Sim Development Pty Ltd v Greenvale Property Group Pty Ltd [2018] VSCA 201

COSTS - Calderbank offers - Whether reasonable not to accept offers - Whether offers so unclear as to be incapable of acceptance - Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority [No 2] [2005] VSCA 298; (2005) 13 VR 435 applied; Little v Saunders [2004] NSWSC 655 distinguished.

1 This application for leave to appeal concerns the payments due to a company which provided consultancy and management services to a property owner in the course of a proposed development of the property. The development did not proceed and the owner decided to sell the property. The consultant company sought a share of the net profit on that sale and was unsuccessful at trial. It succeeded, to some extent, in respect of an alternative claim for payment for the work performed. It seeks to appeal in order to secure an entitlement to a share of net profit and to challenge the judge's assessment of its alternative claim.

2 For the reasons that follow, the trial judge's decision should be upheld and the appeal dismissed.

3 The respondent, Greenvale Property Group Pty Ltd ('Greenvale'), purchased property at 617-643 Spencer Street, West Melbourne, on 22 May 2013. The property had been identified as a potential investment opportunity for Greenvale by the second applicant, Hong Cai (also known as Roy Cai), a 30 per cent shareholder of the first applicant, Sim Development Pty Ltd ('Sim').

4 By written agreement dated 29 May 2013, Greenvale engaged Sim to provide consultancy and management services in relation to a proposed townhouse development project on the property. However, in 2014 Greenvale decided not to pursue the project and to sell the property. Min Li, a director of Greenvale, informed Mr Cai of that decision in September 2014 and the property was listed for sale from October 2014. Sim continued to do work in relation to the property.

5 On 10 July 2015, Greenvale notified Sim of its intention to terminate the agreement with effect from 28 August 2015. On 15 July 2015, Sim lodged a caveat over the property to secure the moneys alleged to be owed to it under the agreement. Sim sent an invoice dated 20 July 2015 to Greenvale for the sum of $380,280 in respect of fees and services provided to Greenvale for the period up to and including 10 July 2015.

6 Two Supreme Court proceedings arose out of these events. In the first proceeding, Sim claimed $380,280 for work performed pursuant to the agreement and a declaration that it was entitled to 20 per cent of the net profit on the sale of the property. It also sought declarations that it had a valid charge over the property and was entitled to maintain its caveat. Greenvale counterclaimed for damages in tort on the basis that the applicants failed to advise Greenvale of an electricity substation on the property and on the basis that the caveat was lodged without reasonable cause. In the second proceeding, Greenvale sought the removal of the caveat.

7 The proceedings were heard together. In the first proceeding, the judge assessed the sum owed to Sim under the agreement at $153,260 and allowed Greenvale's claim in tort in the amount of $20,000.[1] The rest of Sim's claims (including its 20 per cent net profit claim) were dismissed. The judge ordered Greenvale to pay Sim's costs on a standard basis until 4 October 2016 and Sim to pay Greenvale's costs on a standard basis from 5 October 2016. 4 October 2016 was the date by which Sim could have accepted a 'Calderbank'[2] offer made by Greenvale, which the judge found it was unreasonable not to have accepted.[3]

8 The present appeal is from the orders in the first proceeding and involves the amount of Sim's claim for moneys payable under the agreement, including its claim for a declaration as to its entitlement to 20 per cent of the net profit on the sale of the property, and the costs orders. No appeal is sought to be brought in respect of Greenvale's successful counterclaim.

9 As to the issues raised in both proceedings regarding Sim's caveat, the judge found that the agreement gave rise to a caveatable interest in the property and refused Greenvale's application for its removal. Greenvale applied to this Court for removal of the caveat and that application was dismissed on 17 November 2017.[4]

10 It is first helpful to refer to some provisions of the agreement.

11 By recital A, the agreement recorded that Greenvale wished to develop the property. It defined this as the 'Project'. Recital C stated that Sim had located the land for the Project and had agreed 'to engage and manage all the necessary personnel to construct and bring the Project to completion'.

12 The agreement then provided as to the services, as follows:

4 Services

4.1 [Greenvale] has requested [Sim] to provide the Services set out in Item 1 of the Schedule for the duration of this agreement on the terms and conditions set out in this agreement.

4.2 [Sim] agrees to perform the Services set out in the Schedule on the terms and conditions set out in this agreement.

13 Clause 7 set out the principal obligations of Greenvale, as follows:

7 Obligations of [Greenvale]

7.1 [Greenvale] accepts total responsibility for the payment of all costs and disbursements associated with the Project, including but not limited to pre purchase costs, the costs of the land acquisition, construction, relevant experts, the costs associated with the sale of the properties that are a part of the Project, regardless of whether [Greenvale] makes a net profit or a loss on the Project.

7.2 [Greenvale] has made the decision to proceed with the project based on its own enquiries and [Sim] has not made any representations to [Greenvale] regarding the success, profitability or otherwise of the Project.

7.3 [Greenvale] will pay all costs and disbursements as they become payable, immediately upon delivery of a tax invoice by [Sim] or a third party.

7.4 [Greenvale] will pay to [Sim] the Agreed Fee for the Services and any other fees and commissions agreed upon at the Payment Term. For the avoidance of doubt this includes all properties that are a part of the Project.

7.5 [Sim's] Agreed Fee is in accordance with Item 4 of the Schedule. For the avoidance of doubt and for certainty, net profits means the total profits realised from the sale of the properties that constitute the Project after the deduction of the costs arising from the pre purchase, the cost of land acquisition, pre construction costs, the construction and post construction costs, including but not limited to marketing and sale of the properties and costs connected and incidental to the Project, including but not limited to legal and expert opinion. Costs are only those costs incurred in Australia in connection with the Project, but without deduct [sic] GST and any Tax. The parties will agree on the total costs and failing agreement the matter will be determined by a quantity surveyor and both parties will be bound by the decision.

7.6 [Greenvale] will provide to [Sim], upon request, evidence of the sale price of any property that has been sold.

14 Clause 9 set out the time for payment in respect of the fees and commissions payable under the agreement, as follows:

9 Payment terms

[Greenvale] will pay the full invoice value within fourteen (14) days of [Sim] rendering an invoice to [Greenvale] in respect of the Agreed Fee and any other fees and commissions agreed by the parties.

15 Clause 15 provided for termination of the agreement and cl 16 set out the consequences of termination, as follows:

15 Termination

(i) [Either][5] party may terminate this agreement before the Completion Date by giving the other party no less than 60 days notice in writing and such loss [sic] may only be a monetary loss related to the Project specified in [Item 6][6] of the Schedule and the party claiming the loss must provide written evidence of such loss to the other party.

...

16 Consequences of termination

Upon termination of this agreement:

(a) if termination takes place prior to Completion of the Services, [Sim] has no further responsibility to complete the Services, and [Greenvale] is not required to make any further payment for any services provided after receipt of the notice of termination;

(b) if the termination is prior to the Completion of the Project [Greenvale] must pay to [Sim], within 14 days of receiving an invoice, full payment for all work performed by [Sim] up to and including the date of termination at the rate of $300 an hour plus GST;

(c) if the termination is prior to the Completion of the Project [Greenvale] gives [Sim] the right to register a charge over the property in [Item 6][7] of the Schedule and any other property owned by [Greenvale] and such charge [sic] to be applied to the payment in full of any money owed to [Sim];

...

(e) the parties' obligations under clauses 7, 10, 11, 12, 13, 14[8] continue and remain in full force and effect, notwithstanding termination of this agreement.

16 Finally, it is necessary to refer to the definition of 'Agreed Fee' and the contents of the Schedule, as follows:

20 Meaning of words

In this agreement, unless the contrary intention appears from the context:

(a) Agreed Fee means the prices, fees, charges or amounts payable by [Greenvale] to [Sim] for the provision of the Services and includes all costs included in providing the Services in accordance with this agreement, including without limitation, Disbursements.

...

Locating the Project property, appointing and managing all personnel and consultants and all acts and attendances necessary to bring the Project to completion.

Completion means fourteen days [sic] the issuing of a certificate of occupancy by the relevant authority.

$5,000.00 Calendar monthly in advance on the first day of the month and up to 30 payments Difference calculated on the completion date (3 payment received total $15,000)

[Sim] will use its best endeavour to procure the Planning Permit required for the Project at the earliest practicable date. In the event that [Sim] fails to procure the Planning Permit required for the Project within 12 month of the date of settlement of [Greenvale's] acquisition of the property situated at 617-643 Spencer, Wes Melbourne [sic] in the State of Victoria 'the Property', the Agreed Fee stated in the Schedule will be reduced to 15% of the net profit.

17 At trial, Sim claimed a sum of money together with a declaration as to its entitlement to a percentage of Greenvale's net profit on the sale of the property. Each of those claims was said to be supported by the terms of the agreement. The sum was claimed for services rendered at the rate of $330 per hour for a total of 1016 hours ($335,280), said to be payable under cl 16(b) of the agreement, together with a further amount of $45,000 representing outstanding payments of $5,000 per calendar month for a total of 9 months said to be payable under item 5 of the Schedule. The declaration was sought on the basis that Sim was allegedly entitled to 20 per cent of the net profit to be realised on the sale of the property, said to be the 'Agreed Fee' payable under cls 7.4 and 7.5 of the agreement and item 4 of the Schedule.

18 The judge partly allowed the money claim and rejected the net profit claim. In assessing the money claim, the judge disallowed some of the hours claimed on a basis that Sim contests in this Court. He also rejected the monthly payment claim of $45,000. In addition, the judge deducted from the hourly rate calculation the sum of $85,000 which Sim had previously been paid by way of monthly payments. Sim had conceded that these payments stood to be deducted from its net profit claim but contended that they were not to be deducted from the hourly rate claim.

19 As mentioned, the judge also allowed the counterclaim brought by Greenvale concerning the presence of an electricity substation on the property and awarded Greenvale damages of $20,000. No issue is now taken with respect to the counterclaim.

20 For reasons that also need not now be canvassed, the judge dismissed the caveat proceeding.

21 The judge's decisions in respect of each of the claims made by Sim in the primary proceeding are contested on appeal. The reasons for his conclusions are set out in more detail below.

22 Sim contended before the judge that the agreement expressly provided that Sim was entitled to 20 per cent of the net profit from the sale of the property, once it was sold, as a consequence of termination of the agreement. This was said to be a result of the preservation in cl 16(e) of the obligations of the parties under cl 7, which includes provision for the 'Agreed Fee' in cl 7.4 (as defined in item 4 of the Schedule).

23 Greenvale submitted in the Trial Division that the preservation of cl 7 by cl 16(e) related only to that part of cl 7 that was relevant after termination, which did not include the payment of the 'Agreed Fee' and that, in any event, cl 16(a) and (b) meant that the 'Agreed Fee' was not payable if termination took place prior to the completion of the project.

24 The judge agreed with Greenvale's submissions, finding that the 'Agreed Fee' comprising 20 per cent of net profit was only calculated and payable at the end of the project, that is, a 'development involving construction of townhouses or apartments and the consequent marketing and sale thereof'.[9]

25 The judge found that if the agreement was terminated before the project was completed, the hourly rate applied in substitution for the 20 per cent net profit figure:

clause 16 specifically deals with termination 'prior to the Completion of the Services' (clause 16(a)) or 'prior to Completion of the Project' (clause 16(b)) and provides for a particular and different regime. Clause 16 specifically addresses and contemplates a position where the Project or development is not completed (the trigger for the 20%) before termination. This does not mean that the Project or development could or would not be completed but only that, if this be the case, it would occur after termination. The sole remedy for compensation following termination prior to completion is in clause 16.[10]

26 The judge found that cl 16(e) ought to be construed as referring only to the provisions of cl 7 that have continuing application after termination, and not to cl 7.4 which assumed a completely different scenario, being completion of the project.

27 As a result, the judge found that Sim was entitled to be paid by Greenvale only in accordance with the hourly rate specified in cl 16(b).

28 As mentioned earlier, Sim claimed the sum of $335,280 for 1016 hours worked at the rate of $330 per hour, pursuant to cl 16(b) of the agreement. No time sheets or other notes of time spent were kept. As a result, Sim prepared a reconstruction of hours spent in the form of a schedule to the invoice it provided to Greenvale on 20 July 2015. The schedule set out a total of 1016 hours worked by three people, Mr Cai and two others, Jonathan Wang and Michelle Li. Mr Wang was an officer and shareholder of Sim[11] and Ms Li was an urban planning specialist employed by Sim. Each of the three gave evidence that they had calculated the hours they had worked on a conservative basis.

29 Additionally, in response to a request for further and better particulars of the services it performed, Sim prepared a spreadsheet showing 1,773.4 hours worked between February 2013 and October 2015,[12] some 757 hours more than as set out in the schedule to the invoice. Sim did not claim payment for these additional hours, but relied on the spreadsheet to contend that:

the number of hours in the Schedule (1016) should be accepted because the more detailed and comprehensive analysis in the Spreadsheet recording 1,7[7]3.4 hours provided some form of indication and justification that the lower conservative figure represented the minimum hours spent.[13]

30 Greenvale's contention was that the hourly rate provided for in cl 16(b) was the only proper basis for Sim's claim under the agreement. However, it disputed the relevant number of hours, particularly those claimed in relation to work alleged to have been done by Mr Wang.

31 The issue before the judge was how to assess the hours spent where the reconstruction process (comprising the preparation of the schedule and the spreadsheet) involved a degree of estimation. The judge stated in his reasons:

Although the documents evidence the nature and extent of the work done, which was by no means insubstantial, there is no direct correlation between the time recorded and the specific documents evidencing the work done. On the first day of the trial I told the parties, ever mindful of proportionality and the like, that the Court would not spend days assessing the hours spent by reference to the documents. Rather the assessment would be done in a more summary way following the resolution of some necessary principles relating to the time spent. All parties, with respect sensibly, embraced this approach and the trial proceeded accordingly.[14]

32 The judge found that the evidence established that Sim had done substantial work and supported its general claim that many hours were spent on the project.[15] The judge accepted the amount of hours claimed by each of Mr Cai and Ms Li. He accepted their evidence as truthful and found that, given the higher number of hours in the spreadsheet, he could readily accept the number of hours in the schedule as it pertained to them.[16]

33 However, the judge found that Mr Wang's claimed hours required 'far more scrutiny', partly as a result of evidence given on behalf of Greenvale that Mr Wang was never asked to travel to China in connection with the project. As a result, the judge disallowed 294 of the hours claimed to have been worked by Mr Wang that were attributable to such travel.

34 The judge went on to assess the hours spent by Sim as 722 (1016 less 294) and held that Sim was entitled to the sum of $238,260 accordingly.[17]

35 Sim's claim included an amount of $45,000 for nine months' payments under item 5 of the agreement, which it contended were outstanding. Around the time Greenvale decided to sell the property rather than proceeding with the project, it had already paid Sim a total of $85,000 in monthly payments.[18]

36 The judge found that Sim was not entitled to the $45,000 it claimed in monthly payments attributable to the last nine months of the contract. The judge also found that the $85,000 already paid pursuant to item 5 of the Schedule should reduce the total hourly rate sum of $238,260. He found that the monthly payments contemplated by item 5 were intended to be an advance of fees owing to Sim by Greenvale whether or not the project was completed. If, as happened, the agreement was terminated prior to completion of the project, then the monthly amounts were to be an advance on the hourly rate claim. If, on the other hand, the project had been completed, the monthly payments would have been deducted from the 20 per cent net profit to which Sim would then have been entitled.

37 Taking into account the counterclaim, the result was that Sim obtained judgment in the sum of $133,260, together with interest of $19,340. Sim sought the costs of its claim against Greenvale and Greenvale's counterclaim on the standard basis. Greenvale submitted that it was entitled to indemnity costs from 17 September 2016 as the result of Sim's unreasonable refusal to accept Calderbank offers Greenvale had made.

38 Greenvale first made an offer to Sim on 9 September 2016, which was open for acceptance until 16 September 2016. It comprised an offer to resolve all disputes in both proceedings by paying Sim a sum of $270,000 inclusive of costs. The proposed settlement amount included sums for monthly payments (in the total amount of $45,000) as well as hourly fees (to the sum of $155,000) but nothing for Sim's 20 per cent net profit claim. An amount of $70,000 for costs was included in the offer. The reasons for refusing any part of the net profit claim were set out in the offer letter, and the judge found them to be consistent with his reasons for disallowing that claim.[19]

39 Sim did not accept Greenvale's offer and instead counter-offered to settle for a payment from Greenvale of $360,000 plus costs on the standard basis or $430,000 inclusive of costs.

40 Greenvale did not accept Sim's offer and restated its earlier offer, on the same terms. Greenvale's second offer was open for acceptance until 4 October 2016.

41 Greenvale's offers were stated to be subject to the drafting of terms of settlement containing 'standard mutual releases, mutual non-disparagement clauses and a confidentiality clause'.[20] Sim's offer indicated its preparedness to consider documenting the settlement more fully in terms 'which may also include [a] non-disparagement clause and a confidentiality clause'.[21]

42 The judge held that there was every reason to believe that the parties would have reached agreement about the above matters had Sim accepted Greenvale's offers.[22] He held that those offers met all of the requirements set out in Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority [No 2],[23] and that Sim had acted unreasonably in not accepting either offer, particularly the second one.[24] He therefore ordered that Sim pay Greenvale's costs (on the standard basis) from 5 October 2016, being the day after the expiry of the second offer. Sim's costs prior to that date were ordered to be paid by Greenvale, also on the standard basis. The judge declined to make any costs order in respect of the counterclaim or the caveat proceeding.

43 In this Court, Sim relies on rather discursively expressed grounds of appeal which it is not necessary to set out. The grounds canvass the four aspects of the judge's decision summarised above. It is convenient to deal with each of them in turn.

The 20 per cent net profit claim (proposed grounds 4 and 5)

44 Sim contended that the judge erred in not giving effect to the provision in cl 16(e) that the parties' obligations under (relevantly) cl 7.4 remained in full force and effect notwithstanding termination of the agreement. It submitted that the entitlement to 20 per cent of net profit was not contingent on completion of the project. Rather, it was said, cl 7.4 provided that entitlement to the Agreed Fee arose on the sale of the properties constituting the project.

45 Sim submitted that it was relevant that Mr Wang had been a 20 per cent shareholder in Greenvale but transferred his shares at Greenvale's request so that he did not take part in a 20 per cent profit share twice. It was submitted that the judge had not paid sufficient attention to this evidence, which indicated that Sim was always to receive 20 per cent of the net profit from the project, as expressly provided for in cl 16(e).

46 In oral submissions, senior counsel for Sim accepted that, if Sim were to be entitled to 20 per cent of net profit and a net profit was derived from the sale, it would be necessary to deduct both the amounts received by way of the $5,000 monthly advances and any payment for services calculated upon the hourly rate for which cl 16(b) provided. On the other hand, if Sim were not entitled to 20 per cent of net profit (or no net profit was derived), it was submitted that cl 16(b) and the monthly payment provision as envisaged by item 5 of the Schedule would still operate of their own force. In other words, Sim submitted that the agreement provided for it to set off the monthly payments only against its claimed portion of the net profit, once that portion became payable.

47 Sim's submissions should not be accepted. By cl 7.4, the obligation to pay the 'Agreed Fee' requires payment 'at the Payment Term'. Clause 9, headed 'Payment terms', requires payment within 14 days of an invoice being rendered. Also, item 5 of the Schedule is headed 'Payment term' and provides for the $5,000 monthly payments, with the 'difference' to be calculated 'on the completion date'. The 'Completion Date' is defined in item 3 as the day 14 days after the issuing of a certificate of occupancy. It is sufficiently clear that the obligation to pay the Agreed Fee crystallises on the completion date (after which an invoice could be rendered so as to make payment due). Consistently with that understanding, cl 7.5 provides that net profits are to be calculated after deduction of, among others, construction and post-construction costs, including the costs of marketing and selling the properties constituting the project. Also consistent with that view of the agreement, the 'Project' is defined in recital A as the development of the property.

48 While item 4 of the Schedule defines the 'Agreed Fee' as 20 per cent of net profit, the expression is more extensively defined in cl 20(a) to mean the amounts payable by Greenvale to Sim for the provision of the Services as defined in item 1. Those are the acts 'necessary to bring the Project to completion'. As already noted, the completion date is not reached until after a certificate of occupancy has been issued.

49 These provisions indicate that the obligation to pay the Agreed Fee did not crystallise until the project was completed and that it was Sim's obligation to undertake the work necessary for that to happen. The question then is what meaning to give to the provisions of the agreement which entitled either party to terminate the agreement.

50 Clause 15(i) permitted either party to terminate the agreement without giving any reason. Inevitably, the agreement then had to address the question what entitlement Sim would have to payment, if the project had not reached completion before termination. Clause 16(b) made it clear that Sim was to be paid for all work it had performed at the hourly rate of $300 plus GST. The question is whether Sim was also entitled to be paid the amount necessary to bring that payment up to 20 per cent of net profit, once the project was completed. Read literally, cl 16(e) might appear to have that operation.

51 The parties pointed to anomalies that might arise on each other's interpretation. Sim submitted that, on Greenvale's construction, Greenvale could unjustly terminate the agreement shortly before completion of the project upon realising that it would be cheaper to pay Sim by reference to hourly rates than 20 per cent of net profit. Greenvale submitted that, on Sim's construction, Sim could terminate the agreement at a very early stage and do no substantial work, yet earn 20 per cent of net profit. Sim submitted that this merely reflected Mr Wang's previous 20 per cent interest in Greenvale.

52 In our opinion, the construction advanced by Sim is not supported by the contractual language. Clause 16(e) preserves the operation of a collection of clauses, including cl 7. But it does not specify what that operation is to be. That depends on the provisions themselves. In the case of cl 7, the obligation to pay the Agreed Fee under cl 7.4 operates, as has been seen, only upon completion of the project. Clause 7.4 refers to 'the Agreed Fee for the Services'. Yet Sim argues for an entitlement to the fee irrespective of whether it provided the Services. Moreover, it is clear from the agreement that the parties anticipated that Sim would be involved in bringing the project to completion. Recital C and the definition of 'Services' in item 1, in particular, expressly say as much. In that context, cl 16(b) can readily be seen to provide an alternative basis for payment specific to the situation where that completion never occurs because the agreement is terminated before completion is achieved.

53 Greenvale was therefore correct to submit that cl 16(e) is to be read as preserving the operation of the specified provisions to the extent that they are capable of operation. Clause 7.4 is incapable of operating because it depends upon completion of the project taking place as envisaged by the agreement, including by Sim providing the agreed services. After termination, that cannot happen. Clause 16(a) removes doubt on that score by making it clear that after termination Sim has no further responsibility to provide services and Greenvale is not required to pay for any services that are later provided.

54 The judge was therefore correct to hold that Sim was not entitled to the 20 per cent share of net profit.

55 It may also be noted, as the judge pointed out, that a mere sale of the property, as envisaged in the circumstances that arose, would not in any event constitute completion of the Project, as defined, which included the development of that property. Contrary to Sim's written case, cl 7.4 does not provide that the Agreed Fee is payable upon sale of the property rather than completion of the project. Accordingly, even if Sim were to be entitled to the Agreed Fee once the project was completed after termination, without its involvement, that scenario was foreclosed in the present case by the decision to sell, rather than develop, the property. On either basis, the claim fails.

56 In our opinion, Sim's reliance upon the evidence that Mr Wang parted with his 20 per cent shareholding in Greenvale so as to avoid 'doubling up' does not assist its position. Assuming evidence of that kind to be admissible on the present question of construction (which was not debated before us), it is in any event equivocal as to the point in issue. On any view, the agreement entitled Sim at least to a 20 per cent share in the net profit of the project if it was completed before termination of the agreement. That suffices to explain the request made of Mr Wang to relinquish his shareholding. But that act does not illuminate the financial arrangements for payment of Sim in respect of the services it had agreed to provide if the project was never completed.

57 Leave to appeal on proposed grounds 4 and 5 should be granted but the grounds are not made out.

58 Under its first proposed ground of appeal, Sim argues that the judge made what it characterised as an arithmetical error when he deducted 294 hours from the total of 1016 hours it claimed for performance of services under cl 16(b). It will be recalled that the judge based this deduction on a finding that he was not satisfied that Mr Wang had undertaken work on the project while travelling to, from and within China.

59 Sim contended that the judge ought not to have deducted the hours in question from the total number of hours claimed in the invoice and attached schedule upon which the cl 16(b) claim was based, but should instead have deducted the hours from those identified as having been worked by Mr Wang in a spreadsheet provided by Sim by way of further and better particulars and relied upon at the trial. In that spreadsheet, Sim contended, there were 420 hours of Mr Wang's time recorded other than in respect of travel involving China. It was submitted that, if all the travel hours were deducted from the hours in the spreadsheet, there were still sufficient hours remaining worked by Mr Wang, together with those hours found to have been worked by Mr Cai and Ms Li, to more than establish the 1016 hours claimed in the invoice. Sim contended that the judge had treated the claim in respect of Mr Wang's work inconsistently with that concerning Mr Cai and Ms Li because in the latter context he had accepted the hours that appeared in the schedule because of 'the higher figure or amount of hours in the Spreadsheet',[25] but he had not applied the same approach in the case of Mr Wang.

60 Contrary to Sim's argument, the suggested inconsistency is readily explained. The judge accepted Mr Cai and Ms Li as witnesses of truth and accepted their evidence. He said that the position regarding Mr Wang was very different and that his claim required 'far more scrutiny'.[26] In other words, he accepted the evidence of the first two witnesses as to the hours attributable to them in the spreadsheet but made no corresponding finding in respect of Mr Wang.

61 For this reason, the premise for the argument advanced by Sim is not established. There was simply no finding that Sim had established the non-travel-related hours claimed by Mr Wang in the spreadsheet.

62 The argument fails for a second reason. As Greenvale submitted, the spreadsheet was not provided by way of further and better particulars of the amount claimed in the invoice. Nor could it have been, given that cl 9 of the agreement provided for Greenvale to pay Sim for any fees within 14 days of Sim rendering an invoice. At no stage did Sim seek to depart from its pleaded case that the hourly rate amount was that set out in the invoice. The spreadsheet, provided by way of particulars of the services provided, described a larger amount of hours and could not have stood as particulars of the amount claimed by the invoice.

63 The judge indicated to the parties that he would not be undertaking a line-by-line analysis of the spreadsheet, but would proceed in a more summary way. Sim pointed out that its counsel had, in his closing address at trial, urged the judge, if he were to discount the hours claimed, to 'use the 1,800 hour starting point, don't use the amount claimed for in the invoice'. He submitted that the invoice only needed to be a 'claim for hours' and that Sim only needed to justify that it had done the hours claimed. But the judge was not bound to approach the case in that way, especially when the pleading made it clear that Sim sued on the invoice, and the invoice specified the work upon which the claim was based. The judge was entitled instead to use the spreadsheet simply as a potential basis for being satisfied that the number of hours claimed in the invoice were in fact performed. If, as here, the work claimed in the invoice was found to lack a connection with the provision of the agreed services, then the spreadsheet could not alter that conclusion.

64 It can be seen that the judge adopted a 'summary' approach in evaluating the hours claimed. He accepted the evidence of Mr Cai and Ms Li and allowed the claim in respect of their work in full. He did not accept the evidence of Mr Wang and discounted the claim in respect of his work to the extent that it involved China-related travel. He made findings based on conclusions reached on matters of general principle, which the parties had argued, and applied those conclusions to the hours claimed in the invoice and schedule as referred to in the pleading. No error has been shown in the approach the judge took.

65 The argument advanced by Sim would have the perverse result that, although the judge regarded the evidence of Mr Wang as calling for great scrutiny and specifically did not accept his evidence with respect to 294 hours for which Sim had invoiced Greenvale, that invoice would none the less be payable in full. That would involve a significant departure from the pleaded case.

66 Leave should be granted in respect of this proposed ground but the ground fails.

The monthly payment claim (proposed grounds 2 and 3)

67 Sim next took issue with the judge's conclusion that the $5,000 monthly payments fell to be deducted from the amount payable under cl 16(b) calculated on the hourly rate. It was submitted that no term of the agreement provided for any deduction from the cl 16(b) hourly rate calculation, and that, to the contrary, Greenvale remained indebted to Sim for $45,000 by way of monthly payments which had not been made for the period until the date of termination. Sim contended that the monthly payments were to be deducted from the net profit to be paid after completion of the project, but not from the hourly rate claim.

68 The resolution of these grounds depends on the construction of item 5 of the Schedule. The provision appears to be given force by cl 7.4 of the agreement, which requires Greenvale to pay Sim, 'at the Payment Term', 'any other fees and commissions agreed upon'. The heading to Item 5 ('Payment term') indicates that it is relevant in this context. Item 5 itself reads:

$5,000.00 Calendar monthly in advance on the first day of the month and up to 30 payments Difference calculated on the completion date (3 payment received total $15,000)

69 The payments are described as being 'in advance'. That could mean, as in a lease, that the payment is made in advance of receiving the services. Alternatively, it could mean that the payment is by way of an advance of some other obligation. It is apparent from item 5 that the latter is the correct construction. It is anticipated that a 'difference' is to be calculated on the completion date. By inference, an accounting of the monthly payments made up to the completion date will be required upon other payments falling due. Sim accepted that this was the case in respect of the net profit payment which would fall due after completion, but contended that the payment was not an advance in respect of the hourly rate claim.

70 It is clear from the reference in cl 7.4 to the Agreed Fee and the Payment Term that item 5 provides for an advance in respect of the net profit payment. The question is whether it also operates as an advance in respect of other payments under the Agreement.

71 It is true that neither cl 16(b) nor item 5 expressly contemplates an accounting in respect of the hourly rate claim. On the other hand, cl 7.4 refers not only to the Agreed Fee but also to 'other fees and commissions', each of which is payable at the 'Payment Term'.[27] It is therefore capable of operating so as to apply item 5 to other payments. But however far cl 7.4 extends to apply item 5, any amounts paid as a result are by way of advance. If item 5 payments are an advance in respect of any hourly rate payment, then Greenvale would clearly be entitled to have those payments taken into account so as not to make double payment in respect of the hourly rate claim. If, as Sim argued, item 5 payments are not an advance in respect of an hourly rate payment, then a different question arises, namely whether the payments stand to be refunded if no net profit share becomes payable.

72 In the latter situation, the monthly payment will have operated as an advance in respect of an amount which never becomes payable. If the item 5 payments are simply an advance on the net profit share, there is no reason why the parties would have intended that the payments would be retained by Sim if that share never became payable. On that approach, the calculation of the difference could only work one way, in Sim's favour. If that were the operation of item 5, Sim would be paid both for the work done before termination and also for part of the alternative claim for a net profit share to which it was not entitled. Nothing in the agreement supports such a construction.

73 For that reason, in our view the judge was correct to find that the amounts advanced fell to be repaid and that no further payments by way of advance were required. Leave to appeal on these grounds should be granted but again the grounds are not sustained.

74 Sim advanced several arguments against the judge's determination that it pay Greenvale's costs from 5 October 2016. The first set of arguments concerned the terms of the offers. Sim submitted that Greenvale's offers were subject to the agreement of terms not yet specified and so were void for uncertainty and incapable of acceptance. It was pointed out that the offers expired before draft terms were prepared. Further, it was said that the three month period allowed in the offers for Greenvale to make payment was significant and that it was unclear how Greenvale would obtain funds. In addition, Sim contended that it was unclear how the proposed terms of settlement would affect Sim's charge over the property. In the circumstances, Sim submitted that it was not unreasonable for it not to have accepted either offer.

75 Sim relied on Masters v Cameron,[28] and specifically the High Court's conclusion that an agreement made subject to the preparation of a formal contract acceptable to the offeror's solicitors was not a binding agreement. It also referred to Little v Saunders,[29] where Campbell J refused an application for a special costs order because the offer required the parties to enter into a deed of settlement with no way of knowing what it would contain, such that acceptance of the offer would result in a contract that was void for uncertainty.

76 It may be accepted that the clarity with which an offer is expressed is relevant to determining whether it was unreasonable of the offeree not to accept it.[30] However, the reasonableness of a party not accepting an offer of settlement must be judged against all the relevant circumstances.[31] In the present case, two points stand out. The first is that, unlike in Little v Saunders, Greenvale made it clear what subjects would be covered in the terms of settlement. Its letter stated:

If the offer is agreed to by your client, it will need to be recorded in terms of settlement drafted by this firm and which are satisfactory to our client, which terms will contain clauses recording the above arrangements, standard mutual releases, mutual non-disparagement clauses and a confidentiality clause.

77 It can be seen that Greenvale was not stipulating terms of settlement with Sim having ' no way of knowing' what they would contain. The matters in question were the terms plainly spelt out together with 'standard' releases and other clauses commonly found in terms of settlement.

78 Secondly, in Sim's own letter offering to settle the proceedings, it indicated no difficulty with subsequently documenting such terms. To the contrary, it said:

If the offer above is accepted our clients are prepared to consider more fully documenting the settlement in terms acceptable to the parties which may also include non-disparagement clause [sic] and a confidentiality clause.

79 In the circumstances, there was every reason to think, as the judge found, that if the substantive terms of Greenvale's offer had been acceptable to Sim, the parties would have negotiated terms of settlement dealing with the matters yet to be specifically spelt out. Those matters were of a kind typically contained in terms of settlement and both parties indicated their preparedness to discuss such matters once the commercial dispute was resolved.

80 In the circumstances, the fact that these matters were not the subject of express stipulation in the offer did not deprive the offer of clarity or make it reasonable for Sim not to accept it.

81 There is also no substance in Sim's other arguments about the offer. The length of time before payment may have borne on the value of the offer but could not reasonably be seen as suggesting an inability on the part of Greenvale to comply with any settlement that might have been reached. As far as Sim's charge over the property is concerned, Greenvale's offer made it clear that it was a term of the offer that the caveat would be removed. It is not a matter of conjecture, as Sim suggested, what effect the offer would have on the charge.

82 Sim next argued that the judge erred in holding that Sim had 'self-evidently done worse' than the offer. It was submitted that Sim's costs at the date of the offers were more than $173,000 and that Greenvale had failed in the caveat proceeding.

83 These arguments are misconceived. The offer of $270,000, inclusive of costs, represented an offer of $200,000 in respect of the substantive claims and $70,000 in respect of costs. The amount offered in respect of the claims comfortably exceeded the judgment of $152,600 (including interest). Sim's actual costs of $173,000 obviously exceeded the amount offered, but there was no basis for thinking that indemnity costs would be awarded. As it transpired, the amount awarded for the substantive claims fell short of the total offer by some $117,400. The judge was not bound to find that Sim would have received a costs order of that amount, some 68 per cent of its actual costs, in the ordinary course.[32] But in any event, Sim's own offer clearly presupposed that $70,000 was an appropriate figure for its costs, being the difference between its alternative offers with and without costs. The appropriate comparison was therefore between the judgment sum of $152,600 and the offer of $200,000 for the substantive claims which self-evidently exceeded the judgment. The judge, exercising his discretion as to costs, was entitled to proceed on that basis.

84 In relation to the caveat, Sim's success in defending it meant only that it had security pending payment of the amount ultimately due to it. The fact that Greenvale's proposed settlement provided for its removal upon payment actually presupposed that the caveat remained in place until that point and therefore treated Greenvale as losing the caveat proceeding. Sim's submission that it did better in this respect than it would have had it accepted Greenvale's offer is therefore without foundation.

85 There is no substance in any of Sim's arguments as to costs. Leave to appeal on grounds 6-9 should be refused.

86 Sim should have leave to appeal on proposed grounds 1-5 but the appeal should be dismissed. Leave should be refused in respect of the remaining grounds.

[1] Sim Development Pty Ltd v Greenvale Property Group Pty Ltd [2017] VSC 335 ('Reasons'). These amounts were to be set off against one another: Reasons [126]. Greenvale was accordingly ordered to pay Sim $133,260.

[2] Referring to Calderbank v Calderbank [1976] Fam 93; [1975] 3 All ER 333.

[3] Sim Development Pty Ltd v Greenvale Property Group Pty Ltd [No 2] [2017] VSC 456 [22] ('Costs Reasons').

[4] Sim Development Pty Ltd v Greenvale Property Group Pty Ltd [2017] VSCA 345.

[5] Clause 15(i) said 'Neither party may terminate...'. It was agreed at trial that this was an error and that cl 15(i) should be read as 'Either party may terminate...': Reasons [22].

[6] Clause 15(i) said 'Item 5'. It was agreed at trial that this was an error and that it should be read as referring to Item 6: Reasons [22].

[7] Clause 16(c) said 'Item 5'. It was agreed at trial that this was an error and that it should be read as referring to Item 6: Reasons [22].

[8] Clause 10 concerned GST, cls 11-13 were about confidential information and cl 14 was about publication or disclosure of material concerning the project.

[11] He was also a former officer and shareholder of Greenvale.

[12] The agreement provided for payment for work performed prior to its execution: Reasons [82]-[84]. The spreadsheet took the calculation beyond the date of termination.

[18] Reasons [90]. Greenvale ceased making payments to Sim under the agreement from October 2014, the same month in which it listed the property for sale: Reasons [26].

[23] [2005] VSCA 298; (2005) 13 VR 435, 442 [25] (Warren CJ, Maxwell P and Harper AJA) ('Hazeldene'), cited in Costs Reasons [13].

[27] The 'payment terms' in cl 9 appear to operate in respect of an invoice rendered pursuant to cl 16(b).

[28] [1954] HCA 72; (1954) 91 CLR 353.

[29] [2004] NSWSC 655 [46].

[30] Hazeldene [2005] VSCA 298; (2005) 13 VR 435, 442 [25] (Warren CJ, Maxwell P and Harper AJA); Roberts v Rodier [2006] NSWSC 1084 [8]; Pearson v Williams [2002] VSC 30 [15].

[31] Hazeldene [2005] VSCA 298; (2005) 13 VR 435, 442 [25].

[32] If the award of interest is not taken into account, the total order in favour of Sim is $133,260. Compared to the offer of $270,000, that offer would have to be taken to include $136,740 by way of costs, or about 79 per cent of Sim's actual costs.