meeting, occurred.[79] His evidence was that in the telephone conversation he told Mr Geminder that he did not want the requirement in the lease for the NAB's consent removed. He said that Mr Geminder assured him that:

Warren, we know what we are doing. This is the way we want it done. We have had advice on it.[80]

89 Mr Thompson said, 'well, we are not comfortable with it' and Mr Geminder replied:

90 Mr Thompson said 'well, you have already promised me you will fix it', to which Mr Geminder replied: 'Yes, leave it to us, we can get this fixed. I have already spoken to Woolrich. Do as I suggest and get that signed'.[81]

91 Mr Thompson said that he responded 'All right, we trust you' to which Mr Geminder said:

Look, I have already given you assurances that I will fix this. I will buy the mortgage, if necessary, or I will get the property refinanced through Westpac.

92 Mr Thompson said that he responded: 'Fine, well, we are all in.' He said that Mr Geminder's statements were the only reason why he agreed to have the requirement for NAB consent removed from the lease.[82]

93 Mr Geminder contended that Mr Thompson's evidence of a telephone conversation with him on 16 November 2012, in which terms of the lease were discussed, particularly special condition 12, was not credible. The telephone conversation lasted for only 81 seconds and consequently could not have included all of the matters that Mr Thompson alleged.[83]

94 I find that, as Mr Perkins and Mr Geminder gave evidence, that as arranged in Mr Geminder's phone call, they met with Mr Thompson later on 16 November at Pact Group's offices in South Yarra.

95 Mr Geminder said that the purpose the meeting at his office with Mr Thompson was to confront him about the newly-discovered fact that he was a bankrupt.[84] Mr Geminder said that upon asking Mr Thompson 'what the story was', Mr Thompson told him:

... an elaborate story about the fact that his bankruptcies were related to property development and that he had spent a long period of time with either his accountant or his lawyer, creating a structure and trusts and that he had done a whole bunch of work to make sure that those structures and trusts, in anticipation of him going bankrupt, were watertight and foolproof and that after a protracted period of time, he felt comfortable that those structures were bulletproof and he then went bankrupt.[85]

96 Mr Geminder gave evidence that he did not speak with Mr Thompson about the terms of the lease and only discussed them with Mr Perkins to whom he had entrusted their drafting.[86] Mr Geminder denied that he told the Thompsons that he would 'fix things' with the NAB, that he promised that he would make sure that the Thompsons did not lose the house, or that he would potentially buy the mortgage from the NAB or arrange for Westpac to refinance the Thompsons' debt.[87] He said that he did not want to purchase their debt or the mortgage, because he did not did he want to be the mortgagee exercising security rights against them.[88]

97 Mr Perkins' evidence was that the meeting on 16 November occurred about two hours after the telephone call to arrange it. He said that Mr Geminder confronted Mr Thompson about his bankruptcy and that Mr Thompson explained that it was the result of business dealings and claimed that he was the victim of bad advice. He said that he had worked with accountants and lawyers the previous year to protect his affairs from bankruptcy. He told them that Mrs Thompson controlled trusts with some tens of millions of dollars in them of which she was unaware and that the bankruptcy had no bearing on their broader financial position.[89]

98 Mr Thompson said that the meeting occurred after the telephone call about which he had given evidence. He discussed with Mr Geminder his bankruptcy and whether he had any equity left in the property. Mr Thompson gave evidence that he said:

Amanda's solicitor has had discussions with my trustee in bankruptcy and there was a general verbal agreement that if required, he would transfer my interest in the property to her for $1.[90]

99 He said that Mr Geminder asked that that be confirmed in writing. Mr Thompson signed a document dated 15 November 2012 that stated that he had conveyed all his legal and beneficial interest in the property to his wife Amanda Jane Thompson and that he consented to and authorised entry into the lease and would abide by its terms.[91] While the date 15 November throws some doubt on whether the meeting occurred on 16 November, the balance of the evidence suggests that it did, in particular the fact that Mr Perkins received emails detailing Mr Thompson's bankruptcy on 15 November and that on 16 November he signed a Power of Attorney in favour of his wife.

100 I am not satisfied that Mrs Thompson proved that Mr Geminder on or about 16 November made the representations on which part of her case is based in either the telephone conversation or in the subsequent meeting. Mr Thompson was wrong, or uncertain, about the date of these conversations. I do not consider that the plaintiff has proved that Mr Geminder made any relevant promises or representations in the telephone conversation on or about 16 November. I accept Mr Geminder's and Mr Perkins' evidence that the telephone call was to arrange a meeting and no more. It is improbable that such a short telephone conversation could have discussed all the matters about which Mr Thompson gave evidence. Mr Perkins[92] and Mr Geminder[93] were not challenged on their evidence. I also accept their evidence about the meeting that occurred later that day. As was common ground, it primarily concerned Mr Thompson's bankruptcy I find that Mr Thompson's evidence about the contents of the telephone conversation was inaccurate.

101 At about this time, at Mr Perkins' suggestion, Mr Geminder paid one month's rent into his solicitor's trust account to be drawn down when the lease commences, telling Mr Perkins in an email of 15 November 2012:

Lets get one month into that account. That was a bloody good idea. It's the high moral ground. I know he said don't worry. But I like the idea of rent being there, makes it feel more real and one step closer.[94]

102 Mrs Thompson signed the redrafted lease on 19 November 2012.[95] It provided for an initial term of 24 months at a monthly rental of $34,366. The tenant was entitled to two further terms of six months each, the second expiring on 13 January 2016.

103 Mrs Thompson gave evidence that she only signed the lease because Mr Geminder was going to 'fix' things with the NAB.[96] But, she had access to Mr Champion's legal advice if she required it before signing the lease.

104 The lease contained the following special condition:

10. Good faith

The landlord and the tenant will act bona fide in all matters concerning the implementation of this lease.[97]

105 In the days before the auction, Mr Thompson informed Mr Perkins that they were only going through the auction process to honour their commitment to the NAB and to avoid paying agents' fees to Abercromby's. Mr Thompson said that Mr Geminder repeatedly asked him not to sell the property and to cancel the auction. Mr Geminder said that to the best of his recollection he questioned the need for the auction, but did not request it be cancelled.[98] Mr Thompson spoke with Mr Geminder on the eve of the auction and, according to his evidence, when Mr Geminder said that he was worried that he would not honour the deal, assured him that he would and that he was 'making it very difficult for the agent'.[99] Mr Geminder did not recall that conversation.[100] Mr Thompson told Mr Geminder that the house would not be sold at auction under any circumstances, although they would offer the house as vacant possession to accord with the NAB's wishes.[101]

106 On the eve of the auction Mr Thompson sent a text to Mr Geminder stating:

Hi Ruffy just letting you know that there are three serious contenders for the auction of 607 Toorak Rd. One buyer has asked if we would take 10m. We have today advised the agent that we want nearer 13m They are feeling a little frustrated as [they] claim they can sell tomorrow at over 11m. Will let you know after the auction.[102]

Thanks Warren appreciate the heads up. I hope you hold onto the house, we love it and in a good market I think we both agree you will get north of the 15 you talked about, but if you can hold on, you may return to it in a few years and never look back. Give me a call at your convenience. Regards Ruffy

Warren don't forget to mention that the house is tenanted for 2 years. That might help you!! Ruffy.[103]

108 Mrs Thompson was very reluctant to sell the property and wanted to keep it as the family home.[104]

109 The auction took place on Saturday, 28 November 2012. Neither the Thompsons nor the Geminders wanted the property sold. In fact, Mr Thompson agreed that the auction was a ruse.[105] The Geminder lease was not disclosed at the auction and was not included in the s 32 statement.

110 Mr Thompson informed the auctioneer that the reserve price was $13m.[106] There were three bidders, but the property was passed in at an amount of around $8.6m.[107] Shortly after the auction, Mr Thompson sent a text to Mr Geminder advising that the property had been passed in and that he was surprised at the depth of buyers offer in excess of 10m, but 'nobody [was] interested if leased' and stating 'we need to determine a strategy'.[108]

111 Mr Geminder and Mr Thompson spoke on the telephone that afternoon. They discussed the auction, with Mr Thompson telling Mr Geminder that the auctioneer was not terribly happy, because he thought that they could have sold it at $10m, or 'north of $10 million'. Mr Thompson's evidence was that he then said to Mr Geminder: 'We are here, we have done everything you wanted. Now it's up to you to get as quick as you can the National Bank approval.' He said that Mr Geminder replied, 'It's in hand. We've been talking to Woolrich'.[109] Mr Geminder did not recall that conversation, [110] but I accept that a conversation in which Mr Thompson discussed the result of the auction with Mr Geminder occurred. I am not persuaded that anything more significant was discussed. Mr Thompson agreed that there was nothing said on 28 November that caused the Thompsons to change their position or to do anything.[111]

112 The next day, in the morning of 29 November 2012, Mr Perkins spoke with Mr Thompson and said that in order to remove any uncertainty about the tenancy, the arrangements had to be confirmed with the NAB.[112] Mr Thompson said that he was going to tell the NAB about the lease the following day and would again put Mr Geminder's offer to pre-pay the rent to it. Mr Thompson declined Mr Perkins' offer to take part in the conversation with the NAB.[113] Later that day, Mr Perkins sent an email to Mr Geminder setting out the substance of this conversation.

113 On 29 November, Mr Champion sent a letter to NAB's solicitors telling them that the property had not sold at auction and proposing that the NAB grant a new home loan of $8.2m to Mrs Thompson at the current twoyear fixed interest rate, with the proceeds of the loan applied towards the current indebtedness and with the Malones making payments to the NAB of the difference between $8.2m and the amount owed.[114] The proposal also included that two years' interest be prepaid and that after 18 months the property would be offered for sale with settlement to coincide with the expiry of the loan. The letter concluded:

this transaction will be underwritten by Mr Raphael Geminder who is well known to the bank as chairman of the Pact Group.[115]

114 Neither Mr Geminder nor Mr Perkins were provided with a copy of this letter, or informed of the proposal.[116] Mr Geminder said that at that time he definitely had not told Mr Thompson that he would deal with the NAB in relation to any of the matters set out in the letter.[117]

115 Following the NAB's solicitors requests for further information, Mr Champion wrote to them again on 3 December 2012, stating that:

Mr Geminder, who is to take a lease of the property for the period of the extension, will pre-pay the rental so as to enable the reduction in debt proposed.[118]

116 On 6 December the NAB refused the Thompsons' proposal.[119]

The telephone conversation of 5 December 2012

117 The plaintiff relied on the contents of a conversation between Mr Thompson and Mr Geminder said to have occurred on 5 December 2012. This conversation was the foundation of the alleged agreement to vacate, which is one of the contracts upon which the plaintiff sues.

118 Mr Thompson's evidence was that Mr Geminder phoned him at 5.27 pm and asked him whether he had heard anything and he replied that he had not. Mr Thompson told Mr Geminder: 'It's up to you. You have got to fix it'. Mr Geminder replied: 'Yes, that's in hand. We are talking to Woolrich'. Mr Thompson described the conversation as very pleasant, at least initially, but said that it became a little testy. He told Mr Geminder: 'You have got to have it fixed before you move in, before Christmas, before you go away and before you move into the house'. Mr Geminder replied: 'No, we don't have to fix it before that time. We can still buy the mortgage from you or we can refinance it'. Mr Thompson maintained: 'No, I really want it fixed before you go away'.[120] According to Mr Thompson, Mr Geminder then said: 'We have got a lease. You have to let us in. We don't have to fix it beforehand, we can fix it afterwards'. Mr Thompson then replied: 'Oh, Ruffy, look, we can't let you into the house until we have the NAB's consent'. Mr Geminder then said: 'But we have got a lease, you can't do that'. Mr Thompson replied: 'I don't care. You will not be moving into the house beforehand'. Mr Geminder said: 'Warren, I have given you the assurances that we are going to fix it' and repeated: 'I will buy the mortgage if necessary'. Mr Thompson then said: 'That's my preferred option', to which Mr Geminder said: 'We can refinance it'. Mr Thompson stated: 'I would prefer you buy the mortgage'. Mr Geminder responded: 'Trust me, I can fix it'. Mr Thompson said: 'Okay, Ruffy. We have trusted you all along. It's not really a matter of trust. It's just that I wanted to see action. We trust you, that's fine'. Mr Geminder then sought Mr Thompson's confirmation that: 'The house will be ready to move into on 13, 14 January?' to which Mr Thompson replied: 'Yes, I will tell Amanda again that everything is fine'.[121]

119 Mrs Thompson said that Mr Thompson told her about this conversation and, on the basis of it, they agreed to vacate the property and search for a new home.[122]

120 Mr Geminder did not recollect the phone conversation on 5 December.[123] He gave evidence that there had been no discussion in which Mr Thompson said that they would only let him move into the property on condition that he did certain things.[124] He was not challenged on that evidence. However, the telephone records established that he did speak to Mr Thompson that day.

121 Mr Geminder described Mr Thompson's evidence of the conversation on 5 December as manufactured and submitted that it should be rejected. He relied on there being no documents to support it, nor any reference to it in Mr Perkins' emails or communications at that time. In particular, Mr Champion's email to Mr Perkins on 4 December 2012 suggested, without any qualification, that Mr Geminder could move into the property on 14 January 2013.[125] In addition, Mr Geminder relied on Mr Thompson giving different accounts as to the date of the conversation. Mrs Thompson's statement of claim, which stood unamended for two years, pleaded that the conversation occurred one or two weeks prior to Christmas 2012. But, Mr Geminder travelled overseas on holiday on 16 December 2012, so that date range was unlikely. On 20 August 2015, during the trial, Mrs Thompson's counsel stated that Mr Thompson would say that the telephone conversation occurred after the auction on 28 November 2012.[126] The telephone records showed only one substantial telephone call between Mr Thompson and Mr Geminder in December, that occurring on 5 December. [127] At this late point in the litigation, Mr Thompson for the first time contended that the call occurred on 5 December and Mrs Thompson's pleadings were amended to allege that the conversation occurred on that date.

122 I find that the plaintiff has not established the terms of any conversation between Mr Thompson and Mr Geminder on 5 December 2012 and therefore has not established that Mr Geminder made any representation in that alleged conversation. Mr Thompson was uncertain about when the conversation about which he gave evidence occurred. In addition, Mr Geminder's denial of the key point of the alleged conversation, namely that there had been discussions in which Mr Thompson told him that he had to do certain things to obtain possession of the property, was not challenged in cross-examination.

123 By letter of 6 December 2012, the NAB's solicitors told Mr Champion that it was not prepared to accept the 29 November or 3 December proposals and that they were instructed to proceed with recovery action and sell the property as mortgagee in possession. Mr Thompson did not inform Mr Geminder of this communication, despite the fact that on the plaintiff's case, Mr Geminder was to 'fix' everything with the NAB.[128]

124 On the same day, Mr Perkins emailed Mr Geminder suggesting that the NAB be informed that a two year lease had been signed.[129]

125 On 7 December, Mr Champion emailed Mr Thompson stating:

I spoke this afternoon to the lawyer at Thomsons.

She said she had nothing in mind, and nothing to propose, in relation to an alternative proposition except that the bank would not oppose a sale of the property. I think that is accurate.

Is it worth Raf trying another telephone call to the National Head of Credit?[130]

126 Mr Perkins gave evidence that on the same day, he told Mr Woolrich of the NAB of the existence of the lease, that the Geminders were to move into the property on 14 January and were willing to sit down with the NAB to ensure that there was no uncertainty over their tenure. He reminded Mr Woolrich of Mr Geminder's offer to prepay the rent.[131]

127 On 11 December 2012, Mr Thompson emailed Mr Perkins, suggesting that it may be a 'good idea for you or Ruffy to speak with your contacts at the NAB as things are not moving quickly'.[132] Mr Thompson then provided Mr Perkins with the name of the person handling their file, Patrick Xiong, and Mr Perkins replied by saying: 'We will get in touch with Michael Woolrich to ensure that the dots are being joined at their end'.[133]

128 That evening, Mr Perkins spoke with Mr Woolrich and forwarded him a copy of the lease. He said that Mr Woolrich told him that Mr Geminder could become the mortgagee of the property, and could potentially make an offer to purchase the property if he was concerned about the security of his tenancy. He also said that it was not inconceivable that Mr Geminder could buy the debt and have it assigned to him.[134] Mr Perkins was later informed that the NAB would not entertain that latter proposal.[135]

129 Mr Perkins knew at this point that the NAB had not agreed to refinance the Thompsons' facility and that he feared that it might foreclose on the property.[136]

130 Also on 11 December, the Geminders' house manager, Ms van Denderen, attended the property and met with the Thompsons to discuss some alterations to it that the Geminders had requested.[137]

131 On 12 December 2012, Mr Perkins emailed Mr Thompson stating:

Warren - we did speak to Michael Woolrich yesterday afternoon, our NAB institutional banker. He confirmed that he has had a number of conversations directly with Patrick Xiong - both last week and also three weeks ago after Ruffy first spoke with him. We have also sent a copy of the lease to Michael to ensure that there is no uncertainty about the Geminders tenure at the property. We have left an open invitation with NAB to discuss the tenancy, in particular if they would like the rent pre-paid. I will let you know if we hear anything more at our end and would appreciate if you would let us know of any significant developments.[138]

132 On or about 13 December 2012, Mrs Geminder and two of her daughters visited the property. Mr Thompson gave evidence that Mrs Geminder told him that, the day before, at a Pact Group Christmas party for senior staff, she had arranged to sit next to Mr Woolrich so that she could discuss the situation with him. She had asked him how things were going, meaning their leasing the property, he had replied: 'Don't worry about it. That's all fine'.[139]

133 On 16 December 2012, the Geminders travelled overseas on holiday. Mr Thompson and Mr Geminder did not have a conversation again until 31 January 2013.

134 On 17 December 2012, Mr Geminder wrote to the Thompsons about the alterations that he wanted to make to the property. He informed them that upon the expiration of the lease, all the alterations would be made good and returned to their original state, subject to any directions to leave them.[140]

135 On 17 December 2012, Mr Thompson emailed Mr Champion stating:

Can we please follow up the NAB regarding the refinance of the loan on the above property?

I have been advised by the [Geminders] that senior bankers in the NAB have advised them that this matter is 'all going to happen'. The NAB has a copy of the lease agreement between Amanda and Raphael Geminder (provided to the NAB by the [Geminders]). Raphael has confirmed to the NAB that they will pay the rent 'up front' in order that interest on the loan is prepaid.

As this is obviously the best outcome for all parties we would like it to be resolved before Christmas.[141]

136 It is noteworthy that the email did not refer to Mr Geminder buying the mortgage from the NAB, refinancing Mrs Thompson's mortgage with Westpac, or taking any other steps to 'fix' the Thompsons' financial problems with the NAB.

137 On 17 December 2012, Mr Woolrich advised Mr Perkins by email that the NAB did not consent to any lease of the property and could not discuss or disclose further information 'for privacy reasons'. He stated that if Mr Geminder was willing to purchase the property, he could discuss that directly with the Thompsons.[142] Mr Perkins gave evidence that this was the first time that he and Mr Geminder were informed that the NAB did not consent to the lease.[143]

138 On 18 December 2012, Mr Perkins forwarded Mr Woolrich's email to Mr Geminder and commented: 'I think the reference to buying the property may have arisen from the discussion on nab potentially selling the [debt] as its otherwise unsolicited'.[144]

139 Mr Perkins spoke with Mr Thompson and then sent an email to Mr Geminder on 18 December stating that Mr Thompson had told him that 'they were pushing NAB for resolution and had made them an offer. I asked for him to keep me in the loop.'[145] In evidence, Mr Thompson said that the 'offer' to which he was referring was the 29 November offer contained in Mr Champion's letter.[146] The Geminders were unaware of this offer. Mr Thompson did not tell Mr Perkins or Mr Geminder that the offer had already been rejected by the NAB on 6 December.[147]

140 On 18 December 2012, Mr Perkins emailed Mr Thompson requesting that he update Mr Perkins over the break 'if there is any significant updates in your dealings with NAB'.[148]

141 Mr Perkins arranged for the first month's rent for the property to be paid before the vacation break.[149]

142 Shortly before Christmas, the Thompsons received an offer to purchase the property for what Mrs Thompson said was 'an exceptionally good price' from Mr David Heffernan and Mrs Sharon Heffernan, who lived in Dubai. However, the offer gave only gave them until Christmas Eve to vacate the property.[150] The Thompsons rejected the offer, in part because it gave them too short a time in which to vacate the property. Soon after, the Heffernans offered to extend the settlement date by two weeks.[151] Mrs Thompson said they did not pursue the offer because they had promised Mr Geminder they would not sell and if they did receive an offer in writing of a very good price, the NAB might force them to sell. [152]

1. On 4 January 2013, Mr Thompson telephoned Mr Tim Derham of Abercromby's. It was put to Mr Thompson that this was one of a number of contacts that Mr Thompson and Mr Derham had about the Heffernans' offer. Mr Thompson denied that and said that he was seeking the return of a video about his home that he had previously provided to Abercromby's in connection with the auction. Mr Derham did not give evidence and there is no basis for rejecting Mr Thompson's evidence on this point.[153]

144 On or about 9 January 2013, the Heffernans completed and signed by way of offer a contract of sale of the property for $7.65 million.[154] There is no evidence that this offer was sent to the Thompsons.[155]

145 On 10 January 2013, Mr Champion spoke with Ms Michelle Lykiardopoulos, a solicitor at Thomsons Lawyers, who were acting for the NAB, who told him that the NAB did not consent to the lease, did not propose to withhold legal proceedings and did not agree to charge interest at normal commercial rates as opposed to the default rate. Mr Champion emailed an account of this conversation to Mr Thompson.[156]

146 On 10 January 2013, Mr Perkins spoke to Mr Thompson, who told him that the NAB had asked him for a copy of the lease, that the Dubai bidder was still bothering them and that they were moving into a rental property in Malvern. Mr Perkins asked him to keep him abreast of any developments with the potential sale by the NAB and Mr Thompson asked him to do the same. Mr Perkins' email to Mr Geminder included the following recollections of his conversation with Mr Thompson:

Warren called me back this morning. He said that:

1. the bank had asked them for a copy of the lease and they responded by saying that NAB already has a copy from us, and that there has been no changes to the copy provided;
2. that the Dubai bidder is still 'bothering' them. Apparently they were here for Christmas and on Thursday the 20th, made an offer subject to settlement on the 24th of December, which they refused. They then made another offer and gave them 7 days to move out to settle. He said that they again refused and that the value wasn't enough. He also said that they had looked at every house in Toorak while they were here but have gone back now.
3. the selling agent's authority ran out on 15 December and the sign was meant to be taken down on the 7th or 8th of January. He noted it wasn't and said he would call now and hassle them to get it down today.
4. all things on track for their move [...] and that there has been a lot of activity at the house preparing it for our lease commencement on Monday.

I asked him to keep me abreast of any developments with the bank/potential sale and asked him to do the same, which he promised to do.

So all things look on track for move in.

Short of anything new arising, the next round of action is likely to be with NAB as their existing mortgage (according to Warren) nears expiry in March.

Lastly, I am going to progress putting a caveat on the property to protect our leasehold interest ... [157]

147 The statement that the existing mortgage expired in March was incorrect.

148 The NAB repeated its position that it did not consent to the proposed lease.[158]

149 The Thompsons sought new accommodation and on 13 January 2013, Mrs Thompson signed the lease for a property in East Malvern. The Thompsons commenced to move into that property that day. About the same time, the Geminders' staff commenced moving into the Thompsons' Toorak Road property.

150 Around 16 January, Mrs Geminder received text messages from Mike Bartlett, who worked for Pratt Aviation, to call Mr David Heffernan about the property and the possibility of the Heffernans renting it to the Geminders. Mr Heffernan wanted to know if the Geminders would lease it as tenants for three years.[159] Mr Geminder said that he had nothing to talk about to Mr Heffernan because 'Mr Thompson owned the house' and needed to speak to him.[160]

151 On 16 January 2013, Mr Perkins emailed Mrs Geminder expressing his concerns that the NAB could retake possession of the property as mortgagee and of the possibility that a third party purchaser of the property could terminate the lease on 60 days' notice. He pointed out that the lease required the Thompsons to ensure that it continued if they sold the property, but that a claim for any breach of that obligation could only be brought against Mrs Thompson. He commented that:

... of course we would throw as many legal and process road blocks along the way if either of those scenarios unfolded.[161]

152 On the same day, Mr Geminder lodged a caveat on the title of the property recording his interest as lessee in order to protect his tenancy.[162]

153 On 17 January, Mr Thompson drafted an email for Mr Champion to send to the NAB's lawyers, which stated:

We're told that Mr Michael Woolrich from the NAB has verbally confirmed to both Mr & Mrs Geminder that all is okay. We requested that the bank finalise an arrangement with Mrs Thompson for the extension of the loan in order that funds can start flowing to the bank.[163]

154 Mr Perkins denied that he had told Mr Champion or Mr Thompson that all was 'okay'.[164]

155 On 18 January 2013, the NAB attempted to repossess the property, but Ms van Denderen, the Geminders' house manager, and Mr Perkins, spoke to the NAB's mortgagee agent and the attempted repossession ended. Mr Thompson suggested to Mr Perkins that he thought that 'the visit was in response' to the email that he sent to the NAB. He said 'that this should precipitate an outcome and that the Dubai buyer is still 'hanging around''.[165] The next day, Mr Perkins was advised by representatives of the NAB that it had no intention of consenting to a lease of the property.[166]

156 Mr Thompson gave evidence that, on or about 18 January 2013, Mr Perkins spoke to him about what Mr Geminder might do to prevent the NAB from taking possession of the property and selling it. He said that Mr Perkins told him that he had rung Mr Woolrich and informed him that the Geminder $300m relationship was on the line and that 'he had better get it fixed'.[167] Mr Thompson's evidence was that he told Mr Perkins that 'you have got to fix this and work out how you are going to handle it so that our deal is fulfilled'. Mr Perkins stated, 'I will contact Ruffy and see how he wants to proceed'.[168] Mr Perkins denied that he made any such statement.[169]

157 On 20 January 2013, the Geminders moved into the property.

158 On 21 January, Mr Thompson emailed Mr Champion stating:

On Friday afternoon a 'goon' from the NAB (as described by the Geminders senior legal counsel) arrive[d] at the house. Following Nick's arrival to the house from head office the goon left.

Nick subsequently rang Michael Woolrich and told him that the Geminder $300M relationship is on the line.[170]

159 Mr Perkins said that Mr Geminder decided to offer to buy the Toorak Road property from the Thompsons to maintain his tenancy. Mr Perkins was instructed to carry out that decision.[171]

160 Mr Perkins gave evidence that in a telephone conversation on 22 January 2013, he discussed with Mr Thompson the courses of action open to them.[172] He said that he told Mr Thompson that Mr Geminder was very concerned that the NAB and the agent, might be negotiating the sale of the property behind his back. Mr Thompson said that he had heard that, in the absence of the tenancy, the NAB had intended to apply to Court to evict them for being in default of their mortgage obligations. In an email to Mr Geminder, Mr Perkins recorded what he had told Mr Thompson, including that: 'we wanted to demonstrate our support and return the loyalty that [you] have shown us'. He also told Mr Thompson that he had a very short timeframe before the NAB would act and seek to control the process. He stated that Mr Geminder could buy the NAB's mortgage, or help Mrs Thompson obtain a fresh mortgage elsewhere, or purchase the property himself.[173] His email described that he had told Mr Thompson: 'Our offer was to buy the house from [you] for the mortgage payout and [you] could have an option to buy back from us for the same price less transaction costs. He was better to control the process than the bank'.[174] Mr Perkins said that his note of the conversation should have recorded 'plus transaction costs' and not 'less transaction costs'.[175] Those costs were stamp duty of $467,000. He offered to buy the property for $8.2m, being the amount that he understood was owing under the mortgage.[176]

161 Mr Champion said that he was trying to persuade Mr Perkins to have Mr Geminder either take an assignment of the Bank's mortgage or a third party mortgage.[177] His goals were to avoid the property being sold by the NAB, for Mrs Thompson to keep the house and for Mr Geminder to remain in the property pursuant to the lease.[178]

162 Mr Thompson did not specifically recall this conversation.[179] However, particularly in view of his email record of the conversation, I accept Mr Perkin's evidence in this regard as substantially accurate.

163 Mr Perkins' record of his second conversation that day with Mr Champion included that he told Mr Champion that Mr Geminder did not want to be a first mortgagee, as he did not wish to be in the position of having to take possession of the property and evict the Thompsons and that he would 'wear' the $400,000 stamp duty. Mr Perkins also stated that Mr Geminder would want clear title, but that the Thompsons would be able to buy back the property at an agreed time.[180] Mr Champion had no clear recollection of these conversations.[181]

164 Again, I accept Mr Perkins' evidence of these conversations as recorded in the email to Mr Geminder.

165 In the afternoon of 22 January, Mr Perkins asked Mr Thompson by email whether he had a s 32 statement and a contract of sale that he could forward as 'it would be useful not to reinvent the wheel on any sale documents'.[182] During his evidence, Mr Champion agreed that an option deed or agreement of some type was going to be needed and the underlying contract of sale.[183] At that point, the proposal was still that Mr Geminder would purchase the property from the Thompsons.

166 On 23 January 2013, Mr Champion emailed a proposal to sell the property to the Geminders to the NAB's lawyers, stating:

I am told there have been a range of communications between various people in recent days.

I am instructed that the upshot of those communications is that my client proposes a sale of the property to the [Geminder] interests for the sum of $8.2 million (without any estate agent involved) on the basis that the bank accepts that sum in full settlement of claims against Amanda or Warren Thompson.[184]

167 On the same day, Mr Geminder received advice from the Pact Chief Financial Officer, that his best option was for Geminder Holdings to buy the property and fund the rent by the payment of fully franked dividends to him.[185]

168 On 29 January 2013, Mr Champion informed Mr Perkins that the NAB disputed the amount of the debt and maintained that penalty interest was to be added to it. Mr Champion told Mr Perkins that the Thompsons had not defaulted on the loan, other than by Mr Thompson's bankruptcy. Mr Champion said that any pressure that the Geminder camp could place on the NAB would be useful.[186]

169 Mr Champion sent Mr Perkins a contract of sale naming Mr and Mrs Thompson as vendors and a s 32 statement. The statement recorded that the municipal rates for the property were unpaid.

170 On 30 January 2013, Mr Thompson and Mr Champion exchanged emails.[187] Mr Thompson instructed Mr Champion to tell the NAB that '... the Geminders will not offer any more. They will stick with the lease'.[188] Mr Champion informed the NAB of this and then emailed Mr Thompson:

Done,

I didn't have any great comfort that it made any difference ... It might even reduce the prospects of the bank putting a counterproposal however it probably won't make any difference!

I was again asked what was happening with the rent and I said I would seek instructions.[189]

171 The Thompsons did not use the rent that Mr Geminder paid them to make any debt reduction payments to the NAB.

172 The possibility of the Geminders purchasing the property and granting the Thompsons an option to repurchase it was discussed at a meeting on 31 January 2013 at Pact Group's office in South Yarra at which Mr Geminder, Mr Perkins, Mr Thompson and Mr Champion were present. Mr Champion gave evidence that he had discussed this idea with Mr Perkins before the meeting.[190]

173 Mr Geminder's evidence was that 'the whole discussion was a conceptual discussion'.[191] Mr Perkins gave similar evidence, stating that:

There was no detail of the concept that was discussed. There were actions arising out of the meeting and one of the actions was for Mr Champion to go and develop the concepts of potential terms of the option agreement.[192]

174 The parties discussed the amount of debt owed to the NAB, which they thought was between $8.2 and $8.4m using the standard interest rate. They also discussed the actions that the Geminders might take if the NAB attempted to repossess the property.[193]

175 Mr Thompson gave evidence that Mr Geminder said to him:

Okay, well you try and get it for as cheaply as you can from the bank and I will buy it back, buy the property from the bank ... I will stay there as long as I need to and after I have moved out, Amanda will have the right to buy it back - to exercise the option to buy [it] back six months after I move out or the family moves out and then she will have six months in which to pay for it.[194]

And that Mr Geminder said in respect of transaction costs:

I will pay for - I will lose, I think was the terminology he used, lose the transaction cost, lose the stamp duty cost. You will pay it when you purchase it back.[195]

Mr Champion gave similar evidence about the transaction costs.[196]

176 Mr Thompson said that he agreed that that was a generous offer. He gave evidence that Mr Geminder said that he would 'lose' the transaction costs meaning the amount of the stamp duty and that the Thompsons would 'cover those' costs when they repurchased the property.[197] In cross-examination, he agreed that he understood that the proposal discussed at the meeting had to be negotiated with the NAB.[198] He said that they did discuss the option and the timeframe for its exercise at the meeting.[199]

177 Mr Geminder described the meeting in the following terms:

The essence of what was discussed was the notion that we would buy the property for the loan amount, effectively, and that we would give them an option to buy back the property for the loan amount and I think at the time we also said that would exclude the costs associated, transactional costs associated with - once the option is exercised. Something to that effect.[200]

178 Mr Geminder's evidence was that there was no discussion about the terms of an option to repurchase the property during the meeting and he, Mr Perkins and Mr Champion agreed that there was no discussion about the option exercise period.[201] He was not challenged on that evidence. They all intended that the option agreement would be contained in a document and that it would be left to Mr Champion to develop it.[202] Mr Champion did not consider that the drafting of the buyback option was complex.[203]

179 Mr Champion gave evidence that he told Mr Geminder that there could be problems with the lease and that Mr Geminder might have to get out of the property as the NAB could sell it from under him.[204] He said that Mr Geminder replied that he would 'have a huge fight with the bank, and they wouldn't get him out until after he no longer needed the property'.[205] In cross-examination, Mr Geminder stated: 'I don't know if I said it in that meeting but I certainly recall saying that we were a tenant, we were in possession and we would strenuously defend our tenancy'.[206] Mr Champion said that Mr Geminder asked for permission to discuss matters with the NAB.[207]

180 In respect of the caveats lodged on the property's title, Mr Thompson said that the Malones were family and would happily remove their caveat. However, the Castran Gilbert caveat would not be so easy to remove and that an application to the court might be required to remove it. Mr Thompson's evidence was that Mr Champion said that it would be easier, preferable and quicker if they could sell the property as mortgagee in possession because a caveator could not prevent a sale by a mortgagee in possession.[208] The parties agreed that Mr Champion would meet with the NAB to find out the sum that they would accept and Mr Geminder would work behind the scenes.[209] A file note made by Mr Perkins that day recorded these actions as follows:

NP/RG: discuss w/ bank & hear what it is to be said

MC: consider form of option right + respond[210]

181 I find that at the meeting of 31 January 2013, Mr Geminder did discuss the possibility of purchasing the property and giving Mrs Thompson the option to repurchase it. The discussions on 22 January and the email of 1 February 2013 indicate that this purchase and grant of an option was a proposal of significance, which was being discussed at that time.

182 On 1 February 2013, Mr Perkins emailed Mr Champion stating that as he was going on leave the next week, and as he suspected that [events]'may have to move very quickly' he would appreciate that he 'turn [his] mind' to 'the form of option agreement for our respective parties to enter into'. The email stated:

From our end, the purchaser of the property will be Geminder Holdings Pty Ltd... I think that the option should provide that: Geminder Holdings Pty Ltd provides an option to Amanda Thompson to acquire the property at 607 Toorak Road for the sum of [$ to be the same sum as the property was acquired by GH for]. The option period shall commence on expiry or termination of the lease between Geminder Holdings Pty Ltd and Raphael Geminder[211] (including any extension thereof) of which Geminder Holdings must provide immediate notice to Amanda Thompson. Amanda Thompson shall have 180 days (6 months) to exercise the option.

I will have my property colleague here, Peter Daly assist, and we have engaged Peter Kritikides at Lander & Rogers to assist us with finalizing the sale and settlement.

Look forward to hearing from you.[212]

183 Mr Champion did not respond to the email, but forwarded it to Mr Thompson, who replied to him: 'If I read this correctly, Amanda will have 180 days from the end of the lease to exercise her option. This is very generous.'[213]

184 On the same day, 1 February 2013, Mr Geminder and Mr Perkins met with Patrick Xiong and Terry Woolley, who was Head of Strategy and Decisioning, Strategic Business Services at the NAB, who told them that the Thompsons owed the NAB in excess of $9m and that there was a short window of time in which to deal with the Thompsons in relation to the property.[214] Mr Xiong's file note of that meeting recorded that Mr Geminder would consider three options: purchasing the property at a reasonable price, the NAB taking possession and marketing the property as vacant; or with tenants in and the lease as an option and that Mr Geminder would make the property available for inspections. Mr Geminder said that he had offered $8.2m to the Thompsons and that was all he was prepared to pay.[215] Mr Geminder agreed to continue negotiations with the Thompsons and to respond to the NAB the following week.[216]

185 Following the meeting, Mr Perkins informed Mr Champion by email that the NAB was proposing to commence a Supreme Court action seeking a writ of possession and that, if the Geminders were interested in the property, there was a 'short window of time' to deal with the Thompsons in relation to it.[217] The NAB said that its debt exceeded $9m and that it wanted an amount close to that in order to release its security. Mr Geminder had offered $8.2m and that was all he was prepared to pay. The NAB's representatives said that if the offer was closer to $9m they would be able to release their security.[218]

Ruffy wanted to confirm that he was prepared to contribute $8.2M as part of any offer to the bank - [it's] really up to Warren to see what he can negotiate and then contribute any excess above $8.2M to secure the sale. Obviously any excess contributed by Warren would be recovered through the exercise of the option and to confirm, Ruffy would pay all the stamp duty on Geminder Holdings acquisition of the property (and Warren would pay the stamp duty on exercise of the option).

Can you take some instructions and see how Warren gets on with the Bank and let us know?[219]

187 Neither, Mr Champion or Mr Thompson responded to this email.

188 Mr Champion forwarded the email to Mr Thompson stating that:

it looks like Ruffy hasn't got anywhere and doesn't propose to do any more to put pressure on the bank to reduce the figure it requires.

No doubt you will ring to discuss shortly.[220]

189 Mr Thompson and Mr Geminder spoke by telephone on 2 February 2013 about the amount that Mr Geminder would contribute to the purchase price for the property. According to Mr Thompson, Mr Geminder said that he only wanted to contribute $8.2m and that Mrs Thompson could contribute any amount over that sum. Mr Thompson gave evidence that he replied that that 'was not on' and that Mr Geminder would have to 'put up all the money that's required'. Mr Geminder agreed to pay up to $8.5m.[221] Mr Geminder was not asked about this discussion. But, later in February, Mr Geminder was prepared to offer $8.5m.

190 On 4 February, Mr Champion wrote to the NAB's solicitors offering to settle the NAB's claims for $8.45m.[222] On 6 February, the NAB rejected that offer but said that it would accept $8.92m.[223]

191 On 7 February, Mr Champion wrote to the NAB expressing disappointment and stating that the Thompsons could not raise any more money.[224] On 11 or 12 February 2013, he sent Mr Perkins at his request, a calculation of the debt using 'conventional rates' of interest recording principal of $8.04m and interest of $407,617.[225]

192 Mr Perkins spoke to the NAB about the amount of the debt. The NAB told Mr Perkins that they had a little room to move, but not much. [226] On 12 February 2013, in response to an email from Mr Perkins about his discussions with the NAB, Mr Geminder stated: 'I don't trust Warren further than I can throw him!'.[227]

193 On 13 February 2013, Mr Champion emailed Mr Thompson stating that he had confirmed with the NAB's solicitors that his offer was $8.45m, clear of deductions. He had told them that, because of the caveats, he proposed to agree that the NAB sell the property as mortgagee in possession. [228]

194 On 14 February 2013, Mr Perkins emailed Mr Champion stating that Mr Geminder thought that the NAB's figure was 'circa $8.6 million'. Mr Geminder proposed to 'split the increment' with Mr Thompson above $8.45m 'to bear 50/50'. According to Mr Perkins' calculations, this would make their contributions: Mr Geminder $8.325m; and Mr Thompson $275,000. The Thompsons could have the 'option to buy back at' $8.325m. He asked about the Castran Gilbert caveat and said that: 'clearly clear title would be a condition of sale'.[229] On instructions from Mr Thompson, Mr Champion responded:

My client's preference would be that we offer $8.5M, all of which is funded by Ruffy, and that the option price is $8.5M. Is this OK, both as to the amount to NAB and the contributions by Ruffy? I am told that if it is necessary to go to $8.6M, my client will fund the balance above $8.5M.[230]

The Geminder-Thompson meeting on or about 17 February 2013

1. Part of Mrs Thompson's case was that at a meeting over coffee at Zanuba's restaurant on or about 17 February 2013, Mr Geminder represented to Mr Thompson that Geminder Holdings would buy the property from the NAB for a sum of up to $8.5m, with Mrs Thompson contributing any additional amount required, and with Geminder Holdings granting Mrs Thompson an option to repurchase the property for the same price after the expiration of any lease. This was the basis of the Purchase and Buyback Option _A_greement and also was described as the 'third representation of good faith'.
2. Mr Thompson's evidence was that Mr Geminder said that he would contribute up to $8.5m, subject to proper documentation, that Mrs Thompson would contribute any excess above that sum and that Mrs Thompson would have an option to buy back the property at the same price after the end of the Geminder occupation of it.[231] The mechanics of the option agreement were not discussed at the coffee meeting because 'it was generally left to the solicitors.'[232]
3. Mr Geminder gave evidence that the discussion at the meeting was about the purchase price of the property and why it kept changing. He said that he was quite aggravated about how the price had ballooned, but he was trying to be pragmatic and said that 'we will increase our offer to $8.5m, subject to proper documentation and the normal process'.[233] He also said that there was no discussion at the meeting of the Thompsons contributing any sum above $8.5m,[234] or about an option for the repurchase of the property. He said that he did not discuss the option or its form with Mr Thompson or Mr Champion.[235] He understood that the Thompsons would be the vendors of the property because they owned it.[236]
4. The main difference in evidence about this meeting was whether Mr Geminder agreed to grant Mrs Thompson an option to repurchase the property. While I have found that such a proposal was raised in the meeting of 31 January 2013, there is no record of the details of it being discussed after that date. I am not persuaded that it was discussed again in any detail in the meeting on 17 February 2013.
5. On 19 February, Mr Perkins emailed Mr Champion that:

I understand that Ruffy and Warren met on the weekend and agreed that, Geminder Holdings would pay $8.5M and that WT/AT would contribute any further amount required above this to secure the sale. Can you let me know the status of the negotiations with the bank and potential timing of the transaction?

Also, as mentioned before, we will obviously need clear title and so the caveators/other mortgagees must also be dealt with by the Thompsons as part of this process.[237]

200 On 20 February 2013, Mr Champion wrote to the NAB's lawyers increasing Mrs Thompson's offer to $8.5m payable within 28 days of acceptance of the offer and contemporaneously with the settlement of a sale of the property to Geminder Holdings. Mr Champion stated that 'if agreement can be reached as to terms it is proposed that agreement also be reached for your client to enter into the contract of sale as mortgagee in possession.'[238] Mr Perkins did not receive a copy of this letter.[239]

1. On 28 February 2013, Thomsons Lawyers for the NAB responded to Mr Champion's letter of 20 February stating:

Our client is prepared to accept your client's offer of $8.5 million in full and final settlement of the above proceeding strictly on the following terms:

1. there are no objections from the bankruptcy trustee, caveators, or any other interested parties, to NAB selling the security property ... to Mr Raphael Geminder for a net sum of $8.5 million ... ;

2. that settlement be effected no later than 28 March 2013;

1. your client acknowledge that in the event of any failure by your client to pay the settlement sum in clear funds:

(a) NAB will be at liberty to immediately take possession of the security property; and

(b) NAB reserves its rights and entitlement to recover the full amount owed pursuant to the guarantee and the mortgage; and

1. these terms of settlement be documented by way of a Deed of Settlement.[240]

The offer was open for acceptance until the following Monday, 4 March 2013. It was a condition of that offer that no encumbrancer object.[241]

1. Mr Champion sent a copy of the NAB letter to Mr Perkins, who advised Mr Geminder that the NAB intended to take possession of, and then immediately sell, the property to Geminder Holdings.[242] Mr Champion identified two major issues arising from the NAB letter and he outlined them to Mr Thompson on 1 March 2013: first, the need to obtain consent from the caveators, particularly Castran Gilbert; and, secondly, Mrs Thompson's consent to judgment in favour of the NAB if everything did not happen as it should.[243] On 1 March 2013, Mr Champion wrote to the NAB's solicitors requesting a copy of the proposed Deed of Settlement, which was referred to in its letter of offer.[244]
2. On 25 February 2013, according to Mr Perkins' note of information relayed to him by Mr Geminder, Mr Thompson raised the concept of the NAB selling the property as mortgagee in possession and noted that the form of contract may be different.[245] Despite the note of the conversation, Mr Geminder did not recollect this conversation with Mr Thompson.[246] But his case was that this was the first time that the Thompsons had suggested to the Geminders that the NAB would be vendor. Mr Perkins queried whether the NAB could do that and mentioned the interest of the caveators and trustees in bankruptcy.[247] Mr Thompson questioned whether this discussion in fact occurred at the meeting on 31 January 2013.[248]
3. Mr Champion responded to the NAB's letter on 1 March 2013, confirming that Mrs Thompson's proposal was that the NAB enter into the contract as mortgagee in possession with her consent and requesting a copy of the proposed Deed of Settlement.[249]
4. On 5 March 2013, the NAB's solicitors sent letters to the encumbrancers, the Malones and Castran Gilbert.[250] The Malones, at the request of Mr Thompson, emailed the NAB their consent to the sale.[251]
5. In March, Mr Perkins sought updates from Mr Champion, who informed him on 15 March, that there were no developments at his end, although he had left messages with the NAB's lawyers.[252]
6. At this point, the Heffernans again became involved and on 5 March 2013, Klonis Kirby & Co solicitors ('Klonis Kirby'), who were also the solicitors for Castran Gilbert, made an offer on their behalf to the NAB to purchase the property for $8.35m net and subject to the existing tenancy.[253] The NAB' solicitors rejected that offer on 7 March 2013, stating that the offer that they had already received exceeded it. [254]
7. On 14 March, Klonis Kirby increased the offer to $8.55m, on a 30day settlement and reiterated that it was subject to the tenancy.[255] On the following day, they offered to assign Castran Gilbert's rights against Mr Thompson to the NAB.[256]
8. On 20 March 2013, the NAB's solicitors replied to Klonis Kirby stating that because it was not in possession of the property, it was not in a position to accept or reject the offer.[257] Klonis Kirby, in reply, asserted that the NAB had failed to consider the interests of the caveators by not taking possession of the property and by rejecting their 14 March offer.[258]
9. On 26 March 2013, Mr Champion, who was about to go on leave, wrote to the NAB's lawyers, copying Mr Thompson and Mr Perkins, stating: 'I just hope the proposed purchaser hasn't gone off in the meantime.'[259] The 'proposed purchaser' was Mr Geminder.[260]
10. Mr Champion was overseas on holiday for 22 days, commencing on about 26 March 2013.[261]
11. Mr Perkins had no further contact with Mr Champion or Mr Thompson until 4 June, other than one brief email on 24 April 2013, which stated that he was still waiting for a settlement deed from Thomsons Lawyers.[262]
12. On 3 April 2013, NAB's solicitors relayed the Heffernans' offer of $8.55m to Mr Champion, and to Mr Thompson's trustees in bankruptcy. The letter did not name the Heffernans and requested that Mr Champion and Mr Thompson liaise directly with Klonis Kirby, as the NAB was not in possession of the property.[263]
13. Mr Thompson instructed Mr Champion to request that the Klonis Kirby offer be put in writing.[264] He and Mr Champion evaluated its merits. Mr Thompson gave evidence that he was not sure that Mrs Thompson received notice of the offer, but in any event, they contended that they had a deal with the Geminders.[265]
14. The next day, 4 April 2013, Mr Thompson emailed Mr Champion:

I note the offer is NET OF COMMISSION and is SUBJECT TO THE CURRENT TENANCY.

Therefore we need to point out to the bank that as they are not in a position to sell then the current proposal is superior and settlement should occur as soon as possible.

We are aware of the purchaser, they were introduced to the property by Abercrombies, and Abercrombies may also claim a commission.[266]

216 Later, that day he sent Mr Champion a further email evaluating the offer.[267]

1. The next day he emailed Mr Champion stating that:

It is not less if you took interest into account.

The fact that the caveator wants to sell for less than the bank loan should make things a lot easier for the NAB.

The purchaser is 'Heffernan' he is our Dubai buyer and is [aware] of the lease and has also spoken with Ruffy. He has told all of Melbourne that he is buying our [property] and has the money.[268]

1. The Geminders contend that the communications between Mr Thompson and Mr Champion indicated that Mr Thompson was instructing Mr Champion to go ahead and settle by accepting the offer from Klonis Kirby. They argued that this approach did not indicate that the Thompsons placed any reliance on Geminder Holdings purchasing the property.
2. On 8 April 2013, Mr Perkins told Mr Geminder that Mr Thompson had telephoned him and told him that the NAB had received an offer higher than $8.5m, although he did not disclose its amount.[269] He had told the NAB that they were not interested in selling to the Dubai buyer and that they wanted to expedite the sale to Geminder Holdings. He said that they needed to keep pressure on the NAB.[270]
3. Mrs Thompson's case is that she did not entertain this offer because of the agreement with the Geminders and that Mr Perkins was informed of this on 8 April 2013.[271]
4. Mr Thompson said that he had no direct or specific knowledge of Mr Heffernan's offer, although he acknowledged he had spoken to Mr Geminder and Mr Perkins about the Heffernans.[272] The Geminders submitted that Mr Thompson's evidence should not be accepted in this respect. I do not accept it, as Mr Thompson knew from the earlier offers that Mr Heffernan was interested in the property**.** As I have previously mentioned, he said that Mr Heffernan had 'told all of Melbourne' that he was buying the property.
5. On 15 April 2013, Klonis Kirby wrote to Mr Thompson's trustees in bankruptcy referring to the offer of $8.55m and stating that 'the NAB as mortgagee seeks your consent to the sale, and that of Mrs Thompson'. [273]
6. On 15 April 2013, the NAB's solicitors wrote to Mr Champion in a letter marked 'without prejudice save as to costs' stating:[274]

NAB is prepared to accept your client's proposal as set out in your letters of 20 February and 1 March 2013.

We are in the process of preparing the Deed of Settlement and will forward same to you for your client's execution shortly.

All of our client's rights and entitlements pursuant to the facilities and securities remain fully reserved.

1. Mr Perkins gave evidence that he was not aware of this letter.[275] He considered that if terms had not been agreed between the NAB and the Thompsons by the end of April, it was increasingly unlikely that any agreement would be reached.[276]
2. Between 8 April 2013 and 4 June 2013 Mr Champion did not contact the NAB, save for a letter of 23 May 2013 seeking changes to the draft Deed of Settlement.[277]
3. In cross-examination, Mr Thompson gave the following evidence:

Just being neutral, is it fair to say that in the period mid-April to late June you and Mr Champion were not really doing anything to progress a deal but were waiting on correspondence from the bank's solicitors? --- Yes. I rang Mr Champion and said, 'What's happening?' and he said, 'I am still waiting on the contracts from the bank'. [278]

1. On 24 April 2013, Mr Perkins sought an update from Mr Champion, who responded that he was awaiting a deed from NAB's solicitors. Mr Perkins requested that he 'keep [him] in the loop'[279], but he did not hear from him until after the NAB sent its redirection of rent notice.[280]
2. On 2 May, the NAB's solicitors sent copies of the Deed of Settlement to Mr Champion for execution.[281] The Deed recited the loans made by the NAB to Mr Thompson's company, Sunshine Retail, the securities that the Thompsons had provided and their defaults, the County Court proceedings, Mr Thompson's bankruptcy and the lease to the Geminders. It provided for an acknowledgement by Mrs Thompson that she had received legal advice about the effect of the Deed and had entered into it voluntarily. The acknowledgements provided for in the Deed included that, as at 2 May 2013, Mrs Thompson's indebtedness to the NAB pursuant to the facilities and securities was $9,588,346.29 exclusive of costs and that the NAB was entitled to immediate possession of the property. The Deed provided for the NAB, within 21 days from execution of the Deed, to enter into a contract of sale of the property as mortgagee in possession with the tenant, Geminder Holdings, for the purchase price of $8,500,000. It required Mrs Thompson to deliver to the NAB a bank cheque for payment of rates, accept service of the writ and statement of claim in the County Court proceeding, file and serve a notice of appearance in that proceeding and sign a minute of consent providing for the dismissal of the proceeding with a right of reinstatement. It also required her to sign a consent to judgment to be held in escrow and filed only in the event of default under the Deed to obtain the following orders:

1. The proceeding be reinstated.

2. [NAB] recover possession of [...] 607 Toorak Road Toorak....

1. [Mrs Thompson] pay [NAB's] costs on a solicitor/client basis to be taxed in default of agreement.[282]
2. The Default clause provided that:

4.1. In the event of default by Mrs Thompson in compliance with the terms of this Deed and/or the Toorak property is not sold in accordance with the terms of this Deed, NAB, in addition to all other rights and entitlements it may have pursuant to law, contract and equity, will be at liberty to immediately take action as may be necessary to:

(a) exercise its rights and entitlements pursuant to the facilities and securities, including but not limited to:

(i) issuing a rent-redirection notice in respect of the Toorak property;

(ii) issuing a Notice to Vacate; and/or

(iii) selling the Toorak property as mortgagee in possession;

(b) obtain judgment for possession of the Toorak property in the proceeding, whether by entering default judgment and/or filing the consent to judgment referred to in clause 3.3(e) above in the proceeding;

(c) recover all amounts owed by Mrs Thompson to NAB pursuant to the facilities and securities; and/or

(d) otherwise enforce the terms of this Deed.

4.2 An affidavit by a solicitor employed by NAB or a solicitor or agent acting for NAB will be conclusive evidence of default under the terms of this Deed.[283]

1. The covering letter, also marked 'without prejudice save as to costs' stated:

As soon as we receive the executed Deed, our client will proceed with preparation of the contract of sale of the Toorak property.

All our client's rights and entitlements remain fully reserved.[284]

1. The Deed required that it be executed by 16 May 2013. Mr Perkins was not provided with a copy of the Deed or the covering letter, nor was he told about it at the time.[285]
2. On 14 May 2013, Mr Perkins sought an 'update' from Mr Champion, but he did not receive a response.[286]
3. Mr Champion did not respond to the NAB's lawyers' letter of 2 May and on 20 May, Thomsons Lawyers, sent him a second letter, noting that the executed Deed of Settlement had not been received and stating:

we are instructed to proceed with recovery action without further notice unless the executed Deed of Settlement is forwarded to us by 12 noon on Wednesday, 22 May 2013. [287]

Mr Perkins did not receive a copy of this letter.[288]

1. On 23 May 2013, Mr Champion in a letter to Thomsons Lawyers sought a number of changes to the Deed, including the deletion of the statement that the lease to Geminder Holdings had occurred 'without the consent and approval of the NAB' and seeking a copy of the contract of sale. The letter also stated:
   1. In clause 2(c), the reference to the figure of $9.588 million is not accepted and should be deleted. However, our client will agree to the clause being amended to record that the indebtedness is a sum in excess of $8.5 million.

1. In relation to clauses 3.8 and 4.1, it is not possible for [Mrs Thompson] to define her position until the proposed form of contract has been prepared and submitted to Geminder Holdings Pty Ltd for its review and acceptance.
2. Our client will not accept a conclusive evidence clause as proposed in clause 4.2. She will however agree to a prima facie evidence clause.[289]
3. Mr Champion said that he wanted to show a contract to the Geminders to make sure they were happy with it and would sign it.[290]
4. In a letter of 27 May 2013, the NAB rejected the proposed amendments, save for that contained in paragraph 5 of Mr Champion's letter.[291] The NAB also rejected the request for the provision of a copy of the contract of sale because Geminder Holdings was not a party to the Deed and it required the Deed to be executed before it entered into a contract of sale with Geminder Holdings. The NAB required execution of the Deed strictly by noon on Wednesday 29 May 2013, together with a cheque for $10,980 for outstanding rates. The NAB's letter concluded by stating that it was unwilling to delay further and that the NAB 'will be serving a Notice of Redirection of Rentals on the occupants of the Toorak Road property to preserve our client's rights'.[292] Mr Perkins did not receive a copy of this letter.[293]
5. On the afternoon of 27 May 2013, Mr Woolley of the NAB contacted Mr Perkins and told him that it was too difficult to get an outcome with the Thompsons. Mr Perkins understood that the NAB would be taking possession by issuing a rent redirection notice.[294]
6. It appears that in 2013, the Thompsons repaid none of their debt to the NAB and interest on the debt was accruing unabated.[295]
7. On 27 May 2013, the NAB took possession of the property by serving a notice of redirection of rent on Mr Geminder. The notice was copied to the Thompsons.[296] Mr Perkins made arrangements for future rentals to be paid to the NAB.[297]
8. Despite this, Mr Thompson said he was unaware of the rent redirection and understood the settlement agreement with the NAB was still in place.[298] I do not accept Mr Thompson's evidence that he was unaware of the redirection as he gave no explanation as to why he did not receive the notice or was unaware that he was no longer receiving the rent. In any event, as is mentioned below, on 30 May 2013, Mr Perkins informed Mr Champion of the notice.
9. Mr Perkins understood that as a result of the NAB's action in serving a redirection of rent, the Thompsons had, effectively, lost their interest in the property and had become irrelevant, because thereafter there was no opportunity to have any arrangement with them.[299]
10. Mr Geminder recalled receiving the redirection of rental notice and said in evidence in chief that he thought that Mr Thompson had lost control of the house and that the bank was now in possession. He gave the following evidence in chief:

What did that mean for any notion that you might have otherwise come to purchase the house from the Thompsons?---I thought that Mr Thompson was now irrelevant and the only relevant party was the bank.[300]

1. Mr Perkins mentioned to Mr Geminder, that they needed to arrange for the Thompsons' belongings left at the property to be returned to them.[301] He told Ms van Denderen that it might be best to sever the relationship with the Thompsons and deliver up their possessions.[302]
2. On 28 May 2013, Mr Champion forwarded the NAB's letter of 27 May to Mr Thompson stating:

There remains a risk that the contract of sale produced by NAB is not acceptable to [Geminder]. I think it is prudent to push for a copy of the draft contract before agreeing to the document ...[303]

1. On 30 May 2013, Mr Perkins notified Mr Champion of the notice of redirection of rentals by an email stating:

we have received a notice of repossession and rent redirection from NAB which was obviously a bit of a surprise. It would be good to talk this through assuming you are still representing the Thompsons ... [304]

1. On 4 June 2013, Mr Champion told Mr Perkins that he had had difficulty reaching agreement with the NAB as to terms:

The biggest issue is that the bank wants consent to judgement etc if [Geminder] Holdings Pty Ltd does not sign the contract the bank require, but will not provide me with a copy of the contract so that I can show it to you and make sure you are happy for it to be signed.[305]

1. An internal bank briefing note prepared by Mr Xiong on 11 June 2013 for Mr Woolrich, in preparation for a meeting between Mr Geminder and the Chief Executive Officer of the NAB stated:

Mr Geminder advised he was happy to cooperate with NAB, and that he would either buy the property at a reasonable price, vacate the property, or facilitate access for inspections if NAB was to sell with tenants in.[306]

1. On 14 June 2013, Mr Champion again wrote to the NAB's solicitors, seeking a copy of the proposed contract of sale of the property to Geminder Holdings. He said that the solicitors did not return his calls.[307]
2. On Monday, 17 June 2013, Mr Thompson sent a text message to Mr Geminder telling him:

We are all off to Fiji on Friday for a [three] week vacation. Hopefully our transaction will be ready for completion at that time.[308]

1. On 18 June 2013, the NAB appointed Mr Robert Allanadale of Mortgage Services Pty Ltd as its agent for the sale of the property.[309] He was directed to contact Mr Perkins to obtain the Geminders' purchase offer[310] and to obtain the offer of Castran Gilbert's or Klonis Kirby's client, that is the Heffernans, for the NAB's consideration. [311]
2. On 18 June 2013, Mr Woolley told Mr Perkins that the NAB was going to dispose of the property and that "there was another expression of interest but 'that remains to be proven'". He said that if the Geminders were interested in purchasing the property, they should make an offer and there was a very short time period to do so. Mr Perkins emailed Mr Geminder the details of this conversation.[312]
3. Mr Perkins' considered that if the Geminders wished to retain their tenancy after the NAB took possession of the property by serving the rent redirection notice, they would need to participate in the sale process in some way.[313]

1. An important development occurred on 19 June 2013, when Mr Heffernan spoke with Mr Geminder and told him that he was interested in buying the property and that thereafter he would be more than happy to rent it to Mr Geminder until he returned from Dubai. Mr Geminder said that he would be delighted to rent the property, but that he would be making an offer to buy it for $8.5m.[314]
2. On the same day, Mr Geminder, by text and later by telephone, told Mr Heffernan, that if Mr Geminder's offer to purchase the property was successful, that he would sell the property to Mr Heffernan under the nominee clause in the contract of sale. Mr Heffernan agreed that in those circumstances he would allow Mr Geminder to remain as tenant in the property for the term of the existing lease.[315] Mr Geminder did not inform Mr Thompson of his discussions with Mr Heffernan.
3. On 20 June, the NAB's solicitors wrote to Mr Champion stating that, as his client had:

failed to execute and return the Deed and pay the sum of $10,980 by 29 May 2013, we are instructed that the offer is withdrawn and NAB will be arranging for the Toorak property to be sold by way of a standard mortgagee sale.[316]

1. Mr Thompson said that he was in Fiji when he found out about the letter, although he did not leave for Fiji until 21 June.[317]
2. In the first of two conversations on 20 June 2013, Mr Champion told Mr Perkins that the Thompsons were still able to sell the property to the Geminders.[318] Mr Perkins said that Mr Champion's position perplexed him, because the NAB had repossessed the property.[319]
3. Later that day, at 4:15 pm, Mr Champion requested, through Mr Perkins, that the Geminders bid for the property on the basis that the NAB would discharge Mrs Thompson from all further liabilities. Mr Champion reiterated this position to Mr Perkins stating that the Thompsons and the Geminders had a deal. In response, Mr Perkins said that a concept had been developed in February 2013, but there had been no deal and that everything had since changed, given the NAB's repossession and sale process. He told Mr Champion that his assertion that Mr Geminder had induced the giving of the lease by providing an option back was wrong, because the option was not discussed until mid-January 2013, months after the lease was entered into and the Geminders had occupied the property.[320] Mr Perkins also told Mr Champion that he needed to tell the Thompsons the true circumstances of the situation.[321] Mr Perkin's file note of the second conversation recorded Mr Champion as saying:

but 'deal' intact? [Mr Geminder]'s representations to induce lease by providing option back [...] deal was that [Mr Geminder] would persuade bank [...] very concerned that 'deal' being reneged - 'don't want to go there'.[322]

1. Mr Champion gave evidence that he asked Mr Perkins to call the NAB to find out the amount owing to it and to pressure it to proceed with the deal.[323] Mr Perkins said that he would discuss this with Mr Geminder.[324]
2. Also on 20 June 2013, Mr Perkins and Mr Heffernan exchanged emails about the sale of the property, with Mr Perkins advising Mr Heffernan that the s 32 statement and the contract of sale should be ready to be issued and that when he received them he would forward copies to him and to his lawyer, Ms Judi Best of Ken Smith & Associates. [325] Mr Heffernan referred to the possibility of Mr Geminder signing an unconditional contract with 'Nominee', which, presumably, was a reference to a person nominated under a nominee clause, with the possibility of Geminder Holdings nominating Mr Heffernan as purchaser.[326] Mr Perkins also spoke on the telephone to Mr Heffernan.
3. Mr Perkins requested Mr Woolley to send him a copy of the NAB's s 32 statement and sale contract because Geminder Holdings intended to submit a 'clean bid' for the property.[327]
4. At 1:28 pm on 20 June 2013, Mr Thompson sent a text to Mr Geminder stating:

Ruffy I have just been told that the NAB do not want to proceed with our deal and want to auction with Vacant Possession. Have you heard anything?

Warren it's with [Mr Perkins], I have not been close to the detail. I will get him to coordinate with your lawyer. Enjoy Fiji. Regards Ruffy.[328]

264 Mr Champion rang Mr Thompson in Fiji and told him that Mr Perkins was being unhelpful.[329]

1. At 5:37 pm Mr Geminder again texted Mr Thompson stating:

Warren I am travelling back in Melbourne tmrw night. I will catch up with [Mr Perkins] and call you over the weekend, [Mr Perkins] is talking to you lawyer, I think it's taken some time for your lawyer to contact him.[330]

1. At 5:40 pm Mr Thompson again texted Mr Geminder, stating that:

Our lawyer has spoken with [Mr Perkins] and he advises us that [Mr Perkins] is not very interested. I do not think he realises the seriousness of the situation. To protect our mutual positions our second mortgagee [Mrs Malone] will [injunct] the bank to ensure that the bank can only sell the property by public Auction and with vacant possession. This will be very public and damaging. So hopefully the bank will honour their agreement. Amanda is devastated but I have assured her that we are all working to the one end.[331]

1. On the morning of 21 June 2013, at 8:26 am, Mr Champion emailed Mr Perkins a draft of a letter that he was proposing to send to the NAB's solicitors and requested that he review and comment on it. It contained his version of an agreement reached with the NAB and stated that the NAB's insistence upon the particular Deed of Settlement was unreasonable and a failure to act bona fide. The draft letter also stated: (1) that if the proposed contract could be provided, it was possible that the form of the Deed of Settlement could be agreed and settlement of the sale would take place within a matter of days; (2) that the purchaser was already willing and able to effect settlement and had been able to do so for several months; and (3) that the only factors delaying settlement were entirely attributable to the NAB.[332]
2. At 10:30 am, Mr Perkins replied to Mr Champion, informing him that Mr Geminder was travelling that day, and had arranged a phone call with Mr Thompson over the weekend. Mr Perkins explained that he would be unable to provide any feedback on the draft letter until after Mr Geminder had been briefed and had spoken to Mr Thompson. He also stated that the NAB had asked 'us to deal directly with them and we don't understand their process yet'.[333]
3. At 10:48 am, Mr Champion sent the draft letter to the NAB's lawyers.[334]
4. At 11:03 am, in response to Mr Perkins' request made the previous day, the NAB emailed him a copy of the s 32 statement and proposed sale contract. The draft contract said that the property was to be sold by the NAB as mortgagee in possession and subject to the lease. [335]
5. At 12:24 pm, Mr Allanadale, the NAB's agent, sent Castran Gilbert a copy of the proposed contract of sale and the s 32 statement, explaining that the NAB had agreed to extend time for 'your best offer until 12 noon on 26th June 2013.'[336] Mr Perkins sent a copy of the s 32 statement and sale contract to Ms Best, who was Mr Heffernan's solicitor. The covering email referred to the commitment between Mr Geminder and Mr Heffernan in the following terms:

if Ruffy enters into the contract for the purchase of the property, he will nominate [Mr Heffernan] as the purchaser in consideration for [Mr Heffernan]'s commitment to allow the lease to run for the term (in fact, we would look to vary this slightly so that after the initial term of 2 years, the tenant could extend on a monthly basis up to a period of 12 months, terminable on 30 days notice). We will work on a draft document to record this.

In the meantime, please let me know if you have any comments on the sale agreement that you would like for us to incorporate into our comments when we respond to the bank's lawyers.[337]

1. At about the same time, Mr Perkins replied to Mr Xiong and Mr Woolley of the NAB, explaining that Mr Geminder did not require the contract to be on the basis of vacant possession and that the lease should remain on foot.[338]
2. On the evening of 21 June 2013, Mr Perkins again spoke with Mr Heffernan. Mr Perkins' evidence was that Mr Heffernan said that he would also be making an offer for the property, that he told Mr Heffernan that he would need to get his own advice if he made an offer, and that Mr Geminder was comfortable with the nominee arrangements.[339] At 10:56 pm, Mr Geminder spoke to Mr Heffernan, but he said that he had no recollection of that conversation.[340]
3. On Friday, 21 June, 2013, the Thompsons left for a holiday in Fiji.[341]

1. On 24 June, following a review of the contract, Geminder Holdings sent the NAB an offer to purchase the property for $8.5m, subject to the terms set out in the letter.[342] They included a requirement that a clear title be provided and that no director's guarantees be required. Mr Geminder gave evidence that he made the offer to protect his tenancy.[343]

276 After an enquiry from Mr Thompson, Mr Champion sought news of any developments from Mr Perkins.[344] Mr Perkins replied, stating:

As far as I can gather, NAB seems to have lost patience and confidence in sale of the property and have initiated a mortgagee sale process - the design of the process is not clear to us (whether by tender or public auction) however they have asked us to confirm our interest which we have done. I don't think that Warren has been in touch with Ruffy and Ruffy has not spoken with the NAB.[345]

Mr Champion expressed disappointment to Mr Thompson at this response.[346]

277 On 26 June, the Heffernans executed a Deed Poll by which they agreed that if they were the successful purchasers of the property, they would not terminate the lease.[347] Also on that day, the Heffernans, through their solicitor, sent an offer to purchase the property for $8.5m to Abercromby's, who were still acting as vendor's agent.[348]

278 On 26 June 2013, Mr Heffernan increased his offer to $8.53m[349] which, after the deduction of sales commission to the agent, would have provided a net price less than Geminder Holdings offer of $8.5m.

279 On 27 June, 2013 Mr Perkins spoke with Mr Heffernan by telephone. However, when taken to the phone records Mr Perkins could not remember the content of those communications and had no notes of them.[350]

280 At about 3:00 pm, Mr Heffernan made his third offer of $8.55m.[351]

281 On the same day, the NAB emailed Mr Perkins rejecting Geminder Holdings' position of refusing to provide a director's guarantee and its requirement for the provision of clear title. It requested that Mr Perkins contact Mr Allanadale to discuss the offer. Mr Perkins said that Geminder Holdings would review the situation, but did not agree with the NAB's terms.[352]

282 At 1:40 pm on 27 June, Mr Allanadale on behalf of the NAB, told Mr Perkins that two proposals had been received for the property, that they valued the other offer slightly higher than Geminder Holdings' and asked it to review its offer and make any better offer.[353] But, Mr Geminder was unwilling to offer more than $8.5 million for the property.[354]

283 At 3:07 pm on 27 June, Ms K Cusack of Abercromby's emailed Mr L Castran of Castran Gilbert in the following terms:

Please see below. It is $8,550,000. Go and do your thing.

Ring Tim[355]to discuss if you would like to. He has his phone on and is ready to talk.

Good luck.[356]

284 On 27 June, Mr Champion wrote to Thomsons Lawyers stating that if by 4:00 pm on 4 July 2013, he had not received a copy of the agreement which the NAB wanted the purchaser to sign and proposed terms which no longer entitled the NAB to enter judgment in default if the purchaser did not sign the agreement proffered, proceedings would be instituted against the NAB without further notice.[357]

285 Thomsons Lawyers replied the next day, 28 June 2013, stating that there was no basis for proceedings to be commenced.

286 On the same day, the solicitor for the Malones, Darren Muir Fleiter, wrote to Thomsons Lawyers referring to their unregistered second mortgage over the property and stating:

We understand that your client is contemplating a sale of the property by private treaty. Our clients are most concerned that the highest price possible is achieved. Your client would be aware that there is growing strength in the property market at present in Melbourne. The property would clearly be best marketed for sale by auction, particularly with the short supply of other comparable properties on the market.

Any consent which our client may have previously communicated regarding a private sale is withdrawn without reservation. Please advise particulars of how your client intends to proceed.[358]

287 Also on 28 June 2013, Mr Thompson spoke with Mr Champion, particularly about the chattels left on the property.[359]

288 At 9:45 am on 28 June 2013, Mr Perkins informed Mr Allanadale that the Geminders would be comfortable if the property were sold to the Heffernans and they remained as tenants. Mr Geminder had 'drawn a line in the sand'. He reiterated the two legal issues about being unwilling to provide a director's guarantee and requiring a clear title. [360] Mr Perkins, after a later conversation with Mr Allanadale that day, noted:

Good news - might come 2nd [...] sell subject to lease - don't have to buy it and can stay in it.[361]

He did not tell Mr Allanadale of the commitment that the Geminders had reached with the Heffernans.

289 On 28 June, at 12:40pm, Mr L Castran of Castran Gilbert emailed Mr Allanadale[362] confirmation that the Heffernans would offer $8.55m, which was described as 'my last & final revised price/offer', on terms that included provision of a 'free unencumbered title at settlement'. If such title was not provided, the purchaser would have the right to terminate the contract or to extend settlement until the vendor obtained free unencumbered title for a period up to 12 months.[363]

1. Later that day, the NAB accepted Mr Heffernan's offer. The net proceeds that the NAB received by accepting the Heffernans' offer was not significantly greater than would have been received by acceptance of the Geminders' offer of $8.5m. The plaintiff submitted that it was only $3,770.41 greater.
2. Mr Thompson suggested that the telephone conversations between Mr Perkins and Mr Heffernan on 26 and 27 June caused Mr Heffernan to increase his offer. Mr Perkins had no record of those communications. The Geminders, on the other hand, argued that the communications between Mr Thompson and Mr Champion on 28 June 2013 suggested that Mr Thompson was only concerned with retaining the fixtures in the house. Mr Thompson did not suggest in those communications that the Geminders were bound to purchase the property.[364]
3. On 1 July 2013, Mr Perkins confirmed that the Geminders would not be seeking compensation for improvements that they had made to the property.[365]

1. Mr Thompson returned early from his holiday in Fiji on 2 July 2013. He thereafter sent texts to, and had telephone conversations with, Mr Geminder and Mr Perkins.[366]
2. According to Mr Perkins' note of a conversation, at 9:35 am on 2 July 2013, Mr Thompson told him that he had spent $200,000 and settled the second mortgage on the previous Friday, that his sister, Mrs Malone, the second mortgagee would sue the NAB, and that the NAB did not have a right to sell the property and did not own the chattels. Mr Perkins was to call Mr Champion and be ready to close the transaction that day.[367]
3. Mr Thompson gave evidence of a conversation that day with Mr Geminder in which he said that he was very concerned at what was going on and asked Mr Geminder if he knew what was happening. Mr Geminder replied that he had not been close to the transaction because he had been away. Mr Thompson told Mr Geminder that Mr Perkins had not been offering assistance. Mr Geminder confirmed that he had funds available to purchase the property and assured Mr Thompson that he could 'get a cheque drawn and taken down to the bank the next day'.[368] Mr Thompson said that that was 'good' because he was trying to get the Bank back on side and to settle the transaction and the Deed of Settlement simultaneously.[369]
4. Mr Geminder agreed with the substance of Mr Thompson's account of this conversation.[370]
5. Mrs Thompson said that, during these conversations, Mr Geminder did not tell Mr Thompson about any side arrangement that he had made with Mr Heffernan, or that he knew that Geminder Holdings was not going to purchase the property.[371] Mr Geminder did not suggest that he had informed Mr Thompson of these matters.
6. After his discussions with Mr Geminder, Mr Thompson spoke with Mr Perkins at 10:40 am. He requested that Mr Perkins provide Mr Champion with a copy of the contract of sale and the s 32 statement. Mr Perkins did not agree to do so stating that the form of contract with the NAB had not yet been agreed. Mr Thompson told Mr Perkins that they were issuing proceedings against the NAB that afternoon.[372]
7. At 11:18 am, Mr Perkins declined to provide a copy of the contract of sale and the s 32 statement because of obligations of confidentiality. He stated:

Although wishing to be cooperative, having reviewed the relevant documents we are in fact bound by obligations of confidentiality which prevent us from doing so. In light of Warren's indication that there is imminent litigation in relation to the property, I am sure that you will understand our position.[373]

1. Mr Geminder then called Mr Perkins. Mr Perkins did not record in file notes the flurry of communications that he had at that time with Mr Geminder and Mr Heffernan. He said that his decision whether to make file notes of conversations turned on the nature and stage of the matter, the other party to the conversations and any potential outcomes that might arise from them. He did not agree that his failure to make a note of the communications at this time was inconsistent with his usual practice.[374]
2. At 6:03 pm, Mr Champion emailed Mr Perkins stating:[375]

I spoke this morning with Warren Thompson. He relayed conversations he'd had with Ruffy and you to the effect that:

1. Ruffy is still prepared to proceed with the agreement and purchase.

1. This can happen within 24 hours, and there is certainly no issue about available funds.

3. You could/would be talking to NAB to facilitate that.

1. You would provide me with a copy of the contract which NAB had provided to you.

5. You would also ring me to discuss.

I have not heard from you since then or received a copy of the contract. Without checking my files I estimate I must have left at least half a dozen messages for you to call me which have not been returned.

From my point of view, the NAB's position is indefensible. There can be no doubt that an agreement was reached with it - see the attached letter dated 15 April 2013. I would have thought it was also clear beyond argument that NAB was under an implied obligation to use its best endeavours acting bona fide and reasonably to conclude an agreement. The sticking point with NAB was that it required a consent to judgment in the event that [Geminder] Holdings Pty Ltd did not sign whatever contract was proffered to it. I said that I needed to get a copy of the contract it would require Geminder to sign so that I could show it to you and get your instructions before Amanda committed to that. Refusing to provide me with a copy of that contract has got to be a failure to act reasonably and bona fide.

As I am sure you will appreciate, if the NAB do not include [the] agreement with Amanda and take action to recover the difference between what they claim is owing and the amount they agreed to accept then there will be legal proceedings in which all of this will have to be thrashed out (in fact, there will almost certainly be legal proceedings before it comes to that) however I cannot believe your client would want all of this to be dragged before the courts and potentially be involved personally.

Please ring me to discuss and hopefully avoid all of this.

302 At 8:01 pm, Mr Perkins forwarded Mr Champion's email to Mr Geminder and stated:

Warren's lawyer sent the following email - he obviously had not seen my earlier email to him which [I'll] attach to my response (he seems to operate 2 email accounts which may explain his oversight). Before responding, I wanted to check whether you had committed to 1-3 in your discussion with warren (I did not, I just listened to him relay what he said happened on the call). I did cover 4-5 in my call which I then addressed in my email. I want to be very clear with [Mr Champion] as to accurately record status.

Best for us to cover off in a call in the morning - give me a call when it suits and I can take you through.[376]

303 Mr Thompson's evidence was that, as at 2 July 2013, he understood that Mr Geminder would purchase the property from the NAB as mortgagee in possession for $8.5m.[377] Mr Geminder would then give Mrs Thompson an option to repurchase the property for $8.5m, to be exercised within six months of the Geminders leaving the property. Mr Thompson admitted that there was no discussion of the option on 2 July 2013, but said 'that was just part of the transaction.'[378]

1. On 3 July 2013, Mr Perkins replied to Mr Champion stating:

It now appears that litigation against the bank is imminent and other than our willingness to confirm the terms of Ruffy's offer and the family's desire to remain in residence, we believe it is not appropriate or of assistance to become further involved. There is obviously a long and complex history of the Thompsons' dispute with the bank and we don't think it useful for us to express views on the merits of arguments between the parties (and in this respect, I would respectfully request that you do not provide us with copies of correspondence between the bank's lawyers and you or your clients).

1. Ruffy confirmed with Warren that he is still prepared to buy the house for $8.5M and this has also been confirmed directly with the bank's appointed mortgagee agent;
2. Ruffy confirmed with Warren that there are funds immediately available for the purchase, obviously there would need to be agreement on the final terms of any contract of sale;
3. neither Ruffy nor I said that we could or would speak with NAB - to the contrary, Ruffy informed Warren that the bank has specifically asked that we do not contact them and that we direct all communication through their mortgagee agent. We are awaiting a formal response from the agent to our offer to purchase; and
4. ...

Given the litigious environment, I would prefer if we could continue to correspond via email to ensure that there are no misunderstandings about what has been communicated.

Ruffy and I both understand that this is a difficult situation for the Thompsons. As tenant of the property, we hope that you appreciate the position that we are in and we do hope that the Thompson's dispute with the bank can be resolved expeditiously and to the satisfaction of all concerned.[379]

305 In reply, Mr Champion asked Mr Perkins to confirm 'that Geminder Holdings Pty Ltd is comfortable with the form of the contract submitted by the bank'.[380] Later that day, Mr Perkins replied that the form of contract had not been agreed with the NAB because the Geminders objected to the provision for a director's guarantee, the fact that the NAB was not bound to deliver an unencumbered estate, and the NAB's ability to unilaterally extend settlement for up to 90 days, with the purchaser having no corresponding ability to extend or determine the contract during that period. He concluded by stating that 'we don't consider that any of these are unreasonable objections however, to our knowledge, these have not been accepted by the bank'.[381]

1. In the evening of 3 July 2013, Mr Champion wrote to the NAB's solicitors stating that Geminder Holdings was ready, willing and able to settle on 5 July 2013 and sought an undertaking from the NAB that it would not act inconsistently with the settlement agreement entered into on 15 April 2013.[382]
2. On 4 July, Thomsons Lawyers replied to Mr Champion stating that the NAB 'intends to now sell the property as mortgagee in possession'.[383]
3. On 7 July 2013, Mr Champion emailed Mr Perkins with details about the proposed Court application, which he expected to be made two days later on the Tuesday. The following day, Mr Perkins responded informing Mr Champion that King & Wood Mallesons solicitors were acting in respect of the application for Geminder Holdings.[384]
4. On 8 July, Mr Perkins emailed Mr Champion informing him that he was going on 3 weeks leave that week and that it may be that he should speak to King & Wood Mallesons, who he had asked 'to get up to speed in case there is anything urgent that requires legal input' while he was away.[385] On 8 July 2013, Mr Champion emailed Mr Perkins asking whether, if the NAB agreed to the sale proceeding, Hilary Scott, who apparently worked with Mr Perkins at Geminder Holdings, would be dealing with the option.[386]
5. Mr Perkins emailed Mr Champion again later that day stating that 'Hilary will be looking after this matter while I am on leave - I'm here until Friday so she is just getting up to speed at present.' He asked for a copy of the proposed Court application and stated that their present inclination was 'not to become involved', but that it would 'be useful to see the application to better judge this'.[387]

1. On 8 July 2013, Mrs Thompson commenced this proceeding against the NAB alleging a breach of a settlement agreement, and on 9 July 2013 orders were made by consent restraining the NAB from selling the property until 24 July 2013.[388] Lawyers for Mr Geminder and Geminder Holdings were present in court when those orders were made. Mr Champion's evidence was that the injunction proceedings 'were seeking relief against the bank to enable the sale to the Geminders to proceed'.[389]
2. On 9 July 2013, the Malones' solicitors sent a letter to Mr Champion, stating that their clients would not object to a sale of the property to Geminder Holdings for $8.5 million provided:

(1) the first mortgagee accepts that sum in full settlement of all of its claims against Amanda Jane Thompson; and

(2) Geminder Holdings Pty Ltd grants an option in favour of Amanda entitling her to repurchase the property for the sum of $8.5 million at the expiration of the current lease.

The letter also stated: 'These terms would obviously need to be recorded in written documentation satisfactory to the subject parties'.[390]

1. Mr Thompson had spoken to his sister Mrs Malone about the terms of the letter.[391]

1. Mr Thompson spoke with Mr Geminder by telephone on 11 July 2013 for about 26 minutes. According to his account of the conversation he said: 'I hear that this has all gone haywire and that you're not prepared to buy the property anymore'. Mr Geminder replied that Mr Heffernan had approached him and that if Mr Heffernan bought the house, the Geminders could stay in it for as long as they wanted. Mr Thompson replied 'that's not the deal'. Mr Geminder said, 'Look mate, I'm going to save a lot of money out of this. Business is business'. Mr Thompson stated, 'Well business is business, we have a deal. You must proceed with the deal'. Mr Geminder said that it was just business, that he did not want to fall out with Mr Thompson and he enjoyed having him as a friend but that this was just business. Mr Thompson said, 'Look, it's not. Amanda is devastated. It's not business'. Mr Thompson said, 'Ruffy, if you don't complete this deal we will sue you'. Mr Geminder laughed and said, ' Sue me ? Nobody sues me. I have teams of solicitors to handle that sort of thing. Nobody sues me'. He then said, 'Look, don't call me back'.[392]
2. Mr Geminder recalled his last conversation with Mr Thompson, which this conversation of 11 July apparently was, as one in which he told him that:

We put a bid in for $8.5 million. Our bid was not accepted. Mr Heffernan has won the bid and he is going to own the house and we have a house with Mr Heffernan.[393]

1. Mr Geminder did not recall telling Mr Thompson about any statement that Mr Heffernan had made.[394] His general recollection was that Mr Thompson informed him that they had been successful in the court proceeding, that the NAB had no right to sell the property and that as a result the Thompsons would be able to sell the property. He described Mr Thompson as elated because they had won in court, that the NAB had no right to sell their home, that Mrs Thompson could now 'have her house' and they could sell the house to the Geminders.[395] Mr Geminder denied he said 'business is business' or that Mr Thompson said that he would sue him.[396] He said that he regarded Mr Thompson's call as a 'delusional call'.[397]
2. Mr Perkins listened to the telephone conversation on a speaker. His evidence was that Mr Thompson told Mr Geminder that the Court had granted an injunction preventing the NAB from selling the property and had told NAB they were on the wrong side of the argument. He was in a position to sell the property to Mr Geminder.[398] Mr Geminder told Mr Thompson that King & Wood Mallesons had advised him that the NAB had run a mortgagee sale process and that Geminder Holdings had not been successful. Mr Thompson objected to this and kept repeating that the Court had said that the NAB could not sell the property.[399] He said that the property would have to be sold with vacant possession and that the lease had been terminated. Mr Geminder said that that was not his understanding.[400] Mr Thompson also said that he had been paying for the gardener and that there were chattels that would be removed from the property.[401] In reply, Mr Geminder said that he would speak with King & Wood Mallesons.[402] Mrs Thompson said she observed her husband walking angrily up and down in front of the driveway of their rented home while he was speaking on his mobile phone to Mr Geminder.[403]
3. Shortly after the telephone call of 11 July, Mr Thompson sent Mr Geminder a message that referred only to items of furniture and ended with the words 'regards, Warren'.[404]
4. Mr Geminder's account of the conversation was supported by Mr Perkins' evidence, who said that Mr Thompson was 'at times emotional' during the call. Mr Geminder was cross-examined in some detail about this cross-examination, but Mr Perkins was not in any detail.[405] While, I accept that Mr Thompson strongly expressed his disagreement with Mr Geminder not purchasing the property, I prefer the evidence of Mr Geminder and Mr Perkins about the details of the conversation. Although expressly differently, both of them gave evidence to the same general effect.
5. On 12 July 2013, Mrs Thompson rang Mrs Geminder stating that she was calling about the house and pleading for Mr Geminder not to pull out of the deal. She said 'please don't let Ruffy do this to us'.[406] She followed this up with a text message. Mrs Geminder replied saying:

While this is an extremely distressing situation ... I can't talk to you about it. It's with our lawyers.[407]

1. On the same day, Mr Champion wrote to King & Wood Mallesons stating:

I understand your clients have engaged in a range of communications with the National Australia Bank and a person or company who has offered to purchase my client's home in the last 2 months or so.

Being mindful of the commitments of good faith which Mr Geminder gave to my client in order to obtain the lease over my client's home in the first place, I ask that your clients give my client a written comprehensive account of those communications and any arrangements or understandings reached.[408]

1. Correspondence followed and ultimately, on 18 July, Mr Geminder's lawyers, King & Wood Mallesons, declined to provide the 'comprehensive account' sought stating:

It is not in dispute that our client had a number of discussions and negotiations with Amanda and Warren Thompson in relation to the purchase of the Property. However, these discussions and negotiations are just that and no concluded agreement of any kind was reached or entered into between Amanda Thompson and Geminder Holdings and/or Raphael Geminder in relation to the purchase of the property or the granting of an option.

Our client rejects any assertion that your client was induced to enter into the lease for the Property with Mr Geminder on the basis of a series of assurances, including a commitment of good faith. Our client has, at all times, acted in good faith in all of its dealings and in accordance with the lease.[409]

1. By midJuly, Mr Thompson or Mr Champion had received the NAB's affidavits, and must have known of the offer of the third party,[410] but took no step to contribute funds to enable an increased offer to be made.[411] On 7 February 2013, Mr Champion had informed Thomsons Lawyers that his instructions were 'that our clients are simply unable to raise any more than has been offered'.[412]
2. On about 18 July 2013, Mr Thompson sent a text to Mr Geminder, who was overseas, about media comment on the 'Toorak situation', stating:

This whole thing really needs to be resolved quickly. It is stressful for everybody. Our counsel has said that everyone including NAB executives will need to give evidence.[413]

1. On 20 and 21 July, Mr Thompson sent further text messages to Mr Geminder, the second of which contained a compromise proposal, which involved Mr Geminder acquiring the mortgage from the NAB for $8.5m, Mrs Thompson simultaneously making a repayment to him of $250,000 and then, every six months, reducing the loan by $150,000. While the loan remained, Mr Geminder could stay in the property rent free and the loan would be repaid 180 days after the end of the tenancy.[414]
2. On 25 July 2013, the NAB's solicitors wrote to King & Wood Mallesons referring to the Geminders' previous offer of $8.5m made by letter of 24 June 2013 to purchase the property and stating:

Please confirm by no later than 4pm 26 July 2013 by way of an open letter to us:

1. Whether your client is still willing to purchase the security property on the terms set out in the letter dated 24 June 2013; and
2. If not, whether your client is still willing to purchase the security property for $8.5 million and if so, the terms upon which it is prepared to do so.[415]
3. On 26 July, in response to the NAB's enquiry, Geminder Holdings stated they were not prepared to purchase the property.[416]

1. On 5 August 2013, the Court ordered that the injunction previously granted be allowed to lapse at 4pm that day.[417] Elliott J accepted that there was a serious question to be tried, but considered that the balance of convenience favoured the NAB.

1. The Heffernans signed a contract of sale to purchase the property from the NAB on 11 September 2013 for the sum of $8.55m and following settlement in November, became registered as joint proprietors.[418]

Mrs Malone's evidence about the provision of finance

1. Mrs Malone is Mr Thompson's sister. She is close to the Thompsons and their children and has in the past provided them with financial assistance amounting to $270,000 to pay school fees. She held an unregistered mortgage that she held over the property and she lodged a caveat on the property's title because of her interest.
2. She has considerable business experience and, through Horizon Investments Pty Ltd ('Horizon'), was the developer of a project in Carlton for 13 double storey townhouses and six retail outlets, three of which had been leased at the time that she gave evidence. She valued the completed project at $13m. Horizon was the registered proprietor of the property. Mrs Malone and Mr Thompson were directors of Horizon and held one share each in it.[419] It was the trustee of a family trust. In at least one finance application connected with the development, Mr Thompson was described as the 'driving force' behind the Carlton project.[420]
3. Mrs Malone obtained construction finance of approximately $6.39m for the Carlton development and borrowed an additional $550,000.[421] The $6.39m had fallen due for repayment when Mrs Malone gave evidence and Horizon would therefore be required to refinance the loan or obtain further financial accommodation.[422]
4. Mr Thompson was also involved with Mrs Malone in other businesses**.** These included Stylus Properties Pty Ltd ('Stylus') through which Mrs Malone undertook developments.[423] Mrs Thompson and Mrs Malone were directors of Stylus and Mr Thompson was a consultant to it.[424] Stylus paid much of Mrs Thompson's costs of this proceeding.[425] Mrs Malone gave evidence that she would have provided $9.5m for the purchase of the Toorak Road property when the option under the PBO Agreement was exercised. She said that $5m of that sum would come from the sale proceeds of the Carlton development or parts of it. In addition, she, or Horizon, would have borrowed $4.5m from a lender Equity-One Pty Ltd ('Equity-One'). Horizon would have purchased the Toorak Road property.[426]
5. She had applied to Equity-One for that finance to be provided to Horizon and had received indicative approval. It appears that Mr Thompson filled out the loan application.[427] The application valued the Toorak Road property at $12m to $14m, which may have been an overvaluation.[428] Mrs Malone gave evidence that, if it at the end of its 12 month term, the loan was not renewed, she had other sources of finance.[429] One of her companies was involved in substantial business activities developing retirement accommodation in Australia and China.

1. Mr Dean Koutsoumidis of Equity-One gave evidence as part of the plaintiff's case that it made an indicative loan offer dated 27 July 2015[430] to Horizon in its own right and trading as the Horizon Investment Trust. The indicative loan was for the sum of $4.5m for 12 months at a prepaid interest rate of 7.20% p.a. fixed[431] on the security of a first mortgage over the Toorak Road property and a General Security Agreement over Horizon and the Horizon Investment Trust. Mrs Thompson and Mrs Malone would have been required to provide personal guarantees of the loan. An approval fee of $49,500 and an establishment fee of the same amount were to be charged. The purpose of the loan was the purchase of the property for business use. The approval was based on the owners' estimated valuation of $12m to $14m of the Toorak property.[432] Equity-One had not yet obtained its own valuation. If the finance was not required until January 2016, when any option granted to Mrs Thompson might have been exercised, a new appraisal and approval process would have been required. Mr Koutsoumidis could not say if such an application would be successful or what interest rate any new loan offer would attract.

1. Having completed this description of the relevant evidence at trial, it is convenient to consider the plaintiff's submission that the Court should draw Jones v Dunkel[433] inferences against the Geminders because they had not called the following persons to give evidence: Mrs Fiona Geminder, Mr Peter Daly, a part-time property consultant employed by Pact Group, who had some involvement with the transaction with the Thompsons, and Mr David Heffernan. There was no evidence that Mrs Geminder took any part in the conversations or meetings which the plaintiff relies on to establish her claims in contract or estoppel. Her conversation with Mr Woolrich at the Christmas party that she relayed to Mr Thompson is not relied on as being either contractual or a representation that founded an estoppel. Mr Daly was not shown to have played any relevant role in the Geminders' dealings with the Thompsons. Mr Heffernan was joined as a defendant, but did not give evidence. Mrs Thompson did not plead any breach of the duty of good faith by the Geminders' dealings with the Heffernans.
2. The evidence that those witnesses might have given is a matter of speculation and in the case of Mrs Geminder and Mr Daly, it is not evident that it would have been relevant. Mr Heffernan was a party and Mrs Thompson did not plead any cause of action against the Geminders based on Mr Heffernan's conduct. The onus remained on the plaintiff to prove her case.

338 As previously stated, Mrs Thompson contended that she had entered into four contracts with the Geminders, which they had breached.

339 The first was a second agreement to lease dated 12 November 2012.

1. The second was a conditional lease of 19 November 2012, which the plaintiff alleged contained an ad hoc implication of the obligation of good faith. Such an implication was appropriate because she was at a substantial disadvantage or was vulnerable to exploitative conduct in her dealings with the Geminders. Mr Perkins did not explain to Mr Thompson the effect of the consent clause in the lease and the redrafted lease resulted in the parties being unequal in their rights if the NAB did not consent to the lease. In addition, Mrs Thompson placed her trust in Mr Geminder when she authorised him to approach the NAB on her behalf on 1 February 2013.
2. The third contract upon which Mrs Thompson relied was the agreement to vacate the property.
3. The fourth contract upon which Mrs Thompson relied was the purchase and buyback option agreement, the PBO Agreement. Mrs Thompson had agreed to pay the amount of the purchase price above $8.5m and to repurchase the property from the Geminders for the purchase price that they paid. The PBO Agreement was said to be based on discussions in the 31 January 2013 meeting, the 1 February 2013 email and the 17 February 2013 coffee meeting.

343 For ease of reference, I will repeat the plaintiff's allegations of the breaches of these contracts. Those breaches were said to be the Geminders' actions in:

(a) refusing to do all acts and execute all such documents as were necessary and proper to ensure that Mrs Thompson would not lose control of the property to the NAB;

(b) resiling from their obligations to purchase the property for the sum of $8.5m;

(c) alleging that there was no concluded agreement between Mrs Thompson, Mr Geminder and Geminder Holdings to the effect of the PBO Agreement; and

(d) refusing to do all acts and execute all such documents as were necessary and proper to cause Geminder Holdings to purchase the property from the NAB for the sum of $8.5m.

344 Mrs Thompson submitted that the PBO Agreement did not have to satisfy the requirements of s 126 of the Instruments Act 1958, because at the time the agreement was entered into, it did not dispose of a proprietary right then in existence. Such a proprietary right would only have been created upon the execution of the option agreement or the exercise of the option. Alternatively, the email correspondence between the parties was sufficient evidence of the agreement to satisfy the requirements of s 126(2) of the Instruments Act, which states that the requirements under s 126(1) 'may be met in accordance with the Electronic Transactions (Victoria) Act 2000'. Alternatively, even if the Instruments Act otherwise applied, the parties part-performed the PBO Agreement. Both parties made offers to the NAB to purchase the property and Mrs Thompson allowed Mr Geminder and his family to continue to live there and use her possessions.

345 Mrs Thompson claimed damages of $950,000, being the difference between the market value of the property of $10m and the option strike price of $8.5m, after an allowance was made for the stamp duty of $550,000 that would have been payable when she exercised the option. Horizon would be obliged to pay the costs of obtaining finance from Equity-One. She submitted that the amount of $950,000 should be awarded for breach of contract or as equitable compensation to avoid the detriment that Mrs Thompson would otherwise suffer.[434] Mrs Malone's and Mr Koutsoumidis' evidence established that Mrs Thompson would have had access to the funds and finance necessary to repurchase the property when she exercised the option under the PBO Agreement.

The Geminders' submissions about the contract claims

1. Counsel for the Geminders described the plaintiff's claims as being those of a person with no funds and debts to the Bank of over $9m, who contended that because the Geminders had not granted her an option to buy a $9m property and make an unrealised gain of $1m, she should be compensated for that amount.
2. The Geminders contended that there was no agreement or representation that they would prevent Mrs Thompson 'losing control' of the property to the NAB. At most, as the plaintiff accepted, the Geminders were only required to do what was reasonable in the circumstances to assist her.[435] But, rather than relying on the Geminders, the Thompsons dealt directly with the NAB. In any event, the Geminders could only purchase the property and give a repurchase option to the plaintiff if they agreed on terms with the NAB. That did not happen.
3. The Geminders contended that they had not breached any implied term of good faith or cooperation, assuming such a term existed. The term that the plaintiff relied on lacked precision in scope and operation. But, even were such a term to be implied, it did not restrict a party from acting to advance its own legitimate interest, rather than being obliged to prefer the interests of the other party.[436]
4. The Geminders submitted that there was no second agreement to lease. Nor was there an agreement to vacate. The parties entered into the lease two weeks before the date of the alleged agreement to vacate and that made the argument that such an agreement existed untenable.
5. The Geminders submitted that there was no binding PBO Agreement. In any event, the PBO Agreement would have had to be in writing because of the requirements of s 126 of the Instruments Act and it was not, nor had it been part performed.
6. There was no consideration passing from Mrs Thompson for the alleged PBO Agreement, because the Lease entitled the Geminders to undisturbed possession of the property. There was no indication at relevant times that the NAB would be selling the property as mortgagee in possession. The only relief claimed by Mrs Thompson was in respect of the loss of the option and the chance to exercise it.
7. Viewed objectively, the evidence suggested that the parties did not intend to be bound by a PBO Agreement until they had executed a written contract. The parties had only discussed the 'concept' of a PBO Agreement. An agreement to negotiate a future agreement is not enforceable.[437] Once the NAB became the mortgagee in possession of the property, the legal reality underpinning the dealings between the parties altered significantly.
8. Furthermore, even if the parties entered into a PBO Agreement, the Geminders did not breach it because they did not come to terms with the NAB to purchase the property. Therefore, they could never have fulfilled the obligations alleged to have been imposed by the PBO Agreement.
9. The Geminders dealt with the Heffernans about the property after they had not heard from the Thompsons for months. The Thompsons must have learned of the Heffernans' offer to purchase the property because Mr Champion must have read of it in Ms Lykiardopoulos' affidavit sworn on behalf of the NAB in the July court proceedings. In any event, the plaintiff did not plead any claim against the Geminders for dealing with the Heffernans, whether for breach of their obligation of good faith or otherwise.
10. Even if a PBO Agreement was entered into and breached, the plaintiff suffered no loss or damage as a result. She commenced this proceeding to force the NAB to proceed with the sale of the property to the Geminders. However, their interest was only in leasing the property. Their willingness to rent the property and thereby assist the Thompsons retain it, would not have prevented the Thompsons selling the property had they found a willing purchaser on terms acceptable to them. But, there was no evidence that they could have.

356 Further, Mrs Thompson did not give evidence that she would ever have exercised an option to repurchase the property, if one had been granted to her. A further complication was that Equity-One's indicative loan required Horizon to give a charge over its assets, which included the Carlton property, as security and such a charge would have affected Horizon's capacity to sell the Carlton development. In addition, by January 2016, Mrs Thompson's debt to the NAB would have exceeded $10m, being the value of the Toorak Road property.

357 Mrs Malone's evidence was that it was Horizon that would have exercised the option, purchased the property and made any gain.[438] However, the plaintiff's case was that the PBO Agreement was made with Mrs Thompson and gave her, not Horizon, the option to repurchase the property and it was not contended that the option was assignable to Horizon.

358 If Mrs Thompson was entitled to damages, they must be reduced by the uncertainties and contingencies affecting her capacity to exercise an option to repurchase the property. There was real doubt whether she could have obtained the finance to purchase the property if she exercised the option. The Equity-One loan would have been repayable 12 months after the borrowing date and, if not repaid, penalty interest would have been incurred and if not paid, the property may have been repossessed. Equity-One's letter of indicative offer was an approval in principle and did not mean that it would necessarily grant funding. The proposed loan required Mrs Thompson and Mrs Malone to provide guarantees and a declaration of their income and establish a good credit record. Mrs Thompson would not have been able to satisfy that requirement. The value of the property was materially overstated in the application form.

1. It is doubtful that Mrs Malone would have been able to provide Mrs Thompson with the funds required to exercise the option from the Carlton development or other sources. The sales of town houses or shops contained in the Carlton development might have taken longer than expected, development delays might have occurred and tax would have to be paid on the sale proceeds. Then, there were the transaction and funding costs payable to Equity-One or any other lender. Equity-One required as security that Horizon charge its assets and that would have impeded the sale of the Carlton development.
2. There was some discrepancy in the statements of Horizon's and Mrs Malone's income in the loan application and the statements of income recorded in Horizon's profit and loss statement and Mrs Malone's tax returns for relevant years.[439] Mrs Malone was unable to explain these discrepancies.
3. Any damages otherwise awarded should be reduced by 75 per cent.

362 It is important to keep in mind that the plaintiff's claim for damages arises from the loss of the option that she alleges that she was to be granted under the PBO Agreement, which was the fourth contract on which the plaintiff sued or the loss of the chance to exercise it. However, keeping this in mind I will consider each of the four contracts that the plaintiff contends were made and breached.

363 I am not persuaded that Mrs Thompson and the Geminders entered into a second agreement to lease on or about 12 November 2012 as she contends. The agreement to lease of 27 October 2012 described the terms of the lease which the parties intended to enter into, including that it would 'be based on the REIV Residential Lease, incorporating the terms and special conditions herein'. On 19 November 2012, the parties entered into such a lease.

364 I consider that the conversation between Mr Thompson and Mr Geminder on 12 November 2012 did not establish that there was a second agreement to lease. Viewed objectively, the parties' conduct suggested that they intended to be bound by written documents, which were the Agreement to Lease dated 27 October 2012 and the lease dated 19 November 2012 and not otherwise.

1. Mrs Thompson claimed that the Lease contained an implied bona fide and good faith term. As previously mentioned, the Lease contained an express clause providing:

10. Good faith

The landlord and the tenant will act bona fide in all matters concerning the implementation of this lease.

1. Because of this express term, the principles governing the implication of terms in contracts, including leases, would not permit the implication of the term relied on by the plaintiff. The proposed term did not satisfy the principles stated in B.P. Refinery (Westernport) Pty Ltd v Shire of Hastings.[440] In view of the existence of the express term in clause 10, the proposed implied term was not reasonable and equitable; was not necessary to give business efficacy to the contract, as the contract was effective without it, and was not so obvious that 'it goes without saying'. While the proposed implied term was capable of clear expression, it would contradict express terms of the contract. [441]
2. The express term of good faith contained in the Lease imposed on the landlord and the tenant a duty to act bona fide, limited to matters 'concerning the implementation of this lease'. The plaintiff did not allege that the Geminders had breached this clause in any manner concerning the implementation of the Lease and I am not satisfied that they did. No loss or damage arising from any such breach was alleged or established. In any event, any duty of good faith that existed did not restrict Mrs Geminder from acting reasonably to promote her legitimate interests.[442]
3. The other implied term that Mrs Thompson alleged formed part of the lease was that:

Mr Geminder was subject to an ongoing obligation to do all acts and execute all such documents as were necessary and proper to ensure that Mrs Thompson would not lose control of the property to the NAB.

1. This term was said to be partly oral and to be constituted by the conversation held on or about 12 November 2012 between Mr Thompson, for and on behalf of Mrs Thompson, and Mr Geminder. The term was also said to be implied to give efficacy to the agreement.
2. Usually, all contracts contain an implied term that the parties must do all things necessary on their part to enable the other party to have the benefit of the contract.[443] But the term relied on by Mrs Thompson extends much further than the usual implied term, in requiring the Geminders to act to ensure that she not lose control of the property to the NAB.
3. I do not consider that the terms of the conversations on 27 October or 12 November 2012 between Mr Thompson and Mr Geminder support a finding that the implied term on which the plaintiff relies formed part of the lease. Mrs Thompson accepted that Mr Geminder's obligation was to do what was reasonable in the circumstances to 'fix' the Thompsons' financial problems with the NAB so that she would not lose control of the property and no more, so the term pleaded is in wider terms than that accepted obligation.
4. I do not consider that business efficacy required the implication of this term for the purposes of the lease. The lease entitled Mr Geminder to possession and quiet enjoyment of the property. There is no basis for implying an obligation on the lessee to ensure that the landlord would not lose control of the property that was the subject of the lease.
5. Viewed objectively, the evidence does support a finding that Mr Geminder indicated that he would act reasonably in the circumstances to intercede with the NAB to attempt to enable Mrs Thompson to retain the property. I have referred to that evidence previously in setting out the events of 27 October and 12 November 2012. The NAB did offer Mrs Thompson the opportunity to purchase the property on 28 February 2013 and 15 April 2013. This followed representations made by Mr Geminder to the NAB. These occurred by letter to the NAB dated 31 October 2012; Mr Geminder's phone call to Mr Woolrich on 9 November; Mr Perkins' phone conversations with NAB officers on 7 and 11 December; Mr Geminder's and Mr Perkins' meeting with senior NAB officers on 1 February 2013; and Mr Perkins' dealings with the NAB on 7 February. But, the Thompsons were not prepared to agree to aspects of the NAB's offer. To so act was also in Mr Geminder's interests as it would have secured his continued occupancy of the property. He did intercede with the NAB on behalf of the Thompsons. In all these circumstances, the plaintiff has not proved that Mr Geminder failed to do what was reasonable in the circumstances to ensure that Mrs Thompson would not lose control of the property to the NAB.

1. As previously stated, Mrs Thompson also relied on an agreement under which she would vacate the property and allow Mr Geminder to move in. This agreement was said to include terms that she would vacate the property and that Mr Geminder would do all acts and execute all such documents as were necessary and proper to ensure that Mrs Thompson would not lose control of the property to the NAB. Although not expressly stated, it appears that Mrs Thompson alleges that the agreement was made at some time in late November and early December 2012.
2. I am not persuaded that this agreement was made. The lease signed on 19 November 2012 already required Mrs Thompson to give possession of the property to Mr Geminder. If she had failed to do so, she would have breached the lease. She accepted the rent paid under the lease and there was no suggestion that the parties varied the written terms of the lease.

The Purchase and Buyback Option Agreement ('PBO Agreement')

1. The fourth agreement relied on by Mrs Thompson was the PBO Agreement. It was pleaded and argued as a two part agreement, one part being the purchase of the property and the second part being the grant of an option to Mrs Thompson to repurchase it.
2. The plaintiff in fact pleaded, in her original statement of claim, that the NAB failed to do promptly all acts and execute all such documents as were necessary and proper to cause the sale of the property to Geminder Holdings for the sum of $8.5m, on reasonable commercial terms as offered by Geminder Holdings on 24 June 2013. The NAB counterclaimed seeking a sum due under Mrs Thompson's guarantee of 'in excess of $1.5 million'. However, the proceeding between Mrs Thompson and the NAB was settled and consent orders made on the seventh day of the trial.
3. The evidence suggests that on 31 January and 1 February 2013, the parties did discuss the possibility of the Geminders purchasing the property and granting an option to Mrs Thompson to repurchase it. On 17 February, Mr Geminder and Mr Thompson discussed Mr Geminder purchasing the property for up to $8.5m. While Mr Perkins' email of 1 February 2013 indicates that the proposal was more than a concept, I do not consider that the parties reached a binding agreement for a purchase of the property by Mr Geminder and a buyback option, because they did not pursue discussions about its terms, particularly about the amount that the NAB might require to discharge its mortgage.
4. The proposal for a PBO Agreement was a major shift in the dealings between the parties as, if implemented, it would have resulted in the tenant becoming the owner of the property. But, it required that the Geminders be able to purchase the property which would have involved reaching agreement with the NAB about the sum required to repay the mortgage debt. herefore, the discussions about the Geminders purchasing the property were hypothetical, because even if the Geminders had purchased the property directly from Mrs Thompson, the mortgage to the NAB would have had to be discharged and Mrs Thompson would have had to find finance to pay the amount owed to the NAB. As events unfolded, neither the Geminders nor the Thompsons reached agreement with the NAB to purchase the property. They did not act as if they had reached a legally binding agreement in the form of the PBO Agreement. Rather, the evidence suggests that they intended that they would be only bound when they had made a written agreement, as they had done with their two agreements concerning the lease. Agreements concerning the sale of real property are usually contained in writing,[444] not least because of the statutory requirements.[445] Mr Champion agreed that an option deed or agreement of some type would have been required.[446]
5. But, discussions about reaching a legally binding option agreement did not proceed, Mr Champion did not reply to Mr Perkins' email of 1 February 2013,[447] which referred to an option, and there was no discussion of the option again after that date. In the last paragraph of that email, written after discussions with the NAB, Mr Perkins stated:

Ruffy wanted to confirm that he was prepared to contribute $8.2M as part of any offer to the bank-it's really up to Warren to see what he can negotiate and then contribute any excess above $8.2M to secure the sale. Obviously any excess contributed by Warren would be recovered through the exercise of the option and to confirm, Ruffy would pay all the stamp duty on Geminder Holdings acquisition of the property (and Warren would pay the stamp duty on exercise of the option).

Can you take some instructions and see how Warren gets on with the bank and let us know?

1. Mr Champion forwarded the email to Mr Thompson with the comment:

The following ...is self-explanatory. However, it looks like Ruffy hasn't got anywhere and doesn't propose to do any more to put pressure on the bank to reduce the figure it requires.

No doubt you will ring to discuss shortly.

1. On 26 March 2013, Mr Champion emailed the NAB's solicitors seeking details of any news about the arrangement before he went on leave and stating that 'I just hope the proposed purchaser hasn't gone off in the meantime'.[448] He copied Mr Perkins into the email.
2. Much later on 8 July, Mr Champion enquired 'if NAB agreed to the sale proceeding, will Hilary be dealing with the option',[449] but there was no discussion at that time with the Geminders about the option.
3. Any PBO Agreement depended on the NAB agreeing to accept a sum that the Thompsons could provide to discharge its mortgage. After the NAB took possession of the property, the implementation of any such agreement depended on the NAB being willing to sell the property to the Geminders on terms that they were willing to accept. There was no certainty that the NAB would sell to the Geminders. The evidence, viewed objectively, suggests that the parties did not reach any agreement about the terms of a purchase and buyback option. It was another proposal advanced in discussions, but was not finalised because no agreement was reached with the NAB for the sale of the property to the Geminders. This case fell within the third category described in Masters v Cameron, being:

[O]ne in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract. [450]

1. The parties were represented by lawyers who considered that there would need to be a written option agreement.[451]

386 At best, from the plaintiff's perspective, the evidence suggests that there was an agreement to negotiate a purchase of the property and the grant of an option and such an agreement is not enforceable.[452] The proposed PBO Agreement would have been a significant document and it is likely that the parties would have intended to put it in writing.[453] If the PBO Agreement had been reduced to writing in February 2013, it would have had to address the issue of the sum that the NAB was willing to accept and, after it took possession, address the issue of the terms that it required the Geminders to accept.

1. In addition, the plaintiff has not established that she provided any consideration for the option. Mrs Thompson was already obliged under the lease to allow Mr Geminder to occupy the property. If the agreement had been reduced to writing some provision about consideration might have been included.[454]
2. In any event, the PBO Agreement would have been required to be in writing because of the requirements in s 126 of the Instruments Act 1958 (Vic).[455] There was no sufficient note or memorandum coming into existence after the alleged oral agreement containing the terms of the option contract. None of the subsequent emails provided a sufficient note or memorandum of it. Nor were there acts of part performance unequivocally referable to the PBO agreement. Bearing in mind that any agreement depended on the NAB agreeing to the sum offered in respect of its mortgage debt, critical and material terms of the PBO agreement had not been agreed.[456]
3. Apart from all of the above, even if the PBO agreement was entered into and contained a term of good faith, it would not have prevented the Geminders from negotiating the terms of the purchase of the property and acting in their own interests in respect of those terms.[457] Mr Geminder was entitled to decide not to offer any higher purchase price than $8.5m. I do not accept the plaintiff's submissions that he may have had to offer more or made a bid of up to $8.75m or thereabouts. Geminder Holdings did offer to purchase the property for $8.5m, but Mr Geminder could not reach agreement with the NAB upon the terms of sale. It is certainly possible that the Heffernans may have continued to outbid the Geminders. Mrs Thompson took no step under the 'topup mechanism' in the alleged agreement to enable Geminder Holdings to make an offer to the NAB, exceeding $8.5m. In any event, the NAB required other terms including a director's guarantee, but the Geminders were entitled to act in their own best interests and not agree to those terms. In addition, the Geminders required that the vendor be the holder of an unencumbered estate.
4. Further, if contrary to my conclusions, the parties had entered into the PBO Agreement, the Geminders did not breach it. They offered to purchase the property for $8.5m, but were unable to agree on terms with the NAB.
5. It is of some note that Mr Champion, when acting on behalf of the plaintiff and negotiating with the NAB about contractual terms, also could not agree on terms with the NAB.
6. In any event, Mrs Thompson's loss and damage was substantially less than the sum that she claims. She framed her damages as the difference between the market value of the property at the time of trial of $10m and $8.5m, which was described as the strike price of the option to repurchase the property. But there were contingencies affecting the probability that Mrs Thompson would have been able to exercise the option. Assuming that Equity-One loaned Horizon the sum of $4.5m, it would have been repayable 12 months later and needed to be reloaned or refinanced. So far as the remaining $5m was concerned, a number of contingencies might have affected its availability. The sales of the apartments might have taken time and Mrs Thompson's debt increased. Interest would have continued to accrue on the NAB loan until the option was exercised and the purchase of the property completed. There was no independent valuation of the Carlton development.
7. Had I considered that Mrs Thompson was entitled to any loss of damage I would have assessed that loss at $250,000, which is a proportion of the loss that she claims, because of the contingencies that I have mentioned.[458]
8. The Geminders also argued that any obligations of Geminder Holdings under the alleged option agreement were discharged by frustration. It is unnecessary to determine that defence because I consider that the parties did not enter into the PBO Agreement.
9. Despite these conclusions, I should deal with two further points relied on by the Geminders. The first was that it was fatal to the plaintiff's case that she did not give evidence that she would have exercised an option to repurchase the property, if it had been granted to her. I do not accept this submission. Mrs Thompson's evidence strongly indicated that, if the Geminders had granted her an option to repurchase the property, she would have wished to exercise that option if she had the finance to do so. That was why she called Mrs Malone and Mr Koutsoumidis to give evidence about the availability of finance. Findings of fact can be made on the basis of clear inferences just as much as on direct oral evidence.
10. Nor do I consider that the fact that the option would have been granted to Mrs Thompson, and, not to Mrs Malone or Horizon, would necessarily have been fatal to Mrs Thompson's case. Mrs Malone's and the Thompsons' evidence suggested that they would have taken the necessary steps to implement the exercise of the option and one alternative, and there may have been others, would have been for Mrs Thompson to purchase the property on trust for Horizon. These alternatives were not explored in argument and it is unnecessary to express a concluded view on them.

1. As previously mentioned, Mrs Thompson claimed that an equitable estoppel prevented the Geminders from departing from particular assumptions and expectations. The assumptions and expectations were based on three representations, allegedly made by the Geminders, each of which was described as a representation of good faith. Mrs Thompson assumed at all material times that Mr Geminder was bound by the three representations of good faith and that Geminder Holdings was bound by the third representation of good faith.
2. The first representation of good faith was that on or about 12 November 2012, Mr Geminder represented to Mr Thompson that if Mrs Thompson agreed to rent the property to him, he would do all acts and execute all such documents as were necessary and proper to ensure that Mrs Thompson would not lose control of the property to the NAB.
3. The second representation of good faith was that on 28 November 2012 and 5 December 2012, Mr Geminder represented to Mr Thompson, that if Mrs Thompson agreed to vacate the property, he would do all acts and execute all such documents as were necessary and proper to ensure that Mrs Thompson would not lose control of the property to the NAB.
4. The third representation of good faith was allegedly made in February 2013 and was that Geminder Holdings would do all acts and execute all such documents as were necessary and proper to cause the purchase of the property by Geminder Holdings from the NAB for a sum of $8.5m and that Mrs Thompson would contribute any part of the purchase price that exceeded that sum and that Geminder Holdings would grant Mrs Thompson an option to repurchase the property after the expiration of any lease for the purchase price paid by Geminder Holdings.
5. The underpinning of the equitable estoppel on which Mrs Thompson relied was Mr Geminder's promise to Mr Thompson that he would 'fix' things with the NAB. Mrs Thompson submitted that between late October 2012 and 16 February 2013, Mr Geminder made a number of representations that he would 'fix it', meaning the Thompsons' financial problems with the NAB. These included that he would buy the NAB mortgage or that he would organise refinancing or that he would buy the property and grant an 'option back'. This was pleaded in the terms of the assumptions and expectations which are described below, but was accepted as requiring reasonable steps by Mr Geminder and Geminder Holdings and no more.
6. On the basis of the representations, Mrs Thompson assumed that Mr Geminder was bound by the three representations of good faith and that Geminder Holdings was bound by the third representation of good faith. She also pleaded that she expected that:

(a) Mr Geminder would do all acts and execute all such documents as were necessary and proper to ensure that Mrs Thompson would not lose control of the property to the NAB;

(b) Mr Geminder and Geminder Holdings would do all acts and execute all such documents as were necessary and proper to cause the purchase of the Toorak Road Property by Geminder Holdings from the NAB for a sum up to $8.5m;

(c) Mr Geminder and Geminder Holdings would not be free to withdraw from the expected legal relationship.

1. Mrs Thompson alleges that Mr Geminder and, from 16 February 2013, Geminder Holdings induced her to adopt the assumptions or expectations and knew, or intended, that they would so act. She pleaded that:

During the period between 16 February 2013 through to 18 July 2013, the conduct of the relations between Mrs Thompson and Geminder Holdings was based upon an agreed or mutually assumed state of facts to the effect of the third representation of good faith, namely that Mr Geminder and Geminder Holdings would do all acts and execute all such documents as were necessary and proper to cause the purchase of the Toorak Road Property by Geminder Holdings from the NAB for a sum of up to $8.5M.[459]

1. Mrs Thompson's case was that she relied on the representations by entering into the agreement to lease, varying the mortgagee consent term in the agreement to lease, entering into the conditional lease, declining to sell the property at auction, agreeing to vacate the property without resolution of her financial issues with the NAB, agreeing to allow Mr Geminder and Geminder Holdings to remain in possession of the property, refusing Mr Heffernan's offer to purchase the property and losing the right to move back into the property after it was sold to the Heffernans**.**
2. She alleges that the Geminders were aware of her reliance on the representations and that she would suffer detriment and it would be unconscionable if the Geminders were permitted to depart from the assumptions set out above. She alleges that she has suffered the detriment of losing the property to the NAB or and the value of the option to buy it back.
3. Mrs Thompson then contends that Mr Geminder and Geminder Holdings have failed to act to avoid her detriment in that they seek, or have sought, to depart from the first, second and third representations of good faith. In this regard, Mrs Thompson relied on two letters from King & Wood Mallesons of 18 and 26 July 2013. The letter of 18 July 2013, sent to Mr Champion, stated:

It is not in dispute that out client had a number of discussions and negotiations with Amanda and Warren Thompson in relation to the purchase of the Property. However, these discussions and negotiations are just that and no concluded agreement of any kind was reached or entered into between Amanda Thompson and Geminder Holdings and/or Raphael Geminder in relation to the purchase of the Property or the granting of an option.

Our client rejects any assertion that your client was induced to enter into the lease for the Property with Mr Geminder on the basis of a series of assurances, including a commitment of good faith. Our client has, at all times, acted in good faith in all of its dealings and in accordance with the lease.

On our instructions, we will not be providing you with a comprehensive account of any communication between our clients and the National Australia Bank.

The letter of 26 July 2013, sent to the NAB's solicitors, stated:

We refer to your open letter dated 25 July 2013.

We are instructed that our client is not willing to purchase the Property on the terms set out in the letter from Geminder Holdings dated 24 June 2013 or on any other terms.

As you are aware, the Geminder family reside at the Property pursuant to a Residential Tenancy Agreement dated 19 November 2012 between Raphael Geminder and Amanda Thompson (Lease).

Our client is and will continue to meet all of its obligations under the Lease and would like to continue to reside at the Property for the duration of the term of the Lease.

407 Mrs Thompson contends that the minimum equity required to do her justice would be an order compensating her for the loss she has suffered, being the loss of the property to the NAB and the loss of the value of the option.[460] Mrs Thompson claimed the value of the loss of the option was the difference between $10m, the agreed value of the property as at the trial, and $8.5m.

1. Mrs Thompson's pleaded case relied on a number of categories of estoppel. In her written statement of issues, she identified the estoppel issues as:

Does any equitable estoppel or promissory estoppel arise in favour of the plaintiff as against the second or third defendants?

If so, to what if any relief is the plaintiff entitled as a result, including what is required for equity to do justice?

1. Again, in final submissions, Mrs Thompson relied principally on equitable or promissory estoppel.[461]

1. The Geminders disputed Mrs Thompson's claims in estoppel. They submitted that they intended only to be bound by written agreements. They denied that they had made the representations on which the claims were based. In any event, the terms of the representations were too ambiguous and equivocal to found an estoppel. They also submitted that Mrs Thompson did not rely on any such representations and that any reliance that did occur was not reasonable. Mrs Thompson was keen to enter into the lease and saw it as a way of saving her ownership of the property. But, by granting the lease, she was obliged to allow Mr Geminder to occupy the Toorak property. She did not act in reliance on any action or representation made by Mr Geminder in January or February 2013.
2. Mrs Thompson suffered no detriment entitling her to equitable compensation, because by entering into the lease and vacating the property she received and retained rental income of $34,366 per month from Mr Geminder. But for the lease she would have had to sell the property.

1. To establish an equitable or promissory estoppel, Mrs Thompson has to establish the following matters. First, that she assumed that a particular legal relationship existed with the Geminders or expected that it would exist between them and that they would not be free to withdraw from it. Secondly, that the Geminders induced her to adopt that assumption and expectation. Thirdly, that she acted or abstained from acting in reliance on that assumption or expectation. Fourthly, that the Geminders knew or intended that she do so. Fifthly, that her action or inaction would occasion her detriment if the assumption or expectation was not fulfilled. Sixthly, that the Geminders failed to act to avoid that detriment by fulfilling the assumption or expectation or otherwise.[462]

413 The principle on which equitable estoppel in all its forms is founded is that equity will not permit an unjust or unconscionable departure by a party from an assumption or expectation of fact or law, present or future, which that party has caused another party to adopt for the purposes of their legal relations.[463]

414 For conduct or a representation to create an estoppel, it must be clear, unequivocal and unambiguous.[464] Usually, the words or conduct must be capable of misleading a reasonable person in the way that the person relying on the estoppel claims to have been misled.[465]The representation must be able to create the assumption or expectation in question and it must be shown that the assumption was in fact acted on.[466] However, the equivocal or objectively ambiguous nature of the representation is but one, albeit important, consideration in the determination of whether and to what extent, the assumption or expectation is fairly and reasonably to be attributed to the representation.[467] Reliance is a fact to be proved and is not to be imputed on the basis of evidence which falls short of proof of the fact. [468]

1. As stated, Mrs Thompson's equitable estoppel claim is based on three representations of good faith which she contends caused her to adopt the particular assumptions and expectations which have been described previously. Despite their title as representations of good faith, these alleged representations raise claims quite distinct from the obligations of good faith that Mrs Thompson claims were implied terms in the contracts described above.
2. As previously stated, I have found that the plaintiff has not established that she and the Geminders entered into any of the contracts on which she relies to establish her causes of action other than the lease of 19 November 2012. Thus, she did not enter into a contract to vacate and deliver up possession of the property and so, that act of reliance has not been established. Similarly, I do not consider that the parties entered into any contract under which the Geminders would be able to remain in possession of the property, other than the lease.
3. Nothing decisive to the determination of the plaintiff's claims turns on whether, the lease that the parties entered into gave only the Geminders the right to terminate it, if the NAB did not consent to it. The Thompsons were not in a position to pay the mortgage repayments owing to the NAB and granting the lease to Mr Geminder was the only financial alternative available to them.
4. However, on the plaintiff's case, the representations that Mr Geminder made to Mr Thompson in conversations on 12 and 16 November 2012 were key factors in her agreeing to enter into the lease.
5. I do not consider that the plaintiff has established that Mr Geminder, or anyone on his behalf, represented to Mr Thompson in conversations on 12 or 16 November 2012, or at any other time, that the Geminders would ensure that Mrs Thompson would not lose control of the property to the NAB. But, I do find that in the conversation of 12 November 2012, especially following what was discussed on 27 October 2012, that Mr Geminder told Mr Thompson that, in effect, he would attempt to assist the Thompsons in their dealings with the NAB, so that Mrs Thompson would not lose control of the property to the NAB. But on the plaintiff's case, as presented at trial, the Geminders were required to act reasonably in the circumstances to assist the Thompsons to retain control of the property and had no absolute obligation to achieve that result.
6. Mr Geminder did take steps to achieve that outcome on the occasions that I have previously mentioned. While the Mr Geminder's initial wish was only to lease the property, he provided a letter of 31 October to Mr Thompson and he spoke with Mr Woolrich of the NAB in November**.** In so acting, he took reasonable steps in the circumstances to assist the Thompsons to deal with their financial problems with the NAB, but, it would not agree to the lease.
7. The NAB did not appear to be influenced by the Geminders' financial leverage. In February 2013, it informed Mr Geminder that he had a small window of opportunity to purchase the property, failing which it would be sold at a mortgagee auction and then, at a later point, approached Mr Geminder to see if he wished to increase their offer. But following Mr Geminder's intercessions, the NAB did make an offer to sell the property to the Geminders. If that offer had been accepted it might have enabled the Thompsons to retain possession of the property, but they did not accept it.
8. In June 2013, the Geminders did offer to purchase the property from the NAB as they had told the Thompsons they would. But, they did not agree on terms with the NAB. Their interest in and need to purchase the property diminished once they reached an understanding with the Heffernans by which they could continue to lease the property if the Heffernans purchased it. But, by that time the NAB had become the mortgagee in possession of the property and the Thompsons had ceased to be the lessor entitled to receive the rent.

423 So far as events in 2013 are concerned, I accept that Mr Geminder told Mr Thompson on 31 January 2013 that he was willing to purchase the property for up to $8.5m and grant Mrs Thompson an option to repurchase it. Although, for reasons previously given, I do not consider that a contract arose from those discussions or from the meeting of 17 February, I find that Mrs Thompson assumed that Mr Geminder would attempt to purchase the property for a price of up to $8.5m and, if successful, grant her the option to repurchase it. I find that as late as July 2013, the Thompsons did believe that they had a deal or arrangement with the Geminders and the NAB, in the latter case by reason of its letter of 15 April 2013. That was why Mrs Thompson commenced this proceeding against the NAB and not the Geminders.

424 But, Mrs Thompson's belief exceeded a reasonable reliance on Mr Geminder's representations. His representations, on 31 January and 17 February 2013, did not go beyond indicating that he would do what was reasonable in the circumstances to purchase the property for up to $8.5m and, if he succeeded, he would grant Mrs Thompson an option to repurchase it. Mr Geminder had no absolute obligation to purchase the property.

1. Mrs Thompson has not established that she took any step on or acted in reliance on Mr Geminder's statements in the conversations of 31 January and 17 February 2013. In final submissions Mrs Thompson relied on an offer by the Heffernans in April 2013 to purchase the property for an amount that was described as exceeding $8.5m and which she refused because of her understanding with Mr Geminder. But that act of reliance was not pleaded and there were insufficient details of the offer to assess how it might have benefitted Mrs Thompson.

426 There is no evidence that Mrs Thompson, by relying on Mr Geminder's representations, abandoned any other course that might have ended more favourably for her, for example attempting another sale of the property before the NAB took possession in May 2013. That course was not suggested nor could it be determined what its outcome would have been. The benefits that the Thompsons received by the Geminders' payment of rent have to be taken into account.

1. Rather than just relying on Mr Geminder to use his influence with the NAB and to take reasonable steps to purchase the property, soon after the meeting on 31 January, Mr Thompson, through Mr Champion, took dealings with the NAB largely into his own hands. In doing so, he did rely on the fact that Mr Geminder was the tenant. On 4 February, Mr Champion wrote to the NAB offering to settle the NAB's claims for $8.5m. On 20 February, Mr Champion proposed to the NAB that Geminder Holdings purchase the property from it, as mortgagee in possession, for $8.5m 'if agreement could be reached as to terms'. The NAB was willing to accept Mrs Thompson's offer, but not on terms that were agreeable to her. Considering the matter at that point, Mr Geminder's representation had created the opportunity for the first part of the PBO Agreement to be achieved, if the NAB and Mrs Thompson could have agreed on terms for the sale. Mr Champion wrote to the NAB again on 26 March when he was about to go on leave. The NAB replied to him on 15 April and sent him the Deed of Settlement on 2 and 20 May. He responded on 23 May and the NAB responded to him on 27 May. He wrote to the NAB again on 14 June and the NAB responded on 20 June. He wrote again on 21 June. He threatened litigation against the NAB and it responded. Mrs Thompson commenced proceedings against the NAB. Ultimately, the NAB concluded on 27 May 2013 that it was too difficult to achieve an outcome with the Thompsons.

428 These proposals or offers were only able to be made because of Mr Geminder's willingness to assist the Thompsons. But, Mrs Thompson did not accept the NAB's offer and did not pursue discussions with the NAB through her solicitor in March, April and May. She thereby lost the opportunity to obtain an option to repurchase the property.

1. It is significant that Mr Thompson engaged in his own dealings directly, or through Mr Champion, with the NAB. In many of these instances he did so without informing the Geminders. Mr Thompson carried out these negotiations on behalf of Mrs Thompson. He was a businessman of considerable experience and he was attempting to negotiate the best outcome possible for himself and his wife. He did this by negotiating with Mr Geminder, but at the same time negotiated directly with the NAB, particularly through Mr Champion.

430 The plaintiff's estoppel claim fails for the following reasons. First, Mrs Thompson's case involves an unreasonable reliance on the representations that Mr Geminder made in November 2012 and on 31 January and 17 February 2013. The purported reliance exceeds a reasonable expectation of, or assumption about, what had been represented and the legal relationship that would be created between Mrs Thompson and the Geminders. The effect of Mr Geminder's representations was that he would act reasonably in the circumstances to intercede with the NAB for the Thompsons about their financial problems. He did so. It does not diminish those intercessions that it was in Mr Geminder's own interests to have the NAB consent to the lease. He also represented that he would be willing to pay $8.5m to purchase the property and grant Mrs Thompson an option to repurchase it. The evidence suggests that he was willing to, and did make an offer to do that. Therefore, he did not resile from those representations. On the basis of Mr Geminder's representations, Mr Champion, on behalf of the Thompsons, made offers to the NAB to persuade it to sell the property to the Geminders. In June, Mr Geminder made his own offer to purchase the property in accordance with his representations made on 31 January and 17 February. At the time of his offer, Mr Geminder did not want to purchase the property because of the Heffernans' interest in purchasing the property. But, between February and June 2013, Mr Geminder's willingness to purchase the property for up to $8.5m had provided a basis for Mr Thompson's and Mr Champion's negotiations with the NAB.

431 Secondly, the plaintiff has not established that she took any step to her detriment in reliance on Mr Geminder's representations of 12 November 2012, 31 January and 17 February 2013. Rather, by relying on them, Mr Thompson and Mr Champion were able to negotiate with the NAB in February, March and April 2013 and Mrs Thompson obtained the opportunity to achieve a settlement with the NAB. In my opinion, the plaintiff has not established that the Geminders' conduct caused her any material detriment.[469]

432 The Thompsons had no better financial option available than to deal with the Geminders, as they did not have the finance to pay out the mortgage debt owing to the NAB. There is no evidence of any person willing to purchase the property for the price that they wanted. If they had sold the property to the Heffernans, or at auction, it is not clear that their financial position would have been better than it was when the Heffernans ultimately purchased the property for $8.55m. It is clear that by their lease of the property to the Geminders, the Thompsons obtained the benefit of the monthly rental of $34,266 between January and May 2013 and obtained further time to negotiate with the NAB. In addition, Mr Geminder did offer the sum of $8.5m to purchase the property on 24 June 2013, but subject to terms that the NAB would not agree to. Mr Geminder was happy that his offer was not accepted because of his arrangement with the Heffernans to continue to lease it if their offer was successful. But, in that respect, he was acting, as he was entitled to, in his own interests after Mrs Thompson had had a number of months to use his willingness to purchase the property for up to $8.5m as a base on which to negotiate a settlement with the NAB. I do not consider that the evidence supports a finding that he resiled from the representations that he made to Mrs Thompson.

433 Thirdly, the relief that Mrs Thompson seeks would be disproportionate, in the circumstances of the case, to the value of any lost opportunity to exercise an option, taking into account the use that she made of Mr Geminder's representations and the potential opportunities she thereby obtained to deal with her financial problems. In dealing with her contract claim, I have explained why, in my opinion, Mrs Thompson's loss of the option to repurchase the property or the chance to exercise it have a value considerably less than the sum that she claims.

434 Fourthly, I do not consider that the Geminders have engaged in any unconscionable conduct that would cause equity to recognize an estoppel and award her equitable compensation. It would be unreasonable for Mrs Thompson to contend that Mr Geminder's failure to comply with his representations caused her to be unable to solve her financial problems with the NAB and retain the property. Mr Geminder's representations of January and February 2013 were made in circumstances where the Geminders' ability to purchase the property depended on the NAB's willingness to agree to the sale or, after it took possession, sell the property on terms that were agreeable to Mrs Thompson and the Geminders. These terms would have included agreement on the sum that the NAB was willing to accept in respect of its mortgage debt. Nothing that Mr Geminder may have promised Mr Thompson would have advanced the Thompsons' position unless an arrangement could have been reached with the NAB, particularly about the amount of debt that it would accept.

435 The communications between Mr Geminder and Mr Heffernan occurred very late in the piece in June 2013. They included a number of conversations between Mr Perkins or Mr Geminder and Mr Heffernan and their solicitors on and after 20 June 2013. The plaintiff contends that the Geminders were obliged to tell her that a bidding war had commenced for the property, particularly if they were not really proposing to participate to purchase the property. Whatever force there is in this submission, the plaintiff has pleaded no breach of the duty of good faith in reliance on these contacts with the Heffernans. I have taken into account that Mrs Thompson said that the Geminders discovered documents concerning with their dealings with the Heffernans only a few weeks before the commencement of the trial, but the trial was long and it was not submitted that the she was hampered in presenting this argument to the Court.

436 I did refuse the plaintiff's application, left to final submissions, to allege that, by collusion, the Geminders and Mr Heffernan had breached the Competition and Consumer Act 2010 (Cth).

437 I do consider that Mr Geminder deliberately chose not to inform the Thompsons of his arrangements with the Heffernans. In the context of his previous dealings with them, Mr Geminder displayed a lack of candour in not informing them. To consider the Thompsons as irrelevant at that point was inappropriate and inaccurate. But, Mrs Thompson did not plead any cause of action based on the Geminders' dealings with the Heffernans and their failure to inform the Thompsons of them. It is doubtful that the failure to tell the Thompsons of the dealings with the Heffernans involved any departure from the representations made by Mr Geminder. As I have concluded, he had complied with his representations and the Thompsons had taken advantage of them in negotiating directly with the NAB. Mr Geminder had made an offer to purchase the property. By the time Mr Geminder commenced discussions with the Heffernans, he had already attempted to do what he had represented that he would do. He had also allowed Mr and Mrs Thompson, through her husband and Mr Champion, in their direct negotiations with the NAB, to rely on his willingness to purchase the property for up to $8.5m.

438 It may be that without the presence of the Heffernans Mr Geminder would have come to terms with the NAB and purchased the property and granted Mrs Thompson an option to repurchase the property. But, that scenario involves speculation about a fact situation that did not exist. To reiterate my conclusion on this point, Mr Geminder's dealings with the Heffernans have to be assessed for the purposes of the plaintiff's claims against two significant factors. First, between February and June 2013, Mr Geminder's representations about his willingness to purchase the property and grant Mrs Thompson an option to repurchase it enabled her to attempt to come to terms with the NAB, but she was unable to do so. Similarly, the NAB when negotiating directly with Mr Geminder required terms to which he was unwilling to agree. It was not argued that Mr Geminder acted unreasonably in refusing to agree to those parts of the NAB's terms with which he took issue. Secondly, the plaintiff has not pleaded directly any cause of action against the Geminders arising from their dealings with the Heffernans.

439 The evidence demonstrates that there were a range of factors at play in the dealings between the Thompsons, the Geminders and the NAB. I do not consider that the Thompsons lost the opportunity to repurchase the property due to Mr Geminder resiling from any representation that he made.

440 For the above reasons, I do not consider that Mrs Thompson's claims in estoppel have been established.

441 I state for the sake of completeness that Mrs Thompson also pleaded her case in estoppel as giving rise to estoppel by convention, and estoppel by representation in pais. No separate submissions were directed at these other forms of estoppel. The matters that have led me to conclude that no case in equitable or promissory estoppel has been established would equally result in claims in these other forms of estoppel being dismissed. There would be additional reasons why such claims would be unsuccessful. First, estoppel by representation must be a representation of existing fact and not of intended future conduct.[470] Secondly, a claim based upon estoppel by convention would not succeed because the pleaded conventional state of affairs was not established by the evidence.

1. Mrs Thompson claims against Mr Geminder orders for the delivery up of chandeliers, carpets and curtains that she contends are chattels left in the Toorak property and damages, including aggravated and exemplary damages, arising from her deprivation of them. Her case is that she either owned or had the right to immediate possession of those items. She contends that once the Geminders moved into the property they had enjoyed and used the chattels. She makes these claims in trespass, conversion and detinue. Against the Heffernans, she claims the delivery up of these items, but does not claim damages.
2. Mr Geminder's case was that, before permitting Mrs Thompson to collect those items, they were entitled to seek to ascertain which, if any, of them were chattels to which she had the right of possession.
3. The Heffernans contend that the items were fixtures and not chattels and that ownership passed to them when they purchased the property from the NAB.
4. Mrs Thompson accepted that she had to prove her possession of the items or an immediate right to possession.
5. The Heffernans called no evidence, but relied on the evidence of Mr Warren Joel, a fine art auctioneer and valuer, who was called by the plaintiff.
6. It is appropriate to first consider whether the items in question are chattels or fixtures. If they are fixtures, they now belong to the Heffernans pursuant to the contract of sale dated 11 September 2013 by which they purchased the property from the NAB.[471]

1. The curtains and pelmets were installed during major renovations to the property in 2006. They were custom designed and built for the property. Mrs Thompson's claim included 21 curtains.[472] Each curtain was attached to a pelmet that was affixed to the walls of the home using an L-shaped bracket.[473] There was a disagreement between the parties as to whether the curtains could be treated separately from the pelmets. The pelmets were the same colour and cloth as the curtains. Mr Joel considered that they ought be considered together for the purposes of valuation.[474] I consider that each set of curtains and their associated pelmets should be treated as one, or as connected items, because they were designed to complement each other.
2. Mr Joel stated that all the curtains appeared to be custom-made except for the cinema curtains and that custom designed curtains were generally harder to sell.[475]
3. Mr Geminder submitted that the curtains were intended to form a permanent part of the house and were to be treated as fixtures. He relied on the fact that removal of the curtains would require removal of brackets leaving holes in the walls requiring repair. They were custom made to fit the windows.[476] The curtains in the master bedroom were connected to the property's C-Bus system by which they could be opened and shut automatically.[477]
4. The Heffernans submitted that there was nothing in the design of the carpets and curtains that would encourage an observer to appreciate them for their own sake and that that they were installed to fulfil a 'utilitarian function'. They emphasised that the plaintiff had had no intention of ever selling the property and that accordingly the items would have remained in the house.
5. Mrs Thompson relied on the fact that the curtains were very expensive, but easily removable. Mr Stuart Rattle, an interior designer, had acquired them for the Thompsons and supervised their installation. Mrs Thompson gave evidence that Mr and Mrs Geminder had taken down other curtains in some rooms and returned them to her and Mr Thompson.[478]

1. Like the curtains, the four carpets or carpet squares in issue were custom designed and purchased around the time of the 2006 renovations. They were located in the ballroom, the study, the sitting room and the family room. Most of the carpets were designed by Custom Weave, but those in the family room were designed by a separate business. The carpets were designed with reference to the floor space and made to fit into the existing parquetry, which had previously been covered by other carpets.
2. Mr Joel gave evidence that the carpets were firmly affixed to the parquetry using either a glue or hook-and-tack system.[479] There is little doubt the carpets were, like the curtains and chandeliers, expensive, befitting the nature of the property. Ultimately, however, the value of the carpets and curtains was not admitted into evidence and I do not consider that the expense of the items bears on their characterisation as either a chattel or a fixture. The carpets, curtains and light fittings in a house of this character were always likely to be expensive.
3. Mrs Thompson contended that the carpets were placed in the property after she and her husband completed major renovations and they had moved in. They were a decorative centre piece and rested on their own weight, on top of the existing flooring, secured in place so that they could be safely used.
4. However, the auction advertising material and the contract of sale indicated that the carpets and curtains were to be included in the sale of the property. Neither of the agent's sale authorities given to Abercromby's or Kay & Burton included details of the chattels to be sold with the property.[480] The Abercromby's authority noted chattels to be sold with the property as 'T.B.A.'.[481] Abercromby's instructions to its conveyancers were recorded in a letter dated 8 November in the following terms:

Chattels & Fixtures

These should be listed in the Particulars of Sale as: All fixed floor coverings, electric light fittings, blinds, curtains and drapes.

The Vendors have not advised us of any exclusions, however we ask that you confirm this with them prior to completion of the documentation.[482]

1. The Abercromby's contract stated that the land included all improvements and fixtures. The contract identified the goods sold with the land as:

All fixed floor coverings, blinds, curtains and drapes, electric light fittings (excluding all hanging light fittings and chandeliers) and excluding all refrigerators and refrigeration equipment whether "built in" or otherwise.[483]

1. Mrs Thompson said that she did not recall receiving a copy of the contract of sale or the conveyancer's letter or any advertisement prior to the auction. She said that the statements contained in them about the goods to be sold with the property did not reflect her intention at the time.
2. Although Mrs Thompson called Mr Joel as a witness in her case, she submitted that he had had limited opportunity to examine the manner in which items had been fixed to the property and had not been commissioned to undertake that assessment.

1. Eight chandeliers were in issue. Two were in the dining room, one in the hallway, two in the former ballroom, which is now the formal sitting room, one in the study and two in the cellar or basement. The latter two were of a contemporary design. Four were purchased around the time of the renovations to which I have referred and four had been previously purchased and had been used in the Thompsons' previous residence. They were the two in the ballroom and the two in the cellar. Two of those were purchased about 20 years ago.[484] The chandeliers were not specially designed for the house. Mrs Thompson contended that the chandeliers had been purchased primarily for the purpose of display and that the circumstances and location in which they were displayed changed from time to time.[485]
2. The chandeliers were hard wired into the electric circuitry of the house and were part of a C-Bus system, which was installed at the property. C-Bus is a home automation system that allows for central control of lighting and other aspects of the home. The Thompsons were able to control the lights and some curtains using the C-Bus system.[486] Mrs Thompson gave evidence that the chandeliers were 'just' attached to the ceiling.[487] Mr Thompson described them as easily demountable and said that it 'took the electrician 5 minutes' to install them.[488] He said they were clipped onto a hook that had been inserted into a wooden beam.[489] Mr Joel stated that they were fixed to the ceiling by unknown means and were hard wired into the house. He considered that a licensed electrical contractor would be required to remove them.[490]
3. Mr Geminder submitted that removal of the chandeliers would leave holes in the ceiling. He relied on the fact that they were the only source of light in the cellar or basement. The Heffernans relied on the fact that the chandeliers were hard wired into the circuitry and were part of the C-Bus system. If they were removed they would have to be replaced with other light fittings.

1. There are two main limbs to the test of whether an item is a chattel or a fixture: first, the objective intention of the party who places the item on the land at the time of installation; and second, the degree of annexation. The objective intention of the person is assumed to be more important than the degree of annexation. Some authorities also pay some regard to the 'affixer's' actual intention.[491] These two matters are applied with the presumption that an item fixed to the land is a fixture, whereas an item resting on the land is a chattel. Though no single factor is determinative, when considering whether an item is a fixture or a chattel, items that are intended to improve the value of the land, and in this way form part of the land, will ordinarily be deemed fixtures.[492] Thus, the question sometimes asked is: has the item been installed for the benefit of the house or for its use and enjoyment alone? I consider that the eight chandeliers were chattels, however, I consider the other items, being the curtains and carpets, were fixtures and thus were owned by the NAB once it became mortgagee in possession and by the Heffernans after their purchase of the property in November 2013.
2. The Thompsons had spent about six years and about $6m in planning and implementing the renovation of the property. They installed the chandeliers, curtains and rugs to improve their home. Mrs Thompson gave evidence that she had planned to live in the home forever and said:

It's the loss of everything to do with the property. I wanted to keep the whole property. If I had to leave I would have taken every part of it that I possibly could. The curtains and the handwoven rugs and the chandeliers were very sentimental to me. They would be a remnant of the home that I could take with me.[493]

However, Mr Thompson was less committed to keeping the home than Mrs Thompson.

1. Where a chandelier is installed in a home and can be detached without damaging either the fabric of the ceiling or the chandelier itself, it is likely to be a chattel. In those circumstances:

there is no affixation of the chandelier to the house; and it is not in any sense part of the structure. Rather, the chandelier retained its intrinsic property as an essentially decorative chattel.[494]

1. While these chandeliers were elaborate and expensive, I consider that the same proposition applies and that they are chattels.
2. However, different considerations apply to the carpets and curtains, even though they may be expensive. They were designed for the house and, in the case of the carpets, were obviously to be walked on by persons living in, or visiting the house.
3. Some guidance can be gained from the observations of Tadgell J in a case concerning a similar issue, although involving carpets that were considerably less expensive than the carpets considered in this case. They were attached to the floor by 'the usual means', being strips of wood along each wall to which nails secured the edges of the carpets to the floors. His Honour addressed the issue in terms which are generally applicable, despite the cost of a particular carpet:

I suppose most carpets which are fixed to a floor of a building are more or less easily removable. Prima facie, I should have thought carpets in a domestic dwelling are put there for the enjoyment of the dwelling, not for the enjoyment of the carpets as such. According to the test to which Adam J referred - it is, I think, a well-known one - the onus lies upon those who seek to disprove that the carpets fixed in a conventional way to the floor of a suburban dwelling are not fixtures.[495]

1. Similarly, the curtains and pelmets were installed for the 'enjoyment of the dwelling' and are to be regarded as fixtures. The pelmets were attached by brackets to the wall. Like the carpets, the curtains were designed specifically for the house and intended to form part of it and assist in 'the enjoyment of the dwelling'. I consider that they are properly classified as fixtures.

1. The causes of action relied on by Mrs Thompson, in conversion and detinue, each require that she establish either that she had possession of the chattels or an immediate right to their possession.[496]
2. Her claim in trespass requires her to establish that she was in possession of the goods, as '[t]respass is a wrong to possession'[497]. But, Mrs Thompson was not in possession, so the claim of trespass to goods cannot succeed. Mrs Thompson leased the property to Mr Geminder, who was entitled to use the items under the lease. The NAB's notice of redirection of rent would appear to involve an adoption of the lease, although the NAB had not formally consented to it.[498]
3. Once the NAB had repossessed the property by serving the notice of redirection of rent, the Geminders paid rent to the NAB and were in possession of any chattels holding them as bailee in possession for the true owner or owners or otherwise for Mrs Thompson who had an immediate right to possession of them.
4. The Heffernans did not become the owner of the property until November 2013, whereupon they became the owners of any fixtures. Mr Geminder gave evidence that the existing lease that he entered into with Mrs Thompson remained on foot, but that it was subsequently varied to extend the time for occupancy until January 2017.[499] The variation deed or agreement was not in evidence. Although it was not developed in argument, the original lease of 19 November 2012 presumably ended once the Heffernans purchased the property in November 2013 and a new lease by the Heffernans would be taken to have commenced.
5. Because of my findings that the carpets and curtains were fixtures, I need only consider the question of the ownership or immediate right to possession of the chandeliers. There was discrete evidence that related to that question.
6. The ballroom chandeliers were purchased from an Armadale antique shop 20 years ago and were installed in the Thompsons' then home at Kooyong prior to their move to the Toorak Road property.[500] The chandeliers installed in the basement were also purchased some years previously and the Thompsons had also used them in their Kooyong home.[501]
7. Mr Thompson said that the two ballroom chandeliers were purchased by the AEA Thompson Family Trust No 3 of which he and his sister, Mrs Malone, were trustees. The plaintiff's third amended statement of claim alleged that the chattels were 'her chattels' meaning Mrs Thompson's chattels and that 'at all material times she had an immediate right to possession of the chattels upon demand'. She submitted that in so far as they were purchased by the trustees of the AEA Thompson Family Trust No 3, they had allowed her to keep them in her possession.
8. The AEA Thompson Family Trust No 3, was established by Mr Thompson's father in about 1990, in order to purchase pieces of art both for investment and to be used by the family.[502] Mrs Thompson believed that the chandeliers belonged to her through the trust.[503] The trustees of the family trust, being Mr Thompson and Mrs Malone, were not joined in the proceeding and made no claim to the items.
9. Mr Thompson gave evidence that he and Mrs Thompson purchased the other chandeliers but that she owned them.[504] There was no document evidencing their purchase. Mrs Thompson's evidence was in some respects contradictory, including that the claimed chattels were owned by the 'AEA Family Trust', but also including statements that she did not know who owned them. Her evidence really was that she believed that the items said to be chattels belonged to her.[505]

1. Mrs Thompson submitted that despite some uncertainty, in the end the trust referred to in relation to the items was the AEA Thompson Family Trust No 3. She also submitted that whether she owned the items in her own right or jointly, or as bailee for a trust, she had the right to immediate possession of them because none of the defendants had a better right to them than she had.
2. Mr Geminder submitted that the Court could not be satisfied that Mrs Thompson was the owner or bailee of the items in dispute and the rightful claimant in tort. Her evidence was unsatisfactory and equivocal and she was uncertain who owned the chattels. In correspondence before trial, her solicitors had asserted that the items were owned by 'the AEA Thompson Trust' or the 'AEA Thompson Family Trust'. In her outline of opening submissions, she contended that the owner of the chattels was 'the AEA Thompson Family Trust No 3' and that she was a 'bailee with an immediate right to possession'. She could not produce the trust deed of any such trust or documents evidencing the purchase of the items. In oral evidence, Mr Thompson said that the AEA Thompson Family Trust No 3 owned only two of the chandeliers and that the remaining chattels were owned by Mrs Thompson despite having been purchased both by him or Mrs Thompson[506] or by both of them.[507] Mrs Thompson gave evidence that she did not know which family trust owned the items but told the Court: 'I believe they are mine'.[508] By solicitors' letter of 23 July 2013, Mr Thompson's trustees in bankruptcy asserted 'an interest as co-owner in equal shares to the chattels located at the property claimed to be owned by the Thompsons'.[509]

1. To succeed in actions in conversion or detinue, Mrs Thompson must establish that she was either in actual possession or had an immediate right to possession of the chandeliers.[510]
2. The evidence of ownership of the chattels was contradictory and lacked coherence. But it is clear that Mr and Mrs Thompson had used the disputed items at the Toorak property since its renovation. The evidence suggested that the Thompsons had purchased all the chandeliers, but that they purchased the ballroom chandeliers previously installed at the Thompsons' Kooyong home for a family trust of which Mr Thompson and Mrs Malone were trustees. The evidence, although lacking in precision, suggests that that family trust was the AEA Thompson Family Trust No 3. However, if that trust owned the two chandeliers, the Thompsons had been permitted to use them for many years and the law would regard them as at least bailees by implication, even in the absence of a written bailment agreement. The Thompsons, therefore, had a right to their immediate possession over any third party. Possession is significant as it is title as against a wrongdoer.[511]
3. The Thompsons' right to immediate possession of the chattels did not end when the NAB repossessed the property. Whether as an owner or bailee, Mrs Thompson had an immediate right to possession of the chandeliers. She and Mr Thompson were registered proprietors of the property. They had had possession of, and used, the chandeliers in the property. If they were chattels, they were either owners of them or, in the case of the two ballroom chandeliers, were bailees of them. If those ballroom chandeliers were owned by the trust, then the trustees allowed Mr and Mrs Thompson to have possession of them. The only evidence before the Court was that the trustees were Mr Thompson and Mrs Malone.
4. Any person who is willingly in possession of goods that belong to another can be considered a bailee. Consent to his or her possession can be implied and a bailment can arise by implication.[512]
5. Mr Thompson, in either the capacity of a trustee or as a joint owner, asserted no interest in the chandeliers. Nor did Mrs Malone, who Mr Thompson said was the other trustee of the family trust.
6. The trustees in bankruptcy, at one point, did assert an interest in the chattels, but did not apply to be joined as a party. Because I have found the chandeliers to be chattels, the Heffernans have no lawful interest in them.
7. A person who has an immediate right to possession has a cause of action in conversion or detinue. One of the joint bailees can bring such an action. They can seek damages or an order for their delivery up. The authors of Clerk & Lindsell On Torts state that a person with a concurrent interest in goods may recover proportionately according to his or her interest. The authors note that at common law the defendant could plead in abatement that the other co-owners ought to have been joined in the action, but that is not so today, since an action no longer falls to be defeated for want of parties.[513] That position is contained in Rule 9.05 of the Supreme Court (General Civil Procedure) Rules 2015 which provides that:

A proceeding shall not be defeated by reason of the misjoinder or non-joinder of any party or person, and the Court may determine all questions in the proceeding so far as they affect the rights and interests of the parties.

1. The Court cannot usually affect the interest of a person who is not a party. But the rights of other persons who may be interested in the chattels should be taken into account, and those persons should be notified before the Court makes final orders for delivery up of the goods. I will return to that issue.

1. The parties and other relevant persons engaged in extensive correspondence about the Thompsons' right to remove the items that they claimed. To determine whether the plaintiff has established her claims in conversion or detinue, it is necessary to describe that correspondence.
2. On 12 July 2013, Mr Thompson sent a text message to Mr Geminder stating that a truck had been organised to 'pick up our furniture and items in the vault'.[514]
3. On 15 July 2013, Ms J Cameron and Ms F Cull of King & Wood Mallesons, on behalf of the Geminders, wrote to Mr Champion stating that the NAB had no objection to Mr Thompson collecting items from the property, which it understood included furniture, appliances and artwork. These could be collected but on the condition that Mr Thompson's trustees in bankruptcy also consented in writing.[515]
4. On 16 July 2013, King & Wood Mallesons wrote two letters to Mr Champion stating that, as they had not had a response to their letter of the previous day, the items would not be available for collection on 17 July and not until they had received written confirmation from the trustees in bankruptcy that they had no objection to the Thompsons collecting the items.[516]
5. On 17 July 2013, Mr Champion wrote to King & Wood Mallesons stating that its correspondence proceeded upon a fundamental misunderstanding and that the items which Mrs Thompson wished to collect were not owned by the Thompsons, but were assets of the AEA Thompson Trust which was established more than 20 years ago, and were until recently held by Mrs Thompson as bailee. Mr Champion stated that by arrangement between Mrs Thompson and Mrs Geminder, until recently, Mrs Thompson had allowed Mr and Mrs Geminder to use those items at their will.[517] The letter asserted that neither the NAB nor Mr Thompson's trustees in bankruptcy had any claims to them and demanded that Mrs Thompson be allowed to collect items from the property. It stated that unless Mr Champion received confirmation by 4pm on 18 July 2013 that the Geminders would not prevent Mrs Thompson collecting the items, she would 'reluctantly assume that your clients are refusing to deliver up possession' to her.
6. On 18 July 2013, King & Wood Mallesons wrote to Mr Champion attaching a list of items that the Thompsons had left at the property that were available for collection. The list did not include the items now in dispute.[518]
7. On 23 July 2013, Piper Alderman, lawyers for Mr Thompson's trustees in bankruptcy, wrote to Mr Champion stating that, absent any evidence to the contrary, the trustees asserted an interest as co-owners in equal shares in the chattels located at the property claimed to be owned by the Thompsons. They required that a representative of their client be in attendance at the time of the removal of the chattels so that they could be properly identified and catalogued. They also requested that the Thompsons provide an undertaking to preserve any such chattels removed and that they be stored at a secure site pending resolution of the claims to them.[519]
8. On 24 July 2013, Mrs Thompson hired a truck to collect items from the property but had to cancel her plans when Ms van Denderen informed her that she could not provide the 'go ahead' for their collection.[520]
9. On 25 July 2013, Mr Champion replied to Piper Alderman's letter.[521] By letter of 30 July 2013 to King & Wood Mallesons, Mr Thompson's trustees in bankruptcy gave an undertaking that they would not take any action against any member, employee, agent or representative of the Geminder family if items included in a schedule to the letter were delivered into the custody or at the direction of the Thompsons.[522] The list of items included three sets of curtains and pelmets, but not carpets or chandeliers.
10. On 31 July 2013, King & Wood Mallesons wrote to Mr Champion attaching a list of items that were available for collection. The list included, under the heading 'vault room or off site', three sets of curtains and pelmets.[523]
11. On the same day, Mr Champion wrote to Thomsons Lawyers listing assets which the NAB was not in possession of, and 'is therefore not in a position to sell'. The assets referred to included chandeliers, drapes and handwoven carpet squares.[524] Mr Champion emailed a copy of the letter to the Heffernans' solicitors.
12. On 31 July 2013, Ms Best, the solicitor for the Heffernans, emailed Thomsons Lawyers stating that she had spoken to Mr Heffernan regarding the letter and that:

I would assume that the current owners would have been given the right to enter the premises to take any goods prior to the auction.

He has asked me to point out that he would expect all fixtures to be included in the sale, and that includes all built in appliances, carpets, drapes and chandeliers. He acknowledges that the Thompsons are entitled to remove furniture and garden pots, and at the expiration of the Lease the current tenants are also entitled to remove whatever goods they have installed.

Can you please request a detailed list from Champions Lawyers of exactly what items the current owners are referring to and the value of same.

At the auction it was mentioned that the current owners may want to remove the chandeliers. The purchasers may agree to this depending on what other items, and the value of same, the current owners are also now claiming.[525]

1. On 6 August 2013, Mrs Thompson emailed Ms van Denderen informing her that removalists would come to the property the following day to collect items and that she would attend to supervise. Ms van Denderen replied that Mrs Thompson was not able to attend.[526] Mrs Thompson said that she was very upset because 'we were being denied our things'.[527] She described the effect on her of not receiving back the curtains, chandeliers and carpets as being very humiliating and upsetting.[528] She said that those items were very sentimental to her.[529]
2. On 7 August 2013, the Thompsons' representatives collected some items from the property, but not the chandeliers, carpets and curtains.[530]
3. On 8 August 2013, Thomsons Lawyers wrote to Mr Champion stating that of the items on his list, they considered that the furniture, chandeliers, drapes and garden pots were chattels and that the appliances and handwoven carpet squares were fixtures.[531] They requested a statement of the basis upon which Mrs Thompson contended that the appliances and hand woven carpet squares were chattels.[532]
4. On 13 August 2013, Thomsons Lawyers wrote to Mr Champion stating that upon any mortgagee sale, the NAB would sell the land including all improvements. They asserted that the NAB's mortgage applied to all fixtures, whether attached before or after the date of the mortgage, and that any fixtures and fittings would pass to the purchaser upon a sale. They further stated that the furniture, chandeliers, drapes and garden pots were chattels and that the appliances and hand woven carpet squares were fixtures.[533] Thomsons Lawyers also stated that it would be necessary for Mrs Thompson to satisfy Mr Thompson's trustees in bankruptcy that any chattels did not vest in the bankrupt estate, and that they required written confirmation from the trustees in regard to that issue.[534]
5. On the same day, Mr Champion replied to Thomsons Lawyers' letter disputing that the appliances or carpet squares were fixtures or that it was necessary for Mrs Thompson to satisfy the trustees in bankruptcy of her ownership. The letter stated:

We do not understand the basis for your assertion that the carpet squares are fixtures. They are items of art, and not in the nature of fixtures. They are not fixed to the floor by conventional means (c/f Westpac v Rabaiov SCV 17 June 1991). They are more in the nature of rugs which are easily moveable and rely on their own weight to remain in possession [...]

The chattels were in the possession of our client prior to the [lease] to Mr Geminder, and your client has no right to interfere with our client's right to possession [...] including imposing conditions upon their return...[535]

1. Mrs Thompson listed the items which she wished to obtain from the property in an email to Ms van Denderen of 23 August 2013. The list included chandeliers, carpets and curtains.[536] Many of the items on that list have since been returned, the only remaining items in dispute are the eight chandeliers, the carpets and the curtains.
2. Ms van Denderen replied to Mrs Thompson that she was not in a position to respond to her requests and that any requests must be communicated through the lawyers.[537]
3. On 23 August 2013, Mr Champion wrote to King & Wood Mallesons stating that their client had no right to retain 'possession of those chattels' and asking for advice as a 'matter of urgency whether your client resists our client collecting the chattels on 28 August 2013'.[538]
4. That day, King & Wood Mallesons wrote to Thomsons Lawyers stating that most of the items that the Thompsons had requested to be returned were fixtures '(for example, the carpets, curtains, lighting, dishwasher and ovens)' and that it would be unreasonable for these items to be removed while Mr Geminder and his family resided at the property. They attached a list of the items that they understood that the Thompsons had requested be returned. They asked to be informed of how Thomsons Lawyers intended to respond to the Thompsons' request to remove items from the property.[539]
5. On 19 September 2013, Thomsons Lawyers wrote to Mr Champion attaching a list of items that they considered were chattels or fixtures.[540] The list attached to the letter stated that the chandeliers, carpet squares, appliances and drapes were fixtures and that as such they would pass to the purchaser of the property. They also stated that the chattels should remain in the property until the expiration of the lease and noted that the mortgagors entered into the lease with Mr Geminder with the chattels in the property. The letter also stated that:

Should your client and Mr Thompson wish to remove the chattels before the lease expires, the onus is on Mr Thompson to obtain the consent of the bankruptcy trustees and make separate arrangements with the tenant.

1. On 21 February 2014, King & Wood Mallesons wrote to Mr Champion, copying the Heffernans' and the trustees in bankruptcy's solicitors, attaching a list which identified the items that the NAB considered to be fixtures or chattels. The letter stated that the items determined by the NAB to be chattels could be collected provided the written consent of Mr Thompson's trustees in bankruptcy was obtained, as well as the written confirmation of the owners of the property stating that they considered the items to be chattels and had no objection to them being collected. The items identified as chattels did not include the chandeliers, curtains or carpets. The letter concluded:

If you contend that the consent of the trustee is not required please inform us of the basis for that contention.

In relation to the items previously determined by the nab to be fixtures, you will need to liaise with the new owner of the Property as to whether they may be removed by your client. [541]

There is no evidence that the Thompsons or Mr Champion replied to this letter.

1. On 23 July 2015, a month before the commencement of the trial, King & Wood Mallesons wrote to all parties, including Mr Thompson's trustees in bankruptcy and the Heffernans' solicitor, regarding the remaining items at the property and the chandeliers, curtains and rugs.[542] The letter stated that as the solicitors had not received a reply to the letter of 21 February 2014 in the ensuing 17 months, they did not know whether Mr Thompson's trustees in bankruptcy had any views on the classification of items contained in the list of items, or whether they asserted that Mr Thompson had any interest in the items at all. Neither Mr Heffernan nor the NAB disputed the classification of items contained in the list as either fixtures or chattels. The letter stated that unless King & Wood Mallesons heard from any addressee of the letter by 29 July 2015, they would proceed on the basis that the addressees accepted the classification contained in the NAB List. The letter stated that Mr Geminder, as the tenant of the property, had no substantive interest in who was the ultimate legal owner of the chattels or fixtures, but that he had 'found himself in the middle of something of a standoff between the potentially interested parties' and that his position remained:

that he makes no claim to possession or ownership of the items in question and that the items should be made available to those who are entitled to possession or ownership of them.

It seems to us that the question of ownership of fixtures is a matter between Mr Heffernan, Mrs Thompson (and, potentially, Mr Thompson's trustees in bankruptcy). It does not concern Mr Geminder in any substantive sense.[543]

The letter contained details of an arrangement for the collection of items identified as chattels.

1. On 7 August 2015, the remaining items claimed by the Thompsons at the property, except for the chandeliers, curtains and carpets, were returned to Mrs Thompson.[544]
2. On 11 and 13 August 2015, Mrs Thompson's solicitor and the Geminders' solicitor exchanged correspondence about her claim to ownership of the chattels.[545]

Was there a conversion or detinue of the chandeliers by Mr Geminder?

1. To commit the tort of conversion or detinue, a person must act inconsistently with the another person's right of possession. As Dixon J stated:

The essence of conversion is a dealing with a chattel in a manner repugnant to the immediate right of possession of the person who has the property or special property in the chattel.

...

An intent to do that which would deprive "the true owner" of his immediate right to possession or impair it may be said to form the essential ground of the tort.[546]

1. Mrs Thompson submitted that the tort of conversion occurred at the time that Mr Geminder told Mr Thompson on 11 July 2013 that he was not going to honour their deal. She was then entitled to immediate possession of the chattels and had then arranged a truck to collect them.
2. Mr Geminder's case was that he did not wrongfully refuse to return the chattels and there was no clear and unqualified refusal. He pointed to the fact that the 'alleged chattels' were located in a property previously owned and occupied by the Thompsons. Mr Thompson's trustees in bankruptcy had claimed an interest in the items and the NAB, which as mortgagee in possession owned the fixtures, had disputed the classification of those items. But Mrs Thompson's lawyers had not responded to their communications. Nor had they responded to the letter from King & Wood Mallesons of 21 February 2014. There was continuing uncertainty about who owned the items if they were chattels. The Thompsons themselves had difficulty in identifying the true owner of the chattels.
3. The Geminders were analogous to stakeholders and would have returned the disputed items to someone with a good basis for claiming them. Mr Geminder gave evidence that he was not involved in decisions about how items were collected or who attended to their collection and did not give any instructions to his lawyers in relation to them.[547]
4. The remedy of ordering delivery up of chattels is only available to a person suing in detinue, following the refusal of an explicit request for the chattels to be returned.[548]
5. Even assuming that Mrs Thompson's request on 23 August 2013 is sufficient at law to form such a demand, Mr Geminder was entitled to demur from her request so as to ascertain any other claims to the items whether by the NAB, the Heffernans or Mr Thompson's trustees in bankruptcy.

1. The plaintiff has not established that Mr Geminder acted inconsistently with her immediate right to possession of the chandeliers or her title to, or property in, the chandeliers or engaged in the torts of conversion or detinue. Mr Geminder was a tenant. Although he did contend that he should be permitted to use the items during his tenancy, he withheld the chattels installed on leased property in circumstances where the NAB as mortgagee had taken possession of the property and while there was a genuine dispute about whether the items were chattels or fixtures. Both the NAB and the trustees in bankruptcy were asserting an interest in the chandeliers. The Heffernans had become the registered proprietors of the property in which the chandeliers were installed. The Thompsons did not reply to King & Wood Mallesons' letter in February 2014, which proposed collection of items said to be chattels. I do not consider that the defences and submissions that Mr Geminder has made in these proceedings can amount to an assertion of title to the items bearing in mind the circumstances of his tenancy and the doubts about the ownership of the chandeliers and the different claims made to them.
2. The plaintiff's claims in conversion or detinue not being established against Mr Geminder means that no issue of the award of damages arises against him. There was evidence of the value of the chattels, of $68,000 which I would have accepted if I was considering awarding damages.[549] I would not have awarded aggravated or exemplary damages, including for psychological stress, because there was uncertainty about the ownership of the items and whether they were chattels or fixtures.

The claim for delivery up of chattels against the Heffernans

1. The Heffernans were joined as parties on their application on the first day of the trial. Mrs Thompson's submissions in respect of the chattels were mainly directed at Mr Geminder. However, she also submitted that an order for the delivery up of the chattels should be made against the Heffernans.[550]
2. The Heffernans' submissions focused on whether the items were chattels or fixtures and I have discussed this issue previously.

1. The Heffernans asserted an interest in the chattels by their solicitors' letter on 31 July 2013, although they were not the owners of the property at that time. In the third amended statement of claim served on the Heffernans, Mrs Thompson has made a demand for the return of the chattels to her. They filed a defence dated 18 August 2015, in which they pleaded that the curtains, carpets and chandeliers were fixtures, and contended in particulars contained in the defence that:

all chandeliers, all curtains, blinds and carpets are fixtures by reason of their degree of annexation and the fact that each was tailored to the specific requirements and layout of the house as determined by Mrs Thompson. Any chattels such as pots, stereo equipment and the like remain the property of Mrs Thompson.

1. Clause 7(b) of the contract for the sale of the property by the NAB, as mortgagee in possession, to them provided that:

The Purchaser acknowledges that the Vendor does not have the right under its Mortgage to sell any Goods on or in the Property and no Goods will pass with the sale of the Land.

The contract did not provide for the sale of any chattels.

1. But, no claim in conversion or detinue was pleaded against the Heffernans, rather an order for delivery up of the items in dispute was sought against them. No point was taken about that and the case against the Heffernans was argued on the basis that it turned on whether the items in dispute were chattels or fixtures. The remedy of delivery up of the chattels is available as a remedy in detinue. The chandeliers, because of their special character and value, are the kind of chattels of which the Court will order delivery up, rather than awarding damages.[551]
2. It appeared that the parties assumed that an order for delivery up of the chandeliers would follow if they were found to be chattels. The Heffernans have allowed the Geminders to use the chandeliers since they became owners of the property in November 2013, under the lease of the property to Mr Geminder. Mrs Thompson demanded the return of the chandeliers at least from the service of the third amended statement of claim. A refusal to surrender goods upon lawful and reasonable demand can be a conversion and detinue of the chattels.[552] However, because of the absence of a claim in the pleadings against the Heffernans in conversion and detinue, I should find no more at this point than that the chandeliers are chattels.
3. I will discuss with the parties the findings that I have made in the claim against the Heffernans before deciding what order I should make affecting them.

1. The plaintiff's claims in tort do not succeed in respect of the curtains and carpets or carpet squares. However, I find that the chandeliers were chattels.

1. I have not determined in this proceeding any claim that Mr Thompson's trustees in bankruptcy may have to the chandeliers, nor have I determined whether Mr Thompson is able to bring any claim for them. Subject to any submissions of the parties, I propose before making orders for delivery up of the chandeliers to give notice to the trustees in bankruptcy of my decision and provide them with an opportunity to make submissions about such an order, if they be so advised.

1. The plaintiff's proceeding against the second and third defendants will be dismissed. The plaintiff's claims against the fourth and fifth defendants in respect of the curtains and carpets or carpet squares do not succeed.
2. I will hear the parties and, if they choose to make submissions, Mr Thompson's trustees in bankruptcy, about the appropriate orders in respect of the plaintiff's claim against the fourth and fifth defendants for orders for delivery up of the chandeliers.

[1] Transcript of Proceedings, Thompson v Geminder Holdings Pty Ltd (Supreme Court of Victoria, S CI 2013 03476, Ginnane J, 17-20, 24-27 August, 2-4, 7-11, 14-17, 21-22 September 2015) 541-542 ('T').

[3] See the findings contained in Sunshine Retail Investments Pty Ltd v Wulff [1999] VSC 415 [52].

[5] Joint expert report by Mr Murray and Mr Hay dated 17 August 2015 and filed 18 August 2015.

[6] Court Book, Thompson v Geminder Holdings Pty Ltd (Supreme Court of Victoria, S CI 2013 03476, Ginnane J, 17-20, 24-27 August, 2-4, 7-11, 14-17, 21-22 September 2015), 543 ('CB').

[10] T 1754 (now named Kin Group Pty Ltd).

[17] Watson v Foxman (1995) 49 NSWLR 315, 319 (McClelland CJ in Eq).

[18] T 404; CB 792.2, 804.

[57] (1893) 6 R 67 and see Evidence Act 2008 s 46.

[58] J D Heydon, Cross on Evidence (LexisNexis Butterworths, 10th ed, 2015) 613 and Bulstrode v Trimble [1970] VicRp 104; [1970] VR 840, 848.

[61] Trade Practices Commission v Mobil Oil Australia Ltd [1984] FCA 238; (1984) 3 FCR 168 (Toohey J) and Seymour v Australian Broadcasting Commission (1977) 19 NSWLR 219.

[64] Ellis v Wallsend District Hospital (1989) 17 NSWLR 553, 587 (Samuels JA); Curwen v Vanbreck Pty Ltd [2009] VSCA 284; (2009) 26 VR 335, 349 [27]; Philippiadis v Transport Accident Commission (2016) 74 MVR 289, [80]-[91].

[71] CB 973. Special condition 12(b) contained a similar provision in respect of the second mortgagees Garry Kevin Malone and Susan Malone, though placing the obligation to gain consent on the Landlords.

[83] Exhibit B, Selected entries from phone records produced by Telstra under subpoena dated 27 July 2015, 55 ('Ex B').

[91] CB 988; the drafting instructions for this document appear to have come from Mr Perkins, CB 976.1-2.

[112] CB 1025, 1026.3, 1026.4.1, 1026.6.

[135] T 1561-2; CB 1048.

[174] T 1579-80; CB 1060.3.

[180] T 1581, 1584-5, 1216-7; CB 1061.1.

[193] T 505-8, 514, 641-4, 851-4, 856-61, 1218-25, 1320, 1586-9, 1727-33, 1778-9, 1828-9, 1834, 1846-7.

[211] This appears to be an error and should have referred to the lease between Mrs Thompson and Mr Geminder.

[214] T 1590-2, 1734, 1835-7; CB 1078.

[240] CB 1109-10 (emphasis in original).

[261] T 1245; CB 1130.

[269] T 1597; CB 1134-1134.1.

[286] T 1598; CB 1157.

[294] T 1600-2, 1786; CB 1184,.

[297] CB 1182, 1185, 1187.1, 1188, 1189, 1193.

[304] T 1605; CB 1197.

[312] T 1608; CB 1201.1.

[317] T 518, 886; CB 1200.1.

[320] T 1617; CB 1205.

[339] T 1623-4; CB 1307.1.

[352] T 1626; CB 1331.5, 1333, 1340.

[353] T 1628; CB 1348.

[362] With copies to Mr T Derham, Mr P Castran and Ms K Cusack.

[388] Thompson v National Australia Bank [2013] VSC 400.

[393] T 1871-2. The context suggests that by the fourth last word Mr Geminder may have intended to say 'lease'.

[404] T 812, 899; CB 459.

[410] T 1292 and Affidavit of Michelle Lykiardopoulos of Thomsons Lawyers of 18 July 2013, [36].

[417] Thompson v National Australia Bank [2013] VSC 400, [42].

[421] T 1111-3; CB 1445.6, 1463.0.2.

[430] T 1445; CB 1467.

[431] Or a higher rate of 13.20% p.a. fixed.

[432] T 1452; CB 1466.6.

[433] [1959] HCA 8; (1959) 101 CLR 298.

[434] The Commonwealth v Verwayen (1990) 170 CLR 394, 412 (Mason CJ).

[436] See Beerens v Bluescope Distributions Pty Ltd (2012) 39 VR 1, 13 [54].

[437] Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd [1982] HCA 53; (1982) 149 CLR 600, 604.

[438] T 1091, 1095, 1108, 1121-2, 1124-6.

[439] T 1118, 1136-7; CB 1445.0.15, 1449.14, 1445.0.22, 1449.1.

[442] Beerens v Bluescope Distribution Pty Ltd (2012) 39 VR 1, 13 [55].

[443] Butt v M'Donald (1896) 7 QLJ 68, 70-1 and Secured Income Real Estate (Australia) Ltd v St Martins Investment Pty Ltd [1979] HCA 51; (1979) 144 CLR 596, 607.

[444] See, Allen v Carbone [1975] HCA 14; (1975) 132 CLR 528, 533.

[445] See, eg, Property Law Act 1958 s 53.

[448] T 1372; CB 1130.

[450] [1954] HCA 72; (1954) 91 CLR 353, 360.

[452] Brooker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd [1982] HCA 53; (1982) 149 CLR 600, 604.

[453] Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd [1994] VicRp 55; [1994] 2 VR 106, 131, 138 (Brooking J).

[454] Vakele Pty Ltd v Assender [1989] ANZ Conv R 462, 463-4.

[455] See also Gentsis v Forty-First Advocate Management Pty Ltd [2004] VSC 398 [82] and Todrell Pty Ltd v Finch (No.1) [2007] QSC 363; (2008) 1 Qd R 540, 555.

[456] John Wakim and Sons Pty Ltd v BBA Industries Pty Ltd [2000] NSWSC 445.

[457] Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640.

[458] Wenham v Ellis [1972] HCA 43; (1972) 127 CLR 454, 471 and Commonwealth of Australia v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64.

[459] This pleading was in respect of estoppel by convention, but it reflects the way in the plaintiff presented all of her case in estoppel.

[460] The plaintiff relied on Donis v Donis [2007] VSCA 89; (2007) 19 VR 577.

[462] Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387, 428-9 (Brennan J).

[463] Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26 [217] (Nettle J) citing Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641, 674 (Dixon J), Moorgate Mercantile Co Ltd v Twitchings [1976] QB 225, 241-242 (Lord Denning MR) and The Commonwealth v Verwayen (1990) 170 CLR 394, 438, 445 (Deane J).

[464] Legione v Hately [1983] HCA 11; (1983) 152 CLR 406, 435-7.

[465] Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26 [35] ( French CJ, Kiefel and Bell JJ) citing Low v Bouverie [1891] 3 Ch 82, 113.

[466] Ibid, [39] (French CJ, Kiefel and Bell JJ).

[468] Ibid [158] (Keane J) citing Sidhu v Van Dyke [2014] HCA 19; (2014) 251 CLR 505, 522-3.

[469] Sidhu v Van Dyke [2014] HCA 19; (2014) 251 CLR 505.

[470] Jordon v Money (1854) 5 HLC 185; 10 E.R. 868.

[485] For example, Mrs Thompson installed her favourite chandeliers in the Ballroom (T 1195.2).

[491] Butt, Land Law (Lawbook Co, 6th ed 2010), 44.

[492] Butt, Land Law (Lawbook Co, 6th ed 2010), 429 [15 248]; see also Anthony v The Commonwealth (1973) 47 ALJR 83; Re Cancer Care Institute of Australia Pty Limited (administrator appointed) [2013] NSWSC 37; London Borough of Tower Hamlets v London Borough of Bromley [2015] EWHC 1954; and Agripower Barraba Pty Ltd v Blomfield [2015] NSWCA 30; (2015) 317 ALR 202.

[494] Park v Lasrado [2005] QSC 211; see also, The State of Victoria v Tymbrook Pty Ltd [2008] VCAT 965.

[495] Westpac Banking Corporation v Rabaiov (1991) V ConvR 54-412.

[496] See Balkin and Davis, Law of Torts (LexisNexis Butterworths, 5th ed, 2013), 61, 94, 101.

[497] Penfolds Wines Pty Ltd v Elliott [1946] HCA 46; (1946) 74 CLR 204, 224 (Dixon J).

[498] See clause 5.1 (c)(ii) of the Memorandum of Common Provisions; cf Section 77(4) of the Transfer of Land Act 1958 and Figgins Holdings Pty Ltd v SEAA Enterprises Pty Ltd [1999] HCA 20; (1999) 196 CLR 245.

[510] Penfold Wines Pty Ltd v Elliott [1946] HCA 46; (1946) 74 CLR 204, 226, 229 (Dixon J).

[511] See, Norman Palmer, On Bailment (Sweet & Maxwell, 3rd ed, 2009) 321.

[513] See, Michael A Jones et al (eds), Clerk & Lindsell On Torts (Sweet & Maxwell, 20th ed, 2010) 1135 ('Clerk & Lindsell').

[544] Plaintiff's final written submissions, [364].

[546] Penfold Wines Pty Ltd v Elliott [1946] HCA 46; (1946) 74 CLR 204, 229.

[548] Clayton v Le Roy [1911] 2 KB 1031, 1050; Bristol Airport Plc v Powdrill (No2) [1990] Ch 774, 769 and Tavoulareas v Lau [2007] EWCA Civ 474; and Norman Palmer, On Bailment (Sweet & Maxwell Thomson Reuters, 3rd ed, 2009), 73-5 and 83.

[549] Ex F, Report of Warren Joel; and see also, Semenov v Pirvu [2011] VSC 605.

[551] Clerk & Lindsell, above n 513, 1158-9.

[552] Pratten v Pratten [2005] QCA 213, [60]-[61].