SE Ware Street Dev Pty Ltd v Gable Australia Pty Ltd

District Court of NSW|2023-11-23|Before: Mr P

JUDGMENT

On 10 February 2021 the plaintiff, SE Ware Street Dev Pty Ltd, paid to the defendant, Gable Australia Pty Ltd, the sum of $242,000 in connection with a proposed loan from a third party financier to the plaintiff. The defendant procured, or was the broker of, the loan to the plaintiff. No loan agreement was ever executed with the financier and the loan monies were never advanced. The plaintiff says that $132,000 of the monies paid were refundable by the defendant to it pursuant to an express term in an oral agreement struck on 8 February 2021 or, alternatively, as money had and received. It makes no claim for the balance of $110,000, which, it is agreed, was a non-refundable application fee forwarded by the defendant to the financier.
The defendant denies that any monies are refundable. It relies on what it says was an anterior oral agreement struck on or about 15 January 2021, with the effect that the payment of $132,000 comprised 50% of a non-refundable origination fee payable by the plaintiff to the defendant.
The issues to be determined by the Court may be summarised as follows: 1. What was said at meetings alleged to have taken place on each of 15 January, 30 January and 8 February 2021. 2. Was a contract formed, at any stage, for the provision by the defendant to the plaintiff of loan origination services. 3. What were the terms of any such contract, in particular, was any origination fee refundable to the plaintiff if the loan did not proceed, or was the defendant's right to retain the origination fee an accrued right which could not be affected by any subsequent failure of the loan agreement to eventuate. 4. If no contract is established, whether the plaintiff is entitled to recover the sum of $132,000 from the defendant as money had and received.

The parties and their representatives

The plaintiff was incorporated on 3 September 2014, with Mr Juanas and Mr Sam Fayad as directors. Mr Remon Fayad, Sam Fayad's son, became a director in November 2017. Both Mr Fayad Sr and Mr Fayad Jr have ceased as directors, Sam on 17 February 2017 and Remon on 12 May 2021.
In these reasons, when I refer to Mr Fayad, I am referring to Sam Fayad unless indicated otherwise.
Mr Juanas remains the sole director, secretary and non-beneficial owner of the entire issued share capital of 1,000 shares in the plaintiff.
Mr Juanas is a pharmacist, and has known Mr Fayad for several years. At the relevant time, he had no experience in commercial property development and, it seems, little understanding of business. He relied on Mr Fayad to arrange finance for the Ware Street project. He became suspicious of Mr Fayad over the following months and the two fell out over what Mr Juanas believed was Mr Fayad's wilful failure, over a period of years, to pay monies owed to the National Australia Bank in connection with the Ware Street project. Mr Juanas had personally guaranteed payment of those monies and came to believe that Mr Fayad's misconduct exposed him to significant personal liability. According to Mr Juanas, the Ware Street project foundered for this reason.
Mr Karam, the plaintiff's accountant, conducts an accountancy practice and has known Mr Juanas for over 20 years. He also knew Mr Fayad. Mr Juanas relied heavily on Mr Karam to provide advice in relation to all of his financial affairs.
The defendant was incorporated on 26 October 2014 and, according to Mr Singh's affidavit evidence, provides commercial and financial consultancy services, including financial brokerage services. In his oral evidence, Mr Singh resiled from his evidence that the defendant provided brokerage services, however, I consider that its role in the transaction before the Court was as Mr Singh originally admitted in his affidavit.
Mr Singh also had a financial interest in the Car Spa Carwash and café at Parklea (the "Carwash"), where meetings took place and business was transacted. Mr Singh and Mr Fayad had known each other for a long time, with Mr Singh having assisted Mr Fayad in raising finance for Dyldam companies engaged in development and construction projects in the past.
Mr Singh did not know Mr Juanas, Mr Karam or Remon Fayad as at early 2021.

The meeting of 15 January 2021

According to Mr Singh, he and Mr Fayad met at the Carwash on 15 January 2021, where Mr Fayad was a regular visitor. Although they had done business together before, this was the first occasion on which the Ware Street project was discussed. The key issue, for the purpose of the current proceedings, was what was discussed with respect to the defendant's fees. In his oral evidence in chief, Mr Singh stated: Q. Generally, the conversation was about funding in respect of a development. To the best of your recollection, can you recount for the benefit of the Court, the words actually used by yourself and Mr Fayed in respect of that conversation. A. Exact words were like, you know, he wanted ‑ he said, "Gary, can you get me a loan for the Fairfield site?" And, you know, I said, "How much you want? What's the project?" and he explained me, you know, this is units ‑ developing units." Q. Can I just stop you there. You're sort of paraphrasing because you're saying "he explained". To the best that you can, put it in terms of "he said". Okay. Sam said that that's a development site in Fairfield, needed funding for the project, and at that time, they ‑ Sam asked that he needs about 17 million to finish the project, and I said that, "yes, we can get it from RF Eclipse, if you want me to do it", and then he said, "yeah, that should be good. RF Eclipse is okay", and I said that, you know, my ‑ just normal, my 2% origination fee is there. Q. What was his response to that? A. He said that's fine.
Mr Singh then initiated contact with RF Eclipse.
There is no evidence that Mr Fayad ever discussed the 15 January meeting with Mr Juanas, although I infer that at some point he must have informed Mr Juanas that he had taken steps to procure finance for the Ware Street project.

The Term Sheet and the tax invoice

On 28 January 2021, RF Eclipse issued a Term Sheet to the plaintiff in respect of the proposed facility (the "Term Sheet"). The Term Sheet was addressed to the plaintiff, care of the defendant. Relevantly, the Term Sheet provided: 1. The Facility Limit was $17 million. An Establishment Fee was payable to RF Eclipse, calculated at 2.00% of the Facility Amount plus GST, on the date of the Advance and to be deducted from the Advance. 2. An Application Fee of $100,000 plus GST was "payable on acceptance of the Term Sheet" and would be "credited towards the Establishment Fee on the date of the Advance". 3. Commission for introduction of the loan was contemplated as follows: The Financier may pay a fee or commission for the introduction of this loan. These fees and/or commissions are an expense to the Financier. They do not affect any fee or charge payable by you to any mortgage originator in accordance with any arrangements you have reached with the mortgage originator. The Financier may also pay or receive other commissions, fees or benefits in connection with this transaction. 1. The Term Sheet was available for acceptance by the Borrower up until close of business on Friday, 5 February 2021. It was not, of itself, a commitment to lend. 2. Significantly, for the purpose of the present dispute, the mechanism for acceptance of the Term Sheet was specified as follows: Acceptance Should you wish to request Eclipse proceed [sic] with obtaining formal credit approval under the general terms and conditions outlined in this non-binding term sheet, please sign where indicated below and arrange to transfer the non-refundable sum of $110,000.00 (GST INCLUSIVE) on account of the Application Fee to the following account: [emphasis in original] [Details of Commonwealth Bank account in the name of RF Eclipse Limited set out]
On 29 January 2021 Mr Singh prepared a tax invoice ("the Invoice") to the plaintiff, which included the following entries: Loan Application Fee (Non refundable): $100,000.00 As per accepted in signed Term sheet Loan originating Fee from R F Eclipse @ 2%: $340,000.00 GST: $44,000.00 Total: $484,000.00

The invoice payment terms called for immediate payment on acceptance of the term sheet and for payment into a Westpac account of the defendant.
Mr Singh says that he provided the Invoice to Mr Juanas, Mr Fayad and Remon Fayad at a breakfast meeting at the Carwash on 30 January 2021. He gave the following evidence in chief of that meeting: Q. Moving forward to the morning of 30 January 2021, you say you met Sam, Remon and Elias at Car Spa so that the term sheet could be discussed and signed. Can you describe what, if any, explanation you gave in respect of the term sheet. A. On the 30th, when they all came together for the breakfast and we ‑ I said, "look, this is the term sheet I've printed or the term sheet for to be signed". I explained all the terms, that 17 million is there, we have to follow the QS report and all those things. It's credit committee approved. The term sheet is credit committee approved. That means look, money is able to be withdrawn, and as soon, I said I want to be paid my 2% origination fee and I need that to be ‑ and the establishment fee as well on top, so that we can proceed with the loan. Q. Paragraph 11. At the same meeting, you had a conversation with Sam, Remon and Elias regarding whether or not you would forward the credit request and your fee. Do you recall, again, to the best of you recollection, what you said and what either Sam, Remon and/or Elias said in response? A. Everyone agreed, and I‑‑ Q. Sorry, I'll stop you there. You need to say what you said and then you need to say what they said. A. Yeah. I said to them that I attached my tax invoice as well, with the term sheet, and I told them my tax invoice has to be paid as well so I can pay RF Eclipse and get the loan ‑ proceed the loan, and everyone was ‑ accepted the term sheet and accepted it. I said now terms to be expected that this invoice is payable, and everyone - Same [sic], Remon and Elias, they all agreed that it's payable. Q. How did they indicate their agreement? A. It's just a verbal conversation going on, that's it. Q. Again, can you use the words, to the best of you recollection, how they indicated their agreement? A. They said, "yes, agreed".
Mr Juanas denied that Remon was at the meeting or that Mr Singh had spoken about his fees or an invoice. However, on 30 January 2021 each of Mr Juanas and Mr Remon Fayad signed the Term Sheet on behalf of the plaintiff, as both borrower and mortgagor and in their personal capacities as guarantors. I accept that Mr Remon Fayad was at the meeting and that Mr Singh provided Mr Juanas and Mr Remon Fayad with the Invoice on that occasion and asked that it be paid.

Events leading up to 8 February 2021

On 2 February 2021 Mr Singh sent an email to Mr Juanas and Mr Remon Fayad, asking each of them to "remit [their] shares to the [defendant's Westpac bank account] to finalise the loan for the SE Ware Pty Ltd [sic]".
Mr Juanas erroneously believed that the 2 February 2021 email was a second invoice and sent it, the Term Sheet and the Invoice to Mr Karam, and asked him if he thought it was in order. Mr Juanas was reluctant to make any payment without the imprimatur of Mr Karam. Mr Karam reviewed the Term Sheet and Invoice and saw that they did not appear to correspond. The Term Sheet provided for payment of an "establishment fee" to the financier of 2% out of the advance, which he noted was the usual way in which such things were done. The Invoice, however, referred to an "Loan originating Fee from R F Eclipse @ 2%", payable on acceptance of the Term Sheet.
At 2:10pm on 4 February 2021, Mr Karam sent an email to Mr Singh, introducing himself as the accountant for the plaintiff and offering his assistance in achieving the requested finance. He noted that the Term Sheet provided for a non-refundable application fee of $100,000 plus GST and what he described as "a further 2% origination fee payable on the date of the advance" and deductable from it. While agreeing to the application fee, he queried the origination fee, which was not mentioned in the Term Sheet. He asked about the defendant's role and for the defendant to shed light on the contractual relationship between it and RF Eclipse. He also asked for a revised invoice which was confined to the non-refundable application fee of $100,000 plus GST.
Some five minutes later, Mr Singh responded, "That's the arrangement I have with Sam for every deal I get him through. Anyway don't worry for the $110,000.00 as well as the deal has been void already now". Mr Singh denied in cross-examination that this was a "dummy spit", but he did say that he had seen no reason to continue to do the work if he was not going to get paid.
At 2:16pm Mr Karam wrote to Mr Juanas and Mr Fayad. It is likely he sent this email before receiving the 2:15pm email from Mr Singh. Mr Karam asked both of them to remit money for the Establishment Fee ($110,000.00) to the plaintiff's bank account so it could be transferred from that account to the defendant or to "Eclipse". He noted that Mr Juanas would fund payment of the full Establishment Fee "for now". He noted he was waiting for a revised invoice from the defendant in accordance with his 2:10pm email to Mr Singh.
At 3:05pm Mr Fayad sent an email saying, "So gable 100k", to which Mr Singh responded three minutes later, "Boss I seriously don't need anything". At 3:10pm Mr Fayad sent another email to Mr Singh saying, "Need to understand it!! 100k arrangement fee?" Mr Singh responded: "Boss Arrangement fee is 2% of loan. So his share was 170k plus gst and application fee share was 50k plus gst algothar [sic] he suppose to pay 242k".
There was evidently considerable confusion on the part of Mr Fayad and Mr Karam. Mr Karam had not seen any document which entitled the defendant to any fee, so he mistook the "originating Fee" in the Invoice for the Establishment Fee (which was also 2% of the Advance). This was understandable given that Mr Singh described the fee in the invoice as a "Loan originating Fee from R F Eclipse" in the same sum as RF Eclipse's Establishment Fee. In Mr Karam's experience, the fee normally payable to the lender was paid out of the advance, and this was consistent with the Term Sheet. If RF Eclipse was entitled to any other fee, as the Invoice suggested, this was not identified in the Term Sheet.
Mr Fayad also did not understand how the defendant was to be remunerated, believing, at first, that the defendant's fee was to be $100,000.00. In any event, Mr Singh's emails indicated that he was no longer prepared to act in the transaction.
In light of the evident confusion on 4 February 2021, and the prospect that the proposed funding arrangements would founder altogether, it appears a meeting was appointed for 8 February 2021. Mr Karam says that he attended the meeting together with Mr Fayad and Mr Singh.
In his affidavit evidence, Mr Karam says a conversation to the following effect took place: Gary: For a deal to be back on the table, it is required that there is a 2% establishment fee for RF Eclipse payable on the date of the advance. A further 2% establishment fee is payable immediately to Gable Australia Pty Ltd, which is refundable in the case that the loan does not go through for any reason. As well as an application fee of $100,000 payable immediately to RF Eclipse which is non-refundable. Karam: I will put this in an email to my client for their approval, and if they agree we will have the money to you as soon as possible.

In his affidavit, Mr Singh initially denied saying the words "which is refundable in the case that the loan does not go through for any reason" but he did not deny attending the meeting. In his oral evidence, Mr Singh variously could not recall any such meeting and denied attending any such meeting at all but eventually conceded that he may have participated in such a meeting by telephone.
At 4:36pm on 8 February 2021, Mr Karam sent an email to Mr Juanas, Mr Fayad and Mr Juanas's son, Kristian Juanas, whom Mr Juanas hoped to get involved in the Ware Street project. In that email, Mr Karam stated: I have just finished meeting with Sam and Gary from Gable Australia Pty LTD. Gary confirmed to me that there will be 2% for Gable Australia Pty Ltd in addition of the 2% Establishment Fee of Rf Eclipse payable on the date of the advance. The 2% that Gable Australia Pty Ltd is charging is refundable in case the loan didn't go through for any reasons.
Mr Karam went on to discuss required next steps to secure the finance. There is no evidence that Mr Fayad, who was present at the meeting, ever disputed the contents of this email.

Events subsequent to 8 February 2021

On 10 February 2021 Mr Singh had a further conversation with Mr Fayad. He described the conversation, in his evidence in chief, as follows: Q. On 10 February, you say you had a conversation again with Sam Fayed about the deal, as you've described it. Can you, again, to the best of your recollection, put into direct speech what that conversation involved. A. 17 February? Q. Tenth. A. 10 February, I just said that, you know, I haven't received any money yet, and now, you know ‑ and basically, we were thinking the deal is not going through, but Sam had confirmed "no, no we'll pay you and you should proceed with the deal". Q. Did Sam indicate when you would be paid? A. He said, "we are paying today". Q. The whole amount? A. The whole amount ‑ he discussed that "can we give you at the moment some less money and I'll pay you bit later; at the moment, just start the loan", so I said, "okay, pay me at least half of it and then I can proceed and work on it, and then rest, I can work out with you later".
On the same day, the plaintiff paid the sum of $242,000.00 into the defendant's Westpac bank account. The defendant remitted $110,000.00 to RF Eclipse shortly thereafter.
On 19 February 2021 RF Eclipse issued to the plaintiff, again care of the defendant, a conditional offer in respect of the loan facility agreement contemplated by the Term Sheet. That conditional offer was accepted by Mr Remon Fayad and Mr Juanas on a date that is not in evidence. Payment of the $100,000 (plus GST) Application Fee had been made, as was noted in the conditional offer.
On 16 March 2021 RF Eclipse issued to the plaintiff, again care of the defendant, a revised conditional offer in the sum of $18 million. The increased sum reflected variations required by reason of a quantity surveying report. The defendant was the point of contact between RF Eclipse and the plaintiff for communication of the offer and communication of its acceptance.
Sometime between March and May 2021, the plaintiff decided that the Ware Street project would not go ahead. The Fayads, by late May 2021, had both resigned as directors of the plaintiff and the loan from RF Eclipse was never executed. Mr Juanas gave evidence that the reason was his lack of trust in Mr Fayad as set out in paragraph 10 above.
On 9 December 2021 the plaintiff, by its solicitors, sought a refund of what they described as an "Establishment/Originating Fee of $340,000 (plus GST)" in the erroneous belief that Mr Fayad had also made a payment towards the origination fee as contemplated in Mr Singh's 2 February 2021 email and as he stated at the 8 February 2021 meeting. The demand confused the Establishment Fee contemplated in the Term Sheet and the defendant's origination fee identified in the Invoice and discussed at the 8 February 2021 meeting.

Determination of facts in contest

Where proof of a fact is required: "the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality": Helton v Allen (1940) 63 CLR 691 at 712; Briginshaw v Briginshaw (1938) 60 CLR 336 at 361.
In Nguyen v Cosmopolitan Homes [2008] NSWCA 246 at [55], McDougall J summarised the position as follows: (1) A finding that a fact exists (or existed) requires that the evidence induce, in the mind of the fact-finder, an actual persuasion that the fact does (or at the relevant time did) exist; (2) Where on the whole of the evidence such a feeling of actual persuasion is induced, so that the fact-finder finds that the probabilities of the fact's existence are greater than the possibilities of its non-existence, the burden of proof on the balance of probabilities may be satisfied; (3) Where circumstantial evidence is relied upon, it is not in general necessary that all reasonable hypotheses consistent with the non-existence of a fact, or inconsistent with its existence, be excluded before the fact can be found; and (4) A rational choice between competing hypotheses, informed by a sense of actual persuasion in favour of the choice made, will support a finding, on the balance of probabilities, as to the existence of the fact in issue.
Ordinarily, documentary evidence, both of a primary or secondary (contemporaneous or near contemporaneous) character, in particular if unguarded or neutral in origin, ordinarily will be attributed greater probative weight than viva voce evidence ventilating a recollection of conversation, conduct, observation or perception: Nguyen.
The key factual disputes between the parties concerned the alleged meetings of 15 January, 30 January and 8 February 2021. None of the witnesses gave wholly satisfactory evidence. Mr Karam had perhaps the clearest recollection, but to some extent the reliability of his recollection was undermined by his confident denial that he had ever read the affidavit of Mr Fayad, when he had sworn to the contrary in his own reply affidavit, sworn only a day earlier. Nevertheless, as his evidence is corroborated by contemporaneous documents, I have preferred it to the extent of any factual dispute with Mr Singh.
In my view, neither Mr Juanas nor Mr Singh gave completely reliable evidence. In Mr Juanas's case, his recollection appeared to be poor, and it is likely that he did not understand the relevant communications well enough at the time to be able to recall the actual conversations that took place. In Mr Singh's case, I consider that his recollection has been distorted through the prism of his self-interest, as discussed in Watson v Foxman (1995) 49 NSWLR 315 at 318-319.
Mr Singh's account of the 15 January 2021 meeting was neither contested nor corroborated. Nevertheless, subject to one qualification, the version he recalled in his oral evidence appears to me to accord with the probabilities: he and Mr Fayad had dealt with each other before and it is likely that the meeting involved little more than a description of the project and the required funding. The qualification relates to Mr Singh's reference to a 2% originating fee payable to the defendant. It is questionable whether Mr Singh would have specified that such a fee was payable when he and Mr Fayad had a history of dealing with each other. Nevertheless, I am prepared to assume that such a conversation took place for the purpose of these reasons.
In his account of the 30 January 2021 meeting at the Carwash, Mr Singh says that he expressly indicated that a 2% originating fee was payable to the defendant in addition to the 2% Establishment Fee payable to RF Eclipse, and that this was understood and accepted by the plaintiff's representatives, Mr Juanas, Mr Fayad and Mr Remon Fayad.
I do not accept this evidence. Mr Juanas denied the alleged conversation and, leaving to one side the contested accounts of the witnesses, Mr Singh's account neither conforms with the probabilities nor appears likely in light of the objective contemporaneous evidence.
First, the Invoice itself elided the distinction between the Establishment Fee payable to RF Eclipse and the origination fee payable to the defendant. Secondly, and relatedly, there was obvious confusion on the part of the plaintiff's representatives as to what the fee structure would be. By his emails of 4 February 2021, Mr Fayad, who had, on Mr Singh's account, long experience in dealing with him, demonstrated that he did not understand the fee arrangements to be as allegedly discussed only five days earlier. Mr Juanas did not understand them to have the effect contended for by Mr Singh, and did not communicate them to Mr Karam. Mr Karam, relying on the Term Sheet and Invoice themselves, did not understand the arrangements between RF Eclipse and the defendant or the fees payable by the plaintiff when he opened communications with Mr Singh on 4 February 2021.
The lack of understanding of the plaintiff's representatives of the terms of the defendant's remuneration indicates to me that there was no conversation on 30 January 2021 to the effect that the defendant would be entitled to a 2% originating fee as alleged.
However, even if I were to accept that it had been discussed, there is nothing in the evidence that indicates that the fee would be non-refundable. It was not established that there was an express term of the agreement between the parties that the origination fee would be non-refundable.
Mr Singh's initial response to Mr Karam's enquiry of 4 February 2021 was to say the deal was "void", which I find had the effect that any extant contract between the plaintiff and the defendant was terminated. His evidence of his 10 February 2021 conversation with Mr Fayad indicates that he believed any transaction entered prior to the 8 February 2021 meeting had been terminated and he was awaiting word from the plaintiff that it would proceed.
It accords with the probabilities, in light of the email traffic of 4 February 2021 and the 10 February 2021 conversation, that the parties met to discuss the fee structure in respect of the proposed facility agreement. I accept Mr Karam's evidence that the 8 February meeting took place. I also accept his account of the meeting itself, which was recorded in a contemporaneous email sent to Mr Juanas, Mr Juanas's son and Mr Fayad. Critically, Mr Karam recorded that the fee payable to the defendant would be refundable if the loan from RF Eclipse did not go ahead.
The email from Mr Karam was a contemporaneous record, so its contents were fresh in the memory of its author when written. Mr Karam understood the transaction. There would have been no reason for Mr Karam to misrepresent the terms of the meeting to his own client, who would ultimately decide whether to proceed with the transaction based on the report of what had been said at the meeting. The fact that the email was also sent to Mr Fayad, a participant in the meeting as well as a representative of the plaintiff (and that there is no evidence that he queried Mr Karam's account), lends further support to its veracity.
Accordingly, I accept that on 8 February 2021, it was discussed between the parties that a 2% origination fee would be payable by the plaintiff to the defendant on acceptance by the plaintiff of the terms of the Term Sheet, and that Mr Singh said that the fee would be refundable to the plaintiff if the loan transaction did not proceed for any reason.

Was there a contract and, if so, on what terms?

As I have indicated above, I have found that immediately prior to that meeting there was no extant agreement between the parties as to the payment to the defendant of any origination fee. The evidence, in particular the email exchanges of 4 February 2021, shows that between 30 January and 8 February 2021 there had been no clear communication by the defendant to the plaintiff of the basis for its Invoice. There was no discussion to that effect on 15 January 2021. I do not accept the proposition that those terms had been discussed and agreed on 30 January 2021. While the defendant invoiced on the basis of 2% of the Advance, payable on acceptance of the Term Sheet, I do not find that there was an agreement to that effect at that time.
In my view, the terms of the discussion on 8 February 2021 constituted an oral offer for the defendant to procure finance for the plaintiff from RF Eclipse in the sum of $17,000,000 on the basis that the defendant would be paid a refundable origination fee calculated at 2% of the advance. The refund was to be payable if the facility not being proceeded for any reason.
I accept that the plaintiff paid the sum of $242,000 to the defendant on 10 February 2021 in reliance on Mr Karam's report of what had been said at the meeting of 8 February 2021, and that Mr Fayad's communication with Mr Singh on 10 February 2021 was made on the same basis. This was acceptance of the offer comprised in Mr Singh's statements at the meeting of 8 February 2021.
Mr Horobin, on behalf of the defendant, submitted that even if the plaintiff's evidence were accepted in respect of the 8 February 2021 meeting, the statements made by the parties were not capable of constituting the terms of an enforceable contract because: 1. There was already an extant oral contract between the parties comprised in the conversations of 15 and 30 January 2021. That contract provided that the origination fee of $374,000 (including GST) was payable on acceptance of the Term Sheet and by express agreement was not refundable; 2. By its execution of the Term Sheet on 30 January 2021, the plaintiff had accepted the Term Sheet and, consistent with the Invoice, the defendant had an accrued right to payment of its origination fee; and 3. Because the defendant had an accrued right and had performed its obligations under the oral agreement already reached, the 8 February 2021 conversation was ineffective to vary it in the absence of consideration. "Consideration" was, by 8 February 2021, past consideration which could not ground any obligation undertaken on that day. The best the plaintiff could hope for, in the circumstances, would be an estoppel, which had not been pleaded.
As set out above, I have not accepted the factual premise for Mr Horobin's submissions. I have found that there was no extant contract as at 8 February 2021 pursuant to which the defendant could have had an accrued right to a non-refundable origination fee. I am also unable to accept his submissions for the following reasons: 1. Mr Horobin relies on Private Mortgages Australia Pty Limited ACN 600 628 813 as trustee for the PMA Trust v Stever [2019] NSWSC 462 where a borrower was held liable to pay an originator fee notwithstanding the failure of a loan facility to proceed. The present case is distinguishable from that case, where there was an unambiguous express written term to the effect that if the loan did not proceed, the borrower would, nevertheless, be liable for the whole of the fees set out in the letter of offer, which included an originator fee. That is not the case here. 2. In the absence of an express oral term, there was no plea, and no evidence, of industry practice to which both parties subscribed or a course of dealing by which such a term could be either implied or incorporated as a matter of practice. I excluded, on the basis of s 135 of the Evidence Act 1995, a statement by Mr Singh, in his only affidavit, served a mere two days before the hearing, in which he purported to give evidence to the effect that he had been paid, in the past, a 2% origination fee by other borrowers associated with Mr Fayad on the basis that payment was not contingent on the loan proceeding. That evidence was potentially unfair and, in any event, unpersuasive, given that it was a global assertion in which there was nothing to indicate which transactions were being referred to, how the relevant term was struck, and whether there were ever any occasions on which a loan did not proceed and the defendant was, nevertheless, entitled to retain an origination fee. 3. The Invoice, itself, demonstrated a clear distinction between the Application Fee, payable to RF Eclipse, which was expressly described as non-refundable, and the origination fee, which was not so described. While not conclusive, the Invoice is a further indication that there was no discussion or practice as between the parties to the effect that an origination fee was to be a non-refundable payment to the defendant. 4. Even if I were to accept that the usual terms of the defendant's dealings with entities associated with Mr Fayad required the payment of a non-refundable origination fee, if there had ever been an agreement to that effect in the present case, that agreement had been terminated by the defendant on 4 February 2021. This was established by Mr Singh's communication on 4 February 2021 that the deal was "voided" and his refusal to do any more work on the transaction. It was corroborated by Mr Singh's own evidence of his subsequent conversation with Mr Fayad on 10 February 2021, in which he expressed doubt as to whether the deal would "go through".
I have further found that, in any event, there could have been no accrued right to payment that vested in the defendant on the occasion of the plaintiff's execution of the Term Sheet on 30 January 2021. Mr Horobin submitted that such a right accrued as the Invoice recorded that the full amount therein was payable "on acceptance" of the Term Sheet. However, as Mr Jucha, counsel for the plaintiff, pointed out, the Term Sheet specified the manner in which it was to be accepted, which included payment of the Application Fee. Merely signing the Term Sheet was not enough. Until payment was made, the Term Sheet had not been accepted. Until the Term Sheet was accepted, no right to payment of the origination fee, even on the defendant's own case, could have accrued.
Accordingly, the defendant's argument that there was an accrued right to payment of the origination fee as at 30 January 2021 must fail.
Finally, I do not accept the contention that there is no basis to find any consideration in the promises made at the meeting on 8 February 2021. The defendant still had work to perform in order to perform the origination services: Mr Singh expressly held back the signed Term Sheet from RF Eclipse until he had received payment. Similarly, the plaintiff had not accepted the Term Sheet, and did not do so until after it had received a promise from Mr Singh, on the defendant's behalf, that the remaining work would be performed and the origination fee would be refunded if the loan did not proceed. This is a sufficient exchange of promises to establish consideration for a contract.

Money had and received

In light of my findings as to the existence and terms of a contract, there is no basis for a finding on the restitutionary basis of money had and received.

Conclusion

It follows that I have found that the terms of the contract between the parties were that the plaintiff would pay an origination fee to the defendant on acceptance of the Term Sheet, but the origination fee would be repayable to it in the event that the loan contemplated under it did not proceed for any reason. The plaintiff accepted the Term Sheet and paid the origination fee to the defendant on 10 February 2021. The loan did not proceed.
Accordingly, the evidence establishes that the plaintiff is entitled to a refund of $132,000 by way of damages or as a debt due under the contract, as identified at paragraph 14 of the Further Amended Statement of Claim.

Costs

As the plaintiff has been successful, and costs ordinarily follow the event, I will also order that the defendant pay the plaintiff's costs as agreed or assessed, on the ordinary basis.

Interest

The plaintiff also claims interest under s 100 of the Civil Procedure Act 2005 (NSW) in the sum of $17,984.55. The plaintiff did not, however, provide the Court or the defendant with the basis for its calculation of that claim.
Interest is within the discretion of the Court and I will order interest to be paid on the sum of $132,000.00, calculated to accrue from 9 December 2021 until judgment at court rates. This amounts to $15,498.61. An appendix setting out the calculation is attached to these reasons.

Orders

The orders of the Court therefore are: 1. Judgment for the plaintiff against the defendant in the sum of $147,498.61 inclusive of interest. 2. The defendant to pay the plaintiff's costs of the proceedings on the ordinary basis as agreed or assessed.

APPENDIX Start Date End Date Days Rate Amount Per Day Total (%) ($) ($) 9 December 2021 31 December 2021 23 4.1 14.8274 341.03 1 January 2022 30 June 2022 181 4.1 14.8274 2,683.76 1 July 2022 31 December 2022 184 4.85 17.5397 3,227.31 1 January 2023 30 June 2023 181 7.1 25.6767 4,647.48 1 July 2023 4 December 2023 157 8.1 29.2932 4,599.02 Total 15,498.61

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 05 December 2023

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Judgment (18 paragraphs)

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Legislation Cited (1)

Cases Cited (5)