Thousand Hills Property Pty Ltd v LBA Capital Pty Ltd [2025] VSC 768

1. This is a dispute about a deposit of $883,200 that LBA Capital Pty Ltd ('LBA Capital') paid to Thousand Hills Property Pty Ltd ('Thousand Hills') in July 2019 when LBA Capital agreed to purchase 14 apartments 'off the plan' from Thousand Hills at a proposed development in Burwood. The purchase was 'off the plan' in the sense that the contract was entered into before the apartments were built and was for lots identified on a plan of subdivision together with any improvements on those lots and the contract also required Thousand Hills to construct apartments on those lots in accordance with attached plans.
2. Thousand Hills claimed it was entitled to retain the deposit because LBA Capital repudiated the contract by an email dated 7 October 2020 and it accepted that repudiation by an email dated 10 March 2021. After a trial, I found for LBA Capital. I declared that LBA Capital did not repudiate the contract and ordered Thousand Hills to return the deposit.[1] The Court of Appeal disagreed: it concluded that LBA Capital had repudiated the contract. The Court of Appeal set aside my orders and remitted the proceeding to me for further consideration in accordance with its reasons.[2] Accordingly, these reasons concern the other issues that arise that might prevent Thousand Hills from being able to retain the deposit notwithstanding that by its 7 October 2020 email LBA Capital repudiated the contract.
3. These reasons assume familiarity with the circumstances as recorded in my earlier decision and the decision of the Court of Appeal.

1. The repudiation was not of the type where one party breaches an essential term or simply evinces an intention no longer to be bound by a contract. It was instead a repudiation constituted by LBA Capital's communication to Thousand Hills (as found by the Court of Appeal) that while LBA Capital accepted that the contract continued to be binding on it, it would not be able to comply with its contractual obligation to pay the purchase price when the time for payment arrived. This is a repudiation by 'anticipatory breach'. The underpinning logic is clear: a party should be able to extricate itself from a contract that imposes an ongoing obligation on it (to build) once it is clear that the counterparty will not be able to comply with a future obligation on it (to pay) when the time for performance of that obligation arrives.
2. It is often said that a party may only terminate a contract by accepting a repudiation by its counterparty if it is itself ready, willing and able to perform the obligations on it. For example, the majority of the High Court in DTR Nominees Pty Ltd v Mona Homes Pty Ltd said_:_

A party in order to be entitled to rescind for anticipatory breach must at the time of rescission himself be willing to perform the contract on its proper interpretation. Otherwise he is not an innocent party, the common description of a party entitled to rescind for anticipatory breach ...[3]

1. This is easily understood where the terminating party is seeking damages for breach of contract or to retain a deposit: a party ought not to be able to obtain damages for another's failure to comply with contractual obligations, or to retain a deposit, if the first party were not itself able or prepared to comply with the contractual obligations on it that would arise in due course. That is the context in which that principle has repeatedly been affirmed. Also, I note that where damages are sought, the principles of causation would require the claiming party to establish a counter-factual that would include its own compliance with the contractual obligations on it.
2. As a matter of commonsense, however, different principles might apply where the party purporting to accept the repudiation is not seeking relief beyond confirmation that the contract is at an end and a return to the status quo ante by the return of a deposit. In such circumstances, there seems no reason why a party should not be able to bring a contract to an end by accepting a repudiation by another party even if it were unwilling to comply with the contractual obligations on it. Indeed, it would be an odd result if the law treated a contract as ongoing in circumstances where one party had repudiated it and the other party did not wish to or was unable to continue with it and so accepted the repudiation.[4]
3. Similarly, where a vendor holding a deposit repudiates a contract and the purchaser who accepts that repudiation is not seeking damages but only the return of the deposit, the deposit should be returned without the purchaser having to establish that it was ready, willing and able to comply with the contractual obligations on it: if neither party was going to complete the contract, and it was not said that either's failure was due to breaches by the other, it seems to me that, as a matter of principle, the deposit should be returned in order to return the parties to the positions that they were in before the contract was entered into. The situation would be otherwise where a vendor holding a deposit accepts a repudiation by a purchaser and seeks to retain the deposit: in those circumstances, it makes sense that the vendor, if it is to keep the deposit, should have to establish that it would have complied with the contractual obligations on it.
4. This limitation of the principle that a party rescinding must establish that it was 'ready, willing and able' was recognised by the Court of Appeal, in a case concerned with a contractual right to terminate, in Willis v Crosland, where it was said:

As Professor Carter notes, '[t]here is a fundamental distinction between a promisee who calls for performance by the promisor and a promisee who seeks to justify a decision to terminate performance of the contract'. In the case of the latter, 'it is not an element of proof of valid termination that the promisee was ready and willing to perform the contract at the time of termination. So much is obvious where the promisee terminates prior to the time for its performance'.[5]

1. Accordingly, the principle that a party accepting a repudiation must be ready, willing and able to complete the contract for the acceptance to result in a termination of the contract should be qualified as applying only in circumstances where the accepting party is seeking not just to bring the contract to an end but also to claim damages or to retain a deposit.
2. Be that as it may, in this case Thousand Hills is seeking to retain the deposit and so it is common ground that Thousand Hills must establish that when it accepted LBA Capital's repudiation on 20 March 2021 it was 'ready, willing and able' to perform the contractual obligations on it, that is, to complete the construction of the apartments in accordance with the contract.

B.2 Relevance of an ongoing dispute as to the contractual requirements

1. Here, that issue falls to be determined in circumstances where a dispute had arisen as to what the contract in fact obliged Thousand Hills to do. LBA Capital asserted, speaking generally, and on 28 July 2020 for the first time, that the contract obliged Thousand Hills to build the third floor as a 'boarding house' as that was the only way that the special conditions could be met because otherwise LBA Capital would not be able to lease that floor to National Disability Insurance Scheme ('NDIS') participants, even if that meant not just re-working the layout of the third floor but also building to the specifications that apply to a 'Class 3' building (the precise implications of which were not in evidence).[6] On 4 August 2020, LBA Capital asserted that the third floor could not continue as apartments and instead had to be a 'boarding house' because, as I understood it, they asserted that the regulatory scheme underpinning the NDIS did not allow more than 11 single dwelling apartments in a building and there were already 11 on the first floor. Thousand Hills disputed that it was obliged to provide a 'boarding house' or a 'Class 3' building.[7] In this respect, I adhere to the following findings expressed in my earlier reasons of an impasse that had arisen:

I conclude that the situation, by August 2020 was, in summary:

(a) LBA Capital wanted to proceed with the contract, but only [on] the basis that the building be built (in accordance with its view of the contract) as a 'Class 3 building' and the third floor be built to a boarding-house design; and

(b) Thousand Hills:

(i) did not consider itself obliged to build the third floor as a boarding-house design and did not consider that the building should be a 'Class 3 building'; and

(ii) did not want to continue with the contract if that were what it was required to build, or, perhaps, unless the purchase price paid by LBA Capital was adjusted to account for any increased costs.[8]

1. I also adhere to the following comments I made in my earlier decision that relate to the question of the 'Class' of the building, which, as noted, was an issue fundamental to the impasse:

By early April 2020, Embrace Architects (for Thousand Hills) had prepared some amended plans for the first floor and sent them to Thomas Lui (for LBA Capital) for approval. Things seemed to be progressing. Then, on 26 May 2020, Embrace Architects advised Mario Charisiou and Thomas Lui by email that the building surveyor had taken the view that the building had to be a 'Class 3 building' (rather than a 'Class 2 building') because it provided accommodation for people with a disability, and asked Mario Charisiou to sign a letter that could be used by Thousand Hills to try to persuade the building surveyor that the building should instead be a 'Class 2 building'.

The evidence as to what the difference in classification meant to how the building had to be designed or constructed was lean, to say the least. As noted above, the NDIS requirements were not in evidence and no expert evidence was given as to the requirements. However, on the basis of an attachment to one of the emails from Thousand Hills, it seems that a 'Class 2' building is a building containing two or more sole-occupancy units, and a 'Class 3' building is a residential building providing long-term or transient accommodation for certain types of people and includes a 'boarding house', a residential part of a hotel, motel, school, detention centre or health-care building, and 'accommodation for the aged, children, or people with disability'. Again, neither party led any expert evidence on this point. Mario Charisiou said that if the building were treated as a 'Class 3 building' there would have to be some modifications to the common areas to improve accessibility. Scott Liu thought that the major difference was to do with 'fire protection'. Nicholas Sun thought more parking spaces might be required, and also said in his affidavit, after stating that the apartment layouts themselves would likely have been able [to] gain approval:

However, it is unclear if the project could have proceeded without major amendments and costs implications, if the level 1 and level 3 apartments had to be assessed as class 3 buildings by the building surveyor.[9]

1. Neither party contended that the contract was void for uncertainty. Accordingly, the reasoning process must proceed on the basis that there were ascertainable obligations on Thousand Hills as to the form of building and class of building that it was contractually required to have built.
2. I am satisfied that Thousand Hill's position was open to it. The plan of subdivision and the building plans both formed part of the contract. The plan of subdivision provided for the creation of three lots on the third floor, lots 301, 302 and 303, and those lots formed part of the 'Land' that was to be sold by the contract. Further, the building plans identified the location of the various external and internal walls and fittings that one would expect in a unit for each of the three lots, and the contract obliged Thousand Hills to have the units built 'generally in accordance with' those plans.[10] This created a tension with another special condition included at the end of the list of special conditions, which provided as follows:

In addition to relevant regulatory building requirements and good building practice the Vendors will provide the apartments and the outlined amendments identified to the Purchaser to comply with all

• spatial parameters,

• fixtures and fittings specifications

in accordance to NDIS (National Disability Insurance Scheme) SDA (Specialised Disability Accommodation) categories of

• High Physical Support (highest disability category)

• Platinum Level (highest standard)

The aforementioned categories and their criteria are to be current up until the issue of Building Permit (issued by Building Surveyor) or NDIS Pre-Construction Certificates (issued by LHA consultant)

Any variation cost (addition or subtraction) agreed between the Vendor's Project Architect and the Purchaser's Superintendent are to be agreed to within 14 days.

1. This special condition still required the provision of 'apartments' but anticipated changes to the 'spatial parameters' and 'fixtures and fittings specification', but not a redesign of a floor or a recharacterisation of the entire building (bearing in mind that LBA Capital was not purchasing the apartments to be built on the second floor and so was not purchasing the entire building). Also, no agreement was ever reached as to what changes were required or what cost variations would apply.
2. Further, LBA Capital's anticipatory breach was expressed to be due to its own winding down and was not expressed as being consequential upon the position taken by Thousand Hills as to the contractual obligations on it; this is not a case where one party was taking an untenable view of the contract so as to force the other side into taking action to avoid it.
3. The situation, then, was that there was a genuine dispute as to the nature of the obligation that the contract imposed on Thousand Hills. Thousand Hills' communications must be read with this in mind. An expressed unwillingness by Thousand Hills to comply with what LBA Capital asserted was its contractual obligations should not be equated with an unwillingness on the part of Thousand Hills to comply with its actual contractual obligations for the purpose of the law of repudiation. In this context, it is also important to bear in mind that the phrase 'ready, willing and able' to perform does not mean 'desperately keen' to perform. A contracting party may wish to avoid a contract, but consider itself still bound; in this sense there may be a begrudging preparedness to comply with contractual obligations. Also, at least where the obligations are unclear, a party may assert a particular view of the contractual obligations placed on it, including a mistaken view, without that assertion amounting to an unwillingness to comply with the contract once the actual obligations are ascertained. This distinction between a party asserting a disputable view of what a contract requires of it and a party indicating that it does not consider itself bound by a contract, or that it is not ready, willing and able to comply with a contract, was noted in DTR Nominees Pty Ltd v Mona Homes Pty Ltd:

No doubt there are cases in which a party, by insisting on an incorrect interpretation of a contract, evinces an intention that he will not perform the contract according to its terms. But there are other cases in which a party, though asserting a wrong view of a contract because he believes it to be correct, is willing to perform the contract according to its tenor. He may be willing to recognize his heresy once the true doctrine is enunciated or he may be willing to accept an authoritative exposition of the correct interpretation. In either event an intention to repudiate the contract could not be attributed to him. As Pearson L.J. observed in Sweet & Maxwell Ltd. v. Universal News Services Ltd. (1964) 2 QB 699, at p 734:

"In the last resort, if the parties cannot agree, the true construction will have to be determined by the court. A party should not too readily be found to have refused to perform the agreement by contentious observations in the course of discussions or arguments..."[11]

1. This passage was in the context of the court evaluating whether one party's conduct was repudiatory, rather than whether the counterparty was 'ready, willing and able' to perform the contract and therefore able to accept a repudiation. However there is a symmetry between the concept of a party repudiating and the concept of a party not being ready, willing and able: both involve a party intending not to be bound by, or to perform, the contract. The test for whether conduct is repudiatory is an objective test - whether a party has evinced such an intention - and the test for whether a party is ready, willing and able to perform at least includes a subjective element, but the concepts otherwise both reflect the underlying principle that a party ought not to be obliged to comply with a contract, or to be liable for not complying with a contract, if the other party independently had or has no intention of complying with the contract itself.
2. Accordingly, just as a party does not repudiate a contract simply by asserting a disputed view of what the contract requires of it, a party does not cease to be ready, willing and able just because it asserts a disputed view of what the contract requires of it, at least in circumstances where its contention is tenable. Where, as here, the court is not asked to or is not able to adjudicate on whose view of the contract is correct, and the contract is not asserted to be uncertain, it must be assumed, as noted above, that the true obligations are capable of being authoritatively determined. In those circumstances, a party is able to accept a repudiation - will be 'ready, willing and able' - if it tenably asserts what it is obliged to do, tenably disputes what the counterparty asserts it is obliged to do, but accepts that it is bound by the contract and is willing, in the sense of prepared, and is able to comply with whatever the contract on a true construction actually requires of it.

B.3 Was Thousand Hills ready, willing and able?

1. In Foran v Wight, Mason CJ observed that where there has been an anticipatory breach, as is the case here, 'the requirement of readiness and willingness extends only up to the time of acceptance because then the earlier repudiation results in an early termination of the contract.'[12] In the same case, his Honour said:

... in the case of termination for anticipatory breach the plaintiff will generally be able to show at the time of termination that he would have been able to perform at the time for performance by demonstrating that he was not then disabled or incapacitated from such performance. As Dixon CJ noted in Rawson v Hobbs, one "must be careful to see that nothing but a substantial incapacity or definite resolve or decision against doing in the future what the contract requires is counted as an absence of readiness and willingness".[13]

2. In support of its contention that Thousand Hills was not ready, willing and able to comply with the contract, LBA Capital relied particularly on the evidence of Mr Scott Liu.[14] As my earlier reasons make clear, Mr Scott Liu was a director of Thousand Hills and the project manager for the development. He was also Thousand Hills' representative in Australia with whom LBA Capital dealt. He fell out with Mr Weng, an owner and director of Thousand Hills who was based in China, when Mr Weng formed the view, correctly it seems, that Mr Scott Liu was improperly seeking to have LBA Capital purchase apartments at his own developments in substitution for the apartments the subject of this proceeding. On 27 October 2020, Mr Scott Liu was removed as a director of Thousand Hills. His evidence was difficult to follow and at times internally inconsistent. He gave evidence that:

(a) He had never previously been involved in the development of NDIS apartments or a 'Class 3' building;

(b) Mr Weng wanted LBA Capital to cancel the contract because the NDIS apartments were hard to deliver and Thousand Hills itself had no right to cancel the contract;

(c) The desire to cancel was reinforced, in effect, when Thousand Hills found out about the allegations of fraud made against LBA Capital and the Charisious; and

(d) He believed that he needed LBA Capital's architect, Mr Thomas Lui, to agree to the plans for the NDIS apartments.

1. His evidence about the implications of building to NDIS standards was hard to follow. He gave the following evidence:

Is it correct to say that you were willing to amend the plans to accommodate a boarding house, if that's what Mr Charisiou wanted?--- Um, yes. > > But you wanted LBA to pay for those amended plans?---Yes, but I recall initially develop the building class 3 is not actionable upon the building.

If Mr Charisiou was prepared to pay for it, you were prepared to change the plans for him?--- Well, I can't recall, but I don't think so cause they asked - in my - I just recall that the level 3 is not actionable as Building class 3.

3. He stated that by not 'actionable', he meant not 'deliverable' in the sense of 'can't be done'.
4. I took his evidence, seen as a whole, to draw a distinction between the proposed changes to the third floor, that he thought necessary to meet the requirements of 'Class 3' standards and would be very problematic, and the building of individual apartments to NDIS standards, which he did not think would be problematic. He seemed to think, as best I can understand his evidence, that the changes sought by LBA Capital to the third floor - making it a 'boarding house' - was the problem. For example, when referring to NDIS apartments, he said:

You've never had discussions with [Mr Weng] about the difficulties?---Nah. Because I don't think it's very hard to difficult, it's really hard to deliver because very (indistinct words) which is done unapproved by the Thomas Liu, who's then, ah, special architect of the NDIS apartments engaged by Mario [Charisiou]. So once we get a drawing we can construct - construct as per drawing, whatever the - the width of door, the height of the (indistinct), whatever it is. So we just construct as per working drawing and that's all.

I'm trying to say the NDIS apartments requirement is not harder to deliver, in my opinion.

6. Indeed, he said that NDIS apartments were cheaper to build because the fittings were cheaper.
7. I was not impressed by Mr Scott Liu as a witness. But even taking his evidence at face value, it does no more than establish that Thousand Hills:

(a) did not want to build to a 'Class 3' standard if that was what was required;

(b) believed that any requirement to build to a Class 3 standard arose because of a demand by LBA Capital (that it was not entitled to make) that the third floor be built as a 'boarding house' rather than as individual apartments; and

(c) wanted LBA Capital to cancel the contract.

1. As noted, Mr Scott Liu also proposed selling to LBA Capital alternative NDIS apartments on the basis that the contract with Thousand Hills be cancelled in full or in part. This, however, was consistent with the current contract continuing to be in force unless and until some further agreement was reached. Seen as a whole, his evidence was consistent with Thousand Hills considering itself bound by the contract, but engaged in a dispute as to the nature of the obligations that it imposed.
2. Thousand Hills' architect, Mr Nicholas Sun, gave evidence to the effect that:

(a) The issue of building classification 'arose very late in the design process' and 'threatened to seriously derail' the project;

(b) The plans that had been prepared were never 'fully assessed' but the apartments as designed would have been approved;

(c) 'However, it is unclear if the project could have proceeded without major amendments and costs implication, if the level 1 and level 3 apartments had to be assessed as class 3 buildings by the building surveyor.' He later clarified that to convert the entire building from Class 2 to Class 3 would require further fire separation and engineering and an upgrade of the structure for 'consistent levelling of the floor'. This would be possible, but it would cost more;

(d) Turning the third floor into a 'boarding house' would entail an 'overall redesign of the entire floor' and more parking spaces;

(e) He (or his firm) had spent effort and time converting the first floor apartments to make them NDIS compliant and he 'more or less' knew what needed to be done 'to convert level 1 to class 3';

(f) He was prepared to turn the level three apartments into NDIS compliant apartments if needed; and

(g) If level three was to be converted into a boarding house, the additional parking requirements need to be satisfied either by car stackers or additional basement, and this was possible but would cost more.

1. Mr Sun also conveyed that the issue as to whether the classification of Class 3 was applied to an entire building when part but not all of the building was for use by people with disabilities, or whether the classification of Class 3 was applied only to those parts of the building for use by people with disabilities, was unclear and a matter for building surveyors.
2. In circumstances where the question as to whether or not LBA Capital was entitled to insist on the third floor being built as a 'boarding house' or the building being built to 'Class 3' standards remains undetermined, and unable to be determined on the evidence led, neither the evidence of Mr Scott Liu nor Mr Sun precludes a conclusion that Thousand Hills was ready, willing and able to comply with its obligations under the contract in the relevant sense - particularly if it were able to pass on any additional costs associated with building in accordance with the NDIS requirements.
3. The onus, however, remains on Thousand Hills to show it was ready, willing and able. At trial, it called its director Mr Weng. He swore in an affidavit that Thousand Hills had 'every intention' of proceeding with the contract until it communicated acceptance of LBA Capital's repudiation. He referred to a 'WeChat' message he had sent to Mr Scott Liu on 16 October 2020 stating that 'early commencement of construction and on time deliveries are the most important things', which is consistent with Thousand Hills then intending to proceed with the contract. He also swore that 'there was never any difficulty' in obtaining finance for the project. This is supported by the fact that Thousand Hills did, in fact, complete the development after terminating the agreement with LBA Capital, although it did so, in his words, 'going back to the normal apartment building.' Further, Mr Weng agreed, in cross-examination, that Thousand Hills and its architects and other people engaged 'continued to undertake work on the project' between October 2020 to February 2021.
4. Mr Weng was then asked about his reasons for terminating the contract in March 2021. He identified a number of reasons: he was concerned about the allegations of fraud; he had been told that LBA Capital were not 'genuinely trying to buy' the apartments; and he had found out that they were not in a position to settle. I accept that evidence. I am also satisfied that he had become annoyed by the delays that the project had experienced and that he blamed this on LBA Capital. But none of that is really to the point. A party who has a legal right to accept a repudiation is not precluded from doing so because it wants out of the contract and is grateful for the opportunity offered by the counterparty's repudiation.
5. It is true that LBA Capital's 7 October 2020 repudiatory email worked to Thousand Hills' advantage because it allowed Thousand Hills to terminate a contract that it did not wish to pursue and was otherwise seeking to escape by negotiation. The fact that Thousand Hills was engaged in that negotiation and perhaps invited that email was part of what caused me earlier to decide that the 7 October 2020 email seen in context was not repudiatory. But the Court of Appeal have determined, applying the objective theory of contract, that the 7 October 2020 email was repudiatory, and that the repudiation continued until it was accepted (or purportedly accepted) on 10 March 2021. The fact that one party to a contract accepts a repudiation of a contract that it is at the same time seeking to cancel by negotiation is no basis to conclude that the first party was not otherwise ready, willing and able to perform the contract.
6. On the evidence referred to, including that of Mr Weng, I am satisfied that Thousand Hills still considered itself, perhaps unhappily, bound by the contract, in the sense referred to in the passage from DTR Nominees Pty Ltd v Mona Homes Pty Ltd set out at para 18, and was prepared to comply with its contractual obligations, whatever they might ultimately be found to be. Indeed, the fact that it was probably open to a negotiated way out of the contract tends to establish its acceptance that the contract was otherwise binding on it, rather than establishing that it was not ready, willing and able to perform it (if it could not be cancelled or replaced by negotiation). Further, the delay in construction was well explicable given the ongoing nature of the impasse that had arisen and the fact that no agreement had yet been reached on who was going to pay for the changes that LBA Capital was seeking be made and is of itself no reason to conclude that it was not prepared to comply with its true contractual obligations.
7. Based on the evidence of Mr Weng that the company had finance available, and the fact that the project was in fact completed, and in the absence of any clear evidence that the adjustments that Thousand Hills would have to have made to the development (whatever they may have been) would have made it unaffordable for Thousand Hills (even assuming it could not pass on those costs), I am also satisfied that Thousand Hills was able to comply with its true contractual obligations.
8. Accordingly, I conclude that the requirement that Thousand Hills establish, as a condition of its right to terminate the contract by accepting LBA Capital's repudiation, that it was 'ready, willing and able' is satisfied.
9. I have not overlooked the fact that Thousand Hills did not call Mr Robert Fan, whom it had appointed to run the project from September 2020. Mr Scott Liu said that Mr Fan had told Mr Weng that the NDIS apartments were 'hard to deliver' and that Mr Fan did not want to proceed with the NDIS apartments. I do infer that Mr Fan's evidence would not have assisted Thousand Hills, and I accept, based on Mr Scott Liu's evidence, that Mr Fan probably would have preferred to have built ordinary apartments instead of NDIS apartments. But I am not able to speculate about what his evidence might otherwise have been, and, for the reasons set out above, the fact that Mr Fan, or Thousand Hills, was happy that it was able to avoid the contract is not a reason for concluding that it was not otherwise ready, willing and able, in the relevant sense, to complete the contract.

1. Once it is accepted, as it must be, that the 7 October 2020 email was repudiatory, the evidence simply does not establish that LBA Capital sent that email in reliance on representations made by Thousand Hills that created a shared assumption from which it would now be unconscionable for Thousand Hills to resile.
2. LBA Capital expressed the alleged representation, or 'shared assumption', to be:

that LBA Capital would send some form of correspondence proposing the rescission of the Contract and this would be used for the purpose of a mutual rescission of part or all of the Contract.

(a) An email from Mr Mario Charisiou (for LBA Capital) to Mr Scott Liu (for Thousand Hills) on 7 October 2020 at 7:28am indicating that he wished to cancel the contract 'because of the top floor' and to 'design' the first floor contracts as individual contracts, then 'sign' the apartments in another development. This conveyed to Thousand Hills that LBA Capital wanted to cancel the contract, enter into new contracts for the units on the ground floor, and enter into new contracts for units at another development;

(b) An email from Mr Scott Liu to Mr Mario Charisiou on 7 October 2020 at 9:20am indicating that he (Mr Charisiou) could 'send us the cancellation letter at first and request to change the name as well as nomination for the first floor'. This conveyed, as I read it, that Thousand Hills was open to receiving a letter cancelling the contract on the basis that LBA Capital would at the same time agree to purchasing the units on the first floor and units at the other development;

(c) An email from Mr Mario Charisiou on 7 October 2020 at 9:49am, in which he said 'great let's meet tomorrow' and expressed interest in the other development; and

(d) An email from Mr Mario Charisiou to Mr James Charisiou on 7 October 2020 at 12:23pm that said:

James

Can you email Scott below as the director of LBA Capital and advise that the contract of sale for the apartments can not be satisfied by the vendor and by mutual consent by both parties agree to terminate the contract and forgo the deposit. Can you do this today

Cheers

This was, clearly, a request that Mr James Charisiou, the sole director of LBA Capital, write to Thousand Hills inviting it to agree to a proposed cancellation of the contract and, although less obviously, a return of the deposit.[15]

1. Instead, the 7 October 2020 email, sent at 1:04pm by Mr James Charisiou, the sole director of LBA Capital, provided as follows:

Dear Scott

Unfortunately our company is in the process of winding down, as we are unable to continue operating. As such the company will not be in a position to settle on the contract.

My suggestion is that we rescind the contracts, and reach an agreement on how the deposit moneys are used to settle the matter.

Looking forward to your thoughts on this matter.

1. The repudiatory part is the first paragraph of this email, by which LBA Capital advised that it was 'winding down' and 'unable to continue operating' and so would not be in a position to settle on the contract. There is nothing in the prior communications that explain this part of this email. Further, rather than seeking a return of the deposit, the balance of the email anticipates, it seems, that at least some part of the deposit might not be returned, which is consistent with an acceptance that LBA Capital might have some liability to Thousand Hills for its inability to complete the contract.
2. Further, this email, were it induced by the prior communications and sent based on the asserted common assumption, might have been expected to have referred to the prior communications or the asserted common assumption, or even perhaps indicated a willingness still to purchase the units not on the third floor and instead to purchase units at another development.
3. The text of this email, and its divergence from the email that Mr Mario Charisiou had asked Mr James Charisiou to send, was never satisfactorily explained, despite Mr James Charisiou giving evidence. In his affidavit, Mr James Charisiou said that at the time he sent that email he was 'agreeable to the parties mutually terminating the Contract on the basis that LBA Capital's deposit was refunded or applied to a new project for a related entity of LBA Capital' and that at the time he sent the email he was 'considering winding down' LBA Capital. He did not say that he sent this email, or in particular the first part of the email, on the basis of an assumption, induced by Thousand Hills, that Thousand Hills would not accept the apparent repudiation but would treat this letter only as the first step towards a mutual termination or variation of the agreement. In his oral evidence, he variously said when asked about this email:

I mean, when I wrote that, that was in the context of - of my understanding that Mario had been having ongoing discussions with Scott, and Scott was communicating to him - I didn't speak to him directly - via Mario that ... they were unable to continue with the original terms of the agreement and were looking at alternative options ... I was wanting to clearly communicate that we weren't taking any new ventures. We were winding down anything to do with any growth or anything like that.

...

At the time, I was getting communications via Mario that Scott was wanting to vary the contract, ah, so that we could settle on the (indistinct) apartments as is without being upgraded to platinum. Ah, or be looking to vary it by substituting it with some other apartments. And I wasn't wanting to do that, but I do acknowledge that that's not clear.

...

But, at the time, because I clearly remember, ah, what I was thinking generally at the time was, ah - with all this disputed and it was current, my focus was, "How do I keep the existing contracts open? What are the contracts that we can maintain?" And absolutely not getting to any alternate contracts or variations. That was what was top of the mind, ah, of, ah - in regards to this.

...

Yes. Yes, I can't - I can't (indistinct words) of what I was thinking at the time, but the - ah, my general recollection is that at the time ..., I was told that the contracts were - couldn't be fulfilled, and either were ... - and the only ... options are either to agree to the suggested variation of going into another, um-purchasing a different set of apartments or agreeing to the apartments as is, or to close them down completely and - and get the deposit money back, and I assume there would be costs associated with that.

1. Further, LBA Capital had been sued by JB Asset Management Pty Ltd in August 2019, and by July 2020 allegations of fraud on the part of Mr James Charisiou were being investigated. On 7 October 2020, the very day he sent the repudiatory email, the Sydney Morning Herald published an article that suggested that Mr James Charisiou was the man 'behind a $400 million fraud against a major Korean investment house looking to invest in National Disability Insurance Scheme housing projects'. By the time he gave evidence, Mr James Charisiou had been convicted of fraud[16] and he gave his evidence from prison.
2. In these circumstances, I am not satisfied that Mr James Charisiou, as director and on behalf of LBA Capital, sent the repudiatory email as a result of a 'shared assumption' held by him and induced by Mr Scott Liu's communications that the email would or could only be treated by Thousand Hills merely as a first step in a process by which the contract would be varied or cancelled by agreement. The text of the first paragraph of the email just simply goes against that being its purpose. It is more likely, in my view, that the email was sent in the form it was because that is exactly what Mr James Charisiou intended to convey to Thousand Hills at that time.
3. I accept, of course, that he did not anticipate the email being used by Thousand Hills as a method of it extracting itself from the contract on the grounds that LBA Capital had repudiated it and retaining the deposit, but that fact does not give rise to an estoppel. A communication does not cease to be repudiatory because the communicator did not anticipate the legal consequence of that communication.

1. A party that elects to affirm a contract following a repudiation may not then change its mind and accept the repudiation. However, an election to affirm must be an 'unequivocal' election that is communicated to the other party.[17] Conduct that is short of this, that is consistent with the party retaining the right to terminate as an option, will not amount to an election.
2. LBA Capital relied on the facts that:

(a) Thousand Hills continued to work on the development after the 7 October 2020 email; and

(b) Thousand Hills continued to communicate about LBA Capital potentially purchasing apartments in another development instead of at the Burwood development.

1. Also, on 24 December 2020, Thousand Hills' solicitors wrote to LBA Capital's solicitors in the following terms:

Can you please provide your client's instructions as to whether or not they still intend to proceed with the purchase.

As discussed, we have been advised that your client does not wish to proceed with the purchase of some of the lots and seek your assistance in determining which Lots (Level 3?) in particular.

Once we have confirmation we can seek our clients instructions for a Deed of Cancellation.

Please advise

1. This email was never responded to.
2. I do not read this communication, or the fact that Thousand Hills continued to work on the development and to explore the purchase of substituted apartments, as an unequivocal election on the part of Thousand Hills to affirm the contract. The email is directed at ascertaining whether LBA Capital might be interested in purchasing a subset of the lots that it had contracted to purchase and is not inconsistent with Thousand Hills retaining its right to accept the repudiation. The fact that Thousand Hills continued to do work on the development, particularly if that work were not specifically directed at the NDIS aspect of the apartments for LBA Capital (and there was no evidence that it was), was also not an unequivocal affirmation of the contract to sell the apartments to LBA Capital. Even if the contract with LBA Capital were terminated, the apartments on the second floor were never going to be sold to LBA Capital and so had to be completed in any event. Further, Thousand Hills was inevitably going to seek to complete the development even if the contract with LBA Capital were terminated so that it could sell the apartments on the first and third floors to other purchasers.

1. LBA Capital did not formally abandon its argument that it was able to recover the deposit under the principle of unjust enrichment. But it did not present any submissions that established that the principles of unjust enrichment would apply to compel the return of the deposit if I were otherwise satisfied that:

(a) Thousand Hills was 'ready, willing and able' when it accepted LBA Capital's repudiation of the contract; and

(b) Thousand Hills was not estopped from treating the repudiatory email as a repudiation.

1. LBA Capital took me to a passage in Foran v Wight where Deane J said:

Upon rescission, the purchasers were entitled to obtain restitution of the deposit which they had paid. Their claim for the return of the deposit was not founded on the rescinded contract. Nor did it represent a claim for damages for the vendors' breach of its terms. It was a claim founded in the equitable notions of fair dealing and good conscience which require restitution of a benefit received as, or as part of, the quid pro quo for a consideration which has failed.... If it be necessary to clothe that claim in a nomenclature, the appropriate one in a modem context is "restitution" for, or of, "unjust enrichment".[18]

1. In Foran v Wight, however, it was the vendor who had repudiated the contract, and the purchaser who had accepted that repudiation. That explains why the deposit had to be returned. In this case, the purchaser, LBA Capital, repudiated the contract. The essential answer to LBA Capital's submission is that, in such circumstances, it is not unjust that the vendor, Thousand Hills, retain the deposit. A deposit paid by a purchaser is an earnest of performance by it. If the purchaser indicates that it will not be able to complete the purchase, it is not unjust that the vendor retain the deposit.

1. For the above reasons, Thousand Hills was entitled to and did accept LBA Capital's repudiation of the contract, the contract is at an end, and Thousand Hills is entitled to retain the deposit.
2. I will hear the parties on the precise form of orders and on the question of costs.

[1] Thousand Hills Property Pty Ltd v LBA Capital Pty Ltd [2024] VSC 597.

[2] Thousand Hills Property Pty Ltd v LBA Capital Pty Ltd [2025] VSCA 115.

[3] [1978] HCA 12; (1978) 138 CLR 423, 433 (Stephen, Mason and Jacobs JJ, Aickin J agreeing).

[4] See eg: Foran v Wight [1989] HCA 51; (1989) 168 CLR 385 at 437-8 per Deane J: '...I do not accept the proposition that a party must incur the expense necessary to put himself in a position where he can positively demonstrate actual or potential readiness and willingness to perform a contract before he can accept the repudiation of the other party and thereby rescind. In my view, that proposition is unjustified by either principle or common sense. Absence of actual or potential readiness or willingness to perform a contract will prima facie preclude a successful action against the other party for specific enforcement of the contract or for the recovery of damages for its breach. It does not, of itself, preclude recission of the contract by acceptance of the other party's repudiation.... Put differently, it is difficult to see why the law should insist that, even though both parties to a contract have repudiated it, the contract must hang like an albatross around their necks unless and until they can reach a new agreement about its termination.' His Honour made it clear later at 438 that this should be the approach in circumstances where a party was claiming the return of a deposit, not as a result of any alleged breach, but as restitution of a benefit received for a consideration that has failed.; Highmist Pty Ltd v Tricare Ltd [2005] QCA 357, [60]-[62] (Keane JA).

[5] Willis v Crosland (2021) 65 VR 1, 16 [60] (Sifris, Walker JJA, Macaulay AJA), footnotes omitted.

[6] Thousand Hills Property Pty Ltd v LBA Capital Pty Ltd [2025] VSCA 115, [29].

[8] Thousand Hills Property Pty Ltd v LBA Capital Pty Ltd [2024] VSC 597, [33].

[9] Ibid [22], [23], footnotes omitted.

[10] By Special Condition 10.2, Thousand Hills covenanted that it would cause the entry into of the Building Contract and by Special Condition 10.1(b) LBA Capital acknowledged that the building would be 'generally in accordance with the Building Plans'. 'Building Contract' was defined to be a contract under which the Builder would build the building. 'Building' was defined to be a building constructed in accordance with the Building Plans.

[11] [1978] HCA 12; (1978) 138 CLR 423, 432 (Stephen, Mason and Jacobs JJ, Aickin J agreeing).

[12] [1989] HCA 51; (1989) 168 CLR 385, 408.

[13] Ibid, 408-9, footnote omitted. Rawson v Hobbs is reported at [1961] HCA 72; (1961) 107 CLR 466 and the passage extracted is at page 481. See also Dawson J at 453.

[14] To avoid confusion I will include the first names of Mr Scott Liu, Mr Mario Charisiou and Mr James Charisiou.

[15] Mr Mario Charisiou and Mr James Charisiou gave evidence that 'forgo the deposit' was intended to mean, and was understood to mean, a return of the deposit.

[16] DPP v Charisiou [2024] VSC 303.

[17] Sargent v ASL Developments Ltd [1974] HCA 40; (1974) 131 CLR 634, 646.

[18] [1989] HCA 51; (1989) 168 CLR 385, 438.