Urban Traders P/L v Proceris P/L [2005] NSWSC 1192 | Case summary

Urban Traders P/L v Proceris P/L [2005] NSWSC 1192 | Case summary | Zoe

The joint venture 4 On 14 September 2004, Urban, Mr Jamieson, Proceris and Mr Roberts entered into a joint venture agreement. Mr Roberts was then the owner of 100 ordinary shares, and Eremite Pty Ltd was the owner of 200 ordinary shares, in Urban. Mr Roberts and Mr Jamieson were directors of Urban, as was Mrs Jamieson. Mr Roberts owned 80% of the shares in Proceris and was a director and secretary of Proceris, Dale Roberts owning the other 20%. Urban and Proceris were the registered owners of the Bayview land, being the land comprised in Folio Identifier A/32808 and D/32808 as tenants in common as to a one-third share by Proceris and as to a two-thirds share by Urban. Urban and Proceris had granted a first mortgage over the property to the National Australia Bank securing advances of $7 million to Urban. Mr Jamieson, Proceris and Mr Roberts had guaranteed the obligations of Urban to the bank. 5 Urban and Proceris intended to lodge a development application for the construction of approximately 40 dwellings on the property pursuant to SEPP (Seniors Living) 2004. If development consent were given, they intended to on-sell the property with development consent if a profit of 30% or more was achievable, and otherwise to construct dwellings in accordance with the development consent, provided that Urban was able to obtain finance for their construction. Their arrangement was that Proceris and Roberts were not to be required to contribute any capital or moneys towards expenses to pursue the development, and Urban and Jamieson exclusively were to be fully and solely responsible for all capital and expenses. 6 The joint venture agreement relevantly provided that:- · Urban would have a two-thirds interest/share and Proceris a one-third interest/share in the development [clause 3.1]; · Upon the date of the agreement, Mr Roberts would transfer his shares in Urban to Eremite or other nominee of Mr Jamieson [clause 3.2]; · All moneys required for the development would be contributed solely by Urban, and Urban would be solely responsible for any losses or shortfalls after sale [clause 3.3]. Proceris and Mr Roberts would not be required to make any financial contribution, capital or otherwise, in respect of the agreement or any matter relating to or in any way touching upon the property or development [clause 3.4]; · In the event that construction of the dwellings at the property proceeded and was completed, Urban would be entitled to have four units transferred to it and Proceris to two [clause 13]; · If a dispute arose out of or relating to the agreement, a party could not commence court proceedings relating to it unless it had complied with the dispute resolution provisions [clause 20]. 7 On 6 January 2005, Pittwater Council granted a deferred development consent in respect of the property which, when activated, will permit the construction of thirty-five apartments and five care facility accommodation suites pursuant to the provisions of SEPP (Seniors Living) 2004. 8 On 2 February 2005, Urban offered to sell to Proceris all its right, title and interest in the property based on an offer price of $17,500,000. On the same day, at 5.44 pm, Urban purported to terminate the joint venture agreement. On 25 February 2005, following responses from Proceris which contended that both the termination notice and the offer notice were invalid, Urban purported to withdraw both notices, and offered to sell the development to Proceris for $12,500,000. On 1 March 2005, Urban purported to terminate the joint venture agreement. Proceris disputed the validity of these notices also, and when Urban threatened court proceedings, Proceris on 21 March 2005 pointed out that there had not been compliance with the dispute resolution provisions.

The s 66G proceedings and the agreement 9 Urban nonetheless, on 22 March 2005, filed a summons, seeking appointment of trustees for sale under Conveyancing Act, s 66G. On 30 March 2005, Proceris served a notice of dispute under clause 20 (Dispute resolution) of the joint venture agreement. Urban disputed the validity of the notice of dispute. 10 In a judgment given on 20 April 2005 [Urban Pty Ltd v Proceris Pty Ltd [2005] NSWSC 360], Einstein J held that, prior to being entitled to commence court proceedings, Urban was obliged by clause 20 of the joint venture agreement to provide written notice specifying the nature of dispute, but had not done so. Further, as Proceris contended, the notice which it gave triggered the dispute resolution provisions. His Honour concluded that the parties, having made express provision for dispute resolution, should be held to their bargain, and that the proper exercise of the court's discretion was to stay the proceedings until that had happened. Accordingly, on 26 April 2005, Einstein J ordered that the s 66G proceedings be stayed until further order, and that Urban pay Proceris' costs on an indemnity basis. 11 Negotiations ensured and, on 29 July 2005, Einstein J by consent made orders in the s 66G proceedings dismissing the summons, and noting an agreement between the parties (contained in schedule A to the Short Minutes of Order of that date), which provided for the submission of the Bayview land to auction sale "as soon as practicable". The agreement was in the following terms: The defendant hereby offers to the plaintiff to settle the proceedings on the following basis: 1. Its consent to Colliers International being retained as agents to market the subject property for sale by way of public auction to take place as soon as practicable. 2. Its consent to the appointment of an independent firm of solicitors to act on the sale of the property or in default of agreement, to have the President of the Law Society of New South Wales nominate such a firm. 3. Its consent to a reserve price of $10M or to a lower reserve price to be agreed with the plaintiff following consultation with the sales agent, not less than seven days prior to the auction. If the plaintiff and the defendant cannot agree on a lower reserve price, the defendant will consent to the reserve being set by an independent sales agent practicing on the northern beaches of Sydney, appointed by the President of the Real Estate Institute of New South Wales. 4. Its consent to the proceeds of the sale of the development being distributed in accordance with clause 23.5 of the joint venture agreement. 5. Its consent to the dismissal of the summons or the amended summons, with the plaintiff and the defendant each paying their own costs from 27 April 2005.

15 By 17 August, Mr Jamieson had authorised the marketing campaign proposed by Colliers, with a first advertisement on 27 August and the last on 20 September, but at this stage there had been no communication with Mr Roberts about it. 16 On 24 August, Urban forwarded to Proceris four copies of a selling agency agreement with Colliers International, which had already been executed on behalf of Urban by the Jamiesons, requesting that Proceris execute it. This proposed agency agreement was one for the sale of "commercial property". 17 The very next day, 25 August, Proceris responded, acknowledging receipt of the selling agency agreements but asserting that they were unlawful and would expose Proceris to penalties for breach of the Conveyancing Act, and the Property Stock and Business Agents Act and Regulations. Proceris wrote to Colliers on the same day, conveying the same objections. The letter noted that the agreements were for sale of "commercial property", observed that Proceris was not in a position to sign the "commercial" sales agreement, and requested submission of the appropriate agency agreement. Although Urban submits to the contrary, and although the letter is not quite explicit about it, it is plain enough that the objection was that the agreement submitted was one for sale of commercial and not residential property. The objection was not without substance: Conveyancing Act s 66R; Property Stock and Business Agents Act ss 56, 63; Property Stock and Business Agents Regulations clause 13, schedules 7, 8. 18 Mr Jamieson travelled to the Hunter Valley on or about 26 August, returning on 28 August, and he would not have become aware of Mr Roberts' dissatisfaction with the agency agreement until, probably, the evening of 28 August. 19 On 26 August 2005, Colliers sent a letter by email to Mr Jamieson, enclosing proposed amendments to the text for signboard, brochure and advertisements, and continuing: "your prompt attention is appreciated before we 'push the button' on the sign and the marketing and cc copies of all through to Glenn Roberts and the court appointed lawyer". As Mr Alexis SC, for the defendants, submits, this correspondence indicates that it was Mr Jamieson who "pushed the button" for the marketing/auction to proceed (notwithstanding the absence of the required agency agreement and contract for sale of land) and approved the sign and marketing, before it was copied to Mr Roberts and Domain. Mr Jamieson said that he read Colliers' letter as stating that it was also being sent to Mr Roberts and Domain, but it manifestly does not bear that reading.

20 By email to Mr Jamieson on 28 August 2005 at 3.27 pm, Mr Roberts wrote:- I believe I am entitled to at least six/eight weeks leave and seek your agreement to commence my leave beginning Monday 5 September 2005. Could you please confirm at your earliest as I need to pay for airline tickets and organise my itinerary. 21 On 29 August, Colliers sought clarification of Proceris' concerns about the proposed selling agency agreement. On the same date, Mr Jamieson wrote to Mr Roberts, complaining that his failure to sign the agency agreements was preventing sale of the properties, and asserting that he would be held responsible for all losses. Mr Jamieson maintained that the documents sent were the very documents that Mr Roberts' letter requested, plainly missing the point that the objection was that inappropriate (commercial) agency agreements had been submitted for a residential property sale. 22 On 30 August, Mr Roberts responded to Colliers, with a copy to Mr Jamieson, specifying his concerns that an inappropriate agreement had been submitted, that no contract for sale of land had been prepared or was available, and that a large auction sign had been placed on the property, the removal of which he demanded. Mr Roberts says that he first observed the auction sign on 30 August, and that this was when he first became aware that the proposed auction date was 28 September. As at this time there was no agency agreement in place, and no contract for sale available, he was right to point out that Proceris was exposed to penalties. 23 Also on 30 August, Mr Jamieson responded to Mr Roberts' request for several weeks' leave, asserting that six to eight weeks' leave was not appropriate with the auction was scheduled for 28 September and a number of matters requiring attention in preparation for it. Mr Roberts did not take leave. 24 On 31 August, Colliers' solicitor responded to Mr Roberts, sending a copy to Mr Jamieson, referring to "instructions" that the property had a residential and a commercial component, and asserting that it was appropriate to enter into two agency agreements, one commercial and one residential. What was the source, nature or basis for these "instructions" has never been explained. A (residential) sales inspection report and exclusive agency agreement was enclosed for execution, together with the commercial agency agreement. The issue arising from Conveyancing Act, s 66R, and Property Stock and Business Agents Act, s 63, was not addressed. 25 Mr Roberts replied at 2.42 pm (four hours after Colliers sent their email to him). Although Mr Coles QC, for Urban, complains abouut a delay of "almost five hours", I would have thought that this was very prompt, particularly for someone who was allegedly deliberately delaying the transaction. Mr Roberts' reply pointed out that the property was residential vacant land within Conveyancing Act, s 66Q, and did not include any commercial component, and maintained that only a residential agency agreement was appropriate. He pointed out that Property Stock and Business Agents Regulations, clauses 12 and 13 and Schedules 7 to 14 had not been complied with, and, reiterating his concern at Proceris' vulnerability as a result of non-compliance with Conveyancing Act, s 66R, requested that the signage be removed forthwith. He repeated that there was no formal contract for sale available as required. At 15:14, he emailed Mr Jamieson, pointing out that the signage had not been removed, and that urgent regard should be had for s 66R and definition of residential property in s 66Q. 26 On 1 September (at 14:19), Mr Wall at Colliers an email to Mr Roberts, conceding that a residential agency agreement was appropriate, and noting that the contract for sale was being drafted. But Mr Jamieson (at 18:31) complained to Mr Roberts that, while Urban had been trying to move on from the dispute, "your lack of cooperation on a number of fronts has been frustrating our efforts to carry out the terms of the agreement". 27 An internal email of Colliers on 1 September 2004 (from Peter Krieg, State Director/Development and National Director/Residential, to Tim Russell, Roger Klem and Robert Wall) summarised the position as follows:- Rushing means mistakes, lack of clarity and future problems. In review to date we have the following: 1. No formal agreement in place if you assume the partner's comments. 2. Dispute as to the behaviour and responsibilities of Colliers. 3. No DA documentation. 4. No plans of the DA. 5. No construction QS report. 6. No feasibilities. 7. No review of end realisations. 8. No information memorandum. 9. No due diligence CD-Roms. 10. No market commentary on seniors living. 11. Seems to be potentially an alternative DA with less parking? 12. Reason for 84 parks was due to mariners however mariners are not secured? Do they add value anyway. I am happy to keep proceeding however we are not ready to market this thing and we are no doubt heading for the courts. 28 Thus there is some substance in Mr Alexis' submission - that Mr Jamieson's complaint on 1 September that Mr Roberts was frustrating Urban's efforts to carry out the terms of the agreement was without foundation, it being Mr Jamieson who had "pushed the button" to commence the auction campaign without proper documentation in place and without involving Mr Roberts. There was no contract available. It was unlawful to offer the property for sale up to that point. The issues which Mr Roberts had raised were not without substance. 29 On 2 September, Mr Roberts again advised Mr Jamieson of his concerns, reiterating that the auction sign had not been removed, and requesting that it be removed "until it is practical to commence the marketing". Colliers sent an email to Mr Roberts advising that the contract for sale was in the agent's possession and asking that as a matter of urgency he attend to sign the agency agreement and confirm that he did not take issue with the placement of the signage, "now that the contract has been issued". Mr Roberts replied (at 14:02) that he was not in receipt of a contract for sale from the lawyers, and would like to consider its contents before signing anything, and so continued to take issue with the placement of the advertising signage in the meantime. 30 Meanwhile (at 12:26) Mr Jamieson had advised Mr Roberts that he had already signed the agency agreement and requested that he do so as soon as practicable. Mr Roberts replied (at 20:29) that Proceris did not have available a contract prepared by the lawyer, and that as soon as he had considered the contract and obtained legal advice he would then be in a position to consider the agency agreement and facilitate the marketing of the property as soon as practicable. 31 On 5 September, Colliers advised Mr Jamieson that the sale was "on hold" until both vendors had ratified the terms of the contract, and that in the meantime it would be necessary for signage to be removed and stored off-site, for future marketing to be placed on hold, for the printed brochures to be stored pending outcome, and for details on the "Property Look" website to be removed. 32 On the same day, Domain sent the draft contract for sale to Urban. At 20:10, Mr Roberts sent an email to Mr Jamieson, confirming that he had received a call from Peter Kreig of Colliers, who had told him that Colliers had a contract and that copies had been forwarded to Urban and Proceris for approval. He complained that Colliers had asserted on 2 September that there was a contract, and again requested that Colliers remove the auction sign forthwith, as Urban and Proceris were liable to suffer damages. Mr Roberts repeated that "it is imperative that advertising to the public is stopped until such time as the contract for sale of land is approved by the vendors". The law required no less. 33 On 6 September, Mr Roberts received a draft contract from Domain,. And on 7 September, he informed Colliers that he was reviewing the draft and would reply to Domain on 8 September. He continued to object to the presence in the meantime of the auction sign, and to the appearance of advertisements in the press. 34 On 8 September, Mr Roberts responded to Domain, pointing out an anomaly with the s 149 certificates annexed to the contract, in particular that they did not note SEPP (Seniors Living) 2004 as "affecting the land", a not insignificant matter given that it was for a development authorised by that SEPP that the DA had been obtained. He observed that he was obtaining legal advice on 9 September. 35 Domain responded by a letter dated 8 September but forwarded by email on 9 September (at 20:08). Although Mr Coles submits that this response "dispatches various concerns raised by Roberts", it did not address the point which Mr Roberts was making about the s 149 certificates. The response merely asserted that the vendors had sufficiently met their disclosure obligation, which was not the point: the point was that if confusion and difficulties were to be avoided, the s 149 certificates annexed to the contract should (correctly) state that the land was land to which the SEPP applied.

36 In accordance with the email which he sent to Domain on 8 September at 12:19, Mr Roberts sought some legal advice on 9 September, from John Barlow, a property lawyer, and he replied to Domain's letter on Sunday 11 September, pointing out that "as there is so much money at stake all reliant on the Seniors Living approval for erection of apartments that the vendors should do everything in their power to make the contract as accurate and complete as possible". 37 By letter dated 12 September, Mr Roberts elaborated his concerns about the draft contract to Mr Jamieson. Before Mr Jamieson received that letter, he sent a letter (on 13 September, at 11:43) to Mr Roberts, asserting that Proceris had embarked upon a series of steps calculated to derail performance by the parties of their obligations under the 29 July agreement, and purporting to require Mr Roberts by 14 September to return the signed agency agreement to Colliers and to instruct Domain to forward contracts for sale to Colliers. Later, after receiving Mr Roberts letter of 12 September, Mr Jamieson replied (on 13 September, at 17:13), indicating that he would "consider" the matters raised. However, as Mr Alexis submits, Mr Jamieson's evidence, in cross-examination, tends to show that he gave no real consideration to them, but proceeded on the assumption that Mr Germanos at Domain (whom he persists in inaccurately describing as the "court appointed lawyer") would know what he was doing (and, implicitly, was therefore not to be questioned). A further email that evening from Mr Jamieson to Mr Roberts (at 17:44) asked whether all was in order with the agency agreement. 38 On 14 September, the Department of Lands forwarded to Urban advice that Ragnam had lodged a caveat on the title of the property. The caveat was signed for Ragnam by Mr Roberts on 13 September, and purported to claim an interest as follows:- Bruce & Barbara Jamieson, directors of Urban Traders Pty Limited, a registered proprietor of the land in two-thirds share as tenants in common agreed to not use information, agreed that no licence was implied or granted in respect of the community scheme and works on the land unless authorised in writing by the company,

by virtue of "Deed Of Copyright Agreement" and by virtue of:- On 18 April 2001 the directors of Urban Traders Pty Ltd signed a deed of copyright for works and planning carried out on the land A & D/32808. The company 002000697 is the legal and beneficial owner of all rights in the information and of copyright in the artistic works and no licence has been granted or implied to use the works. 39 Mr Jamieson says that on 14 September 2005 at about 8:15 am - before he received notice of the caveat - he went to Manly to try to find Mr Roberts so that they could discuss the lack of progress with the lack of sale. He found him opposite Café Steyne and approached him near his car, where, according to Mr Jamieson, they had a conversation to the following effect: Jamieson: Glen do you have a few minutes to talk? I would like to know why are you stalling the date of the auction? Roberts: The agreement we reached on 29 July 2005 says that the auction is to take place as soon as practicable. I will make sure that it will never be practicable. I will tie this auction up for two years. Urban is trading insolvently and it will be wound up in seven days for not paying the judgment for the costs. Jamieson: There is an appeal about the costs. Of what use is it to tie up the auction for two years? Roberts: I have told you before, your lawyers are incompetent. You should get yourself a commercial lawyer and stop using Cara Marasco. Urban terminated the joint venture agreement incorrectly and you had a blatant disregard for the joint venture agreement. I guarantee you will be bankrupt and gaoled the way you are going, you don't seem to realise how serious this is. Are you stupid? Have you told the bank about not being able to pay the next bills? The bank will step in when you can't pay your debts. Read the mortgage documents. I can't tell you how serious all of this is. You and Barbara will be gaoled as directors of a company trading insolvent. I might be able to help you out because I have someone who will pay out the bank loan. You and Barbara signing the commercial agency agreement with Colliers have left yourselves open for massive damages. Jamieson: Glen, if you spent less time trying to ruin us and more time on carrying out our agreement from 29 July 2005, we would be able to get the property sold and all the debts paid out. So why don't you just do what we agreed to do and let's get on with the selling of the property. Roberts: I intend to pursue the development. Yves and I are going to tie this up so you and Barbara go broke before the property is sold. Jamieson: The reason I let you go on title against the advice of our lawyers, is because we trusted you, Glen. The reason we went into this deal with you was because you showed us figures which indicated a profit of about $20 million which you know were grossly inaccurate. Roberts: We already had a verbal and a draft joint venture contract and I needed to protect my interests. No-one knows what the true profits will be until the development is completed and sold. Jamieson: Your figures of $20 million profit were clearly wrong. It is more likely to be a small profit or maybe just pay the debts so we break even. 40 Mr Roberts agrees that there was a conversation at about 8:15 am on 14 September at Manly, but says that it was to the following effect: Jamieson: Why are you delaying the auction and doing this to me? Roberts: I am not delaying the auction but am trying to get the contract correct and Colliers are not acting in our best interests. Jamieson: You have cancelled the auction. Roberts: I haven't cancelled the auction, Colliers were acting unlawfully and that is not in our interests. Jamieson: Why don't you sign the agreement? Roberts: I haven't received the consumer guide as yet and need to look after my interests. Jamieson: I have signed the agreement. Roberts: This conversation is going nowhere and is really stupid. You should get legal advice on these very serious matters. When are you going to pay my legal costs as a sign of good faith? Jamieson: I have appealed against the costs. Roberts: You can't appeal against costs, don't you realise how serious this is. You owe my company a lot of money and I believe your company is trading insolvently. Do you realise that if a company is found to be trading insolvently the directors are liable for its debts. Jamieson: We are not insolvent as the interest is in the bank to pay the bills and we can borrow more money as we have lots of assets. Roberts: It is the company that must pay its debts as and when they fall due. I would like to carry out the development and am trying to organise some investment capital. Can we talk about what your two thirds interest is worth? Jamieson: You agreed to sell the property by auction, so let's get on with it. Roberts: Yes, when it is practicable and at the moment there are s 149 problems as Council has said seniors living is prohibited on the property. If we sell the way it is we are both going to lose a lot of money. Jamieson: We are going to lose everything. Roberts: Why don't we start having meetings daily to resolve issues so that we both don't lose out. Perhaps we can start this Thursday or Friday? Roberts: Would you like to start this afternoon at 3:00 pm and we can do it every day until we resolve all the issues and bring the matter to a conclusion. Jamieson: Yes, I will come this afternoon. Roberts: Okay I will see you on this bench here this afternoon at 3:00 pm. 41 Mr Jamieson says that following the meeting at 8:15 am on 14 September he made hand-written notes which were subsequently typed. The typescript includes the following:- Bruce asked Glen, "why are you stalling the dates of the auction?". Glen answered that there is no practicable date for the auction. Planning instrument prevents Seniors 2004 on the land, no contract for sale, only a draft, Glen said he will tie this (auction) up for two years. 42 The document then goes on to record, at significantly greater length, a conversation not inconsistent with that deposed to by Mr Jamieson, but which focuses on the allegations of insolvent trading. Resolution of the competing versions of this conversation is an important issue in the case, which needs to be undertaken later, in the context of an understanding of the whole of the evidence. 43 Also on 14 September, Proceris wrote to Urban, reiterating its concerns about the contract. In another letter from Proceris to Urban of the same date, Procers asserted that Urban had acted unlawfully with Colliers by signing a commercial sole agency agreement and undertaking broadcast advertising to the public (in the absence of a contract of sale); denied having embarked on a series of steps to derail performance of the agreement; maintained that Proceris still did not have an agency agreement from Colliers for consideration, nor the residential consumer guide, and was therefore not in a position to sign any agreement; and contended that the demand to forward the contract of sale by 5:00 pm that afternoon was totally unreasonable, since in its present form it was misleading and if released would damage the vendors. The letter also asserted that Urban was insolvent. 44 Later on 14 September, at 3:00 pm, Mr Jamieson and Mr Roberts met on the bench. According to Mr Roberts, they discussed "ways in which we could move forward to resolve the disputes between us". Mr Jamieson says that very little was said.

55 In Equitable Remedies, Dr Spry says [5th edition, p77]:- If a party to a contract wishes to sue for legal damages in respect of a breach of one of its terms, he will not succeed unless that breach has taken place, and accordingly a right of action has arisen, by the time of commencement of the material proceedings. It is, of course, sufficient that there should have taken place an anticipatory breach, as opposed to an actual breach, yet there are many cases where it appears that the defendant has threatened not to perform part of a contract but where no anticipatory breach has taken place. So one party may have announced his intention of fulfilling his obligations apart from a particular inessential breach of those obligations, that is, a breach other than one on the absence of which the obligations of the plaintiff are intended to depend or on the occurrence of which a right to rescind would arise. In such cases there is no remedy at law until the breach in question has in fact occurred. But in equity the position is entirely different. An order of specific performance generally requires the defendant to carry out in specie every term, whether or not it is a condition or essential term, and accordingly wherever a breach has occurred or there is in the circumstances a sufficient likelihood of the occurrence of a breach to render it desirable that the interests of the plaintiff should be safeguarded by the court, an order of specific performance will be granted if otherwise appropriate. So it has been said that "proceedings for the specific performance of a contract which is of such a kind that it can be specifically enforced can be commenced as soon as one party threatens to refuse to perform the contract or any part thereof or actually refuses to perform any promise for which the time of performance has arrived". … Further, it is not essential that there should have been an explicit threat not to perform the material obligation. There must be more than a theoretical or remote possibility of a breach, but otherwise a greater or lesser probability that there will be a failure to perform may be found to be sufficient in the general circumstances; and in particular the degree of probability of a future breach that must be shown before the court will intervene depends on the extent of hardship that the plaintiff may suffer if the breach occurs and on any other such matters that bear on the justice or injustice of granting relief immediately. 56 In Marks v Lilley [1959] 1 WLR 749, a vendor had not completed in accordance with a notice to complete (which did not make time essential) and the purchaser commenced proceedings for specific performance. The contract was thereafter completed. Vaisey J held that the equitable right to specific performance had already accrued, even though time had not been made essential, quoting Williams on the Contract of Sale of Land (1930) (at p132) as saying that the cause of action for specific performance was not a breach of contract, but the duty considered in equity to be incumbent on the defendant of actually doing what he promised by the contract to perform: "It follows that a breach of the contract by one party thereto is not necessarily a condition precedent to the other party's obtaining an order for its specific performance; though a breach of the contract is usually requisite to induce the court to interfere". 57 In Hasham v Zenab [1960] AC 316, the defendant vendor repudiated the contract shortly after signing it. The plaintiff purchaser instituted proceedings for specific performance weeks before the date for completion. The vendor arguing that the proceedings were issued prematurely, the Privy Council upheld the purchaser's claim to an order for specific performance, holding that all that was required (for specific performance) was to "show circumstances which will justify the intervention by a court of equity". Significantly, Hasham points out that an order for specific performance often falls into two parts: the first of a declaratory nature, and the second containing consequential directions, with the first being suitable to a case where the time for performance might not have arrived even at the date of the order - in which case, in the event of subsequent non-performance, the court would not require the issue of a fresh writ before making consequential directions for performance. 58 In Turner v Bladin (1951) 82 CLR 463, the High Court held that it was not a defence to a suit for specific performance that some part of the contract was not immediately performable, and that proceedings for the specific performance of a contract could be commenced as soon as one party threatened to refuse to perform the contract or any part thereof, or actually refused to perform any promise for which the time for performance had arrived: the court can then make a decree that the contract ought to be specifically performed and carried into execution, and can so mould its decree and order such inquiries, accounts and other proceedings under it as may be necessary to carry into effect all the promises of both parties whether presently performable or performable only in the future. 59 The authors of Equity Doctrines & Remedies (Meagher, Heydon & Leeming, 4th edition), say [at [20-030]]: "Equity will in some cases intervene with a decree quia timet even though, since no breach - not even an anticipatory breach - has yet occurred, a cause of action for damages has not yet accrued: Hasham v Zenab [1960] AC 316, and see Turner v Bladin (1951) 82 CLR 463". 60 In this field of equitable intervention quia timet, as in the related field of quia timet injunctive relief, the court weighs and balances the magnitude of the damage which would be caused against the chances of its occurrence, so that a greater or lesser likelihood that the breach will in fact take place may be sufficient depending on the hardship which specific relief might occasion to the defendant and the damage which the breach might occasion to the plaintiff [Hooper v Rogers [1975] Ch 43; Earl of Rippon v Hobart (1834) 3 MynK 169, 176; 40 ER 65, 68; R v MacFarlane; ex parte O'Flanagan (1923) 32 CLR 518, 551]. Were there circumstances justifying equitable intervention? 61 Urban contended, and the defendants accepted, that it was implicit in the 29 July agreement that Proceris would do all things necessary on its part to enable the property to be submitted to sale by public auction "as soon as practicable". Such an obligation is imported by the principle of construction stated in Mackay v Dick (1881) 6 AppCas 251, 263: I think I may safety say, as a general rule, that where in written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect. What is the part of each must depend on circumstances. 62 That passage was cited with approval by Mason J in the High Court of Australia in Secured Income Real Estate (Australia) Limited v St Martin's Investments Pty Ltd (1979) 144 CLR 596, where his Honour added:- It is not to be thought that this rule of construction is confined to the imposition of an obligation on one contracting party to co-operate in doing all that is necessary to be done for the performance by the other party of his obligations under the contract. As Griffith CJ said in Butt v M'Donald (1896) 7 QLJ 68 at 70-1: "It is a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his part to enable the other party to have the benefit of the contract." 63 Mr Coles on the other hand accepted that no such duty required Proceris to forego its legal rights. Nor, in my opinion, did it require Proceris to disregard or sacrifice its own interests: Proceris was not bound to accept a contract prepared by the joint solicitor regardless of its terms, and was entitled to consider the terms of that contract and suggest amendments. And, within the constraints of co-operating in the submission of the property to auction "soon as practicable", Proceris was entitled to propose steps to maximise the return. The phase "as soon as practicable" is not one which admits of no delay at all. 64 Accordingly, the issue is whether there were, when Urban instituted these proceedings, such circumstances as would justify the intervention of a court of equity having regard to risk of Proceris not performing, and the balance of convenience and hardship, and if so what relief should now be granted. 65 Mr Roberts denies that he has ever suggested that he intends to tie up the auction of the property. He says he has always intended to, and has taken, all steps required to give effect to the 29 July agreement, whilst protecting his rights and performing his obligations. It will already be apparent that I do not accept many of Urban's complaints about Proceris' alleged procrastination. Many of the points taken by Mr Roberts were entirely legitimate. He was not bound to sacrifice his legal rights, nor even subordinate his own legitimate commercial interests, for the sake of a quick sale. Here, nothing more could reasonably be expected to have been done before the contract was received by Proceris on or about 6 September 2005. Thereafter, Proceris was entitled to at least a few days to consider the contract and obtain advice about it. Mr Roberts' concerns about the s 149 certificates were legitimate. I do not consider that the legitimacy of this position is affected by Mr Roberts' later approval, subject to expressed reservations, of the contract containing defective s 149 certificates. Contrary to Urban' submissions, those concerns had not been adequately addressed by 16 September. Were it not for the caveat, there would be no question of Mr Roberts having taken any action which unreasonably delayed the submission of the property to auction as soon as practicable. By the time he lodged the caveat it was it think already practically inevitable that the auction could not proceed on 28 September. Thus I do not think that any act of Mr Roberts has in fact resulted in any delay in the submission of the property to auction as soon as practicable. 66 However, there are some aspects of his conduct and evidence which are not so easily explained, and which tend to support a conclusion that Mr Roberts is not facilitating a sale, such as to found a threat, implicit if not explicit, of non-performance of his contractual obligations. Those matters are:- · The caveat; · The "Issues for determination" document; and · The 14 September conversation.

68 In his affidavit, Mr Roberts explains that Ragnam was the owner of rights in relation to drawings and plans concerning the proposed development of the property, and had not granted any rights to Urban to deal with those drawings and plans. He said that Ragnam was concerned that the sale of the property may result in an assignment of its rights in the drawings and plans, and so lodged a caveat. In his oral evidence, he said that he lodged the caveat because he believed that the land was going to be sold at auction, and that if it were sold to some other entity he might lose his rights to the artistic works and intellectual property associated with the plans. When asked whether he believed that a caveat would have the effect of preventing a transfer of the property he answered: "No I didn't. At the time I was just trying to assert my rights and protect my artistic [work] and to have settlement to pay me out or to pay out the companies that owned those works". Given Mr Roberts' long history of involvement in land dealings, I do not accept that he did not know that a caveat would prevent a transfer. 69 Proceris was, of course, one of the registered proprietors. Any transfer of the properties had to be executed by Proceris. Upon completion of any sale, Proceris would be entitled to one-third of the nett proceeds on sale, reflective of Proceris' equity in the property. As Mr Roberts explained, whereas Urban had contributed the funding, he (presumably on behalf of Ragnam) had contributed the intellectual property, and his recompense for that contribution was Proceris' one-third equity. I cannot see any tenable basis in logic or in law as to why it was necessary or appropriate to lodge a caveat, and even less basis for supposing that Ragnam had any caveatable interest. Objectively viewed, the lodging of the caveat was an obstructive move, calculated to impede or delay the sale, whatever Mr Roberts' subjective belief might have been. Given the relationship between Proceris, Mr Roberts and Ragnam, it created a reasonable apprehension that Proceris might not perform its contractual obligations. 70 The second aspect of Mr Roberts' conduct that is difficult to rationalise is the "Issues for Discussion" paper, handed by Mr Roberts to Mr Jamieson on 16 September. That paper contemplated a number of possible scenarios for the Bayview land. Most of them, if adopted, would have resulted in a sale not proceeding. Mr Roberts endeavoured to assert that contemporaneously with any of those proposals the auction would proceed "all the while this is happening". Yet he said that the development would take two years, and when asked how that sat with the auction sale proceeding some time this year, he answered: "Either party can pull out of the auction at any time. The most important thing is trying to resolve the s 149 certificate which was deficient. I didn't know whether the Seniors Living was possible on the land any more. So therefore, it was better for us to take up the consent we had now and move forward with the development rather than losing the use of the land and having the land sold at what we paid for it, which was only six or six-and-a-half million dollars". 71 This avoided, and did not answer, the question. The "Issues for Discussion" were alternatives to proceeding with the auction for which Mr Roberts wished to negotiate. If he secured agreement to any of them, then the property would not go to auction. This is what he preferred. Mr Roberts said that it was not correct that he did not particularly want the property to go to auction. I do not accept that answer. Although he was somewhat coy about it, I do not doubt that it is his preference that if possible the development proceed and that he retain an interest in it (although I would not accept that he would prefer a mortgagee sale to an auction by the parties, which Urban suggested was his aim). 72 As to the 14 September conversation, there are some objective indicia that tend to favour the substance of Mr Jamieson's version. First, the circumstance that the caveat had been prepared on 13 September 2005 and was to be lodged on 14 September must have been in Mr Roberts' mind when he was speaking to Mr Jamieson, and is consistent with the substance of the threats which Mr Jamieson attributes to him. Secondly, Mr Jamieson's version has considerable emphasis being given by Mr Roberts to the prospect of liability for insolvent trading; and Mr Roberts returned to the theme of Urban's alleged insolvency in one of his letters of 14 September. Thirdly, Mr Jamieson's notes, albeit not prepared quite as he initially suggested, nonetheless are a significant contemporaneous record of the conversation. 73 Against that, Mr Alexis advances three reasons for preferring Mr Roberts' position. The first is that given the preceding correspondence, it is unlikely that Mr Roberts would threaten to make sure that the auction would never be practicable and to tie it up for two years. But while I accept that up to that point Mr Roberts' correspondence and objections, with the exception of the caveat, were legitimate and could not properly be the subject of complaint by Urban, that conclusion is equivocal as to Mr Roberts' motive: that the issues raised by Mr Roberts to that point were legitimate is consistent both with Mr Roberts insisting in good faith on his strict rights, and with his using his strict rights to impose delay, and does not bear one way or the other on the respective likelihood of the competing versions of the conversation. 74 The second reason advanced by Mr Alexis is that there are inconsistencies in Mr Jamieson's version. But while there are some, they are minor and not of consequence. Although his evidence about the provenance of the typescript notes of that conversation was inaccurate, Mr Jamieson's notes corroborate, more or less contemporaneously with the event, the substance of his version. 75 The third reason advanced by Mr Alexis is that, despite the suggested threat to "tie it all up for two years", Mr Jamieson returned later the same afternoon for further discussions. Mr Alexis puts that this is an unlikely response to a threat to tie the sale up forever, but is consistent with Mr Roberts' version. While it would be difficult to reconcile Mr Jamieson's return that afternoon, to discuss the issues further, apparently at Mr Roberts' invitation to do so, with the categorical statements that he would tie up the auction and pursue the development that are attributed to him by Mr Jamieson in his affidavit, they are reconcilable with an invitation to negotiate to resolve their differences.

76 Mr Roberts is a particular and punctilious man. He takes a strict and punctilious view of his rights and obligations, to a point which some, including no doubt Mr Jamieson, especially in his present circumstances, must find infuriating. He insists that things are done absolutely "properly". Generally speaking, his answers were direct and precise. While it is the case that he often asked for questions to be repeated, contrary to Mr Coles' submission I thought that these requests were not dissembling but reflective of a genuine need on his part for precision in the questions that he was asked. However, his reliability - particularly on matters going to his subjective state of mind as distinct from objective facts - was clouded by his reluctance to concede - though he ultimately did - that it was his preference that the development proceed with himself as an interested party. And serious doubt was cast over a significant aspect of his evidence - his claim that he was not aware of the proposed auction date until 30 August, by the circumstance that, on 25 August, Colliers sent to Mr Jamieson and Mr Roberts by email a letter attaching a copy of the signed marketing schedule, noting that the soonest that all of the marketing material would be available for distribution would be "Tuesday week", and that for that reason it was appropriate that the auction be held on 28 September. 77 Against that, I do not consider that I can safely rely on Mr Jamieson's evidence as an accurate report of the 14 September conversation. As his cross-examination progressed, Mr Jamieson became progressively more overtly adversarial, it becoming apparent that he was determined to make whatever points he could against Mr Roberts. I do not overlook Mr Coles' submission that a party to litigation may understandably adopt an adversarial position in the witness box, as a result of the attacks made upon him and his position in the litigation, and that one should not be too hasty to discount his evidence on that account. However, such a presentation demonstrates a want of objectivity, which may warrant treating the witness's evidence with caution. Moreover, that want of objectivity was reflected in the case of Mr Jamieson by a propensity to make assumptions which invariably favoured his own position; to assume the most sinister explanation for Mr Roberts' conduct; and to misconstrue correspondence in a manner which suited his case but which it obviously did not bear. His evidence was often lacking in precision and accuracy; one example is his assertion that he had prepared the typescript notes of the 14 September conversation with Mr Roberts in his car immediately following the conversation, from which he was compelled to resile. He is no doubt concerned to secure an early sale and, I infer, is under no little financial pressure to do so. His pressing need for an early sale inclines him to view any steps taken by Mr Roberts to raise any query as being calculated to delay or defeat a sale. He is convinced that Mr Roberts is seeking to obstruct the sale, and that conviction has coloured his view of events. In my view Mr Jamieson is sensitive to his present financial vulnerability, can see that it may be in Mr Roberts' interests to prolong the sale process, is very frustrated by the delays which have so far taken place, and firmly believes that Mr Roberts is deliberately causing delay. Given that state of mind, and coupled with his demonstrable ability to read correspondence (and, I infer, hear conversations) in a way consistent with his own case but which they do not in fact bear, I cannot safely prefer his version. 78 I cannot resolve this issue by preferring one version to the other. It is improbable that either version is entirely accurate, and likely that the versions of each protagonist are coloured by their perceptions of their respective positions. It is unnecessary to conclude precisely what was said; the crucial question is whether what Mr Roberts said founded a reasonable apprehension that Proceris might not perform its contractual obligations. 79 The probabilities favour the view that the conversation taken as a whole did not convey an outright declaration by Mr Roberts that he would frustrate the sale: had he done so, there would have been no point in Mr Jamieson returning for further discussions that afternoon and on following days. But it certainly included a statement to the effect that a sale was not reasonably practicable, and on the probabilities it did convey, at least implicitly, the suggestion that if he wanted to do so, Mr Roberts could make things very difficult, so as to found a reasonable apprehension of non-performance by Proceris of its obligation to do all things necessary on its part to facilitate an auction sale as soon as practicable: there would have been nothing further to discuss and resolve had it not done so. 80 The critical factor in reaching this conclusion is the logic of the positions of each of the parties. Mr Jamieson, to Mr Roberts' knowledge, was under financial pressure and wanted to extricate himself from it with a quick sale, as swiftly as possible. Mr Roberts had, by the 29 July agreement, bound himself to cooperate in bringing about an auction sale "as soon as practicable". But Mr Roberts preferred an alternative outcome, which would permit the development to proceed: the "Issues for Discussion" paper of 16 September makes this clear, and though his admissions were less than fulsome, he did in substance concede that was his preference. He wished to negotiate for an alternative outcome, as that "Issues" paper shows. But if he were to perform Proceris' contractual obligation to co-operate in bringing about an auction sale "as soon as practicable", he had no negotiating position. 81 That a party might prefer another outcome does not necessarily mean that it will not perform its contractual obligations as required, and it is not always inconsistent for a party to a contract to negotiate for an alternative outcome while at the same time bona fide intending to perform the contract if the alternative is not agreed. However, that is not the case where the party's bargaining position is the threat, express or implied, that unless an alternative outcome is agreed, it will not perform the contract (to the prejudice of the other party). 82 For example, a negotiation which proceeded on the basis that there were more attractive outcomes for Urban than the contractual outcome, Proceris' explicit or implicit position being "but if you don't like them, we'll implement the contract leaving you to your less favourable contractual position" would be unobjectionable. But that was not the way Mr Roberts proceeded. 83 On Mr Roberts' version:- · he maintained that it was not presently practicable for there to be an auction; · he raised the spectre of liability for insolvent trading; · he raised the prospect of himself carrying out the development and buying out Urban' interest; · Mr Jamieson rejected that proposal; · Mr Roberts said that sale at the moment was not practicable, and invited Mr Jamieson to commence having daily meetings with him "to resolve issues so that we both don't lose out … until we resolve all the issues and bring the matter to a conclusion". 84 It is plain that, on Mr Robert's own version, the issues to be resolved were Mr Roberts' desire to negotiate an outcome other than a sale, and given that he was already bound to co-operate in a sale, his only real negotiating position to achieve that end was such capacity as he might have to impede a sale despite his contractual obligation. Mr Roberts emphasised the dire straits in which Urban and the Jamiesons were, and the jeopardy which they faced. On his own version, he conveyed that the sale was not going to happen as quickly as Mr Jamieson would like. To achieve the outcome he desired, his negotiating position had to be, in effect, that the sale might take too long to save Urban. It was that threat, implicit if not explicit, which gave rise to the need for further discussions to "resolve issues". Without it, there would not have been issues for resolution between Mr Jamieson and Mr Roberts. The issue about the s 149 certificate was not one which would or could be sorted out by conversations between them. 85 In the context of 14 and 16 September, Mr Roberts' negotiating position was necessarily that he may be able to prevent Urban securing the agreed outcome of a sale "as soon as practicable", and it was the existence of that position which necessitated further discussions. That founded a reasonable apprehension that Proceris might not perform its contractual obligations, which apprehension was considerably reinforced by the "Issues for Discussion" paper, and by the caveat. 86 No hardship would be occasioned to Proceris from being held to the 29 July agreement. A fundamental purpose of the 29 July agreement was to enable Urban to discharge its liabilities. Substantial damage ($10,000 per week in interest, and the risk of default) would be occasioned to Urban if the auction were delayed. Given the reasonable apprehension of non-performance, and that potential damage, there was sufficient to invoke the intervention of equity, and the balance of risk and hardship favours the granting of specific relief. At the time when Urban instituted proceedings for specific performance, it was justified in doing so. 87 Mr Alexis did not oppose the relief in claim 1 in the summons. However, he opposed the more specific directions in claim 3. By the time of the hearing, Mr Roberts had approved the contract, executed the agency agreement, and agreed to an auction date (2 November). He had withdrawn the caveat. The evidence does not establish any failure on the part of Mr Roberts or Proceris to execute any particular document or take any particular step to advance the sale when it was incumbent on them to do so. Some of the steps about which directions were sought had already been performed by the time of the hearing. The time for performance of the others had not arrived. In that context, relief in the declaratory rather than prescriptive form is appropriate [see Hasham v Zenab [1960] AC 316; Tito v Waddell (No. 2) [1977] Ch 106, 324]. Conclusion and orders

88 In my opinion, the potential damage which would be occasioned to Urban, in the event that Proceris did not perform its obligation to do whatever was necessary on its part to facilitate an auction of the Bayview land "as soon as practicable", was such that the combination of the conversations of 14 and 16 September, the "Issues" paper and the caveat sufficiently founded a reasonable apprehension of non-performance to justify the intervention of equity. There should be a declaration that the agreement ought to be specifically performed, with leave reserved to apply for specific directions if required. 89 As to the orders sought in respect of the caveat, it has not been suggested, even faintly, that there was any caveatable interest to sustain the caveat. Although on behalf of Mr Roberts it is said that the summons was premature, and that there should have been a request for removal of the caveat first, I am unable to agree. A person who lodges an abusive caveat is not entitled to the courtesy of a request for its removal, especially when there are pressures of time, and in my opinion the circumstance that it was removed, ultimately a week after proceedings were instituted, does not deprive Urban of its right to costs in that respect up to the date of removal. As the caveat has now been removed, an order for its withdrawal is no longer necessary. Given that Ragnam with the participation of Mr Roberts has already lodged one abusive caveat without acceptable explanation, there is a case for an injunction restraining the lodgement of further caveats. Given that Proceris is a registered proprietor, no prejudice would be occasioned by such an injunction. I would make an order to the effect of claim 5, restraining the lodgement of further caveats. Subject to what follows, I would make an order to the effect of claim 16 in the summons, that the second and third defendants pay the costs of the proceedings for removal of the caveat. 90 No sufficient case is made for an order to the effect set out in claim 6. Proceris has a substantial interest in the property. Mr Roberts as its principal is entitled to attend the auction. The second limb of the claim - for an injunction restraining him from "taking any steps to interfere with, delay or frustrate the sale of the property in accordance with these orders" is in my opinion too general and too extensive to be justifiable. In particular, as has already been the case, there may be steps that Mr Roberts is entitled to take in legitimate protection of his own rights, which might unavoidably have the effect of interfering with or delaying the sale. 91 As has been mentioned, Proceris announced at the outset of the hearing that it did not oppose the relief sought in claim 1. Urban pressed, unsuccessfully, for further relief. In those circumstances, prima facie, Urban should have its costs up to the first day of the hearing, and the defendants should have costs thereafter. As such an order encompasses the costs of the proceedings for removal of the caveat, no separate order to the effect of claim 16 is necessary. But I shall reserve leave to the parties to apply for a different costs order if so advised. 92 I make the following orders: 1. Declare that the agreement made between the plaintiff and the defendant on 29 July 2005, contained in the annexure to the Short Minutes of Order in accordance with which orders were made in proceedings 2055 of 2005 that day, ought to be specifically performed and carried into execution.

Urban Traders P/L v Proceris P/L

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Judgment (38 paragraphs)

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