Supreme Court New South Wales Medium Neutral Citation: KPE Superannuation Fund Pty Limited v Two Tempe Holdings Pty Ltd [2022] NSWSC 1614 Hearing dates: 2 – 5 May 2022; 7, 25, 30 June 2022 Date of orders: 25 November 2022 Decision date: 25 November 2022 Jurisdiction: Equity Before: Richmond J Decision: The relevant deed was delivered by the first defendant in escrow. Given the applicable condition was not performed, the first and second defendant are not bound by the relevant deed. Plaintiff's claim is therefore dismissed with costs. Catchwords: CONTRACTS — deeds — delivery — whether deed delivered to other side unconditionally or in escrow — where plaintiff did not put an alternative case that if deed not delivered then it was effective as simple contract Legislation Cited: Conveyancing Act 1919 (NSW) s 38 Corporations Act 2001 (Cth) s 127 Cases Cited: Bank of Scotland v Henry Butcher & Co [2003] EWCA Civ 67 Bowker v Burdekin (1843) 11 M&W 128 Centuria Property Funds Ltd v Thorn Australia Pty Ltd [2022] NSWCA 104 Federal Commissioner of Taxation v Taylor (1929) 42 CLR 80; [1929] HCA 13 Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 Hall v Bainbridge (1848) 12 QB 699; 116 ER 1032 Hooker Industrial Development Pty Ltd v Trustees of the Christian Brothers (1977) 2 NSWLR 109 Macedo v Stroud [1992] 2 AC 330 Monarch Petroleum NL v Citco Australia Petroleum Limited [1986] WAR 310 NTT Australia Digital Pty Ltd v Cover Genius Services Pty Ltd [2020] NSWSC 1378; 19 BPR 40,711 Pittmore Pty Ltd v Chan (2020) 104 NSWLR 62; [2020] NSWCA 344 Scook v Premier Building Solutions Pty Ltd (2003) 28 WAR 124; [2003] WASCA 263 Segboer v AJ Richardson Properties Pty Ltd [2012] NSWCA 253; 16 BPR 31,235 Thorn Australia Pty Ltd v Centuria Property Funds Ltd [2021] NSWSC 1217 Wardley Australia Ltd v McPharlin (1984) 3 BPR 9500 Xenos v Wickham (1867) LR 2 HL 296 Texts Cited: JD Heydon, Cross on Evidence (13th Australian ed, 2021, LexisNexis) JD Heydon, Heydon on Contract (2019, Lawbook Co) RJA Morrison and H Goolden, Norton on Deeds (2nd ed, 1928, Sweet & Maxwell) N Seddon, Seddon on Deeds (2015, Federation Press) Category: Principal judgment Parties: KPE Superannuation Fund Pty Ltd (ACN 114 428 367) as trustee for the Ellems Superannuation Fund (Plaintiff) Two Tempe Holdings Pty Ltd (ACN 634 416 925) (First Defendant) Simon Quinn (Second Defendant) AFSH Nominees Pty Ltd (Third Defendant) Representation: Counsel: S Docker with M Forgacs (Plaintiff) N Kidd SC (First and Second Defendants) Solicitors: Henry Williams Lawyers (Plaintiff) Keypoint Law (First and Second Defendants) Thomson Geer (Third Defendant) File Number(s): 2020/355192 Judgment 1. This is a dispute about whether an instrument dated 5 June 2020 entitled "Deed of Agreement" (Deed) between the plaintiff and the first and second defendants in connection with a property joint venture is binding on the first and second defendants. The central issue is whether the Deed was delivered by the first and second defendants on 10 June 2020. The plaintiff contends that it was, whereas the first and second defendants contend that it was not. If it was delivered, the plaintiff seeks various relief including an order that the first and second defendants pay an amount of $1,195,000 pursuant to the Deed and an order for the sale of a property at Jindabyne owned by the second defendant pursuant to an equitable charge granted under the Deed as security for amounts payable to the plaintiff. 2. The third defendant, AFSH Nominees Pty Ltd, which holds a registered mortgage over the Jindabyne property took no active part in the proceedings having indicated that it consents to whatever order the Court makes in the matter. 3. The plaintiff, KPE Superannuation Fund Pty Ltd (KPE), does not put an alternative case that if the Deed is not binding as a deed it is binding as a simple contract. 4. The nature of the issues in dispute requires a consideration of the dealings between the parties regarding the Deed and the wider transaction of which it formed part. All references to dates in paragraphs [12] to [73] of this judgment are to the 2020 calendar year unless otherwise stated. Background 1. This case concerns a unit trust called the QRM Unit Trust (Trust) established in June 2019 with QRM Holdings Pty Ltd as trustee (Trustee). The initial unitholders were One Tempe Holdings Pty Ltd with 100 units, and Two Tempe Holdings Pty Ltd (Two Tempe) with 200 units. Not long afterwards, Two Tempe acquired the 100 units held by the other unitholder so that Two Tempe became the sole unitholder in the Trust. 2. On 27 June 2019 the Trustee entered into a contract to purchase a property at Tempe, NSW (Tempe Property) for $7,400,000 (Contract). The Trustee paid a deposit of $740,000 to the vendor, which was an unrelated entity, of which $81,400 was subsequently refunded to the Trustee in circumstances not presently relevant. The completion date under the Contract was 27 May 2020. 3. In October 2019, KPE acquired 149 units in the Trust from Two Tempe for a purchase price of $149 pursuant to a unit sale agreement dated 10 October 2019. This gave KPE a 49.67% interest in the Trust with Two Tempe holding the remaining 50.33% interest. 4. The key individuals in the events which followed are: 1. Mr Ellems and his wife were the sole directors of KPE and Mr Ellems was also the secretary. KPE made the acquisition of its units in the Trust in its capacity as trustee of Mr Ellems' self-managed superannuation fund. Mr Ellems gave evidence and was cross-examined. 2. Ms Jurgens is a licensed conveyancer who previously acted for Mr Ellems in conveyancing transactions and was engaged by him in early June 2020 to assist KPE in relation to the transaction in June 2020 described below. Ms Jurgens is not a solicitor. She gave evidence and was cross-examined. 3. Mr Quinn, the second defendant, has at all relevant times been the sole director and secretary of both the Trustee and Two Tempe. Mr Quinn gave evidence and was cross-examined. 4. Mr Manca is a solicitor who was engaged by Mr Quinn in early June 2020 to act for Mr Quinn in relation to the transaction in June 2020 described below. He gave evidence and was cross-examined. 1. At the time of KPE's acquisition of its 149 units, it entered into an agreement entitled "Unitholders Agreement" with Two Tempe, the Trustee and Mr Quinn (Unitholders Agreement) in order to govern the rights and obligations of KPE and Two Tempe under the Trust. The key terms of the Unitholders Agreement are set out below. 1. Under cl 3.1, KPE and Two Tempe agreed to carry out the "Project" (being establishing the Trust, completing the purchase of the Tempe Property, improving the Tempe Property and selling the Tempe Property following the improvements so as to maximise the Project profit). 2. Clause 5.3 deals with the position where the Contract fails to complete. It provides: (a) If the Property Contract is rescinded by the Vendor or by the Trustee, then subject to the agreement of the Unitholders to the contrary in accordance with this Agreement: (i) the Trust will be determined; (ii) after repayment of the Unitholder Loans, any Establishment Expenses paid by the Trustee will be apportioned among the Unitholders pro-rata in accordance with their Unit holding and debited to the accounts of those Unitholders; and (iii) any capital in the Trust will returned to the Unitholders. 1. Under cl 6.1 the Trustee was authorised to require the unitholders to make loans to the Trustee from time to time to provide working capital on a pro rata basis by way of "Unitholder Loans". The term "Unitholder Loan" is defined to mean "the loans made by the unitholders and in the amount set out in Schedule 4 or as otherwise notified to the trustee from time to time." Schedule 4 sets out beside KPE's name, relevantly, the amount of $1,195,000 as a "loan amount". Between 14 October 2019 and 31 January 2020, KPE advanced approximately $1.1 million to the Trustee in respect of this loan and, while there is a disagreement between the parties as to the precise amount, it is not material for present purposes. 2. Under cl 6.2 the Trustee was authorised to require the unitholders to contribute towards the balance of the purchase price payable under the Contract, in addition to their unitholder loans. Clause 6.2 provides: The Unitholders acknowledge that in addition to any Unitholder Loans on foot at the date of this Agreement, they may be required to contribute towards the balance of the purchase price required not less than 14 days prior to settlement. 1. Under cl 6.3 Mr Quinn granted a charge to KPE over the Jindabyne property as security for the Trustee's obligation to repay KPE's unitholder loan (but without undertaking a personal obligation to repay that loan) and consented to KPE lodging a caveat in respect of that charge. It appears from the title search in evidence that KPE did not lodge a caveat in respect of this charge in 2019 or 2020. 2. Clause 7 provides that all decisions in connection with the Project and the Trust shall be made by the unitholders in general meeting in the manner contemplated by cl 8. Clause 8 requires the unitholders to meet at regular intervals and at least once a year or at such other intervals as are agreed by the unitholders and sets out procedures for the conduct of such meetings. It appears that no formal meetings of the unitholders occurred and instead Mr Ellems and Mr Quinn met informally from time to time, usually in coffee shops. 3. Under cl 9 the unitholders were entitled to the Project profit derived by the Trustee pro rata in accordance with the number of units held. Clause 9.2 provides: All revenue derived from the Project must be distributed as follows and in the following order of priority: (i) in payment or repayment of Establishment Expenses and all other Project Costs; (ii) in repayment of any outstanding Unitholder Loans; (iii) proportionately between the Unitholders in accordance with the number of units held. 1. Clause 13 and Sch 2 provide a procedure for a unitholder to give notice to each other unitholder of its desire to terminate the Agreement, in which event the remaining unitholders have an option to purchase the transferring unitholder's units in accordance with the provisions of Sch 2. 1. In the period up to the scheduled completion date of the contract of 27 May 2020, Mr Quinn unsuccessfully approached two potential lenders seeking to obtain finance to fund the balance of the purchase price and consequently the Trustee was unable to complete the contract on 27 May 2020. 2. On 28 May 2020 the vendor issued a notice to complete requiring settlement to occur on 12 June 2020, making time of the essence. Events from 1 to 9 June 2020 1. On Monday, 1 June, Mr Ellems and Mr Quinn met at a coffee shop in Cronulla and Mr Quinn told Mr Ellems that the financier was going to be MaxCap Group Pty Ltd (MaxCap). Mr Quinn also said "we will need to put in about $800,000 each as I can't get a loan for all of it." This was a reference to the shortfall between the loan provided by the financier and the balance of the purchase price payable on completion of the Contract. Mr Quinn's evidence was that he had made such requests to Mr Ellems on previous occasions in May. 2. Also on 1 June, most likely after Mr Quinn had the conversation with Mr Ellems referred to above, Mr Quinn received an indicative term sheet from MaxCap for the provision of a loan of $6,405,000 for a period of 6 months at an interest rate of 13% per annum. There was a commitment fee of $50,000 payable within 1 business day of acceptance of the offer in the term sheet, and an establishment fee of 2% of the facility limit (plus GST) payable on drawdown. The facility would not, if accepted, provide the Trustee with the full amount required to complete the Contract giving rise to a funding shortfall in the order of $1,661,969. Mr Quinn forwarded the MaxCap term sheet to Mr Ellems on 2 June at 9.02am. 3. The MaxCap term sheet included the following condition precedent to MaxCap making available the facility to the Trustee: 2.4 No Financial Indebtedness Evidence satisfactory to the Lender that the Borrower has no Financial Indebtedness other than those which the Lender has given its prior written approval and consent (any creditor relating to such financial indebtedness for which the Lender has given its prior approval must enter into a subordination deed with the Lender on terms acceptable to the Lender). This suggests that it was not a requirement of MaxCap that KPE's unitholder loan be discharged. There is nothing in the evidence to suggest that it could not have remained on foot provided KPE agreed that its right to repayment was subordinated to the debt owing to MaxCap under the new facility. 1. Mr Ellems and Mr Quinn had another conversation on or around 3 June (after Mr Ellems had received the MaxCap term sheet) in which Mr Quinn repeated his insistence that it would be necessary for KPE put in approximately $800,000 to enable the Trustee to complete the purchase. At or around the same time, most likely in the same conversations, Mr Ellems told Mr Quinn that KPE did not wish to continue its involvement with the project and wanted to exit the Trust and Mr Quinn proposed that KPE sell its units in the Trust back to Two Tempe. 2. On 3 June, Minter Ellison (acting for MaxCap) sent an email to Mr Manca seeking clarification in relation to the proposed arrangements to be made with respect to the unitholders in the Trust. The email relevantly stated: We understand that there is currently a unitholder agreement in place in respect of the trust with two unitholders (Two Tempe and Ellems Superannuation Fund) and that the Superannuation Fund will be selling its units back to Two Tempe prior to Financial Close. Would you please confirm that there will be another unit sale agreement in respect of the units held by the Superannuation Fund being sold to Two Tempe? Accordingly, would you also please confirm that the attached unitholder agreement will no longer be in place once this sale has occurred. According to the attached unitholder agreement, we understand that there was a unitholder loan from the Superannuation Fund to the Trustee secured by a property owned by Simon Quinn. Would you please confirm that as part of the buy back, the loan will be repaid and the security will be released? Please also confirm if there is or proposed to be any loans from Two Tempe to the Borrower. 1. Mr Manca forwarded this email to Mr Quinn on the same day and Mr Quinn forwarded it to Mr Ellems on 4 June at 8:19am. Mr Manca did not respond to Minter Ellison until the following day (see [21] below). 2. On the evening of 3 June, Mr Manca received instructions from Mr Quinn to prepare an agreement for the purchase of the units held by KPE in the Trust by Two Tempe and a "side agreement" under which Mr Quinn would agree to pay the unitholder loan in six months' time when a construction finance facility would be available to replace the MaxCap facility. Mr Manca prepared drafts of the Unit Sale Agreement and the Deed which he sent by email to Mr Quinn on the evening of 3 June 2020. 3. On Thursday 4 June at 8.43am, Mr Quinn forwarded Mr Manca's email to Mr Ellems attaching the Unit Sale Agreement and "side agreement" (being the Deed). Mr Quinn's email said "[p]lease sign and return". Later that morning Mr Ellems forwarded Mr Quinn's email to Ms Jurgens and then went to her office to discuss the matter. This was Ms Jurgens' first involvement in the transaction. 4. Later in the morning of 4 June, Ms Jurgens rang Mr Manca to discuss the two documents which Mr Ellems had forwarded to her. During this conversation Mr Manca told Ms Jurgens that "KPE also needs to put more money in for this to settle" and Ms Jurgens responded that "if you want KPE to make more contribution then this has to be documented". The conversation ended with Ms Jurgens stating that she would send Mr Manca an email setting out KPE's requirements. 5. Later on 4 June at 2.59pm, Mr Manca responded to Minter Ellison's email of the previous day by an email which said: Simon is the sole shareholder and there are no JV or shareholder agreements. There is a unitholder agreement, because as you have identified there were two partners involved in the trust, however I understand that Simon (Two Tempe Holdings Pty Ltd ATF Two Tempe Unit Trust) has acquired all of the units in the trust held by KPE Superannuation Fund Pty Limited ATF Ellems Superannuation Fund. I am waiting on my client to provide confirmation that this transfer has completed (which I understand is to take place today). As part of the unitholder agreement there was a unitholder loan from Ellems Superannuation Fund, which I understand will be extinguished today, and no further unitholder loans will exist, therefore not requiring any subordination of existing loans. 1. I infer that at the time this email was sent Mr Manca was working on the assumption that the Unit Sale Agreement would be entered into that day and he had not at this stage discussed with Mr Quinn the terms on which KPE would contribute further funds as he did not receive Ms Jurgens' email with KPE's requirements for that to occur until an hour later. 2. At 3.52pm on 4 June, Ms Jurgens sent the following email to Mr Manca (which Mr Ellems said in cross examination reflected his instructions to her as to the terms on which KPE might exit the Trust): Thanks for taking my call earlier. I confirm our discussion as follows: Agreement for Ellems Superannuation Fund to sell his share to Two Tempe, by way of a loan to Two Tempe repayable within 180 days, secured as follows: 1. Charge over the sold shares by means of registered PPSR; and 2. Paul Ellems to hold the original Share Certificates until loan repaid; and 3. Two Tempe to sign a Mortgage document over Jindabyne property to be held by Paul Ellems; and 4. Ellems superannuation to lodge Caveat over Jindabyne property. Simon Quin [sic] to provide evidence of the value of the loan from ASFH Nominees registered against Jindabyne to establish the remaining equity. Paul Ellems is prepared to proceed to signing the documents on that basis, subject to a Deed being prepared and signed by QRM and Simon Quinn providing that Paul Ellems is still entitled to 50% share of profit upon sale of the Tempe Property. 1. I infer that the words "to sell his share to Two Tempe by way of a loan to Two Tempe repayable within 180 days, secured as follows" were intended to be a reference to a sale of KPE's units in the Trust to Two Tempe on terms that Two Tempe would undertake to repay KPE's unitholder loan in 180 days with security for that obligation as set out in items 1 to 4. The email sets out what are essentially the conditions on which KPE was prepared to enter into the Unit Sale Agreement and the Deed, none of which had been (or were subsequently) agreed to by Mr Quinn, including item 3 that Mr Quinn give a mortgage over the Jindabyne property and, in the last paragraph, that the Trustee and Mr Quinn execute a deed giving KPE an entitlement to a 50% share of the profit on the sale of the Tempe Property. No mention is made in this email of the requirement that KPE contribute a further $800,000, but Ms Jurgens gave evidence that the condition she included in the last paragraph related to Mr Quinn's insistence that KPE contribute further funds because there were not enough funds from the proposed lender (MaxCap) to enable the purchase to be completed. 2. At 4.01pm on 4 June, Minter Ellison sent an email to Mr Manca responding to his earlier email sent at 2.59pm. In this email Minter Ellison stated that it would need to receive, by close of business on 5 June, confirmation that the transfer of KPE's units to Two Tempe had occurred, including an updated unitholder register and the Unit Sale Agreement. The deadline was said to be "in order for MaxCap to be in a position to fund for settlement on 11 June 2020". This deadline was subsequently revised (see [38] below) but ultimately was never met. 3. On Friday, 5 June at 7.41am, Ms Jurgens sent an email to Mr Manca stating: I have attached the signed Deed of Agreement and Unit Sale Agreement together with the Mortgage document which Simon will need to sign. Paul will require the original Mortgage document to be signed by Simon and returned to Paul. Please urgently provide the Deed for approval setting out the 50% share distribution due to KPE upon settlement of the sale of Tempe. 1. The Deed of Agreement and Unit Sale Agreement attached to the email were in the same form as the "drafts" prepared by Mr Manca and forwarded to Ms Jurgens on the previous day. The Mortgage document related to the property at Jindabyne owned by Mr Quinn and was expressed to be security for "the debt or liability described in the terms and conditions set out or referred to in this mortgage". However, no particulars are given under the heading "Terms and Conditions of this Mortgage" and accordingly the document could not create an effective security. All three documents had been signed by Mr Ellems on behalf of KPE but not by the other director (his wife). 2. At 9.13am that day, Mr Manca forwarded Ms Jurgens' email to Mr Quinn by an email which said: Share Sale Agreement has been signed. They want you to sign a mortgage (note that it has no terms). Not sure what she is talking about with respect to a 50% share distribution on settlement. 1. The last sentence of this email is a reference to the last paragraph of Ms Jurgens' email of the previous day. I infer from this that Mr Manca had not, at this stage, discussed with Mr Quinn the implications of Ms Jurgens' proposal that if KPE was to contribute an additional $800,000, there would need to be a deed giving KPE an entitlement to a 50% share of the profit on the sale of the Tempe Property. That discussion between Mr Manca and Mr Quinn occurred on 10 June 2020 when Mr Quinn signed the Unit Sale Agreement and the Deed in Mr Manca's office (see [42] below). 2. Later on 5 June, Ms Jurgens sent a further email to Mr Manca asking for his confirmation that the documents attached to her earlier email (signed by Mr Ellems) had been received and that "they are signed as required". Mr Manca did not respond to this email. 3. There was a conflict in the evidence of Mr Ellems and Mr Quinn as to whether they had a telephone conversation in the afternoon of 5 June and, if so, what was discussed. It is not necessary to resolve that conflict because it is clear, as the defendants submitted, that the position at the end of 5 June (which was a Friday before the Queen's Birthday long weekend) as communicated in Ms Jurgen's emails of 4 and 5 June was that KPE still wanted a mortgage from Mr Quinn over the Jindabyne property which he had not agreed to give; KPE still wanted a deed relating to a 50% profit share which Mr Quinn had not agreed to and Mr Ellems understood that Mr Quinn was insisting on KPE contributing approximately $800,000 to enable the Contract to be completed. It is clear that the terms on which KPE would exit the Trust were still under negotiation and the Deed and Unit Sale Agreement were part of that overall transaction which the parties were negotiating. 4. On Saturday, 6 June, Minter Ellison emailed to Mr Manca draft transaction documents, including the facility agreement and security documents. 5. On Tuesday, 9 June at 1.06pm, Mr Manca sent an email to Minter Ellison stating that he was instructed that the terms of the draft facility agreement and other transaction documents were agreed and asking for execution copies to be sent. Shortly afterwards, at 1.34pm, Minter Ellison responded by an email stating that various requests for documents and information remained outstanding, including "Borrower to confirm no ongoing unitholder agreements, ongoing obligations under any Unit Sale Agreement". 6. Some time on Tuesday, 9 June, Ms Jurgens lodged a caveat on the title to Mr Quinn's property at Jindabyne claiming an interest identified as follows: ESTATE OR INTEREST CLAIMED Mortgage By virtue of: Loan Agreement Dated: 09/06/2020 Between KPE SUPERANNUATION FUND PTY LIMITED And SIMON JOHN QUINN Details Supporting The Claim: Security provided for in Deed of Agreement dated 5 June 2020 for sale and purchase of Unit Shares in QRM Unit Trust to Two Tempe Holdings Pty Limited. 1. I note that at the time this caveat was lodged the Unit Sale Agreement, the Deed and Mortgage had not been executed by Mr Quinn (and indeed the Mortgage never was executed by him). Mr Quinn did not become aware of the caveat until 12 June (see [71] below). 2. In the late afternoon of 9 June, Mr Quinn had a telephone conversation with Mr Ellems. They each gave evidence to the same effect that during the conversation Mr Quinn told Mr Ellems that there was a shortfall in the funds available to complete the Contract because the MaxCap funding would not be enough; that KPE would need to contribute additional funds of approximately $800,000 to enable completion to occur; and that if KPE did not contribute the additional funds the Contract was going to "fall over" and not be completed, and that Mr Ellems responded in words to the effect of "I will have to get back to you". 3. Thus, as at the late afternoon on 9 June, the communicated position between the parties to the Deed was that: (a) Mr Quinn was still insisting that KPE should provide additional funds of around $800,000 to enable the Contract to be completed, and (b) Mr Ellems was considering that request and had indicated he would get back to Mr Quinn about it. Further, Mr Ellems' communicated position to Mr Quinn was still that KPE required a number of additional conditions to be satisfied as stated in Ms Jurgens' email of 4 June. This continued to be the position throughout the next day, 10 June, including during the morning of that day when Mr Quinn met with Mr Manca at his office. 4. At 5.40pm on 9 June, Minter Ellison sent an email to Mr Manca stating that before execution copies of the facility documents could be issued Minter Ellison needed responses to their outstanding queries that day if drawdown was to occur on 11 June. Mr Manca responded that evening by emails attaching a number of documents including the Unit Sale Agreement signed on behalf of KPE (but not Two Tempe or Mr Quinn). In one of the emails (sent at 5.43pm), Mr Manca said "There are no ongoing unitholder agreements, ongoing obligations under any unit sale agreements …" (which was a response to Minter Ellison's request at [33] above). That email also attached what was described as "a register of current unitholders and transfers of units for the QRM Unit Trust". This document purported to show that KPE's 149 units had been transferred to Two Tempe. That was inaccurate because at that stage, the Unit Sale Agreement had only been executed by KPE (albeit ineffectually) and no transfer of KPE's units had been (or ever was) executed. In cross-examination, Mr Manca said that he was intending to state in this email what the position would be "by the time we get to settlement of the [MaxCap] facility". I accept this evidence. However, in so far as it might have been read by Minter Ellison as a statement of present fact, it was wrong but ultimately nothing turns on the fact that the statement was made. 5. Later that evening at 9.14pm, Minter Ellison sent an email to Mr Manca attaching an execution copy of the facility agreement between MaxCap as lender and the Trustee as borrower, requesting him to arrange for it to be executed by the Trustee. The document was not executed by MaxCap. The email indicated that execution copies of the remaining facility documents would issue in due course, and included the following statement as to the basis on which the signed document would be held by Minter Ellison when it was returned: Authorisations By returning the document to Minter Ellison, you: 1. confirm that MinterEllison is authorised to hold the scanned or original document until the date that MinterEllison is satisfied that the document (and any related ancillary document) has been duly executed by each party to that document (Relevant Date); and 2. authorise MinterEllison to date the scanned or original document the Relevant Date and to circulate a complete signed and dated copy of the document (and any related ancillary document) to the transaction parties. 1. In effect, this was a statement that when the facility agreement was returned after it had been signed by the Trustee it would be held in escrow by Minter Ellison until it and any related ancillary document was executed by all relevant parties, including MaxCap. Events on 10 June 2020 1. On the morning of Wednesday, 10 June, at around 8:43am Mr Manca received an email from Minter Ellison attaching, among other things, execution copies of the remaining transaction documents which were subject to the same "Authorisations" requirement set out in the email the previous evening. A further email was received by Mr Manca from Minter Ellison at 12.20pm noting that the Unit Sale Agreement was only signed by KPE and requesting that a fully executed copy be provided, and another one at 12.53pm requesting "an update in relation to the signed documents and draft [verification certificates] and share/unit transfers for our review". 2. During the morning of 10 June, Mr Quinn attended Mr Manca's office to sign the documents necessary for the MaxCap facility which Minter Ellison had sent. While he was there, he signed the Unit Sale Agreement and the Deed. Mr Manca and Mr Quinn each gave evidence of a conversation they had in the meeting about the Unit Sale Agreement and the Deed which I deal with at [112] below. Mr Manca gave evidence that he inserted the date of 5 June on the first page of the Deed at the meeting without thinking and without instruction from Mr Quinn to do so. Mr Manca also gave evidence that Mr Quinn signed the documents, including the Unit Sale Agreement and the Deed before Ms Jurgens' email referred to in the next paragraph arrived. 3. At 1.08pm on 10 June, Ms Jurgens sent an email to Mr Manca as follows: I refer to our telephone conversation last week and am advised that KPE Superannuation Fund has been asked to contribute additional funds to enable completion of the settlement of the purchase of Tempe property. On behalf of the director of KPE Superannuation Fund, and under the provisions of The QRM Unit Trust agreement, please provide the following: 1. Copy of exchanged Contract for Sale of Tempe property which is due for settlement this week. 2. Financials in relation to the settlement, including source funds, to establish the shortfall which has been requested. 3. Unit Sale Agreement from KPE to Two Tempe executed by the director of Two Tempe Holdings Pty Ltd and the director of QRM Holdings Pty Ltd. 4. Deed of Agreement regarding the loan by KPE to Two Tempe Holdings Pty Ltd dated and signed by the director of Two Tempe Holdings Pty Ltd and Simon Quinn. 5. Draft Deed of Agreement for approval regarding the division of the project's profit. I note that all decisions in relation to the project and trust must be made by all unit holders in general meeting but to date Paul Ellems, director of KPE being unit holder of 149 shares has not received any paperwork in relation to the purchase contract or settlement information. Accordingly, upon receipt of the abovementioned information, Mr Ellems will be in a position to contribute to funds for settlement. 1. It is clear from the last paragraph of this email that KPE was proposing an arrangement whereby if the documents referred to in items 1 to 5 of the email were provided, KPE "will be in a position to contribute" the funds (of around $800,000) needed for settlement of the Contract. The identified documents included the Unit Sale Agreement (item 3), the Deed (item 4) and a "draft Deed of Agreement for approval regarding the division of the project's profit" (after the Tempe Property had been redeveloped and sold) (item 5). There was no longer a requirement for a mortgage from Mr Quinn over the Jindabyne property. 2. At around 1.28pm that day, shortly after Ms Jurgen's email was sent, Mr Ellems and Mr Quinn exchanged the following text messages: Ellems: "Katherine my associate is trying to get some information from Dion. can u let him no, so I can chase monies for settlement". Quinn: "I'm in Dions office dealing with it now" Ellems: "Ok" 1. At 2:15pm that day, Mr Manca sent an email to Minter Ellison attaching a copy of the facility agreement and draw notice for the advance under the facility, each signed by Mr Quinn on behalf of Two Tempe. The draw notice stated that the amount to be advanced for the purchase was $5,884,078 giving rise to the funding shortfall referred to at [13] above. The provision of the facility agreement was subject to the condition stated in Minter Ellison's email set out at [39] above. 2. The email stated that "[a]ll documents are now signed save for a variation to the Vedcast Trust, as I need another director to sign it". The Vedcast Trust is not presently relevant. The reference to "all documents" is ambiguous, but given that Minter Ellison had asked for a copy of the Unit Sale Agreement signed by all parties to it by their email of 12.20pm, it could have been construed by Minter Ellison as a statement that the Unit Sale Agreement had been executed by all parties. However, I note that there is no evidence that Mr Manca ever sent to Minter Ellison (or MaxCap) the Unit Sale Agreement showing that all parties had executed it (despite Minter Ellison's request for it in their email referred to at [41] above) and I infer that he did not. Importantly, Mr Manca's email cannot be taken as reference to the Deed as Minter Ellison and MaxCap were not aware of it, and it was not intended to be disclosed by Two Tempe to MaxCap. A copy of the signed Deed was never sent to Minter Ellison (or MaxCap). 3. At 4.04pm in the afternoon of 10 June, Mr Manca sent the following email to Ms Jurgens: I have sought instructions as to the below and am instructed to provide you with the following documents. 1. Contract for the purchase of the property. 2. Settlement adjustment sheet (showing amount payable of $7,546,047.29). 3. Loan facility agreement and draw notice (showing net amount available of only $5,884,078 available at settlement; 4. Unit Sale Agreement and Deed of Agreement between the parties. 5. There is no deed of agreement for distribution of the project profit, other than the unitholders agreement, which provides a clear mechanism for this. This would only come into play in the event that my client did not meet its obligations under the Deed of Agreement in any case. The shortfall is $1,661,969.29. Your client's share of the shortfall is $830,984.64. Please have this sum transferred into my trust account so that it will be clear to enable a settlement via PEXA on 12 June 2020. My trust account details are set out below. 1. The attachments to Mr Manca's email were each of the documents listed in items 1 to 4, which included the Unit Sale Agreement now signed by Mr Quinn on behalf of Two Tempe, the Trustee and in his personal capacity, and the Deed now signed by him on behalf of Two Tempe and in his personal capacity. The email reiterated in the last paragraph the requirement which Mr Manca had stated to Ms Jurgens in their previous conversation (see [20] above) regarding the need for Ms Jurgens to arrange for her client to contribute its share of the funding shortfall to enable settlement of the Contract to occur. 2. Mr Manca's email stated that he had instructions to provide to Ms Jurgens the documents listed in items 1 to 4. Mr Quinn gave evidence in cross examination that Mr Manca telephoned him after he received Ms Jurgen's email (which was copied to Mr Quinn) and asked Mr Quinn if he was happy for Mr Manca to send the information Ms Jurgens had requested, and that he responded in words to the effect of "[s]end it, if that's what they require to have a look at". 3. Ms Jurgens forwarded Mr Manca's email to Mr Ellems at 4.22pm that day and said in her email: Please see email below and attachments. I strongly recommend you obtain legal advice from a legal practitioner with the expertise to advise you on these matters. I cannot provide you any advice on the Temple [sic] Facility Agreement and Tempe Draw Notice. It appears they have provided executed copies of the sale/transfer of your unitholding to Two Tempe and provided executed copy of the Deed Agreement, which provided for the loan and repayment of the sum for sale/purchase of the unitholding. 1. Ms Jurgens sent the following email to Mr Manca at 4.29pm that day (which appears to be commenting on the settlement adjustment sheet attached to Mr Manca's email of 4.04pm which showed that the deposit paid to the vendor was $658,600): I understand that KPE has already contributed $1,195,000.00 to the trust when it purchased the unitholdings. However, the statement reflects only a payment of $658,600.00. Please provide a balance statement as to the whereabouts of the difference of $536,400.00. 1. Mr Manca replied by email at 5.59pm that day as follows: I am instructed that the funds paid by your client were subscription payments for the acquisition of the units at the agreed price. The settlement adjustment sheet does not reflect the full amount of funds spent by the trust. I am instructed that considerable funds have been spent by the trust for consultants in relation to the planning and approvals for the site, which resulted in a significant increased value of the property. My client reserves its rights. 1. During the evening of 10 June, Mr Manca sent emails to Minter Ellison attaching documents required to satisfy the conditions precedent under the MaxCap facility agreement, including a verification certificate which stated relevantly that "[a]s at Financial Close: (a) the Company will have no Debt other than Debt incurred under the Finance Documents …". The term "Financial Close" was defined to mean "the time the first Draw is provided". Importantly, this was a representation as to the position at a future date, i.e. on drawdown under the facility agreement which was anticipated to occur at settlement of the Contract but did not in fact occur. 2. Minter Ellison responded by an email sent at 11.19pm which raised a number of queries regarding the documents attached to the verification certificate, including that the Unit Sale Agreement was not properly executed by KPE. 3. Mr Manca responded to this email at 10.40am the following morning, and stated that he would investigate the issue regarding KPE's execution of the Unit Sale Agreement and "obtain full execution if required". Events on 11 June 2020 1. On Thursday 11 June at 9.17am Ms Jurgens replied to Mr Manca's email of 5.59pm the previous evening by an email which stated: Thanks for your email response below. Paul Ellems, as director of KPE Superannuation Fund Pty Ltd, under the terms of original Unit Trust Agreement, is entitled to receive a statement of the accounts to support the expenditure. Please forward the statement of accounts by return with supporting documentation. This email indicates that Ms Jurgens was still proceeding on the basis that Mr Ellems was considering the position stated in Mr Manca's email of 4.04pm on the previous day (see [46] above). 1. Mr Manca responded by email sent at 1.33pm on 11 June as follows: My client has provided me with the attached statement of expenses incurred by the trust for the project so far. Note that the deposit paid to the vendor was refunded in part pursuant to an agreement with the vendor because it required the deposit to be released. As you can see, the amount that has been spent so far is over $1.5M. Your client has to date contributed only $1,098,603.57, which is less than the $1,195,000.000 required to be paid when it subscribed for the units in the trust. On the basis of the above, my client demands prompt payment of the $830,984.64 today, and further requires the other director of your client Kim Ellems to execute the unit transfer agreement, as our client's mortgagee has identified that it is missing, and this will impact by delaying settlement. If my client is unable to complete the contract tomorrow due to your client's failure to comply with the above demands, there will be significant loss suffered by our client, not limited to the loss in the uplift in value of the property achieved by my client since exchange of contracts, which is in excess of $3M, let alone the lost opportunity to derive ongoing income from the property. We look forward to your response. Attached to the email was a schedule listing the date, amount and payee names for payments made by the trust totalling $1,516,144. This schedule supports Mr Quinn's evidence in cross examination that Two Tempe also made significant unitholder loans to the Trustee under cl 6.1 of the Unitholders Agreement (of around $400,000). The email also refers to a potential loss to the Trustee of $3 million if the Contract was not completed. This is consistent with the statement in the application for finance made to MaxCap on behalf of the Trustee in late May that the market value of the Tempe Property was $10,600,000 as a result of a development approval obtained on behalf of the Trustee. The application for finance (which was tendered by the plaintiff) also refers to Mr Quinn's considerable experience in property development projects in New South Wales. 1. At 3.06pm on 11 June, Ms Jurgens sent an email to Mr Manca as follows: Paul Ellems is arranging for the execution by Kim Ellems of the Unit Sale Agreement and the Deed of Agreement in relation to the loan to Two Tempe for the purchase price of the Unit Holding sale. These documents will be delivered back to me later today for scanning and forwarding to you. Prior to returning these documents, please provide a copy of the QRM Unit Trust Deed established on 25 June 2019. 1. At 3.13pm, Mr Manca replied to Ms Jurgens' email attaching a copy of the Trust Deed and also stating: "Can you please confirm that the required funds will be paid into my trust account so as to be clear for PEXA settlement tomorrow". 2. At 4.14pm that day, Ms Jurgens sent an email to Mr Manca which stated: As requested by your office, I now attach Unit Sale Agreement signed by both directors of KPE Superannuation Fund Pty Ltd and dated 4 June 2020 together with Deed of Agreement in relation to the loan for the consideration payable by Two Tempe Pty Ltd signed by both directors of KPE Superannuation Fund Pty Ltd and dated 5 June 2020. I enclose dated Deed of Agreement and dated Unit Sale Agreement signed by Simon Quinn both personally and in capacity of director of Two Tempe Holdings Pty Ltd and director of QRM Holdings Pty Ltd. As both counterparts are now dated formalising the sale of the Unit Holding from KPE Superannuation Fund Pty Limited to Two Tempe Holdings Pty Ltd, please confirm the sale/transfer of the unit holdings have been recorded in the trust registry. The attachments to this email were the Unit Sale Agreement and the Deed on which his wife's signature now appeared beside that of Mr Ellems in the execution clause for KPE. 1. Late in the afternoon on 11 June, after Ms Jurgen's email set out above was sent, Mr Ellems informed Mr Quinn that he would not contribute any amount to the funding shortfall. Events on and after 12 June 2020 1. The following day, Friday, 12 June was the date for completion of the Contract. At 8.18am, Mr Manca sent a text message to Mr Quinn as follows: I think we should go back to Paul's conveyancer and say there has been no exchange of the unit sale deed or loan deed and the original agreement remains on foot. He is obliged to contribute his share or the trust can dilute him. Also – we only sent her the signed contracts on the basis that the shortfall funds would be paid. 1. At 9.28am, Mr Manca sent the following email to Ms Jurgens: I am instructed that the Deed of Agreement and Unit Sale Agreement were not validly entered into and are not binding on the parties. My client never authorised the exchange of contracts. We submitted the counterpart contacts signed by our client at your request, not for exchange purposes, and subject to your client's agreement to contribute the shortfall, which was referenced in your email of 10 June 2020 which requested the documents, and our email in reply of 10 June 020 which attached the documents. The documents had been pre-dated in expectation that they would be formally exchanged, but this never happened, as the parties did not authorise each other to exchange. There was a positive representation by your client in your email of 10 June 2020 that upon provision of the documents requested, your client would contribute the funds required for settlement. Our client relied upon that representation and provided you with the documents on the basis that your client would provide the funds required for settlement as promised. Your client informed my client yesterday afternoon that he would not be contributing any shortfall, and you had also advised me of this fact yesterday afternoon. Accordingly, the necessary precondition that the Deed of Agreement and Unit Sale Agreement were based on is not satisfied. This is aside form (sic) the fact that your client had not properly executed the documents until yesterday afternoon when they were submitted to us. Following the submission of the properly executed documents to us, there was no mutual consensus to exchange, and in any event, there could not have been an exchange any earlier that your submission of the properly executed documents in the afternoon of 11 June 2020. Accordingly, the terms of the unitholder agreement remain on foot. Your client is in default of its obligations in that it has failed to fully pay for the units it subscribed for (having only contributed $1,098,603.67 of the $1,195,000.00 required to be paid for the units) and it has failed to contribute its share of the shortfall between the mortgagee funds and the balance of the price payable to purchase the property. The trustee has called upon your client as a unitholder to provide funds that it requires to complete the purchase of the project property in accordance with its holding in the trust. Your client has failed to comply with that request. This failure will have disastrous consequences for the trust. Our client reserves its rights to recover from your client damages resulting from the loss that it suffers as a consequence of your client's failures described above. 1. At 9.45am, Minter Ellison sent an email to Mr Manca requesting an update on a number of outstanding conditions precedent including a revised verification certificate executed by the Trustee, amended to include a certified copy of the unit register showing Two Tempe as sole unitholder, and the Unit Sale Agreement duly executed by KPE. Minter Ellison followed up the request again by another email at 10.28am. There is no evidence that these emails were ever responded to by Mr Manca or that Minter Ellison ever informed Mr Manca (or the Trustee) that the condition referred to at [40] or [41] above was ever satisfied, and I infer that it was not. 2. At 10.59am, Mr Manca sent an email to Ms Jurgens stating that the vendor's solicitor had advised that if settlement did not occur that day, the vendor would terminate the Contract. The email went on to state that the funding shortfall had reduced to $1,334,958.14 and required KPE's share ($663,029.21) to be paid into the trust account in cleared funds to enable settlement to occur that day. 3. At 11.11am, Mr Manca sent a further email to Ms Jurgens advising that a third party was prepared to advance $228,071.07 to KPE to assist it to meet its share of the funding shortfall, so that KPE would need to pay the sum of $434,958.14 into Mr Manca's trust account that day to enable settlement to occur. Mr Quinn explained in cross examination that he had before 12 June sought to identify a lender who would provide funds to assist Mr Ellems to meet KPE's share of the funding shortfall, but that otherwise the only sources of funds that he on behalf of the Trustee had identified to meet the funding shortfall were the two unitholders, KPE and Two Tempe, on a pro rata basis. I accept this evidence. 4. At 11.39am, Ms Jurgens sent an email to Mr Manca as follows: I note your assertion (which I disagree with) that the Deed of Agreement and Unit Sale Agreement were not validly entered into and are not binding on the parties. However, I understand that MaxCap required the Deed of Agreement and Unit Sale Agreement to be exchanged as a precondition to their funding. Please confirm that MaxCap will be proceeding with their funding today on the understanding that the Deed of Agreement and Unit Sale Agreement have been validly exchanged. 1. At 1.16pm, Mr Manca responded by email as follows: The agreements have not been validly entered into, which is obvious, for starters given that all directors of your client had not executed in accordance with the provisions of s 127 of the Corporations Act 2001 until yesterday afternoon when the second director appears to have signed the document, and there was no subsequent consensus for the parties to have formally exchanged the documents on that date. To address your other point, I confirm that Maxcap require the Unit Sale Agreement to be validly entered into by the parties, but not the Deed of Agreement. Maxcap will only proceed with the funding today on the basis that the Unit Sale Agreement is validly exchanged, but will not proceed if the Deed of Agreement is exchanged. 1. Shortly afterwards, Ms Jurgens sent an email to Mr Manca asking him to "confirm that MaxCap have already accepted the Unit Sale Agreement as validly exchanged and on that basis will be proceeding with their funding today" to which Mr Manca responded "No. They have not accepted the Unit Sale Agreement as validly exchanged". 2. Later that afternoon, Mr Quinn became aware that KPE had lodged a caveat over the Jindabyne property. This came about because the financier approached by Mr Quinn to fund Two Tempe's share of the funding shortfall for which Mr Quinn had offered the Jindabyne property as security had pointed out the existence of a caveat as an impediment to the making of the loan to Two Tempe. Mr Manca sent an email to Ms Jurgens at 5.19pm requesting that it be immediately removed because the caveat was defective for a number of reasons, including that the Deed was not binding. 3. Completion did not occur on 12 June and on 15 June the vendor issued a notice terminating the Contract and stating that the deposit of $658,600 was forfeited, which is what occurred. 4. There were further email exchanges between the parties on 15 June regarding the implications of what had occurred which are not presently relevant, culminating with KPE issuing a demand to Two Tempe and Mr Quinn for payment of $1,195,000 pursuant to cl 2(a) of the Deed in December 2020. Terms of the relevant agreements 1. It is necessary to set out the key terms of the Unit Sale Agreement and the Deed both of which are expressed to be deeds. (a) Terms of the Unit Sale Agreement 1. The Unit Sale Agreement bears a printed date of 4 June 2020, and identifies the parties as KPE, Two Tempe, the Trustee and Mr Quinn. 2. The recitals state as follows: A. The Seller and the Buyer agreed to establish the QRM Unit Trust for the potential purchase and development of the Property. B. The Seller has advanced an amount to the Trust by way of the Unitholder Loan. C. Simon has provided security for the repayment of the Unitholder Loan. D. The Seller acknowledges that the Unitholder Loan has been repaid to its satisfaction. E. The Trustee and the Seller wish to terminate their relationship. F. The Seller agrees to sell all of the Sale Units upon and subject to the provisions of this Agreement. 1. The expression, "Unitholder Loan" is defined in cl 1.1 to mean "the amount of $1,195,000.00 advanced by the Seller to the Trustee as set out in Schedule 4 to the Unitholders Agreement, satisfactory repayment of which is hereby acknowledged by the Seller". Although the actual amount advanced was less than the amount of $1,195,000 stated in Sch 4 of the Unitholders Agreement nothing turns on this as it is apparent that this amount was chosen simply to reflect what Sch 4 provided: see [9(c)] above. 2. Clause 2 deals with the acknowledgement of repayment of the Unitholder Loan in the following terms: The Seller acknowledges that: (a) the Unitholder Loan has been repaid to the satisfaction of the Seller; (b) the security for repayment of the Unitholder Loan is hereby released; and (c) any rights that the Seller had in respect of the Unitholder Loan under the Unitholders Agreement are hereby extinguished. The acknowledgement in paragraph (a) was clearly premised on the creation of the obligation on Two Tempe and Mr Quinn to pay the same amount to KPE under cl 2(a) of the Deed set out at [86] below. 1. Clauses 3.1 and 3.2 deal with the sale of KPE's units to Two Tempe and provide relevantly as follows: 3.1 Sale and Purchase (a) Upon and subject to the provisions of this Agreement, and subject to the repayment of the Unitholder Loan by the Trustee, the Seller must sell to the Buyer and the Buyer must purchase from the Seller the Sale Units at Completion for the Price as follows (Consideration): Number of Units Sold Total Price 149 Units in the Trust $149.00 Number of Units Purchased Total Payment Amount 149 Units in the Trust $149.00 (b) The Seller and its officers and employees waive any rights they may have to appoint a director to the board of the Trustee or to own shares in the Trustee. 3.2 Title transfer (a) The Seller must upon Completion transfer to the Buyer the full, exclusive, absolute and entire legal and beneficial right, title and interest to or in the Sale Units, free and clear of: (i) (Security Interests): any Security Interests; and (ii) (adverse interests): any other adverse right of any third party of any nature or description. (b) The risk in relation to the Units passes to the Buyer with effect from the transfer of the Sale Units to the Buyer and their registration in the name of the Buyer. 1. Clause 1.1 defines "Sale Units" and "Units" to mean relevantly the 149 units held by KPE in the Trust, "Completion" to mean "the completion of the sale and purchase of the Units under clause 5", and "Completion Date" to mean "the date of the Agreement, subject to any amendment in accordance with clause 5.1". 2. Clause 5 deals with completion of the sale and provides relevantly: 5.1 Completion date (a) Completion of the sale and purchase of the Sale Units under this Agreement must take place on the Completion Date at a time and place to be agreed between the parties in writing. 5.2 Seller obligations The Seller must, and the Trustee must procure that the Seller will, at Completion deliver to the Buyer or procure delivery to the Buyer: (a) (certificates): original unit certificates for all the Sale Units (if available); (b) (transfer): a transfer of the Sale Units duly executed by the Seller; 5.3 Trustee obligations The Trustee must procure delivery to the Seller at Completion of: (a) (pre-emption waiver): if applicable, a duly executed waiver or consent by each shareholder of the Trustee or unitholder of the Trust of or under any pre-emption or similar right conferred by any constitution document of the Trustee or any other agreement; 5.4 Buyer obligations (a) (Unit payment): The Buyer must at Completion pay the Price less the deposit referred to in clause 2.1(b) to or at the direction of the Seller. (b) (Discharge): The receipt of: (i) the Price by the Seller is a sufficient discharge to the Buyer of the Consideration. 5.5 Trustee obligations (a) The Trustee must at Completion: (i) sign and do anything required for the transfer of the Sale Units and their registration. 5.6 Obligation to register (a) The Trustee must ensure that registration of the transfer of the Sale Units takes place as soon as possible after Completion. 5.7 Interdependence (a) The obligations of the Seller, the Trustee and the Buyer under this clause 5 are interdependent. (b) Completion will not occur unless all of the obligations of the Seller, the Buyer, and the Trustee under this clause 5 are complied with and are fully effective. 1. Two aspects of cl 5 may be noted. First, cl 5.1 does not expressly contemplate the amendment of the Completion Date, and merely refers to the parties agreeing upon a time and place for completion. Nevertheless, it was open to the parties to agree orally or in writing that the Completion Date would be a date other than the "date of this Agreement" and indeed it could not have occurred on the date which the Agreement bore (4 June 2020) as that was a date before either party signed it. There is no evidence to suggest that any other date has been agreed. Second, at completion the Seller was required to sign and deliver a unit transfer to the Buyer and the Buyer was required to pay the purchase price of $149. This has not occurred. 2. Clause 6.5 is headed "Entire Agreement" and provides: This Agreement contains the entire agreement between the Parties as at the date of this Agreement with respect to its subject matter and supersedes all prior agreements and understandings between the Parties in connection with it. 1. The Unit Sale Agreement is expressed, on the execution page, to be "[e]xecuted as a deed" and the execution clause for each party stated that it is "signed and delivered" by that party. (b) Terms of the Deed 1. The Deed is dated 5 June 2020 (by hand) and identifies the parties as Two Tempe, KPE and Mr Quinn. The recitals state: A. By agreement dated 10 October 2019 KPE purchased from Two Tempe 149 units (the Sale Units) in the QRM Unit Trust (the Trust). B. By agreement dated 10 October 2019 KPE, Two Tempe, Simon and the trustee of the Trust entered into a unitholders agreement in respect of the Trust (the Unitholders Agreement). C. By agreement dated 4 June 2020 between KPE, Two Tempe and Simon, Two Tempe purchased from KPE the Sale Units and the Unitholders Agreement was terminated. D. The parties have entered into this deed to regulate certain matters not satisfactorily resolved by the agreement dated 4 June 2020. 1. Clause 2 is headed "Operative provisions" and provides: (a) Two Tempe and Simon shall pay to KPE the sum of $1,195,000.00 (the Final Payment) within 180 days of the date of this agreement. (b) Two Tempe grants KPE a security interest over the Sale Units to secure performance by Two Tempe of its obligations under this agreement. (c) Simon grants to KPE a charge over real property known as [the Jindabyne property] and owned by Simon (Jindabyne) to further secure the performance by Two Tempe of its obligations under this agreement. 1. Clause 4 is headed "Entire agreement" and provides: This deed is the entire agreement and understanding between the parties on everything connected with the subject matter of this deed, and supersedes any prior understanding, arrangement, representation or agreements between the parties as to the subject matter contained in this deed. 1. The Deed is expressed, on the execution page, to be "executed as a deed" and the execution clause for Mr Quinn states that it is "signed sealed and delivered" by him. In contrast, the execution clauses for Two Tempe and KPE merely state that it is "executed" by each of them. Issues 1. KPE claims that Two Tempe and Mr Quinn became bound by the Unit Sale Agreement and the Deed immediately and unconditionally when Mr Quinn executed both documents, on behalf of Two Tempe and in his personal capacity, in Mr Manca's office on 10 June 2020 or, alternatively, conditionally, the condition being that the documents be sent to KPE (or its agent) (which occurred later that day) or alternatively, the condition was both that the documents be sent to KPE (or its agent) and a duly executed counterpart of each document be received in return (which occurred on 11 June 2020). 2. KPE puts a secondary position that Two Tempe and Mr Quinn became bound by the Unit Sale Agreement and the Deed when Mr Quinn instructed Mr Manca to send those documents to Ms Jurgens (this occurred later on 10 June 2020). KPE contends that this constituted delivery of the deeds either absolutely or subject to a condition, being that duly executed counterparts be received in return (which occurred on 11 June 2020). 3. Two Tempe and Mr Quinn contend that the Unit Sale Agreement and the Deed did not become binding on them on 10 June 2020 (or subsequently) because they were never delivered. They contend that they were executed (and copies were emailed to Ms Jurgens) with the intention that Two Tempe and Mr Quinn would not be bound until conditions were met, including the payment by KPE of $830,984 to enable the Trustee to complete the Contract which did not occur. 4. Hence, the dispute between the parties is whether the Deed (and the Unit Sale Agreement) was delivered either absolutely or in escrow on 10 June and, if the latter, whether the relevant escrow condition or conditions was or were satisfied. 5. Before addressing those questions it is necessary to summarise the legal principles to be applied. Relevant principles 1. A deed is a document which is signed, sealed and delivered by the party bound. It will usually operate to transfer or create an interest in property, or to create a right or an obligation, or to confirm an act whereby an interest in property has already passed or a right or obligation was created: RJA Morrison and H Goolden, Norton on Deeds (2nd ed, 1928, Sweet & Maxwell) at 3; JD Heydon, Heydon on Contract (2019, Lawbook Co) at [6.10]. Execution of a deed 1. In relation to execution of a deed by an individual, s 38(1) of the Conveyancing Act 1919 (NSW) provides that every deed shall be signed as well as sealed and shall be attested by at least one witness not being a party to the deed. Under s 38(3) every instrument expressed to be a deed, or to be sealed, which is signed and attested in accordance with the section, shall be deemed to be sealed. The requirements of s 38(1) are satisfied in respect of Mr Quinn's execution of both the Deed and the Unit Sale Agreement in his personal capacity as each is expressed to be a deed and his signature on each was witnessed by Mr Manca. 2. In relation to execution of a deed by a company, s 127(1) and (3) of the Corporations Act 2001 (Cth) provide that a company may execute a deed by its sole director and secretary if it is expressed to be executed as a deed. Mr Quinn was the sole director and secretary of both the Trustee and Two Tempe as at 10 June 2020 when he executed both the Deed and the Unit Sale Agreement on behalf of Two Tempe and the Unit Sale Agreement on behalf of the Trustee and hence the requirements of s 127 were satisfied in respect of the execution by both companies. Concept of delivery 1. Delivery is essential before a deed is binding: Pittmore Pty Ltd v Chan (2020) 104 NSWLR 62; [2020] NSWCA 344 at [68], Segboer v AJ Richardson Properties Pty Ltd [2012] NSWCA 253; 16 BPR 31,235 at [51]–[52]. "Delivery" in this context does not mean physical delivery and indeed physical delivery of a deed to or for the benefit of the party in whose favour the deed operates is not necessary in order for a deed to be delivered and thereby take effect as a deed. Rather, the critical question is whether the grantor has evinced an intention to be bound immediately: Pittmore at [71]; Segboer at [58]. 2. The principle was stated by Blackburn J in Xenos v Wickham (1867) LR 2 HL 296 at 312 as follows: The mere affixing the seal does not render it a deed; but as soon as there are acts or words sufficient to show that it is intended by the party to be executed as his deed presently binding on him, it is sufficient. The most apt and expressive mode of indicating such an intention is to hand it over, saying: "I deliver this as my deed;" but any other words or acts that sufficiently show that it was intended to be finally executed will do as well. And it is clear on the authorities, as well as the reason of the thing, that the deed is binding on the obligor before it comes into the custody of the obligee, nay, before he even knows of it; though, of course, if he has not previously assented to the making of the deed, the obligee may refuse it. 1. Whether the grantor has evinced an intention to be bound immediately is a question of fact to be determined objectively having regard to the words used by and the conduct of the grantor, taking into account the circumstances attending the execution of the instrument: Pittmore at [75]; Segboer at [59]. 2. While physical delivery of a deed is not necessary, the delivery of the deed to the other party or parties taking the benefit of it is an act which is a common way of showing the intention to be bound: Macedo v Stroud [1992] 2 AC 330 at 337. 3. A document in the form of a deed which is expressed to be "signed and sealed" raises a presumption that it has been delivered: Hall v Bainbridge (1848) 12 QB 699 at 710; 116 ER 1032; Segboer at [57]. A presumption of delivery also arises where the document is expressed to be "signed sealed and delivered", given that the word "delivered" has been used: Wardley Australia Ltd v McPharlin (1984) 3 BPR 9500 at 9503. In the latter case the presumption may be stronger because the use of the word "delivered" evinces the relevant intention as Blackburn J observed in Xenos v Wickham in the passage quoted at [58] above. However, in both cases the presumption is capable of being rebutted by evidence that establishes that the party executing the deed did not intend to be bound immediately: Wardley at 9503. 4. A deed can be delivered in escrow, in which event the deed is not recallable but equally is not operative until a particular condition is satisfied and if the condition is not satisfied the deed never becomes binding: Segboer at [72]; Pittmore at [72]. It will be a delivery in escrow if it can reasonably be inferred that the deed was delivered on the basis that it was not to take effect as a deed until a certain condition was performed: Pittmore at [75]. As Parke B stated in Bowker v Burdekin (1843) 11 M&W 128 at 147 (in a passage approved by Starke and Dixon JJ in Federal Commissioner of Taxation v Taylor (1929) 42 CLR 80; [1929] HCA 13 at 88 – 89): In order to constitute the delivery of a writing as an escrow, it is not necessary it should be done by express words, but you are to look at all the facts attending the execution – to all that took place at the time, and to the result of the transaction; and therefore, though it is in form an absolute delivery, if it can reasonably be inferred that it was delivered not to take effect as a deed until a certain condition was performed, it will nevertheless operate as an escrow. 1. Delivery in escrow is to be distinguished from a case where the grantor's intention is not to be bound at all until some future event occurs (such as exchange of counterparts of the deed by all parties to it), in which case there is no delivery: Segboer at [72]. 2. Hence, as noted in Pittmore at [73], it follows that there are three possibilities in relation to the delivery of a deed: 1. The deed may have been delivered unconditionally (in which case it takes effect immediately); 2. The deed may have been delivered in escrow, ie. subject to a condition such that it is not operative until the condition is satisfied, but in the meantime there is no power to recall it; 3. The document may have been physically delivered (in the sense of handed over) subject to a condition and on the basis that the grantor may recall the deed prior to the condition being complied with, which is not delivery at all (and hence the document is not binding). How intention necessary for delivery is determined 1. Whether a deed has been delivered unconditionally, delivered in escrow or not delivered at all is a question of fact which depends upon the grantor's intention, which is to be determined objectively by reference to the words used by and the conduct of the grantor, taking into account the circumstances attending the execution of the deed: Pittmore at [75]; Segboer at [59] and [73]. 2. Determination of the objective intention depends on all of the circumstances as objectively manifested, which includes the nature of the bargain and context: Pittmore at [79]-[89] and [90]-[92]. The circumstances can include the underlying legal rights of the parties inter se and the communications between the parties' solicitors before signing: Thorn Australia Pty Ltd v Centuria Property Funds Ltd [2021] NSWSC 1217 at [56]-[60]. The circumstances also include things the solicitor said and did not say (which might (or might not) imply more needed to be done before the grantor is bound): Segboer at [62]. 3. The subjective opinions or the state of mind of the grantor are not relevant; rather, it is what his acts and statements at the time demonstrated: Segboer at [59]-[60]. 4. In determining the intention of the grantor, it is permissible to take into account later events, in addition to the circumstances prior to or contemporaneous with the alleged delivery of the deed, in order to ascertain the intention of the grantor at that time: Monarch Petroleum NL v Citco Australia Petroleum Limited [1986] WAR 310 at 356; Scook v Premier Building Solutions Pty Ltd (2003) 28 WAR 124 at 133; [2003] WASCA 263; NTT Australia Digital Pty Ltd v Cover Genius Services Pty Ltd 2020] NSWSC 1378; 19 BPR 40,711 at [77]; Thorn Australia Pty Ltd v Centuria Property Funds Ltd [2021] NSWSC 1217 at [46] (affirmed on appeal, [2022] NSWCA 104 at [62]); cf Segboer at [68] (left open). Later events can include communications from the solicitor for the grantor to the solicitor for the grantee when the documents are sent over: Thorn Australia at [62]-[63], [65]-[66], [67]-[68]. In each case, having regard to later events in this way is a form of retrospectant evidence: JD Heydon, Cross on Evidence (13th Australian ed, 2021, LexisNexis) at [1170]. 5. Forwarding the executed deed (whether or not the receiver has authority to accept it) may be an indicator of the requisite intention to be bound: Segboer at [63]. This is particularly so where the executed deed is sent to the other party without any express qualification. Munby J observed (Aldous LJ agreeing) in Bank of Scotland v Henry Butcher & Co [2003] EWCA Div 67 at [42]: The intention of the grantor may be of the greatest importance – may indeed be determinative – in a case … where it is being said that the grantor has delivered a document as a deed even though it has not been sent to the other side at all and indeed has never left his custody. But different considerations must apply where, as in the present case, the executed document is sent to the other party. In my judgment, a person who has executed a document containing on its face, as the guarantee did in the present case, a clear statement that it has been "executed and delivered as a deed", and who then sends that document to the other party without any expressed indication that the document is being delivered otherwise than as a deed, simply cannot set up some private mental reservation or uncommunicated intention as the basis of a contention that the document was in fact delivered not as the deed it purported to be but merely in escrow. Whether the Deed was delivered unconditionally or in escrow at the time of execution by Mr Quinn on 10 June 2020 1. To address the first question it is necessary to consider the acts and words of Mr Quinn, taking into account the circumstances attending his execution of the Deed including the nature of the bargain and context. Despite the entire agreement clause, the context includes the Unit Sale Agreement to which it was related and the wider transaction of which it was part: Pittmore at [81]. Further, as the Unit Sale Agreement and the Deed relate to the same transaction, the question as to their delivery ought to be dealt with on the basis that they travel together: Hooker Industrial Development Pty Ltd v Trustees of the Christian Brothers (1977) 2 NSWLR 109 at 115. 2. In my opinion, the acts and words of Mr Quinn leading up to and including the time of execution of the Deed, when viewed objectively in light of the surrounding circumstances, evince an intention that Two Tempe and Mr Quinn (in his personal capacity) are to be bound by the Deed and the Unit Sale Agreement conditionally on KPE providing its share of the funding shortfall to enable the Contract to be completed. My reasons are as follows. 3. First, Mr Quinn and Mr Manca gave evidence of a conversation between them on 10 June 2020 in the meeting in Mr Manca's office during which Mr Quinn signed the Unit Sale Agreement and the Deed. I accept their evidence that in this conversation Mr Quinn told Mr Manca that KPE had to contribute half of the funding shortfall or the Contract would not complete, and that Mr Quinn would sign the Unit Sale Agreement and the Deed and leave them with Mr Manca who would hold onto them until Mr Ellems paid his share of the funding shortfall. There are slight differences in their respective recollections of the conversation but the substance of what was said is the same. I consider that the differences are explained by the vagaries of human memory rather than being an indication that the conversation did not occur. This is because the substance of the conversation is consistent with what occurred before Mr Quinn signed the deeds (see [36] and [45] above) and afterwards (see the email exchange between Ms Jurgens and Mr Manca referred to at [43] and [48] above). 4. The plaintiff submitted that the Court should reject Mr Manca's evidence about the conversation with Mr Quinn on 10 June 2020 for two reasons. The first reason advanced by the plaintiff is that, in his affidavit of 5 May 2022, Mr Manca set out the substance of the conversation in a form which suggested that it had occurred before Mr Quinn signed the Unit Sale Agreement and the Deed but in cross-examination he said that it occurred afterwards. I do not regard this discrepancy as significant because whether the conversation came before or after Mr Quinn signed the Deed is not material either to the reliability of his recollection that the conversation occurred or to whether Mr Quinn had the relevant intention at the time of signing the Deed. This is because, as the defendants submit, there is nothing in the evidence to suggest that something happened during the meeting between Mr Manca and Mr Quinn on 10 June 2020 which caused Mr Quinn to change his intention as to the binding nature of the Deed. 5. The second reason why the plaintiff submitted that the evidence Mr Manca and Mr Quinn gave about the conversation should be rejected is that it was contained in affidavits of each of them sworn on 4 May 2022, during the hearing, rather than in their original affidavits and this suggested that it was a recent invention. I do not accept that submission. The defendants' explanation for the lateness of the evidence is that the Statement of Claim originally pleaded that the Deed had been entered into on 11 June 2020 (when Ms Jurgens sent to Mr Manca the Deed and the Unit Sale Agreement following its re-execution by KPE) rather than on 10 June 2020 and contained no suggestion that the Deed had become binding at the time it was signed by Mr Quinn. The amendment to the Statement of Claim to amend the relevant date to 10 June occurred on 3 May 2022, after the plaintiff's evidence had been filed. I accept this explanation. 6. I note that the plaintiff did not submit that the court should make adverse credit findings against either Mr Manca (a solicitor) or Mr Quinn, both of whom were cross-examined at length. The only issue was as to the accuracy of their recollection of events and conversations and, where it has been necessary to consider that evidence, I have tested it by reference to the contemporaneous documents, the established contemporaneous facts and the apparent logic of events: Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [31]. 7. The second matter confirming Mr Quinn's objective intention at the time of execution of the Unit Sale Agreement and the Deed is that the communications between Mr Quinn and Mr Ellems from 1 June to 11 June 2020 show that the Unit Sale Agreement and the Deed were part of an ongoing commercial negotiation between them as to the terms on which KPE would exit the Trust. Throughout the period from 1 June to 11 June 2020 Mr Quinn had repeatedly communicated to Mr Ellems that KPE was required to contribute its share of the funding shortfall to allow the Trust to complete the purchase under the Contract. Mr Ellems' communicated position to Mr Quinn as at 10 June 2020 was that KPE would be in a position to contribute its share of the funding shortfall if, among other things, KPE was given a mortgage over the Jindabyne property and a deed was executed giving KPE a 50% share of the profit on the sale of the Tempe Property. Mr Quinn was resisting both of those requirements but was still insisting on 10 June that it was necessary for KPE to contribute a further amount of approximately $800,000 to enable the purchase to go ahead. As at 10 June 2020, Mr Ellems had stated that he would get back to Mr Quinn about that matter. It was not until late on 11 June 2020 that Mr Ellems told Mr Quinn that KPE would not contribute its share of the funding shortfall. 8. The third matter which confirms Mr Quinn's objective intention is the context in which the Deed was signed. It was part of the arrangement by which KPE would exit the Trust at a time when the Trustee was seeking to complete the Contract, but had a funding shortfall of approximately $1.6 million. Mr Quinn's communicated position to Mr Ellems as at 10 June 2020 was that unless KPE contributed half of this amount, the purchase would not complete and the Trust would lose its deposit of $658,600. In addition Mr Quinn considered that there was a profit of some $3 million to be realised from the increase in value of the Tempe Property between the time of contract and completion (see [53] and [58] above) and that opportunity would be lost if the Contract did not complete. Indeed in that situation, Two Tempe would (if the Deed and the Unit Sale Agreement were binding unconditionally) hold a 100% unitholding in a trust with no assets and Two Tempe and Mr Quinn would have a liability to pay $1.195 million to KPE in respect of KPE's unitholder loan (for which Two Tempe and Mr Quinn would otherwise have no personal liability, as the charge under cl 6.3 of the Unitholders Agreement was merely a security for a liability of a third party, the Trustee). 9. It would be illogical for Mr Quinn, an experienced property developer, to agree to repurchase KPE's units in the Trust and effectively assume a personal obligation to repay the KPE's unitholder loan unless the Trust was able to acquire the Tempe Property. Put another way, it made no commercial sense for Two Tempe and Mr Quinn to assume a personal liability to pay $1.195 million to KPE in circumstances where Two Tempe's investment in the Trust was worthless (as would be the case if the Contract was not completed). 10. The fourth matter confirming Mr Quinn's objective intention at the time of execution of the Deed is the subsequent correspondence between Mr Quinn and Mr Ellems on 12 June 2020 which is entirely consistent with the conclusion that Mr Quinn did not intend that Two Tempe would be unconditionally bound by the Deed on 10 June 2020: see in particular the text from Mr Manca to Mr Quinn at [63] and the emails between Mr Manca to Ms Jurgens at [64]-[70]. Nothing happened in the period between 10 June and 12 June 2020 to suggest that Mr Quinn's intention had changed. 11. The plaintiff submitted that the following matters support an inference that Mr Quinn objectively intended to be bound by the Deed immediately and unconditionally at the time he executed it (on behalf of Two Tempe and in his personal capacity) in Mr Manca's office on 10 June 2020. 12. First, it was said that as the Deed was expressed to be signed, sealed and delivered by Mr Quinn this raised a strong presumption that the Deed was delivered by him and furthermore, he signed it with the necessary formality before his solicitor, Mr Manca. It is true that the Deed is expressed to be signed, sealed and delivered by Mr Quinn (though not by Two Tempe) and, in so far as Two Tempe is concerned, it is expressed to be "executed as a deed". While these words raise a rebuttable presumption that delivery occurred, they are equivocal as to whether the Deed was delivered unconditionally or in escrow. I have concluded that there was delivery in escrow. 13. Second, the plaintiff submitted that Mr Manca's act of dating the Deed when Mr Quinn signed it, bearing in mind that his practice was not to date a document until it was binding, was strong evidence that Mr Manca believed the Deed to be binding, particularly as he backdated it to an earlier date (5 June 2020) after the Deed had, apparently, already been executed by KPE. These matters concerning the dating of the Deed are of no assistance for two reasons. First, Mr Manca's intention is not the issue. Rather, it is Mr Quinn's objective intention which is relevant and in circumstances where Mr Quinn did not instruct Mr Manca to date the document (which he did not), Mr Manca's act of dating has little or no significance. Second, the dating of a deed is not necessary for it to be binding but where a date is inserted it may be presumed to be the date of delivery unless the presumption is rebutted: N Seddon, Seddon on Deeds (2015, Federation Press) at [3.6]. However, the dating of a deed does not, without more, indicate whether it is binding immediately and unconditionally, or alternatively conditionally. In the present case I have concluded that the latter is the correct conclusion. 14. Third, the plaintiff submitted that the fact that when Mr Quinn signed the Deed it had already, apparently, been signed by KPE favours the finding that Mr Quinn intended to be bound when he signed it for Two Tempe and in his personal capacity. In my view, the fact that KPE had already signed the Deed has no bearing on Mr Quinn's objective intention when he signed it and is entirely consistent with an objective intention that he would be bound by the Deed subject to the condition identified above. 15. Fourth, the plaintiff submitted that it was necessary for the preconditions for the MaxCap facility to be satisfied by 5 June 2020 in order to make the funding available by 11 June 2020 and the Unit Sale Agreement and the Deed were executed in order to satisfy MaxCap's requirements so that funding could occur on completion of the Contract. The plaintiff submitted that this explained the dating of the Deed of 5 June 2020, particularly as Mr Manca provided various documents to Minter Ellison, including a verification certificate, which made a representation that there were no ongoing unitholder agreements or indebtedness of the Trustee. 16. In my opinion the fact that Mr Manca was seeking to satisfy MaxCap's requirements for funding to occur on completion of the Contract, of which Mr Quinn was no doubt aware, has no bearing on Mr Quinn's intention at the time he signed the Deed on behalf of Two Tempe and in his personal capacity. This is because, firstly, the facility agreement was never entered into with MaxCap. Second, Mr Manca gave evidence which I accept that he provided the various documents, including the verification certificate, to MaxCap on the basis that they would take effect if and when MaxCap entered into the facility agreement which was expected to be on 12 June 2020 if the Trustee was then in a position to meet the funding shortfall, which of course it never was. Further, and importantly, Mr Manca did not provide the Deed to Minter Ellison and indeed there is no evidence to suggest that Minter Ellison or MaxCap were ever aware of its existence. Whether Mr Quinn's objective intention changed subsequently 1. The next question is whether by giving instructions to Mr Manca later on 10 June 2020 to send copies of the Unit Sale Agreement and the Deed as signed by him earlier that day to Ms Jurgens, Mr Quinn evinced an intention that Two Tempe and he would be bound unconditionally by those documents. In my opinion, the answer is no for the following reasons. 2. First, Mr Manca's email to Ms Jurgens at 4.04pm set out at [48] above clearly reiterates the requirement that Mr Quinn has been insisting upon since early June that KPE must contribute approximately $800,000 to the funding shortfall to enable the Contract to be completed. While Mr Manca's email does not state that the Deed is sent subject to a "condition" that the amount of $830,984 is provided by KPE, it is not necessary that the condition be expressed in that way – it is sufficient for a delivery in escrow that it can reasonably be inferred that the Deed was delivered on the basis that it was not to take effect until a certain condition was satisfied: see [102] above. When the email is read as a whole, and in context of the discussion which preceded it, it can reasonably be inferred that the Deed was being sent to Ms Jurgens on the basis that the condition stated at the end of Mr Manca's email needed to be complied with in order for the Deed and the Unit Sale Agreement to take effect. 3. Second, Mr Quinn gave evidence in cross-examination that he gave his instructions to Mr Manca to send the signed Unit Sale Agreement and Deed to Ms Jurgens in words to the effect: "Send it, if that's what they require to have a look at." The context in which this statement was made is Ms Jurgen's email of 1.08pm that day (which Mr Quinn had seen) which requested that certain documents (including these two documents signed by Mr Quinn) be provided by Mr Manca, upon receipt of which "Mr Ellems will be in a position to contribute to funds for settlement". Given that context, Mr Quinn's instructions are not an indication of an intention to be unconditionally bound by the Deed and the Unit Sale Agreement. 4. Third, Mr Manca's email was not expressed as an exchange of counterparts of the Deed but rather as the provision of documents which Ms Jurgens had requested as part of her proposal in her email of 1.08pm on 10 June, and Mr Manca's email made explicit, when doing so, that the condition regarding KPE's contribution to the funding shortfall of approximately $800,000 was still required by Mr Quinn. While the provision to the other party of a signed deed without any express qualification may lead to an inference that it is delivered (see [109] above), here there is an express qualification in the final paragraph of the email. Further it is significant that Mr Manca did not at any time send copies of the Unit Sale Agreement and Deed signed by Mr Quinn to Minter Ellison, which is consistent with the qualified nature of the provision of these documents to Ms Jurgens. 5. Fourth, the other considerations referred to at [112]-[119] above continue to apply as at 4.04pm on 10 June 2020 when Mr Manca's email was sent. 6. The plaintiff submitted that the alleged condition to delivery asserted by Mr Manca in the email is commercially nonsensical and the Court should not find that Mr Quinn had an intention based on that condition as it would be commercially absurd for him to hold it. With respect, the condition was not "commercially nonsensical". As Mr Quinn explained in cross-examination: At that point, Mr Ellems was looking at a possible loss of more than $1.2 million if we didn't settle. That's what he purported to have put in in the original deal. If we did not settle this property, there would be further loss, I had guaranteed as to – by myself and as the Trustee to settle the property. At that point, Mr Ellems was looking at north of $1.2 million as possible loss. The commercial decision would be to mitigate that loss to $800,000 odd. That's not a silly position. It's a commercial decision, that was his decision. 1. It may well be that Mr Quinn engaged in a form of brinkmanship designed to force Mr Ellems to relent and agree to contribute to the funding shortfall because Mr Ellems would ultimately recognise that he would be in a worse position if he did not, but it cannot be said to be commercially nonsensical. Rather, as the first and second defendants submitted, KPE and Two Tempe were conducting a commercial negotiation as to the basis upon which KPE would be permitted to exit the Trust in circumstances where Two Tempe considered that KPE had a contractual obligation to contribute, pro rata with Two Tempe, to the funding shortfall of approximately $1.6 million and had refused to do so. Two Tempe's position in that regard finds support in cl 6.2 of the Unitholders Agreement. 2. It is apparent that Mr Quinn and Mr Ellems (and their respective advisors, Mr Manca and Ms Jurgens) were to some extent at cross-purposes during their negotiations in the period from 1 to 12 June 2020. This was due, at least in part, to a tension between their conflicting objectives. Mr Ellems wanted to exit the Trust on terms that he receive the full amount that he had invested of around $1.1 million. Mr Quinn was only prepared to allow Mr Ellems to exit the Trust on that basis if KPE honoured its obligation under cl 6.2 of the Unitholders Agreement to contribute pro rata with Two Tempe towards any shortfall between the external debt and the amount payable to the vendor on completion of the Contract, because otherwise the Trustee could not complete the purchase. Mr Quinn wanted the purchase to go ahead in order to enable the Trust to benefit from an increase in the value of the Tempe Property which he estimated to be in order of $3 million. The contemporaneous communications between the parties, and the evidence of their conversations at the time, do not explain why this tension caused by the inconsistency of objectives was never properly recognised and addressed. However, whatever the explanation for that may be, Mr Quinn's objective intention was that the Deed and Unit Sale Agreement would only be binding on Two Tempe, the Trustee and himself if KPE contributed its share of the funding shortfall to enable the Contract to be completed. Conclusion 1. For the above reasons, I have concluded that Two Tempe and Mr Quinn delivered the Deed and the Unit Sale Agreement in escrow, the condition being that they would be bound by those deeds on KPE contributing its share of the funding shortfall of $830,984.64 so that the completion of the Contract could occur. As that condition was not satisfied and is not capable of being satisfied, neither the Deed nor the Unit Sale Agreement is binding on Two Tempe or Mr Quinn. 2. For these reasons, the proceedings should be dismissed with costs. I will hear the parties as to the form of the orders as to costs. ********** 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: 28 November 2022