Property Law Act 1958, s 49(1).

Foran v Wight [1989] HCA 51; (1989) 168 CLR 385; Shevill v Builders Licensing Board [1982] HCA 47; (1982) 149 CLR 620; Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471, referred to.

Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; (2007) 233 CLR 115, applied.

1. On 24 July 2019, Thousand Hills Property Pty Ltd ('the developer') and LBA Capital Pty Ltd ('the purchaser') entered into an agreement for the off-the-plan sale of 14 lots proposed to be created within an apartment building intended to be constructed in McIntyre Street, Burwood.
2. Eleven of the proposed lots, which were the subject of agreement, comprised apartments on the first floor of the proposed development and three of the proposed lots comprised apartments on the third floor of the proposed development.
3. The contract of sale attached proposed floor plans for the apartments. Thus, the contract of sale extended not only to the provision of individual lots within prescribed envelopes contained in the proposed building but also to the provision of apartments in accordance with the floor plans.
4. A deposit of $883,200 was paid to the developer by the purchaser. The proposed sale has not proceeded and a dispute has arisen as to whether the developer is entitled to retain the deposit.
5. In order to resolve this dispute the developer has instituted proceedings in the Trial Division of this Court. By originating motion and summons the developer sought, pursuant to s 49(1) of the Property Law Act 1958, an answer to the question 'Did the defendant [purchaser] repudiate, and has the plaintiff [developer] accepted the repudiation of the Contract.' It also sought declaratory relief and orders for the forfeiture of the deposit and accrued interest.
6. The foundation of the developer's case is an email of 7 October 2020 sent by James Charisiou on behalf of the purchaser to Xiaoyu (Scott) Liu on behalf of the developer (the 'withdrawal email').

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.

1. On 10 March 2021, the developer's solicitors wrote to the purchaser's solicitors by email purporting to accept repudiation of the contract.
2. Notwithstanding the terms of the withdrawal email, the purchaser contends that, understood in the context of surrounding circumstances evidenced by communications between the parties, the withdrawal email did not constitute repudiation of the contract.
3. More particularly:

(a) the withdrawal email followed an unresolved and substantial dispute as to the consequences of a special condition requiring the developer to bring the design of the proposed apartments into compliance with requirements imposed under the National Disability Insurance Scheme ('NDIS') as a precondition to the funding of the accommodation of disabled persons within them; and

(b) that dispute had led to discussion between representatives of the parties with respect to possible substitution of apartments at another location for the provision of apartments under the contract.

1. Moreover, some discussion of the potential substitution of alternative apartments to those proposed under the contract continued after the withdrawal email and before the purported acceptance of repudiation.
2. In response to this sequence of events, the purchaser took the position stated in a solicitor's letter of 24 May 2023:

The communications do not support a conclusion of anticipatory breach or any other breach by our clients. It is clear from other communications in or around early October 2020, as well as earlier and later, that your client did not wish to proceed with the contracts because of the requirement it construct the apartments to the agreed NDIS Standards and, separately, that it treated the contracts as remaining in force after any communication(s) by our client upon which your client now seeks to rely to establish repudiation and its acceptance.

1. After a three day hearing, during which his Honour heard oral evidence from persons associated with the parties, Gorton J determined that the question raised for determination should be answered in the negative.[1] His Honour held that the withdrawal email, seen in its full context, would not have conveyed to a reasonable person in the developer's position that the purchaser did not consider itself bound by the contract or that the purchaser would not be able to complete the contract.[2] The developer now seeks leave to appeal this decision.
2. For the reasons which follow, we respectfully take the view that the withdrawal email did repudiate the contract. In turn, the developer was entitled to accept the repudiation of the contract (which was not withdrawn) if at the date of such acceptance it was ready, willing and able to perform the contract and it was not otherwise precluded from doing so.
3. In summary this is because:

(a) the objective meaning of the withdrawal email is plain. It states that the purchaser is 'winding down' as it is unable to continue operating. In consequence, the purchaser 'will not be in a position to settle on the contract'.

(b) the email was sent by the officer of the purchaser who managed its financial affairs at a time when the purchaser's assets were frozen by Court Order, and on the day upon which the financial capacity of the purchaser to complete the contract was potentially affected by the public disclosure in the press of the fact that the sender of the email was implicated in serious allegations of fraud;

(c) neither the prior dispute as to the consequences of the special condition relating to NDIS requirements, nor the discussion between the representatives of the parties concerning potential substitute transactions prior to the withdrawal email, derogated from the plain meaning of that email;

(d) a subsequent email communication from the purchaser to the developer alleging the developer was not itself ready, willing and able to perform the contract did not derogate from the purchaser's repudiation of the contract; and

(e) at the date of the acceptance of the repudiation, the purchaser had not purported to resile from the position that it would not be able to settle on the contract. Although alternative arrangements were discussed between representatives of the parties, the repudiation itself was not withdrawn.

1. Accordingly, leave to appeal should be granted and the appeal allowed. The trial judge did not determine whether the developer was ready, willing and able to perform the contract, nor did he determine various other matters raised at trial. Therefore the matter must be remitted to the Trial Division for determination.

1. Section 49 of the Property Law Act 1958 provides:

(1) A vendor or purchaser of any interest in land, or their representatives respectively, may apply to the Court, in respect of any requisitions or objections, or any claim for compensation, or any other question arising out of or connected with the contract (not being a question affecting the existence or validity of the contract), and the Court may make such order upon the application as to the Court may appear just, and may order how and by whom all or any of the costs of and incident to the application are to be borne and paid.

(2) Where the Court refuses to grant specific performance of a contract, or in any action for the return of a deposit, the Court may, if it thinks fit, order the repayment of any deposit.

(3) This section shall apply to a contract for the sale or exchange of any interest in land.

1. The question raised for determination falls within the terms of this provision.
2. In turn, the principles governing the concept of repudiation applicable to the present case are well established, and there was no real dispute about them between the parties. As the trial judge held, a party repudiates a contract and gives the counter party a right to accept that repudiation and thereby bring the contract to an end if that party objectively indicates that it is no longer able to perform the contract.
3. In Foran v Wight,[3] the High Court considered a case concerning a contract for the sale of land. The vendors intimated that they would not be able to settle in accordance with the contract. Mason CJ summarised the relevant general principles as follows:[4]

In a contract for the sale of land, the vendor's obligation to deliver a good title and the purchaser's obligation to pay the purchase money are concurrent and mutually dependent obligations in the sense that they are 'simultaneous acts to be performed interchangeably'.[5] Generally speaking, a party in breach of such an obligation cannot terminate for the other party's breach. But a party may be excused or absolved from performance of his concurrent obligation by conduct on the part of the other party amounting to a waiver or dispensation with performance. A repudiation by that party of his concurrent obligation may constitute such a waiver or dispensation. In that event the party excused or absolved from performance may terminate the contract and sue for damages.

1. In Shevill v Builders Licensing Board, Gibbs CJ stated that 'a contract may be repudiated if one party renounces his liabilities under it - if he evinces an intention no longer to be bound by the contract'.[6]
2. In Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd, Gleeson CJ, Gummow, Heydon and Crennan JJ stated:[7]

The term repudiation is used in different senses.[8] First, it may refer to conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party's obligations.[9] It may be termed renunciation.[10] The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it.[11] ... Secondly, it may refer to any breach of contract which justifies termination by the other party.[12]

1. This test reflects the objective theory of contract: '[t]he legal rights and obligations of the parties turn upon what their words and conduct would be reasonably understood to convey, not upon actual beliefs or intentions'.[13]
2. The critical question in this case is whether the withdrawal email evidenced a renunciation of the contract. That question falls to be judged objectively having regard to what the withdrawal email would convey to a reasonable person in the position of the developer and, in particular, whether it would convey that the purchaser was unable to and would not perform the contract.

1. On 24 July 2019, when the parties entered into the contract, the developer had two directors. The first director, Guozheng Weng, was based in China. He did not have direct communications with the purchaser but provided the funding for the project. The other director, Scott Liu, was a builder based in Australia. He signed the contract on behalf of the developer, managed the project and represented the developer in its dealings with the purchaser.
2. The purchaser's director was James Charisiou. His brother, Mario Charisiou, also worked for the purchaser company. Mario Charisiou managed the project for the purchaser and signed the contract as a guarantor.
3. The contract required the developer to build apartments in accordance with attached plans. It was further subject to a special condition which stated:

In addition to relevant regulatory building requirements and good building practice the Vendor 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 Certificate (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. On 23 August 2019, the Court, on an ex parte application made in proceedings against parties which included both the purchaser and its director, froze the purchaser's assets in circumstances where it was alleged that it had defrauded some Korean investors of many millions of dollars in relation to other development projects.[14] A freezing order governing the purchaser's assets continued in force throughout the course of the subsequent events in issue.
2. In May 2020, the developer's architects received advice that the building surveyor appointed to the project considered that in order to achieve NDIS compliance, the apartments, including those on level one, needed to be built to Class 3 of the Building Code rather than Class 2 as the plans attached to the contract contemplated.
3. The purchaser then took the position that:

(a) the apartments required to be provided under the contract must be built to a Class 3 level; and

(b) the apartments on the third floor were to be constructed in a form suitable for use as a boarding house in order to limit the total number of occupancies for the purpose of the NDIS requirements.

1. The developer took the position that it was not required to provide either a 'boarding house' or a 'Class 3' building.
2. An impasse arose by August 2020. The purchaser wanted to proceed with the contract, but only on the basis that the building be built as a Class 3 building and the third floor be built to a design which would accommodate a 'boarding house' use. The developer did not consider itself obliged to build the third floor to a design which would accommodate a boarding house use and did not accept that the building should be a Class 3 building.
3. By September 2020, Mario Charisiou and Scott Liu had started to explore an arrangement whereby the purchaser would purchase apartments in other locations, in substitution for the apartments in Burwood. It emerged at trial that the alternative apartments were in projects being undertaken by Scott Liu, not by the developer. However, the trial judge observed that there was nothing in the correspondence to suggest that Scott Liu ever conveyed to Mario Charisiou that the alternative developments were not projects of the developer and his Honour accepted Mario Charisiou's evidence that he thought that Scott Liu 'was' the developer when proposing the other projects.[15]
4. As at 7 October 2020, Scott Liu was engaged in negotiations with Mario Charisiou exploring the possibility of an agreement whereby the contract for the Burwood apartments might be cancelled or at least substantially modified and other apartments purchased in substitution.
5. On 7 October 2020 at 2.48 am, Scott Liu emailed Mario Charisiou as follows:

Hi Mario

I hope this email finds you well

Just want to touch base for NDIS apartments, could we have time to discuss and get everything going forward?

Regards

1. On 7 October 2020 at 7:28 am, Mario Charisiou sent Scott Liu an email as follows:

Hi Scott

Yes I am keen however as we can't proceed on the Burwood apartments because of the top floor we need to first Cancell [sic] that contract and design the fist [sic] floor apartments as individual contracts .we can also then sign the mentone apartments .i can have a letter issued to you to advise of the cancelation and you have the letter of acceptance and at the same time we sign all the new contracts for Burwood and Mentone.Im free around 12 pm today if you want to come by to discuss .

Have you got your funding through for Burwood ?

Regards

1. We interpolate that, read as a whole, this email contemplates the possible termination of the contract by agreement, in conjunction with the simultaneous entry into new contracts relating to the first floor apartments coupled with the purchase of alternative accommodation at other locations.
2. We also note that there is no evidence this email was copied to James Charisiou.
3. On 7 October 2020 at 9:20 am, Scott Liu emailed Mario Charisiou as follows:

Hi,Mario

Can we have meeting tomorrow?

My appointments are really full today, what time will suit you? Anytime late afternoon?

And, the fund should be ok now, but not formal approved yet, because the approval needs building permit, but the building permit needs civil plan from council, I have chased up many times in the past three months, unfortunately, still waiting, the Whitehorse is too slow now.

But, for the contract, that should be ok. I think you can send us the cancellation letter at first and request to change the name as well as nomination for the first floor. I need the solicitor to review contracts

For the camberwell, are you interested to buy some for your NDIS? I just found that the government announced higher budget for NDIS from news yesterday, rally [sic] a great news for you

Regards

1. Again, we interpolate that this email indicated a provisional willingness to enter into new agreements in substitution for the contract. It did no more, however, than outline what 'should be ok' in relation to the contract, and invited a proposal relating to the first floor (only) of the Burwood development coupled with the provision of further alternative accommodation at Camberwell.
2. There is no evidence that a copy of this email was forwarded to James Charisiou.
3. On 7 October 2020, an article concerning allegations of fraud against James Charisiou appeared in the press. The article in the Sydney Morning Herald reported proceedings in the Supreme Court of Victoria[16] in which James Charisiou sought to stay civil proceedings against himself and companies associated with him pending the resolution of potential criminal charges alleging serious fraud which James Charisiou feared he was facing. The article further stated in part:

JB Asset Management and its investment broker KB Securities allege they advanced $395 million to [the purchaser] to make investments in NDIS-endorsed property developments but that the transactions were never completed or were completely faked.

The Korean groups told the Court they remained $40 million short after $337 million was returned to them and $15 million worth of property purchased with their money located.

The Korean companies allege [the purchaser]'s representative created fake letters for support from Liberal Senator Sarah Henderson and registered a company under a name that was similar to property giant LendLease's main wholesale investment vehicle.

1. On 7 October 2020 at 9:49 am, Mario Charisiou emailed Scott Liu as follows:

Great let's meet tomorrow

And yes I am interested in camberwell

Regards

1. On 7 October 2020 at 12:23 pm, Mario Charisiou sent James Charisiou an email as follows:

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

1. This email attached a copy of an email from Scott Liu recording his email address and dated 30 July 2020. It did not attach copies of the earlier correspondence between Scott Liu and Mario Charisiou which had been exchanged on the morning of 7 October 2020.
2. On 7 October 2020 at 1:04 pm, James Charisiou sent the withdrawal email to Scott Liu which we will repeat for convenience:

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.

1. James Charisiou gave evidence before Gorton J that his subjective intention in sending the withdrawal email was to make clear that the purchaser would not enter into any arrangements other than those specified in the contract.

You said nothing in that email about doing any different deals, did you?---No, but I was writing that in the context that I understood at the time. Okay. 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.

Okay. So you were saying that - - -?---Reading it now - reading it - reading now and having read it when I made the affidavit, I recognise it wasn't as clearly, ah, as that. 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.

1. Neither the purchaser nor the developer contends that the withdrawal email conveys this intention.
2. On 7 October 2020 at 11:22 pm, Scott Liu replied to the withdrawal email as follows:

Hi James

That should be ok, could you please ask your solicitor to contact my solicitor to arrange the change as nomination?

1. On 8 October 2020 at 9:32 am, James Charisiou sent another email to Scott Liu stating:

Scott

Irrespective of LBA's circumstances the contract of sale for the apartments cannot be satisfied by the vendor. We need to arrive by mutual consent by both parties agree to terminate the contract and determine how the deposit is to dealt with [sic].

I have copied in my solicitor, Nick Galatas and his assistant who can follow up with the vendor's solicitor on this matter.

Regards

1. The use of the phrase 'Irrespective of LBA's circumstances' makes clear that the email was not intended to qualify the statements which had been made concerning those circumstances in the withdrawal email.
2. Further discussion subsequently occurred between Mario Charisiou and Scott Liu as to possible alternative arrangements for the provision of apartments to the purchaser. That discussion is reflected in a series of Whatsapp messages.
   • On 19 October 2020, Scott Liu sent a message to Mario Charisiou stating:
     • Hi Mario
     • My architect is still working on the NDIS layout for Camberwell, will send to you at this Wednesday
   • Mario Charisiou responded:
     • How about Mentone
   • Scott Liu answered:
     • I am working on it, because I used different Architect, so I need to contact them and discuss with them. That is no problems, but takes a bit of time.
   • On 26 October 2020, Scott Liu sent a message to Mario Charisiou:
     • I have sent you the floor plan of NDIS, can I call you tomorrow to discuss?
   • On 27 October 2020, Mario Charisiou responded:
     • Can I call you later?
3. On 24 December 2020, the developer's solicitors wrote to the purchaser's solicitors and said:

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 client's instructions for a Deed of Cancellation.

Please advise.

Regards

1. On 27 February 2021, Scott Liu sent an email to Mario Charisiou as follows:

Hi, Mario

Just wondering what is decision about the NDIS apartment that you bought, do you want to cancel the purchase as we discussed last time?

Regards

1. On 10 March 2021, the developer purported to accept what it said was a repudiation of the contract by the purchaser constituted by the withdrawal email.
2. By this date Guozheng Weng had become 'frustrated and disappointed' with Scott Liu's management of the project, and engaged Robert Fan as a project manager.
3. On 11 March 2021, James Charisiou was charged with fraud offences in respect of a $38 million loss arising out of the dealings referred to in the press report set out above.[17]
4. On 22 April 2021 the purchaser's solicitor sent correspondence to the developer's solicitor as follows:

The purchaser does not accept that it has breached the contract in any way, says it is not in breach and does not assert it cannot settle.

The settlement date has not passed.

Our client's rights under the contract are asserted and maintained.

For the avoidance of doubt, it has not repudiated the contract and accordingly, there is no repudiation for your client to accept. The contract remains on foot.

1. The developer has since built the Burwood apartments other than to the specified NDIS standards, and has sold, or is in the process of selling them, to other purchasers.

1. At trial, the developer called evidence from the following witnesses:

(a) Ms Li Guo (the current director of the developer); and

(b) Mr Guozheng Weng (a former director of the developer and husband of Ms Gou).

1. At trial, the purchaser called evidence from the following witnesses:

(a) Mr James Charisiou (the former director of the purchaser who at the time of trial was serving a 12 year sentence for fraud relating to dealings in respect of other proposed NDIS building projects not involving the developer);

(b) Mr Mario Charisiou (guarantor under the contract and the brother of James Charisiou);

(c) Mr Xiaoyu (Scott) Liu (the former director of the developer who signed the contract and had all communications with the purchaser on behalf of the developer); and

(d) Mr Xiaoxi (Nicholas) Sun (architect for the developer).

1. The trial judge first identified the central questions before him, namely, whether the purchaser had repudiated the contract and (if so) whether the developer had accepted the repudiation.
2. His Honour then summarised the relevant legal principles, emphasising that the first question fell to be determined objectively and that an expression of a firm intention not to continue with a contract is not to be equated with 'an expression of a desire not to comply with a future contractual obligation or a request to be relieved from that obligation, as part of a renegotiation or otherwise'.[18]
3. His Honour set out the terms of the withdrawal email and recorded its purported acceptance as a repudiation.[19] His Honour then stated:

The statement in [the purchaser]'s 7 October 2020 email that [the purchaser] 'will not be in a position to settle on the contract' could, certainly, convey to a reasonable person in [the developer]'s position that [the purchaser] would not be able to pay for the lots when the apartments were complete or otherwise that it did not consider itself bound by the contract. Whether it did convey that, however, requires the email to be evaluated in the context of the surrounding circumstances. [The purchaser] relied on what it contended were written and oral communications that, it said, provided the context in which the above two emails had to be seen and by which it should be concluded that [the purchaser] did not repudiate the contract.[20]

1. After describing the persons involved in the relevant dealings, the trial judge then noted the contractual requirement to build to NDIS standards and observed:

This should be emphasised: although some of the written terms required [the developer] to build apartments in accordance with attached plans, the contractual intention, as emerging from the special condition, was instead that:

(a) those plans would, at some later time, be modified to ensure that the apartments [the purchaser] was to buy were compliant with the NDIS's requirements for its highest level of physical disability; and

(b) the purchase price would or could then be varied, having regard to any costs or savings associated with those modifications, in a subsequent agreement.

In this way, the contract anticipated, if not required, that the parties would have to come to a further agreement. Neither party argued that the contract was void for uncertainty and, presumably, if required, terms could be implied that the parties act reasonably. The actual NDIS requirements were not in evidence.[21]

1. The trial judge then set out the history of dispute as to the appropriate building class required to be adopted under the Building Code if NDIS requirements were to be met.

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 [the developer], 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 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.

I accept that if the obligation to make the apartments sold to [the purchaser] NDIS compliant meant the building would be treated as a 'Class 3' building, changes would have to be made to the building as a whole and not just to the individual apartments to be sold to [the purchaser], and that the cost and other implications of that happening were uncertain but not insignificant. That would explain why [the developer] did not want the building to be categorised as Class 3.[22]

1. His Honour then recorded the history of the dispute between the parties following the assertion by the purchaser that the third floor needed to be designed as a single boarding house occupancy in order to meet NDIS requirements. The basis of this position was expressed in an email from Mario Charisiou to Scott Liu on 4 August 2020:

To be clear, the top floor was all to be NDIS high physical support boarding home. The top floor cannot be full NDIS apartments because the maximum full apartments per building is 10, with a spare for overnight carer, hence the 11 down stairs. Our contractor special conditions can't be met on the top floor as NDIS apartments because they won't obtain construction certification as NDIS apartments however will do so as boarding house Platinum level boarding homes. On that basis the building will need to classified as class 3 as per your building surveyor advise [sic]. Can you please confirm you will be doing so, so I can have my architect designed the top floor to meet the special conditions of the contract.

I will need to have you confirm the classification as Class 3 and that you will comply with the special conditions by COB this Friday 7th August, otherwise I will need to advise [the purchaser] the special conditions can't be met hence the purchase is now void and deposit returned to them.[23]

1. After reference to further communications between the parties, his Honour found:

These communications indicate that [the purchaser] was asserting that it was entitled under the contract to have the top floor modified to be a 'boarding house' so that the special conditions could be met. Scott Liu for [the developer] said he held the view, at the time, that [the developer] was not required to provide a 'boarding house' and that it would not be 'deliverable' to construct the apartments on level 3 to 'Class 3' standard: that that 'can't be done'. He believed that [the developer] was only required to build to Class 2. Further, Scott Liu said, and I accept, that Mr Weng did not want to build level 3 of the Burwood development to the NDIS standards, certainly if that required building to Class 3.

This evidence reveals the impasse that had arisen. I conclude that the situation, by August 2020 was, in summary:

(a) [the purchaser] wanted to proceed with the contract, but only 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) [the developer]:

(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 [the purchaser] was adjusted to account for any increased costs.[24]

1. The trial judge then summarised the evidence demonstrating that, by September 2020, Mario Charisiou and Scott Liu had started to explore an alternative arrangement under which the purchaser could purchase apartments proposed to be constructed in Mentone or Camberwell, in substitution for the apartments proposed in Burwood. This discussion led to the critical emails of 7 October 2020 which we have set out above. His Honour went on to record:

The existence of these proposed alternative arrangements was also supported by other evidence. Mario Charisiou swore in an affidavit that [the developer] became concerned that it could not meet the NDIS requirements without substantial additional cost and indeed that it 'could not meet the requirements of the special condition', and clarified in oral evidence that this [was] what Scott Liu had told him. He then said that in this context there were discussions about [the purchaser] buying 'other apartments [the developer] was developing to satisfy [the purchaser]'s interest in this type of accommodation.' Scott Liu said that he told Mario Charisiou:

• 'If you want cancel contract ... and if you want to buy ... another apartments to do the NDIS business, so I can sell ... another ... to him to do the NDIS apartments.'

Mario Charisiou said that, prior to his sending the email to his brother ..., Scott Liu told him that [the developer] 'could not complete the contract because it could not meet the requirements of the special condition relating to the NDIS and SDA apartments' and, in that context, [the purchaser] was looking instead to buy other NDIS apartments from [the developer].

Scott Liu did not accept that he said that [the developer] could not complete the Burwood contract. He did say, however, that Mr Weng had told him he wanted to cancel the contract, and that he had also heard the new project manager, Mr Fan, wanted to cancel the contract.

Mario Charisiou said in his oral evidence that the discussions also involved the Burwood property deposit, that had already been paid, being applied or 'reallocated' towards the new purchases. This was not put in terms to Scott Liu. I doubt that there would have been oral discussions to that effect given that there was no reference to the treatment of the deposit in the emails. However, I accept that, consistent with ordinary common sense in circumstances where one contract was to be replaced by agreement with another, the unspoken assumption was that the deposit would not be forfeited but would be applied, subject to some other agreement being reached, towards the substituted purchases.

It is also relevant that the Burwood development was becoming financially unattractive to [the developer] at least in part due to the delays. Mr Weng said 'the disability issue delayed my project by over a year'. The designs had not yet been finalised. Ms Guo accepted that the costs of building went up after the COVID pandemic, that 'construction costs have been increasing dramatically' and that 'the NDIS specifications have not been worked with us, and the project is delayed'. Mr Weng said: 'Overall, it had been delayed by over a year, and we have encountered big losses.'[25]

1. In turn, his Honour summarised the context in which the withdrawal email was sent as follows:

Accordingly, I conclude that, as at 7 October 2020, and immediately prior to the sending of the email relied on by [the developer] as a repudiation justifying its retention of the deposit:

(a) [the purchaser] had not conveyed that it was unprepared to or was not able proceed with the contract for the Burwood project, but was instead asserting an obligation on the part of [the developer] to complete and to sell to it the apartments at Burwood in the way it thought the contract required [the developer] to do;

(b) [the developer] believed that it was not required to build in the way that [the purchaser] asserted it was required to build;

(c) The construction of the Burwood apartments had stalled;

(d) Both sides were dissatisfied with the Burwood contract and would have been happy to get out of their contractual obligations in relation to it;

(e) Scott Liu, with ostensible authority to act on behalf of [the developer]:

(i) had conveyed to Mario Charisiou that [the developer] did not wish to build the apartments in the manner that [the purchaser] said they had to be built;

(ii) was engaged in negotiations with Mario Charisiou directed at achieving an agreement whereby the contract for the Burwood apartments would be cancelled or at least substantially modified and other apartments bought in substitution for the apartments provided for in that contract;

(iii) had invited [the purchaser], as the first step in that process, to forward a letter cancelling the contract for the Burwood apartments; and

(f) It was an unspoken assumption that if an alternative agreement were reached then the deposit would be applied to the purchase of the new apartments, rather than forfeited.[26]

1. The trial judge then returned to the sending of an email by Mario Charisiou to his brother James Charisiou at 12:23 pm on 7 October 2020 suggesting that James email Scott Liu advising that because the developer could not satisfy the contract both parties agree to terminate the contract and 'forego the deposit'. Then, after repeating the terms of the withdrawal email which was sent at 1:04 pm on 7 October 2020 by James Charisiou, his Honour recorded that in evidence James Charisiou was unable to explain why he sent an email that diverged in the substantial way that it did from the email sent to him by Mario Charisiou earlier that same day.[27]
2. His Honour then recorded the reply of Scott Liu at 11:22 pm and the further email sent by James Charisiou at 9:32 am the next day.
3. His Honour then noted:

There was no immediate response to this communication in evidence. Scott Liu and Mario Charisiou continued to communicate in relation to [the purchaser] purchasing apartments other than the Burwood development. On 19 October 2020, Scott Liu sent a text message to Mario Charisiou saying that his architect was 'still working on the NDIS layout for Camberwell'. Mario Charisiou replied asking 'How about Mentone'. Scott Liu replied that he was 'working on it'. Further, Scott Liu did not forward James Charisiou's 7 October 2020 email to Mr Weng until around March 2021 (although Mr Weng said he became aware of it in December 2020). This is consistent with Scott Liu's understanding that [the purchaser] was seeking to bring the contract to an end by agreement, rather than conveying that it no longer considered itself to be bound by the contract or conveying that it simply would not comply with the obligations under it.[28]

1. The trial judge then further addressed the period after the October 2020 emails noting that Scott Liu was removed as a director and replaced with Guozheng Weng's wife, Li Guo, on 27 October 2020 because it was believed Scott Liu had misappropriated money from Guozheng Weng. During November, Guozheng Weng also became aware that the purchaser had been accused of defrauding other investors. Despite these concerns, the developer's solicitors wrote to the purchaser's solicitors on 24 December 2020 in the terms we have already set out seeking confirmation whether or not the purchaser still intended to proceed with the purchase. His Honour observed:

This communication is revealing in two respects. First, it indicates that [the developer] was then unsure as to whether [the purchaser] intended to proceed with the contract. In this way, it is inconsistent with [the developer] genuinely holding the view, at that time, that [the purchaser] had already conveyed, in a manner that would amount to a repudiation justifying the forfeiture of its deposit, that it would not or could not complete the contract. Second, it is consistent with my conclusion, expressed above, that the parties were working towards a consensual variation of the contract.[29]

1. After recording the purported acceptance of the repudiation of the contract, his Honour turned to the proposition that the purchaser could not in any event have proceeded with the purchase.

It was put to James Charisiou that because of the allegations of fraud that had been made as described in para 56(b), [the purchaser] simply would not have been able to meet its obligations under the contract for the Burwood development, and that this was consistent with the statement in the email that [the purchaser] was 'winding down' and would not be in a position to 'settle on the contract'. James Charisiou disagreed. He said that the 'business case' for the apartments was very good and that the contract for the construction of the NDIS apartments was 'an attractive deal'. He accepted that [the purchaser] would have had to borrow funds to pay the purchase price and that the fraud allegations were such that [the purchaser] would probably have had difficulty raising funds from the major banks, but expressed confidence that funds could have been obtained from private investors. This makes sense to me. Just as the obligation to build NDIS apartments in 2021 for the contracted price was burdensome for [the developer], it seems that their value to [the purchaser] if completed may well have exceeded the balance of the amount owed under the contract (bearing in mind that a 10% deposit had already been paid).

As noted above, [the developer] has since constructed the apartments (not to NDIS specifications) and sold them to other purchasers. Counsel for [the purchaser] asserted that they were sold for a higher price than the price payable by it under the contract, and called for the sale contracts. The parties later agreed any party wishing to adduce a copy of any contract of sale was to do so by way of a confidential exhibit. There was talk of the contracts being relevant only as to their dates of sale. Ultimately, no contracts were put in evidence before me. In all the circumstances, I am not satisfied that the fraud allegations made in late 2020 meant that [the purchaser] could not have completed the contract.[30]

1. The trial judge then expressed the following conclusions:[31]

When the 7 October 2020 email is seen in its full context, it is apparent that, despite its unfortunate and largely-inexplicable wording, it would not in the unusual circumstances of this case have conveyed to the reasonable person in [the developer]'s position that [the purchaser] did not consider itself bound by the contract or that [the purchaser] simply would not be able to complete the contract. It was sent at the express request of [the developer]'s agent as the first step towards a mutual variation or cancellation of the contract. The statements that [the purchaser] was 'unable to continue operating' and 'will not be in a position to settle' were somewhat weakened by the next sentence that proposed that the contract be rescinded and the treatment of the deposit be determined by agreement. But they are also to be seen in the following context: the contract was constructed with a special condition providing that in effect the plans would need to be varied by further agreement; a dispute had arisen in relation to the contractual obligations on the parties; [the developer] did not want to proceed with the contract if it were obliged to do what [the purchaser] said it was obliged to do, and [the purchaser] did not want to proceed if [the developer] were not obliged to do what [the purchaser] said it was obliged to do; there was a plan to replace this contract (at least in part) with another contract by which [the purchaser] would instead purchase some apartments in another development; [the developer][32] had invited [the purchaser] to commence that process by sending a letter terminating the Burwood contract; [the purchaser] did not have to pay the balance owing for the apartments at Burwood until they had been built; the apartments would likely be worth at least the settlement amount owing; and a substantial deposit had been paid. Consistently with these surrounding communications and circumstances, the email conveyed instead that [the purchaser] wanted to escape the contract by agreement in accordance with suggestions to that effect made by [the developer]'s agent.

Further, [the purchaser] sent a second email less than 24 hours afterward clarifying that 'Irrespective of [the purchaser]'s circumstances the contract of sale for the apartments can not [sic] be satisfied by the vendor. We need to arrive by mutual consent by both parties agree to terminate the contract and determine how the deposit is to [be] dealt with.' This was sent prior to any acceptance of the purported repudiation and, consistently with my conclusion expressed above, indicates that [the purchaser] was in truth not indicating that it could not or would not comply with the contract if need be but was instead seeking to have the contract terminated by agreement.

In reaching these conclusion, I have not overlooked the fact that the 7 October 2020 email was sent on the same day that the articles about the fraud allegations appeared in the press. I reject James Charisiou's evidence that those articles had nothing to do with his writing of that email. Even so, my conclusion remains unchanged. The public emergence of the fraud allegations, in my view, likely encouraged [the developer]'s and James Charisiou's wish to escape from the contract. But that did not alter the quality of the communication: as noted, [the purchaser] conveyed that it wanted to escape from the contract, but did not convey a belief or assert that it was not bound by the contract.

Accordingly, the deposit was not forfeited and must be repaid.

1. Finally, his Honour recorded under the heading 'Other matters' that the developer did not call its project manager, Mr Robert Fan, and that no explanation was given for this failure. He inferred that Mr Fan's evidence would not have assisted the developer but recorded that he had not had to rely on this inference in reaching his conclusions. His Honour also noted that it had not been necessary for him to determine:

(a) whether [the developer] was obliged to build to 'Class 3' specifications, who was to pay any variation in costs, or any other dispute relating to whether [the developer] was ready, willing and able to perform the contract;

(b) whether [the developer] was required to but did not comply with termination provisions in the contract;

(c) whether, if [the purchaser] did repudiate the contract, [the developer] nonetheless elected to continue with the contract;

(d) whether [the developer] is estopped from asserting that it accepted a repudiation; or

(e) whether [the developer] would be 'unjustly enriched' if it were to retain the deposit.[33]

(1) The learned trial judge erred in finding that the respondent did not repudiate the contract of sale dated 24 July 2019.

(2) The learned trial judge should have found that the applicant accepted the respondent's repudiation of the contract, and duly terminated the contract.

1. In respect of ground 1, the developer submitted that:

(a) on the whole of the evidence, the trial judge should have been satisfied that the purchaser would have been unable to complete the contract;

(b) the trial judge gave insufficient consideration to the weight of the evidence supporting the conclusion that the purchaser would have found it extremely difficult if not impossible to complete the contract;

(c) to the extent that the trial judge regarded as necessary, proof of an absolute and final lack of capacity by the purchaser to complete the contract, the trial judge was in error; the simple truth is that the purchaser suggested, by written words and conduct, that it could not complete the contract, and it never retracted that intimation. There was a significant risk that if the developer redesigned the third floor as a boarding house the purchaser would not be able to complete the contract;

(d) the contract did not, in any event, require the developer to redesign the whole third floor;

(e) the trial judge placed too much weight on the dealings between the purchaser and Scott Liu canvassing the possibility of a substitute arrangement; and

(f) contrary to the trial judge's view, the withdrawal email did unequivocally state that the purchaser could not complete the contract.

1. In respect of ground 2, the developer submitted that:

(a) the purchaser represented to the developer that it was unable to settle and failed to retract that admission at any time;

(b) the developer was ready, willing and able to complete if required; and

(c) the further contentions of the purchaser should be rejected by the Court.

(a) the evidence demonstrates the developer was not ready, willing and able to complete the contract at the date of the purported acceptance of the repudiation;

(b) the trial judge's lack of satisfaction that the purchaser would not have been able to complete the contract accords with the weight of the evidence;

(c) the trial judge did not fail to consider the evidence as to the purchaser's financial difficulties;

(d) the trial judge correctly considered the meaning of the withdrawal email in context;

(e) the developer did not wish to build the proposed development in compliance with Class 3 requirements under the Building Code as required by the special condition;

(f) Mr Liu had ostensible authority to act on behalf of the developer;

(g) the evidence at trial was that it was the developer who instituted and continued discussion of the possibility of alternative arrangements;

(h) the trial judge did not make the necessary finding that the developer was ready, willing and able to perform the contract; and

(i) the trial judge did not determine the further subsidiary issues which the applicant seeks to agitate, and if the appeal were successful, the proceeding should be remitted back to the trial judge for further determination in accordance with law.

1. In oral submission, both parties highlighted aspects of the evidence bearing on the reasonableness of the positions they had respectively adopted in the course of the dispute concerning NDIS requirements prior to the withdrawal email.

1. In our view, the plain meaning of the initial statements in the withdrawal email was that:

(a) the purchaser was unable to continue operating for financial reasons; and consequently

(b) it would not be in a position to settle on the contract.

1. A reasonable person in the position of the developer would regard these statements as a renunciation of the contract.
2. This is so despite the further 'suggestion' that the parties reach agreement as to the disposition of the deposit. This suggestion does not 'weaken' the prior meaning of the statements to which we have referred.
3. The following circumstances favour the view that the words expressing renunciation of the contract should be given their plain meaning:

(a) The withdrawal email was sent by James Charisiou, the sole director of the purchaser who was the officer of the purchaser who, as Mario Charisiou said, 'ran the business' and was, on the evidence, in charge of the purchaser's financial affairs.

(b) At the time of the withdrawal email, the purchaser's assets had been frozen by Court Order and this was a matter of public record.

(c) James Charisiou was the person allegedly responsible for the substantial frauds publicised on the same day prior to the sending of the withdrawal email. He was, on the face of it, the person best placed to evaluate the financial implications of the fraud allegations on the capacity of the purchaser to continue trading. The trial judge accepted that there was a connection between the publication of the press report and the sending of the withdrawal email.[34]

1. The terms of the withdrawal email are only 'unfortunate and largely inexplicable' if one assumes that they do not mean what they say.
2. The statement that the purchaser would be unable to settle on the contract was never subsequently withdrawn.
3. The evidence does not establish (and it is not suggested that) the developer and purchaser had reached an agreement or arrangement to terminate the contract prior to the sending of the withdrawal email.
4. It follows that the trial judge's finding that there was a 'plan' to replace the contract, overstates the position in so far as it suggests there was an agreed 'plan'. There were discussions about alternative developments, but what occurred was that the purchaser renounced the contract before any substitute arrangement was agreed.
5. It is true that, at 7:28 am on 7 October 2020, Mario Charisiou sent Scott Liu an email which contemplated exchange of letters cancelling the contract as part of an arrangement to enter into substitute arrangements and Scott Liu responded at 9:20 am indicating a provisional willingness to proceed on this basis. However, no substitute arrangements were agreed.
6. The reason for the renunciation of the contract stated in the withdrawal email was not the ongoing dispute as to what was necessary for compliance with the special condition relating to NDIS requirements. It was simply the financial incapacity of the purchaser.
7. The follow-up email sent by James Charisiou, which asserted that, irrespective of the purchaser's circumstances, the contract could not be satisfied by the developer, did not qualify in any way the statement that the purchaser could not proceed with the contract for financial reasons. Likewise, the follow-up email did not assert that the purchaser could or would comply with the contract and no assertion was ever made to this effect prior to the acceptance of the repudiation.
8. It is true, as the trial judge found, that whilst conveying that the purchaser wanted to escape from the contract, the withdrawal email 'did not convey a belief or assert that it was not bound by the contract'. What it did convey, however, was that despite its obligations under the contract, the purchaser simply could not perform the contract.
9. It is also true that the terms of the withdrawal email do not reflect the terms suggested to James Charisiou by Mario Charisiou at 12:30 pm on 7 October 2020. What was suggested by Mario Charisiou was that James Charisiou put to the developer that the developer could not complete the contract. The withdrawal email addresses the purchaser's position and makes clear that it could not perform the contract. The supplementary email sent on 8 October 2020 put the allegation concerning the developer's position which had originally been suggested by Mario Charisiou. Nonetheless, it did not withdraw or modify the statement which had been made by James Charisiou as to the purchaser's financial incapacity to proceed with the contract.
10. It is unnecessary to resolve the question whether in fact, and looking at the matter with the benefit of hindsight, the evidence at trial demonstrates that at the time of the withdrawal email the purchaser lacked the capacity to proceed with the contract. His Honour found that he was not satisfied that this was so. Whatever the truth of the situation looked at in hindsight, the withdrawal email made clear to the reasonable person in the position of the developer that, because of a decision to cease trading made at that point in time, the purchaser would not complete the contract.
11. The decision not to proceed was evidenced by the purchaser's express declaration that it could not do so. In these circumstances, the test formulated by the High Court in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd[35] was satisfied. The withdrawal email evidenced renunciation of the contract as a whole because of an inability to perform the obligation to settle. In these circumstances, it was not incumbent upon the developer to prove that the purchaser was in fact wholly and finally disabled from performing the contract.
12. Whatever subjective view the developer's representative may have taken of the meaning of the withdrawal email, that meaning was plain to the reasonable person in the position of the developer. Likewise, whilst the email from the developer's solicitors dated 24 December 2020 may reflect uncertainty on the part of the developer's representatives at that point in time, it cannot affect the objective construction of the meaning of the withdrawal email.
13. Lastly, we observe that the proposition that the withdrawal email was intended to be responsive to previous communications contemplating a substitute agreement, begs the question of the factual basis and character of the response. First, the evidence did not establish that James Charisiou ever received copies of the emails from Scott Liu sent on 7 October 2020. Secondly, even if it is assumed James Charisiou was probably aware of the general tenor of these communications,[36] the further course of dealings remained to be resolved. There was no settled agreement as to substitute arrangements. The evidence of James Charisiou illustrates this point. His evidence was that his intention was to convey by the withdrawal email that the purchaser would not enter into any alternative dealings but required the provision of apartments in accordance with the contract. This evidence is fundamentally inconsistent with the proposition that the withdrawal email was intended to convey cancellation of the contract as a first step to alternative arrangements of the kind which had been canvassed by Mario Charisiou.
14. The evidence of James Charisiou thus illustrates the difficulty in hypothesising what the withdrawal email was intended to convey other than by reference to its full terms and plain meaning. In our view, the reasonable person in the position of the purchaser would regard the withdrawal email as having its plain meaning. That plain meaning constituted a renunciation of the contract.

1. Because of the view that he took of the objective meaning of the withdrawal email, the trial judge did not resolve the question of whether the developer was ready, willing and able to perform the contract at the date of acceptance of the repudiation. This issue remains to be resolved together with the following issues:

(a) whether, if the purchaser did repudiate the contract, the developer nonetheless elected to continue with the contract;

(b) whether the developer is estopped from asserting that it accepted a repudiation; and

(c) whether the developer would be unjustly enriched if it were to retain the deposit.[37]

1. On the hearing of the application for leave to appeal, the parties agreed that if the appeal were allowed these issues must be remitted to the trial judge for further determination.
2. We will grant leave to appeal and allow the appeal. The trial judge's determination of 10 October 2024 will be set aside and the matter remitted for further consideration in accordance with these reasons.

[1] Thousand Hills Property Pty Ltd v LBA Capital Pty Ltd [2024] VSC 597, [76] ('Reasons').

[3] [1989] HCA 51; (1989) 168 CLR 385.

[5] Palmer v Lark [1945] Ch 182, 184-5; Michael Realty Pty Ltd v Carr [1977] 1 NSWLR 553, 571; Frankcombe v Foster Investments Pty Ltd [1978] 2 NSWLR 41, 48.

[6] [1982] HCA 47; (1982) 149 CLR 620, 625 (citations omitted).

[7] [2007] HCA 61; (2007) 233 CLR 115, 135-6 [44] (emphasis added) (citations in original).

[8] Heyman v Darwins Ltd [1942] AC 356, 378; Shevill v Builders Licensing Board [1982] HCA 47; (1982) 149 CLR 620, 625-626.

[9] Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623, 634 (Mason CJ).

[10] Heyman v Darwins Ltd [1942] AC 356, 397.

[11] Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623, 659.

[12] See Carter, Breach of Contract, 2nd ed (1991), 217.

[13] Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471, 483 [34] (Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ) citing Gissing v Gissing [1970] UKHL 3; (1971) AC 886, 906 (Lord Diplock) and Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441, 502 (Lord Diplock).

[14] See JB Asset Management v LBA Capital Pty Ltd [2020] VSC 629.

[16] See JB Asset Management v LBA Capital Pty Ltd [2020] VSC 629 (McDonald J).

[17] DPP v Charisiou [2024] VSC 303 (Champion J). Demetrious Charisiou is otherwise known as James Charisiou: see Reasons, [5].

[22] Ibid [23]-[24] (citation omitted).

[31] Ibid [62]-[65] (citation in original).

[32] Through its ostensible agent Scott Liu.

[35] [2007] HCA 61; (2007) 233 CLR 115.

[36] See his evidence quoted at [46], above.

[37] The proposition that the developer was required to but did not comply with termination provisions in the contract is misconceived.