Tonk Sydney Pty Ltd v ILend Capital Pty Ltd

Supreme Court of NSW|2024-10-22|Before: Richmond J

Background

The third plaintiff, Mr Ciliegi, is the father-in-law of the fourth plaintiff, Mr Martino. In February 2022, they intended to collaborate with each other through their respective companies, Tonk in the case of Mr Martino and JDC in the case of Mr Ciliegi, to acquire land for redevelopment and construction of townhouses for sale. Tonk would be the vehicle to acquire any suitable property and JDC would project manage the construction on the land.
During February 2022, Mr Ciliegi and Mr Martino found a suitable property at 15-17 Kirkwood Road, Cronulla (the Cronulla property) which was listed for sale by Ms Suzanne Hibberd of Abode Property Agents.
On 18 February 2022 Mr Ciliegi submitted an offer on behalf of the proposed purchaser to Ms Hibberd to purchase the Cronulla property for $7.4 million with a 10% deposit payable upon exchange and a four month delayed settlement. After discussions with Ms Hibberd, he made an increased offer of $7.7 million in writing on 19 February to acquire the property on the same terms. The plaintiffs were contemplating constructing six townhouses over a basement for car parking on the property.

Terms of the Mandates

Mandate 1 is dated 15 March 2022. After setting out the names of the parties (being ILend and the plaintiffs), it then describes under the heading 'Property/Project/Security Address' the Glenorie property, the Alfords Point property, another property at Panania (also owned by one of the plaintiffs) and the Cronulla property.
Mandate 1 then continues (emphasis added): i. The borrower/s AND guarantor/s hereby engage and instruct ILEND CAPITAL PTY LTD to source an Offer of Finance/ Loan Approval secured by the above-mentioned Properties, on their behalf, substantially upon the following terms: a. Loan Amount $7,900,000.00 b. Term: 6 MONTHS c. Interest Rate (indicative rate) 4.9% p.a. Interest Only d. Security Requirement Guarantees, charges or mortgages As required by Lender. The Borrower/s AND guarantor/s and/or their related entities and associates appoint ILEND CAPITAL PTY LTD as their exclusive finance broker, and agree that they will not obtain, receive or procure similar services from any person or entity where such services are similar or competitive in any way with the services offered by ILEND CAPITAL PTYLTD. ii. ILEND CAPITAL PTY LTD hereby accepts the Borrower/s/Guarantor/s engagement and undertakes to use its best endeavors to obtain an offer of Finance/Loan approval from a source prepared to lend money to the borrower substantially upon the terms contained in Clause(i). iii. Under the terms of this Agreement, the Borrower/Guarantor hereby agrees to pay ILEND CAPITAL PTY LTD a Brokerage Fee/Success Fee of 2.2% inclusive of GST based on borrowings of $7,900,000.00 exclusive of any commission payable by the lender/s to ILEND CAPITAL PTY LTD. The Borrower/Guarantor agree to pay the Brokerage Fee/Success Fee on demand when ILEND CAPITAL PTY LTD produces an offer for finance and shall be payable whether or not the Borrower/Guarantor accepts the finance offer; this agreement was terminated prior to the Borrower/Guarantor accepting the finance offer; or the Borrower/Guarantor terminates this agreement without cause. iv. This Brokerage fee is payable as follows: 2.2% Upon Execution of this Agreement (hereinafter referred to as the Brokerage fee or Success fee, inclusive of GST). While the payment of the Brokerage fee is due and payable upon execution of this Agreement, ILEND CAPITAL PTY LTD will accept payment of the brokerage fee upon drawdown or settlement of the loan, or in instalments as agreed by the Lender/mortgagee but reserves its rights to demand full payment should the Borrower/Guarantor refuse to proceed with the loan after it has been confirmed in writing. v. In the event of the borrower/guarantor not taking up the offer of finance/loan offer after it has been confirmed in writing, substantially in the terms in (i.) above, by the Lender/mortgagee or its solicitor, then the Borrower/Guarantor agrees to pay the agreed Brokerage Fee as stated above. Furthermore, in the event that ILEND CAPITAL PTY LTD fails to provide an offer of finance/loan offer solely due to the borrower/guarantor's actions and non disclosure, whether they are erroneous, misleading and/or fraudulent, then regardless of whether ILEND CAPITAL PTY LTD provides a substitute offer of finance/loan offer (on substantially different terms), or withdraws their offer, the Borrower/Guarantor agrees to pay the agreed Brokerage Fee as stated above. vi. Once an Offer of Finance/Loan Offer is sourced by a Lender through ILEND CAPITAL PTY LTD, a Commitment fee is payable to ILEND CAPITAL PTY LTD in favour of the Lender/mortgagee, and the Borrower/s/guarantor/s agree to pay all commitment fees to ILEND CAPITAL PTY LTD and/or the Lender/mortgagee if requested. This Commitment fee does not constitute part of the brokerage fee/success fee and is payable IN ADDITION to the brokerage fee/success fee. vii. In Recognition of ILEND CAPITAL PTY LTD Providing its services under the terms of this Agreement, the Borrower/s/Guarantor/s hereby consents to ILEND CAPITAL PTY LTD securing payment of all of its monies/service fees which may become payable by the Borrower/s/Guarantors to ILEND CAPITAL PTY LTD under this guarantee, the Borrower/s/Guarantor/s hereby charge/s with the due payment of those monies all of the Borrower/s/Guarantor/s interest, right and title in the security properties as well as.in any real property both (a) present, and (b) future, and the Borrower/s/Guarantor/s Against the above mentioned Properties consents to ILEND CAPITAL PTY LTD lodging and registering a Caveat(s) noting its interests hereunder without challenge by the Borrower/s/Guarantor/s. Such registration of a Caveat/s by ILEND CAPITAL PTY LTD over the Borrower/s/Guarantor/s property/ies shall not be challenged by the Borrower/s/Guarantor/s in any way whatsoever, and the Borrower/s/Guarantor/s agree/snot to take any steps in filing a "Lapsing Notice" via the Land Titles Office to have the Caveat/s removed, until such time the Borrower/s/Guarantor/s has/have paid all monies owing by it to ILEND CAPITAL PTY LTD as claimed from time to time. In addition to the charges over real property, the Borrower/s/Guarantor/s hereby grant to ILEND CAPITAL PTY LTD a PPSA Security Interest over all of the Borrower/s/Guarantor/s PPSA personal property, both present and after acquired, and a fixed charge over all Other Property, to secure the payment of ILEND CAPITAL PTY LTD's monies/service fees which may become payable. The Borrower/s/Guarantor/s further agrees not to circumvent this agreement and deal or transact business directly with funder/s proposed or nominated by ILEND CAPITAL PTY LTD without first gaining consent from ILEND CAPITAL PTY LTD; upon such an event occurring the monies/service fee made under this arrangement will automatically become due and payable and not challenged by the Borrower/s/Guarantor/s in anyway whatsoever. In this agreement: PPSA means !he Personal Property Securities Act 2009(Cth). PPSA Personal Property means: (a) All of the Borrower(s) and Guarantor(s) present and after-acquired property in which the Barrower(s) and Guarantor(s) can be a Borrower(s) and Guarantor(s) of a PPSA Security Interest including property in which the Borrower(s) and Guarantor(s) has, or may in the future have rights or the power to transfer rights; (b) proceeds; and (c) PPSA retention of title property (as that term is defined in the Corporations Act). PPSA Security Interest has the meaning given to the term 'security interest' in the PPSA. Other Property means all present and after-acquired property of the Borrower(s) and Guarantor(s) which is not PPSA Personal Property. viii. The Borrower/s/Guarantor/s hereby irrevocably authorise and direct the Lender and its Solicitor to deduct from the Loan Amount, at settlement or first draw down of the loan, ILEND CAPITAL PTY LTD's Brokerage Fee and any part of the commitment fee not paid or waived. The brokerage fee shall be payable directly into the following company bank account or otherwise as directed by ILEND CAPITAL PTY LTD's Directors: Name: ILEND CAPITAL PTY LTD Address: SITE 1.23, 90-96 BOURKE ROAD, ALEXANDRIA NSW 2015 Bank: NAB BSB: 082 429 Account No: 421 683 751
Clause (ix) contains a guarantee by the persons named as 'guarantors' (being each of the plaintiffs) in favour of ILend of all money presently owing or that may be owing in the future by Tonk and JDC to ILend.
Mandate 1 then continues relevantly as follows: By signing this Mandate to Act you irrevocably acknowledge and agree that: 1. you have appointed ILEND CAPITAL PTY LTD exclusively solely to negotiate with funders/lenders and obtain approval for the Facility on a reasonable efforts basis (Approval); … 5. you are liable to pay ILEND CAPITAL PTY LTD the Commitment Fee: a. immediately upon signing this Mandate to Act; b. regardless of whether we agree to defer payment of the Engagement Fee; c. whether or not we obtain an Approval, and d. whether it is you or ILEND CAPITAL PTY LTD who terminates this Mandate to Act. … 7. you are liable to pay ILEND CAPITAL PTY LTD the Brokerage Fee/Success Fee in full; a. Upon ILEND CAPITAL PTY LTD obtaining an Approval, whether conditional or unconditional; b. If approval is not obtained solely due to your actions and non-disclosure; c. However, the brokerage fee in full is not payable if ILEND CAPITAL PTY LTD does not provide an Approval or if ILEND CAPITAL PTY LTD withdraws from the deal and you are not at fault. 8. the lender's solicitor (for any Facility settled for which ILEND CAPITAL PTY LTD has acted on behalf of you) is to draw down in favour of ILEND CAPITAL PTY LTD at settlement, the Fees due to be paid by you under this Mandate to Act in priority to any other amounts which may be due to you under a Facility; 9. as security for any money owing to ILEND CAPITAL PTY LTD under this Mandate to Act you charge in favour of ILEND CAPITAL PTY LTD all your rights, interest and title in all current and/or future real and personal property (property) of whatever kind and permit ILEND CAPITAL PTY LTD to lodge a caveat or PPSR registration over all of your property as security; 10. any overdue fees shall be charged interest at an interest rate of 2.00% per month.
Mandate 2 is in the same terms as Mandate 1, except that in cl (i) the loan amount is $14,400,000, the term is 12 months, the interest rate is 2.25% above BBSW, interest only.

Issue 1: Whether the Mandates are binding contracts

The plaintiffs submit that the Mandates are not binding contracts for essentially two reasons. First, the contemplated mode of acceptance by the plaintiffs of the offer contained in each Mandate was the execution of each Mandate once they were submitted to the plaintiffs through the Docusign system which never occurred. Second, insofar as reliance is placed on the signature by Mr Ciliegi and Mr Martino on the documents given to them in the meeting on 15 March 2022, no binding contract came into existence at that time because Mr Salim accepted at the meeting that no binding legal relationship would come into existence between the plaintiffs and ILend until such time as the plaintiffs secured the purchase of the Cronulla property, which never occurred.
Mr Ciliegi and Mr Martino each deposed to conversations before and at the meeting on 15 March 2022 in which Mr Ciliegi told Mr Salim that the obtaining of finance for the purchase and development of the Cronulla property was subject to Tonk securing the purchase of the Cronulla property. Indeed, at the meeting on 15 March, Mr Ciliegi telephoned the real estate agent, Ms Hibberd, to find out where the vendor stood with Tonk's previous offer, and was told by her that there were other buyers interested and Tonk's offer had not been accepted by the vendor. This evidence is corroborated by the evidence of Ms Hibberd.
Mr Ciliegi and Mr Martino each deposed to a conversation in the meeting on 15 March 2022 that Mr Salim asked them to sign some documents to progress the loan application and also said that ILend would send its mandate terms and conditions by Docusign after the meeting for signature by Mr Ciliegi and Mr Martino. They also deposed that they signed some documents at the meeting which they believed were loan application forms. ILend contends in the cross-claim that Mr Ciliegi and Mr Martino signed the Mandates at the meeting and there is a copy of each Mandate in evidence (subject to a limitation under s 136 of the Evidence Act 1995 (NSW)) which appears to bear their signatures. The plaintiffs dispute that the Mandates were signed at the meeting and issued a notice to produce calling for production of the originals of the documents which ILend says were signed at the meeting. Nothing was produced by ILend in response.
The plaintiffs' contention that the method of acceptance of the offer contained in each Mandate was delivery of signed copies of the mandate through Docusign is confirmed by subsequent events. At 5.21pm on 15 March 2022 shortly after the meeting concluded ILend sent an email to Mr Martino with the message 'ILend Capital sent you a document to review and sign' and a link to access the two Mandates. This was followed up by emails from ILend to Mr Martino and Mr Ciliegi on 17 and 18 March 2022 requesting their signature on the Mandates through Docusign. On 18 March 2022, Mr Martino sent to an email to Mr Salim stating that he was seeking advice from his solicitor on the form of the Mandates, and on the following Monday sent an email with suggested changes to the Mandates (reflecting the advice received from Mr Martino's solicitor). The response from ILend to this email was simply: 'When [Mr Salim] is in the office today we'll go over your solicitor's notes and come back to you.' There was no assertion either in this email or until 18 May 2022 when the 'friendly letter of demand' was sent by ILend to the plaintiffs claiming that the brokerage fees were payable, that it was too late to seek amendments to the Mandates as they had already been entered into.
I will address first the plaintiffs' submission that the Mandates are not legally binding on the plaintiffs. I will do so on the basis that the plaintiffs do not deny that Mr Ciliegi and Mr Martino may have signed the Mandates presented by Mr Salim at the meeting on 15 March 2022, as it may have been one of a number of documents which Mr Salim presented to them as necessary to advance the loan applications. Their contention is that if they did sign the Mandates, they were under a mistake as to what they were signing and did not intend to sign the Mandates as they had not been shown to them or explained to them at the meeting and Mr Cilegi had told Mr Salim in the meeting that the plaintiffs would 'need to get any documents reviewed by our solicitor prior to signing'.
An agreement is not contractually enforceable unless a reasonable person in the position of each party would think that the other intends to create legal relations: JD Heydon, Heydon on Contract (2019, Lawbook Co) at [4.20]. Whether that intention exists is determined by what 'would objectively be conveyed by what was said or done, in regard to the circumstances in which those statements and actions happen. It is not a search for the uncommunicated subjective motives or intentions of the parties': Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; [2002] HCA 8 at [25].
In the present case, even if Mr Ciliegi and Mr Martino signed the Mandates at the meeting on 15 March 2022, (a) their evidence of what they said at the meeting in the context of what they previously told Mr Salim about the proposed purchase of the Cronulla property leading up to the meeting, (b) the evidence of what Ms Hibberd said on the telephone during the meeting, and (c) the commercial context and purpose of the mandate(s) which was that the loan approvals were only required if the plaintiffs were unable to secure the Cronulla property and it was clear at the meeting on 15 March 2022 that they had not done so, would objectively convey to ILend that no mandate was given to secure an offer of finance/loan approval until the plaintiffs had entered into a contract to purchase the Cronulla property, which never occurred. That this was the common understanding of the plaintiffs and ILend at the time of the meeting is confirmed by the subsequent conduct of ILend referred to at [58] and [67] above. Post contractual conduct is admissible on the issue of whether there is a contract: Heydon on Contract at [4.170].
A document which to outward appearances constitutes a contract may be subject to a condition precedent which prevents it from being binding until the condition precedent is satisfied: Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 336.
Put another way, the matters referred to in [70] above indicate that the arrangement discussed at the meeting on 15 March 2022 for ILend to have a mandate to procure an offer for finance for the plaintiffs was subject to a condition precedent that the plaintiffs were successful in entering into a contract to purchase the Cronulla property. As that condition was never satisfied, no contract of mandate ever came into existence.
The plaintiffs put forward in written submissions a number of alternative arguments open to them as to why the Mandates are not binding. First, it was submitted that the evidence establishes that the prescribed method of acceptance of the offer contained in each mandate (being signature of the Mandates when they were sent after the meeting through Docusign) was not followed and accordingly no binding contract came into existence: NC Seddon & RA Bigwood, Cheshire & Fifoot Law of Contract (12th Australian Edition, 2023, LexisNexis Australia) at [3.46]. There are claims that representations were made by Mr Salim at the meeting on 15 March 2022 which ground relief for breach of s 18 of the ACL and s 23 of the ACL. Ultimately, in light of the conclusion above (and the conclusion on the next issue) it is not necessary to deal with these submissions.

Issue 2: Whether any amounts became due and payable under Mandate 1 or Mandate 2

If contrary to the conclusion reached above, Mandate 1 and Mandate 2 created binding contracts, the question arises whether the brokerage fee of $173,800 is due and payable under Mandate 1 and whether the brokerage fee of $316,800 and the commitment fee of $33,000 are due and payable under Mandate 2.

Mandate 1

The cross-claim pleads at [9] that on or about 17 May 2022 ILend procured for the cross-defendants/plaintiffs and provided to them an offer for finance/loan approval satisfying cl (i) of Mandate 1 when it provided the cross-defendants/plaintiffs a document identified as 'ILend Capital Pty Ltd written offer of loan dated 17 May 2022' (ILend Offer). That document is in evidence (CB95). It is a letter dated 17 May 2022 on the letterhead of ILend addressed to the directors of Tonk and JDC. It is headed: 'Re: Proposed first mortgage advance to Tonk Sydney Pty Ltd & JDC Project Management Pty Ltd. Loan amount: $7,900,000'.
The opening paragraphs of the letter are as follows: The ILend Capital Investment Fund Pty Ltd ("the Facilitator") is pleased to advised that your application for a Loan facility ("the Loan") has been given preliminary approval on the terms and conditions set out in this offer. The loan will be provided by either The ILend Capital Mortgage Trust, a member of the ILend Capital Group of Companies, a structured or syndicated investment fund administered by or associated with the ILend Capital Group of Companies or nominee (the ultimate lending entity is hereafter referred to as "the Lender"). For the avoidance of confusion, where the term ILend Capital is used, it refers to The ILend Capital Investment Fund Pty Ltd and any of its subsidiaries. The Loan and security documentation ("Loan Documentation") which is to be prepared by the Lender's solicitors will include the Lender's standard legal requirements relating to representations and warranties, covenants and events of default.
The letter goes on to name the borrowers as Tonk and JDC and the guarantors as Mr Martino and Mr Ciliegi, states the purpose of the loan facility to be 'to provide funds to assist in the refinance of a residential development site situated at 15-17 Kirkwood Road, Cronulla NSW, the subsequent of (sic) construction of six luxury townhouses on the site…', states that the security for the loan will be a loan agreement between the Lender, a first registered mortgage over the Cronulla property, and a deed of guarantee given by Mr Martino and Mr Ciliegi. Clause 11 provides that upon on the acceptance of the letter of offer and issue of mortgage documents the borrower and guarantors will be liable for a number of fees, including 'a brokerage fee of 2.0% of the loan amount payable to ILend Capital at settlement' and 'upon acceptance of the offer, a non-refundable commitment and due diligence fee of $33,000 (inc GST) is payable'.
Clause 14 provides that the letter of offer may be withdrawn at the Facilitator's sole discretion if a number of events occur (without the Lender or Facilitator incurring any liability whatsoever). These include if circumstances or facts arise or come to the Facilitator's notice which in the Facilitator's opinion may be prejudicial to the Lender's interests or results in a situation where it would be, in the Facilitator's opinion, uncommercial for the Lender to provide the loan, or the results of any searches or any enquiries relating to the security properties, the Borrower, the Guarantor or any associates prove to be unsatisfactory to the Lender in any way.
Clause 19 headed 'Disclaimer' includes the following: Kindly note that the approval of any loan facility is not finalised until the making of the advance and the satisfaction of the Lender of all terms and conditions stipulated herein.
The letter is not signed by or on behalf of ILend (or any other person). While it bears the typewritten words 'ILend Capital' at the end under the words 'Yours faithfully' that is not a signature for ILend by Mr Salim, the only person with authority to act on its behalf.
For a number of reasons, this document cannot be regarded as an 'offer of finance/loan approval' which meets the description in cl (i) of Mandate 1. First, it is merely expressed to be a 'preliminary approval' not an approval. In its ordinary meaning, 'preliminary' means 'preceding and leading up to the main matter or business; introductory; preparatory' (Macquarie Dictionary, online ed, October 2024). The qualified nature of the 'offer' contained in the document is made clear by cl 14 and cl 19, which clearly indicate that there will be no offer or approval of a loan until the making of an actual advance by the 'Lender'.
Second, the document is not signed by the entity which purported to issue it, being ILend. Nor is it signed by the entity which purportedly has given the 'preliminary approval', being the Facilitator. Indeed, a search at ASIC of the word 'ILend' discloses that there was no entity registered with the name 'ILend Capital Investment Fund Pty Ltd'. Hence, the purported (preliminary) approval referred to in the letter is by an entity which does not exist.
Third, there is no evidence before the Court that ILend ever had the financial capacity to make a loan of $7.9 million on the terms of the Offer. The plaintiffs issued a notice to produce to ILend for bank statements and records of accounts for either ILend or ILend Capital Investment Fund Pty Ltd and nothing was produced.
Fourth, when the Offer was purportedly issued to Tonk and JDC, Mr Salim was aware that the purchase of the Cronulla property had not gone ahead and would not do so, as noted above.
As the plaintiffs submit, the document is a sham, in the sense of being a mere piece of machinery (indeed a worthless piece of paper) for serving some purpose other than that of constituting the whole of the arrangement which it purports to give effect: Raftland Pty Ltd as Trustee of Raftland Trust v Commissioner of Taxation (2008) 238 CLR 516; [2008] HCA 21 at [34].
As ILend did not source an 'offer of finance/loan approval' meeting the description in cl 1(i) of Mandate 1, the brokerage fee of $173,200 (being 2.2% of $7,900,0000) claimed by ILend under Mandate 1 never became due and payable. This is because on the proper construction of Mandate 1, if it was binding, the brokerage fee only becomes payable if the condition stated in cl (iii) is met, being that 'ILend produces an offer for finance' which meets the description in cl (i).
I note the cl (iv) of Mandate 1 states that the brokerage fee is payable 'upon execution of this agreement' and goes on to state that 'while the payment of the brokerage fee is due and payable upon execution of this agreement, ILend Capital Pty Ltd will accept payment of the brokerage fee upon drawdown or settlement of the loan…'. Clause (iv) is inconsistent with both cl (iii) and cl 7 and is difficult to reconcile with cl (viii). The question arises as to how this inconsistency is to be resolved.
It is a fundamental principle that a contract is to be construed as a whole, which means that the Court endeavours to construe each provision with the others so as to render the provisions harmonious with each other: Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99; [1973] HCA 36 at 109. It is sometimes the case that two provisions will appear to be inconsistent with each other, but this can be resolved by giving each a construction which resolves the conflict, for example by construing one as subject to the other. However, in circumstances where two provisions are inconsistent in the sense that they cannot be reconciled, the correct approach is to give effect to that part of the contract which is calculated to carry into effect the real intention of the parties as gathered from the instrument as a whole: Taylor v Dexta Corp Ltd [2006] NSWCA 310 at [1], [66], and [71]; GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1; [2003] FCA 50 at [306]; McGowan v Commissioner of Stamp Duties [2002] 2 Qd R 499; [2001] QCA 36 at [22]; P Herzfeld & T Prince, Interpretation (2nd ed, 2020, Lawbook Co) at [22.90].
The purpose of Mandate 1, if it were binding, is the appointment of ILend to perform a service of obtaining an approval for a loan facility on the terms set out in cl (i). This is clear from cl (i), cl (ii) and cl 1. The consideration payable for performance of that service is the brokerage fee. It is consistent with the purpose of the agreement that the consideration would only become payable if the service is performed and not at the time of execution of the agreement irrespective of performance. This is what cl (iii) provides, consistently with cl 7 and the heading of Mandate 1 (which describes the document as a 'mandate, brokerage agreement and irrevocable authority to pay on first drawdown or settlement, whichever occurs first)'. Accordingly, the statement contained in cl (iv) that the brokerage fee is payable 'upon execution of this agreement' should be rejected.
It follows that the brokerage fee of $173,800 never became due and payable.

Mandate 2

The cross-claim pleads that on or about 15 March 2022 ILend procured for the cross-defendants/plaintiffs an offer of finance/loan approval satisfying cl (i) of Mandate 2 when it provided to them a document identified as 'CC Capital written offer dated 14 March 2022': see cross-claim at [15].
The document put forward by ILend as the document meeting this description (found at CB133) is a letter addressed to the directors of Tonk and JDC on the letterhead of CC Capital Investment Fund Pty Ltd and dated 14 March 2022, but is unsigned (CC Offer). It refers in the heading to a proposed first mortgage advanced to Tonk and JDC for a loan amount of $14,400,000. The opening paragraphs of the letter are as follows: The CC Capital Investment Fund Pty Ltd (the facilitator) is pleased to advise your application for a Loan facility (the Loan) has been given preliminary approval on the terms and conditions set out in this offer. The Loan will be provided by either The CC Capital Mortgage Trust, a member of the CC Capital Group of Companies, a structured or syndicated investment fund administered by or associated with the CC Capital Group of Companies or nominee (the ultimate lending entity is hereinafter referred to as "the lender"). For the avoidance of confusion where the term CC Capital is used, it refers to The CC Capital Investment Fund Pty Ltd and any of its subsidiaries. The Loan and security documentation ("Loan Documentation") which is to be prepared by the Lender's solicitors will include the Lender's standard legal requirements relating to representations and warranties, covenants and events of default.
The remainder of the letter bears a close similarity to the ILend Offer (and it may be inferred that the draftsperson of the ILend Offer used the CC Offer as a template).
The CC Offer includes in cl 11(c) a statement that 'a brokerage fee of 2% of the loan amount is payable to ILend Capital at settlement' and in cl 11(d) a statement that 'upon acceptance of this offer a non-refundable commitment and due diligence fee of $33,000.00 inc GST is payable'. Clauses 14 and 19 are in the same terms as the ILend Offer, including relevantly the statement in cl 19 that 'the approval of any loan facility is not finalised until the making of the advance and the satisfaction of the Lender of all terms and conditions stipulated herein'. The document contains a space for the signature of David Carter, credit manager, on behalf of CC Capital Investment Fund Pty Ltd, but no signature appears on the document. None of the evidence filed by the defendants in the proceedings includes a signed copy of the letter. Nothing further was done by Mr Carter in relation to it, and it is clear from the email exchange referred to at [58] above that Mr Carter was aware by 31 March 2022 that the application for the loan was 'dead'.
In my opinion the CC Offer document cannot be regarded as an 'offer of finance/loan approval' which meets the description in cl (i) of Mandate 2. First, it is merely expressed to be a preliminary approval, and for the same reasons given above in relation to the ILend Offer, the CC Offer was not an offer of finance/loan approval but something preliminary thereto. Second, as the document is not signed by or on behalf of CC Capital Investment Fund Pty Ltd, there is no evidence that the letter was intended to create a legal obligation on the part of CC Capital Investment Fund Pty Ltd.
The provisions of Mandate 2 dealing with the time at which a brokerage fee of 2.2% on a borrowing of $14.4 million (being $316,800), would become due and payable are the same as those in Mandate 1. For the reasons given above in relation to Mandate 1, the brokerage fee under Mandate 2 only became due and payable when ILend produced an offer of finance which met the description in cl (i). It did not do so by producing the CC Offer. There is no other 'offer' put forward by ILend. Accordingly, the brokerage fee of $316,800 never became due and payable.
In relation to the commitment fee of $33,000, cl (vi) of Mandate 2 makes a commitment fee payable to ILend 'once an offer of finance/loan offer is sourced by a lender through ILend Capital Pty Ltd'. There is no reference to a commitment fee of $33,000 in Mandate 2 but the cross-claim gives particulars of the commitment fee as the CC Offer. That document does refer to a commitment fee of $33,000. However, the CC Offer does not purport to create an obligation by the borrowers to pay ILend a commitment fee of that amount and, in any event, does not create any obligation of the plaintiffs to CC Capital Investment Fund Pty Ltd. Further, the CC Offer is not an 'offer of finance/loan approval' meeting the description in cl (i) of Mandate 2 and accordingly cl (vi) of Mandate 2 did not create any obligation on the plaintiffs to pay $33,000 to ILend.
For these reasons, even if Mandate 2 created a binding contract between the plaintiffs and ILend (contrary to the conclusion reached earlier that it did not), the brokerage fee and the commitment fee claimed in the cross-claim were not at any time due and payable by the plaintiff to ILend under Mandate 2.

Conclusion

For the above reasons the plaintiffs have established that the Mandates are not binding contracts and, even if they were, no amounts became due and payable under them in respect of the amounts claimed in the cross-claim.
Accordingly, the cross-claim should be dismissed and the plaintiffs are entitled to the relief they seek in the ASOC in relation to the non-enforceability of the Mandates and declarations and orders for the removal of the registration under the PPSR of the security interests claimed by the first defendant in respect of the Mandates. The plaintiffs are entitled to their costs of the proceedings.
At the hearing the plaintiffs informed the Court that the other relief claimed in the ASOC was not pressed, including the orders for removal of the caveats, which were no longer required because the caveats had lapsed in late 2022 under s 74J of the Real Property Act after the plaintiffs lodged lapsing notices.
At the hearing, the plaintiffs indicated that they wish to bring a separate application for indemnity costs and I will allow a timetable for this to occur.
Accordingly, the Court will make the following orders: 1. A declaration that the first defendant's Mandates to Act dated 15 March 2022 are not binding on the plaintiffs and do not create enforceable obligations against any of the plaintiffs. 2. A declaration that the first defendant has no valid entitlement to register any security interest as referred to in Schedule 1 below under the Personal Property Securities Act 2009 (Cth) (PPSA). 3. An order pursuant to s 182(4) of the PPSA that the third defendant (Registrar of Personal Property Securities) be and is hereby required to register a financing change statement removing the registration of each purported security interest referred to in Schedule 1 below from the Personal Property Securities Register. 4. Each of the first and second defendants, their servants and/or agents be and are hereby restrained from enforcing or taking steps to register as against the plaintiffs, or any of them, a security interest relying on the first defendant's Mandates to Act dated 15 March 2022. 5. The cross-claim is dismissed. 6. The first and second defendants are to pay the costs of the plaintiffs of the proceedings. 7. If the plaintiffs seek a different costs order, they may file and serve a written submission (of no more than three pages), together with any evidence on which they rely, within 14 days. In that event, the first and second defendant may file and serve a responding submission within a further seven days, and the issue of costs will be determined on the papers unless any party notifies the Court in their submissions that an oral hearing is required. Schedule 1 - PPSR Registration PPSR Registration Number 202206150021659 dated 15/06/2023 - Domenico Ciliegi PPSR Registration Number 202206220019756 dated 22/06/2023 - Domenico Ciliegi - Matthew Joseph Martino PPSR Registration number 202206140035843 dated 22/06/2023 - ACN 632 192 164 (Tonk Sydney Pty Ltd) - ACN 095 873 242 (JDC Project Management Pty Ltd)

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 October 2024

Australian Consumer Law Evidence Act 1995(NSW)

Personal Properties Securities Act 2009(Cth)

Reasons for refusing adjournment application

Under s 66 of the Civil Procedure Act 2005 (NSW) (CP Act) the court has power to adjourn the hearing of proceedings before it.
Section 56(1) of the CP Act states that the overriding purpose of the CP Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. Section 56(2) of the CP Act states that when the court exercises any power given to it by the CP Act or by rules of court it must seek to give effect to that overriding purpose. Each party is under a duty to assist the court to achieve that purpose, including by complying with directions of the court: s 56(3).
Under s 57 of the CP Act, for the purpose of furthering the overriding purpose referred to in section 56(1), proceedings in any court are to be managed having regard to the just determination of the proceedings, the efficient disposal of the business of the court, the efficient use of available judicial and administrative resources, the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties. In addition, s 59 of the CP Act requires that in any proceedings, the practice and procedure of the court should be implemented with the object of eliminating delay.
Under s 58 of the CP Act the court is to follow the dictates of justice in deciding whether to make any order or direction for the management of proceedings, including whether to grant an adjournment of the proceedings. For the purpose of determining what are the dictates of justice in a particular case, the court must have regard to the provisions of sections 56 and 57, and may have regard to the matters set out in s 58(2)(b), which include to the extent to which it considers them relevant: (i) the degree of difficulty or complexity to which the issues in the proceedings give rise, (ii) the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities, (iii) the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties, (iv) the degree to which the respective parties have fulfilled their duties under section 56 (3), (v) the use that any party has made, or could Have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings, (vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction, (vii) such other matters as the court considers relevant in the circumstances of the case.
In Hamod v State of New South Wales [2011] NSWCA 375, Beazley JA (Giles JA and Whealy JA agreeing) made the following observations regarding the principles to be applied when deciding whether an adjournment should be granted: [139] The considerations relevant to the determination of interlocutory applications were recently considered by the High Court in Aon Risk Services Australia Ltd v Australian National University. In Aon Risk Services Australia Ltd, the court was dealing with the rules of court of the Supreme Court of the ACT. Those rules are relevantly similar to the Civil Procedure Act, s 56 ff. Although the application in question in that case was an application to amend pleadings, the High Court addressed the concerns of case management more generally, noting the impact that substantial delay and wasted costs has on parties, the court and other litigants. Relevant to the application in this case are the comments of French CJ, at [5]: [T]here is an irreparable element of unfair prejudice in unnecessarily delaying proceedings. Moreover, the time of the court is a publicly funded resource. Inefficiencies in the use of that resource, arising from the vacation or adjournment of trials, are to be taken into account. So too is the need to maintain public confidence in the judicial system. [140] His Honour further stated, at [30]: Also to be considered is the potential for loss of public confidence in the legal system which arises where a court is seen to accede to applications made without adequate explanation or justification, whether they be for adjournment, for amendments giving rise to adjournment, or for vacation of fixed trial dates resulting in the resetting of interlocutory processes. [141] A just resolution of proceedings remains the paramount purpose of the case management objectives articulated in the relevant procedural provisions of the civil procedure legislation: in particular see the Civil Procedure Act, s 56. What constitutes a "just resolution" is to be understood in light of the purposes and objectives stated in the statutory provisions. Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings. However, these terms are relative and parties should be given an appropriate opportunity to plead and argue their case. Nonetheless, there are limits to the extent that a party will be accommodated in the conduct of the litigation. In Aon Risk Services Australia Ltd, Gummow, Hayne, Crennan, Kiefel and Bell JJ, at [98], stated: The Rule's reference to the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution. It cannot therefore be said that a just resolution requires that a party be permitted to raise any arguable case at any point in the proceedings, on payment of costs. [142] In his submissions to this court, Mr Hamod made specific reference to these provisions, as well as to s 66. He submitted that his Honour was obliged to apply s 66, subject to s 56, and to then make his determination according to the dictates of justice as required by ss 57-58. Section 66 provides, relevantly, that the court may at any time, by order, adjourn proceedings. [143] There is nothing new in this provision. It merely confers upon the court a discretion to grant an adjournment. The court has always had that power, both in the exercise of its inherent jurisdiction and pursuant to the Supreme Court Act 1970. Nor is s 56 a new concept. Rather, it is the statutory embodiment of jurisprudence that had already gained prominence in the case law. Issues of delay, costs and inefficiency have led to active case management in the courts as a recognised feature of the administration of justice for at least the last two decades. [144] Mr Hamod also relied upon ss 57 and 58. Section 57 provides that in furthering the overriding purpose of a just, quick and cheap resolution of case, the court is required to manage cases having regard, inter alia, to "the just determination of the proceedings": s 57(a). Section 58 provides that in making any order or direction the court is to "seek to act" in accordance with the dictates of justice, including having regard to the "degree of injustice that would be suffered by the respective parties as a consequence of any order or direction". [145] These provisions have been the subject of frequent judicial comment: Tripple Take Pty Ltd v Clark Rubber Franchising Pty Ltd [2005] NSWSC 1169; Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2005] NSWSC 1339; Dennis v Australian Broadcasting Corporation [2008] NSWCA 37; Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230; Bi v Mourad [2010] NSWCA 17 at [47]; Richards v Cornford (No 3) [2010] NSWCA 134; McMahon v John Fairfax Publications Pty Ltd [2010] NSWCA 308. In McMahon v John Fairfax Publications Allsop P, at [26], referred to the case management provisions ss 56-60 as follows: The operation of the Civil Procedure Act, ss 56-60 has brought about important changes to the conduct of civil litigation in this State. To a significant degree those provisions enshrined many of the developments in case management and the approach to litigation over the previous 20-30 years in this country. They now have statutory form. They are, however, a clear statutory watershed. That statutory form comprises the over-riding purpose: s 56, the fulfilment of which binds the Court (s 56(2)), the parties (s 56(3)) and legal advisers (s 56(4)). That over-riding purpose is the "just, quick and cheap resolution of the real issues in the proceedings".

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