Supreme Court New South Wales Medium Neutral Citation: David Alan Thomson v Golden Destiny Investments Pty Limited [2015] NSWSC 1176 Hearing dates: 9,10,11,12,13, 16, 17,18,19 March, directions 20 March, oral submissions 13, 14, 15 May 2015, written submissions, further directions hearing 22 May 2015, directions 11 June 2015, further written submissions 12 June 2015, further directions 15 June 2015 Date of orders: 21 August 2015 Decision date: 21 August 2015 Before: Sackar J Decision: See [644]-[653] Catchwords: CONTRACTS – abandonment or abrogation – whether ongoing intention to be bound – objective assessment of conduct – where one party purported to terminate agreement – nature of agreement CONTRACTS – breach of retainer – scope of retainer – where solicitor acting for multiple parties to transaction – conflict of interest – failure to advise CONTRACTS – rescission – rescission on basis of solicitor's conflict of interest – divergence between parties' interests – failure to advise – entitlement to rescind EQUITY – fiduciary duties – conflict of interest – where solicitor acting for both parties to transaction – where solicitor had personal interest in transaction – whether fully informed consent sought – whether causal relationship between loss and breach of duty – appropriate counterfactual for assessing loss PROPERTY – caveats – lodgement of caveats – refusal to withdraw caveats – caveatable interest – where contribution made to purchase price by third party – where no contractual relationship between vendor and third party – nature of interest – constructive or resulting trust – whether trust conferred a beneficial interest in land PROPERTY – caveats – whether caveator had honest belief on reasonable grounds that caveat could be lodged Legislation Cited: Civil Liability Act 2002 (NSW) Competition and Consumer Act 2010 (Cth) Corporations Act 2001 (Cth) Professional Standards Act 1994 (NSW) Real Property Act 1900 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Aberaman Ironworks v Wickens (1868-69) LR 4 Ch App 101 Allied Pastoral Holdings Pty Ltd v FCT [1983] 1 NSWLR 1 Arkbay Investments Pty Ltd v Tripod Funds Management Pty Ltd [2014] Avco Financial Services Ltd v White [1977] VR 561 Bahr v Nicolay (No 2) (1988) 164 CLR 604 Beca Developments Pty Ltd v Idameneo (No 92) Pty Ltd (1990) 21 NSWLR 459 Bedford Properties Pty Ltd v Surgo [1981] 1 NSWLR 106 Belvino Investments No 2 Pty Ltd v Australian Vintage Ltd [2014] NSWSC 978 Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 384 Black Uhlans Inc v NSW Crime Commission (2002) 12 BPR 22,421 Browne v Dunn (1893) 6 R 67 (HL) Calverley v Green (1984) 155 CLR 242 Carantinos v Magafas [2008] NSWCA 304 Castlereagh Motels Ltd v Davies-Roe (1966) 67 SR (NSW) 279 Chan v Zacharia (1984) 154 CLR 178 Clark Boyce v Mouat [1994] 1 AC 428 Corin v Patton (1990) 169 CLR 540 Cubillo v Commonwealth (No 2) (2000) 103 FCR 1 Davies v Uratoriu (1995) 6 BPR 13,917 Dering v Earl of Winchelsea (1787) 1 Cox 318 Dow Securities Pty Ltd v Manufacturing Investments Ltd (1981) 5 ACLR 501 Farrington v Rowe McBride & Partners [1985] 1 NZLR 83 Fox v Percy (2003) 214 CLR 118 Hart Security Australia Pty Ltd v Boucousis [2014] NSWSC 1654 Hewett v Court (1983) 149 CLR 639 Jones v Sutherland Shire Council [1979] 2 NSWLR 206 Kation Pty Ltd v Lamru Pty Ltd (2009) 257 ALR 336 Kimberley NZI Finance Ltd v AR Barr Investments Pty Ltd [1990] ANZ ConvR 438 Law Society of New South Wales v Harvey [1976] 2 NSWLR 154 Lee v Ross (No 2) (2003) 11 BPR 20,111 Lysaght v Edwards (1876) 2 Ch D 499 Maguire v Makaronis (1997) 188 CLR 449 Mahendran v Chase Enterprises Pty Ltd (2013) 17 BPR 32,733 Moody v Cox and Hatt [1917] 2 Ch 71 Municipal District of Concord v Coles (1905) 3 CLR 96 Nicholls v Michael Wilson & Partners Ltd [2012] NSWCA 383 Re Broadcasting Station 2GB Pty Ltd [1964-5] NSWR 1648 Re Paul (1902) 19 WN (NSW) 114 Re Pile's Caveats [1981] Qd R 81 Re Wadham (1879) 13 SALR 70; Rose v Watson (1864) 11 ER 1187 Ryder v Frohlich [2004] NSWCA 472 Shaw v Foster (1871-72) LR 5 HL 321 Spellson v George (1992) 26 NSWLR 666 Summers v The Commonwealth (1918) 25 CLR 144 Valerica v Global (2001) NSW ConvR 55-963 Woolworths Ltd v Kelly (1991) 22 NSWLR 189 Texts Cited: S Lindsay, Caveats Against Dealings in Australia and New Zealand (The Federation Press, 1995) GR Northcote, Fry on Specific Performance (Stevens and Sons, 6th ed, 1921) Category: Principal judgment Parties: David Alan Thomson – first plaintiff Tracy Spencer – second plaintiff Joseph Luis Alonso – third plaintiff Kay Alison Brunton Alonso – fourth plaintiff John Sydney Wolfe – fifth plaintiff Janyce Robin Wolfe – sixth plaintiff Malcolm Richard Smith – seventh plaintiff Katherine Anne Smith – eighth plaintiff Pera Marion Webb – ninth plaintiff Maureen Lee Theobald – tenth plaintiff Golden Destiny Investments Pty Ltd (ACN 163 123 359) – first defendant MV Golden Destiny Development (Turramurra) Pty Ltd (ACN 169 649 923) – second defendant New Galaxy Investments Pty Ltd (ACN 163 095 234) – third defendant Representation: Counsel: G Sirtes SC, N Bilinsky - plaintiffs M Darke SC, J C Lee - first defendant, thirteenth defendant M Ashhurst SC, D Allen - second defendant M Cashion SC, J Donohoe (until 26 May 2015), M Einfeld QC and D Krochmalik (after 26 May 2015) - third defendant L Gyles SC, B McManus - fourteenth cross-defendant Solicitors: Fox & Staniland Lawyers - plaintiffs MBP Legal (until 21 January 2015), Ren Zhou Lawyers (after 21 January 2015) – first defendant Dib Lawyers (until 3 March 2015), Ketakos Lawyers (after 3 March 2015) – second defendant Avondale Lawyers (until 26 May 2015), Websters Lawyers (after 26 May 2015) - third defendant Kennedys – fourteenth cross-defendant File Number(s): 2014/228930 Publication restriction: N/A Judgment 1. These proceedings concern three groups of interrelated parties. Before describing the relief sought by various of the parties, it is apposite to set out, in brief, the relationships between them. There is some complexity attendant upon those relationships and the context in which the interactions between the relevant parties took place. 2. The plaintiffs (Vendors) owned six adjacent properties in Turramurra (Turramurra Properties or Properties). 3. The first defendant, Golden Destiny Investments Pty Ltd (GDI), was an incorporated company named as the purchaser under six contracts for the sale of land exchanged with the Vendors on 23 April 2014 (the New Contracts). Mr Haizhon Cai (Mr Cai), the husband of Ms Louise Lin (Ms Lin), and Mr Zu Feng Wu (Mr Wu), were at all material times the directors of GDI. 4. The second defendant, MV Golden Destiny Development (Turramurra) Pty Ltd (MVGDD), is an incorporated company which had placed caveats on the Properties on the basis of a novation provision under the New Contracts (as defined below) permitting the substitution of purchasers. 5. The third defendant, New Galaxy Investments Pty Ltd (NGI), is an incorporated company which had also placed caveats on the Properties on the basis of an alleged equitable interest. Ms Katherine Gai (Ms Gai) is the director of NGI. She initially had, indirectly, a 40% shareholding in NGI through Gold Stone Venture Capital Pty Ltd (GSVC). This later increased to 60%. 6. The thirteenth defendant to the cross-claim filed by NGI, Ms Lin, is a conveyancer and registered migration agent. 7. The fourteenth cross-defendant to the cross-claim filed by GDI, Mr Kristjan Geering (Mr Geering), is a solicitor who acted for both GDI and NGI in relation to the transaction. Mr Geering is the director, principal solicitor and a 50% shareholder in Austleg Lawyers (Austleg). GDI, NGI and Austleg all shared an office space. Ms Lin was, indirectly, a 50% shareholder in Austleg. 8. Ms Gai and Mr Geering are now married and were de facto partners (with the exception of a brief separation) when the events relevant to the proceedings took place. 9. At all material times NGI was the trustee for the Gold Stone Future Investments Property Fund (Property Fund). The Property Fund held an Australian Financial Services Licence through an entity known as Ergo Capital Pty Ltd (Ergo Capital). The claims of the parties 1. The Vendors, by their Amended Statement of Claim, sought declarations concerning the identity of the proper purchaser of the Properties. The Vendors also sought orders that NGI remove the caveats it had lodged over those properties, and claimed compensation from NGI pursuant to s 74P of the Real Property Act 1900 (NSW) (RPA). Finally, the Vendors sought orders for specific performance of the New Contracts. 2. NGI filed a cross-claim (NGI's Cross-Claim) against the Vendors, GDI, and Ms Lin. NGI sought orders for specific performance of agreements alleged to subsist between it and GDI, and declarations that GDI and the Vendors were estopped from novating the New Contracts to any person other than NGI or its nominees. In the alternative, it alleged breach of fiduciary duty, misleading conduct and unconscionable conduct by GDI in the context of $6 million that NGI paid to the Vendors as part of the purchase price under the New Contracts. NGI claimed that GDI and/or the Vendors held an interest in the Turramurra Properties to the value of $6 million on constructive trust and that NGI had an equitable charge over those properties. Finally, NGI alleged breaches of duty as a shadow or de facto director of NGI and breaches of duty as an agent of NGI against Ms Lin. 3. A second cross-claim was filed by GDI (GDI's Cross-Claim). The current version of this claim is a further amended statement of cross-claim filed in court on 9 March 2015. It essentially advanced claims against NGI and the fourteenth cross-defendant, Mr Geering. GDI sought a declaration that a deed it entered into with NGI on 24 February 2014 (Short Form Deed) had been abandoned or terminated on the basis of NGI's repudiation. Alternatively, GDI sought orders for rescission of the Short Form Deed, claiming that it was induced to enter into the Short Form Deed on the basis of misleading conduct in contravention of sch 2 of the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law) (ACL) and/or on the basis that Mr Geering had an actual or potential conflict of interest and so breached his fiduciary duty to GDI. Finally, GDI sought damages from NGI pursuant to s 74P of the RPA as well as equitable compensation from Mr Geering for his breach of duty and damages for negligence. 4. During the trial MVGDD filed a cross-claim (MVGDD's Cross-Claim) seeking referral out of its claim against NGI pursuant to an undertaking as to damages and against GDI pursuant to an indemnity given by GDI in cl 2(a) of a deed between them dated July 2014. That cross-claim was therefore not addressed in MVGDD's closing submissions. 5. The hearing stretched over many days in March. I then had to adjourn because of other commitments. Final oral submissions occurred in May. They were preceded by extensive, and in some cases belated, written submissions. 6. On the third day of final submissions, i.e. 15 May 2015, Mr Donohoe, then counsel for NGI, indicated to the Court that he had been instructed to concede that NGI was not at that time ready, willing and able to complete the New Contracts. Mr Donohoe also conceded that at that time there was no legal basis on which he could maintain the caveats. After a brief adjournment, Mr Donohoe indicated that the documentation to facilitate the withdrawal of the caveats was being prepared and he asked to be excused to attend to that process. 7. The submissions then concluded and, apart from a short directions hearing to determine what issues remained, I reserved my decision. 8. However, on 5 June 2015 my associate was notified by email that the representatives of the third defendant had changed and there were new solicitors and counsel. I was asked to relist the matter. 9. When the matter was relisted Mr Einfeld QC announced his appearance with Mr Krochmalik for NGI. A motion had been filed purporting to apply to the Court for an order that order 1 of the orders I made on 22 May 2015 be set aside. That order was that "the date for the completion of the contracts for sale between the plaintiffs and the second defendant (MVGDD), as set forth in the Schedule annexed to these orders, be fixed for 19 June 2015". If granted, that would have deferred the settlement proposed for 19 June 2015. No supporting material was filed in support of the motion. After some argument I indicated I would not, in light of what had been filed, contemplate setting order 1 aside, but that I would grant leave to the third defendant to file further written submissions on a limited number of points. That then occurred. Background facts – overview 1. Many of the events described below will be subject to further elaboration over the course of the consideration of the factual narrative commencing at [113], which takes into account the evidence of the relevant witnesses and the contemporaneous documents. To assist in providing context for that discussion, however, the following provides an overview of the relevant events. Background prior to entry into the Short Form Deed 1. GSVC was established in 2012 by Ms Lin, Ms Gai and Mr Geering for the purpose of attracting Chinese investors to Australia (CB8/2400B_004). From that point until 29 May 2014 the shareholdings in GSVC were maintained as follows (CB6/1448): * 40% owned by Ms Gai; * 20% by Mr Geering; and * 40% by Zoom Capital Pty Ltd (Zoom), a company associated with Ms Lin, of which Ms Zhu was the sole director and shareholder. 1. NGI was established as a wholly owned subsidiary of GSVC in early 2013 by Ms Lin, Ms Gai and Mr Geering. The purpose of establishing NGI was so that it could be trustee and manager of the Gold Stone Income Fund (Income Fund) (CB2400B_002). NGI also became the trustee and manager of the Property Fund once the Property Fund was established (CB82400B_005). Until 22 April 2014 Ms Gai and Ms Lin's mother, Ms Zhu, were the directors of NGI (CB6/1449-1450; CB8/2400A_009). 2. Austleg was incorporated on 26 July 2013. Mr Geering has at all times been the principal lawyer carrying on practice via that company. From September 2013 he was also Austleg's sole director. Despite his retainer or retainers for NGI and/or GDI, Mr Geering hoped to profit from GSVC's commercial activities including through fees earned by NGI on monies invested in the Income Fund and Property Fund (T466/14-16, 466/58-467/8). 3. Until 22 April 2014 Ms Zhu was a director and a 40% shareholder of GSVC. From 29 May 2014 onwards Mr Geering was a 40% shareholder in GSVC and, as a consequence, indirectly of NGI. Prior to this point he had been a 20% shareholder in GSVC. On 22 April 2014 he acquired 20% of Ms Zhu's shareholding for no consideration. The other 20% of Ms Zhu's shareholding was transferred to Ms Gai. The purchase of the Turramurra Properties 1. GDI entered into a costs agreement (Costs Agreement) with Austleg on 13 December 2013. This agreement related to conveyancing work and advice concerning the purchase of the Turramurra Properties. Mr Geering was listed in the Costs Agreement as the solicitor who would be undertaking the work on behalf of Austleg. The agreement stated that Mr Geering would not continue to work for GDI if, on reasonable grounds, he believed he may have a conflict of interest (Exhibit 14XD-1/8). 2. GDI entered into six contracts for the purchase of the Turramurra Properties on 17 December 2013 (Old Contracts), in addition to a Deed with Century 21 Real Estate Agents (C21 Deed). The global price was $15.1 million. The C21 Deed related to development costs said to have been incurred by Century 21. These costs related to ensuring that the Turramurra Properties were prepared in a way that allowed them to be sold to a developer like GDI. It is common ground between the parties that GDI paid $1.51 million as a deposit under the Old Contracts and the C21 Deed. The completion date for the Old Contracts was 17 March 2014. 3. Special condition 48 of the Old Contracts provided that the contracts could be novated to another purchaser, but only simultaneously upon completion. Joint venture between GDI and NGI 1. Discussions about a joint venture between NGI and GDI in relation to the purchase and the development of the Turramurra Properties began in 2013. Between 9 December 2013 and late January 2014 there were meetings and emails between Ms Gai, Mr Geering and Ms Lin. During one conversation Ms Gai indicated to Ms Lin that it would be possible for NGI to raise $9 million. This would theoretically enable NGI to acquire a 50% share in the joint venture, allowing for a premium intended to compensate GDI for the initial risk and outlay in entering into the Old Contracts. It was intended GDI would provide $7 million of the purchase price. 2. Ms Lin and Mr Geering had a conversation in early February 2014 concerning NGI taking over the development of the Turramurra Properties. Around the middle of February, Ms Gai indicated to Ms Lin and Mr Geering that NGI would be able to fund $10.5 million of the purchase price by the completion date of the Old Contracts. At this meeting it was understood that GDI would be able to finance up to $5.5 million to allow completion to occur, including the $1.5 million deposit already paid. 3. However, by 27 January 2014 the structure of the proposed joint venture changed and the parties intended that NGI would become the registered proprietor of the Properties, with GDI being a lender to the development. 4. In around the middle of February 2014 Ms Gai, Mr Geering and Ms Lin met to discuss the commercial terms of what was to become the Short Form Deed. Ms Lin said she no longer wanted to develop the project because of the risk. Ms Gai stated that NGI had the capacity to complete the purchase of the Properties and develop the project. She was happy to accept a loan from GDI or Gold Stone Capital Pty Ltd (GSC). She said she was confident of raising all monies required. 5. GDI, NGI, GSC and Ergo Investment entered into a Deed (Short Form Deed) on 24 February 2014. It is alleged that GDI entered into the Short Form Deed on the basis of the representation of Ms Gai that NGI would be able to fund $10.5 million of the purchase price. Mr Geering who had earlier prepared (acting for GDI and NGI) draft Heads of Agreement was charged and willingly accepted the task of drafting the terms of the deed. He chose the language contained in the Deed. 6. The Short Form Deed relevantly provided that: 1. NGI would secure funding arrangements for the "Purchase Price", being the amount of $15.1 million payable under the Old Contracts and the C21 Deed plus stamp duty (expected to be around $900,000): cl 2.1; Lin 1 [49] (CB6/1458); 2. all parties, directors, related entities and associates thereof would use their best endeavours to assist NGI to obtain that funding: cl 2.8; 3. after NGI secured the funding, GDI would seek to novate the Old Contracts to NGI under special condition 48 of those contracts: cl 2.1; 4. if novation was successful: 1. NGI as trustee for the Property Fund would own the Turramurra project and be entitled to the profit and liable for the loss thereof: cl 2.2; 2. the deposit which had been paid by GDI under the Old Contracts would be assigned to NGI, and NGI would reimburse GDI for it and issue GDI with 750,000 units in the Property Fund: cll 2.3-2.5; 3. GSC or GDI would loan NGI up to $5.5 million and interest of 20% per annum (if the loan was from GSC) or 15% per annum (if the loan was from GDI): cl 2.7; 4. NGI would reimburse Ergo Investment for payments made to third parties to further the Turramurra project, and the contracts with those third parties would be novated to NGI: cl 2.9; and 5. NGI would engage Ergo Investment to conduct the sales and marketing of the Turramurra project, to sell the project's finished product, and to sell units in the Property Fund: cl 2.10; and 1. the parties would do all things reasonably required for completely effectuating the provisions of the deed: cl 3.1. The events of March and April 2014 1. Discussions between GDI and the plaintiffs concerning the potential for delaying the settlement date or, in the alternative, entering into an agreement for a staged settlement of the Old Contracts, ensued in March 2014 as NGI had not been able to raise the required funds. The settlement was ultimately slightly delayed due to the death of one of the Vendors, pursuant to special condition 32(a) of the Old Contracts. 2. On 12 March 2014 Mr Geering forwarded novation notices to the Vendors. These had the effect of nominating NGI as the novated party to replace GDI on completion. On the same day Ms Lin emailed Mr Geering and Ms Gai to say that GDI did not have the funds required to settle the Old Contracts. It is alleged that Ms Lin also stated that NGI would complete the Old Contracts, consistent with the Short Form Deed and on the basis of the assumption that NGI would comply with the terms of the Short Form Deed. 3. On 13 March 2014 Mr Bruce Yahl, the legal representative of the Vendors, wrote to Mr Geering rejecting the novation notices. 4. During March 2014 Ms Lin, it seems acting on the basis of concerns that NGI would not be able to raise the required finance, investigated potential joint venture partners, including a Mr Victor Fong, who controlled MVGDD. Mr Fong conducted due diligence and received material in relation to the project between 17 March 2014 and early April 2014. 5. Between mid-March and mid-April 2014 NGI made applications for finance with Centenary Advisory Group Pty Ltd (CAG) and Eclipse Prudent Mortgage Corporation (Eclipse). The application with the latter sought an amount of $6 million with a draw down date of 17 April 2014. 6. On 4 April 2014 the legal representatives of the Vendors attempted to serve notices to complete for the Old Contracts. There was subsequent correspondence between GDI and the Vendors and a new settlement date of 22 April 2014 was agreed. 7. Mr Geering met with the Vendors' legal representatives on 8 April 2014. He requested additional time to settle the Old Contracts and indicated to Mr Yahl that "his clients" had $8 million in liquid funds. The following day Ms Lin informed Mr Geering that Mr Fong had almost finished due diligence on the Turramurra Properties and that a legal representative of Mr Fong would contact Mr Geering. 8. On 10 April 2014 a draft Joint Venture agreement between Mr Fong and GDI was circulated between Mr Fong, Mr Fong's legal representatives, Ms Lin and Mr Cai. 9. On the same day, Mr Geering directed an email to Ms Lin and Ms Gai regarding Mr Fong's involvement in the project. 10. Several meetings took place between 11 April and 15 April 2014 between Ms Lin, Ms Gai, Mr Cai and Mr Geering regarding the proposal made by Mr Yahl that the $8 million be released to the Vendors as a condition of any new contractual arrangement between the parties. 11. On 22 April 2014 Mr Brett Scott, a solicitor acting for Eclipse, sent a letter to NGI offering conditional finance to NGI providing certain conditions were met. 12. It is GDI and Ms Lin's submission that those conditions were not met. 13. The Old Contracts did not settle on 22 April 2014 and the time for settlement was extended until 23 April 2014 at 10am. 14. However, on 22 April 2014 Ms Zhu resigned as a director of GSVC and NGI. Mr Geering and Ms Gai acquired her interests. 15. On 23 April 2014 GDI entered into the New Contracts with a settlement date of 22 July 2014, and a Deed of Release in relation to the Old Contracts and the C21 Deed. The New Contracts stipulated a global purchase price of $15.3 million and the release of $8 million on exchange to the Vendors. On the same date GDI made a payment for an additional $490,000 to the Vendors and NGI made a payment of $6 million to Century 21, the Vendors' agent. The events of May 2014 1. A number of emails passed between Mr Geering, Ms Lin, Ms Gai, Mr Cai and Mr David Darmali on 1 May 2014 concerning Mr Fong's interest in the development of the Properties. Mr Darmali, as responsible manager of the Property Fund, wished to meet regarding the basis on which NGI had transferred $6 million of investors' funds in the absence of any written agreement. 2. At Mr Geering's request, on 3 May 2014, Mr Cai emailed Mr Geering saying that GDI held $6 million of NGI's money on trust, referring to the monies that had been paid to Century 21, as the Vendors' agent, by NGI. On 10 May 2014 Ms Lin emailed Mr Geering, Mr Darmali, Ms Gai and Mr Cai sating that GDI proposed to enter into a joint venture with an experienced property developer such as Mr Fong. 3. On 5 May 2014 GDI terminated Austleg's retainer. 4. An email of 13 May 2014 from Ms Lin indicated that, based on the best interests of GDI and investors in NGI, GDI would novate the contracts to a suitable developer. 5. On 20 May 2014 MVGDD was incorporated as a special purpose vehicle to facilitate Mr Fong developing the Turramurra Properties. The events of July and August 2014 1. GDI and MVGDD entered into a deed to the effect that MVGDD was to be the novated party and GDI was to procure the release of all parties from the Short Form Deed prior to novation in early July 2014. During July 2014 GDI, MVGDD, Ms Zhang (an investor), and a property trust called Australia Jing's Investments Pty Limited entered into an Umbrella Finance Agreement in respect of the Turramurra Properties. 2. On 3 July 2014 NGI's lawyers wrote to Dib Lawyers asserting that NGI had obtained the required funding and wanted to exercise its right to novation pursuant to the Short Form Deed. This was followed by a letter of 7 July 2014 attaching six New Contracts identifying NGI as the new purchaser and Ms Gai as the new guarantor. On 7 July 2014 GDI's lawyers sent six copies of proposed New Contracts to the Vendors nominating MVGDD as the new purchaser. 3. On 18 July 2014 NGI lodged caveats over the Properties. On 22 July 2014 Mr Fong attended settlement and, it is alleged by GDI, was willing, ready and able to complete the New Contracts. NGI did not remove the caveats over the Properties and the settlement could not proceed. 4. On 4 August 2014 the Vendors commenced these proceedings. Primary contentions of the parties 1. The plaintiffs' position is that there has never been a legitimate basis for the caveatable interest claimed by NGI over the Properties, and as such NGI should be liable for losses under s 74P of the RPA. 2. The central contentions advanced by GDI and Ms Lin are as follows: 1. The Short Form Deed was terminated or abandoned on or around 23 May 2014 when Ms Gai emailed Ms Lin purporting to terminate the Deed and Ms Lin replied to say that there was no contractual relationship between GDI and NGI; 2. In the alternative, the Short Form Deed is liable to be rescinded either because it was mediated by Mr Geering in breach of his fiduciary duties or because GDI's entry into it was induced by NGI's misleading conduct; 3. Consequent upon (1) and (2), NGI cannot obtain specific performance of the Short Form Deed, and none of the other agreements of which it sought specific performance have been established by the evidence; 4. Accordingly, orders should be made for the novation of the New Contracts to MVGDD and for MVGDD to complete the novated contracts; 5. When that occurs, the Vendors will be obliged to repay GDI the $6.49 million which has been released to them as part payment of the purchase price under the New Contracts, and GDI will be obliged to transfer $6 million to NGI; 6. GDI should not be ordered to pay interest to NGI on this $6 million because NGI would have received $6 million on 22 July 2014 had it not lodged caveats over the Properties which prevented MVGDD's purchase of those properties from completing; 7. GDI is entitled to damages for misleading conduct from NGI under s 236 of the ACL and to compensation for loss caused to it by NGI's caveats under s 74P of the RPA; and 8. GDI is also entitled to damages or equitable compensation from Mr Geering for his breaches of fiduciary duty, breaches of retainer and/or negligence. 1. MVGDD had submitted that NGI was not entitled to specific performance of the Short Form Deed because: 1. The Short Form Deed stated that it applied only to the Old Contracts, which were rescinded on 23 April 2014, it did not apply to the New Contracts; 2. Pursuant to special condition 48(ii) of the New Contracts, the time in which a request for novation must have been served expired on 7 July 2014; and 3. If there was an agreement still in existence between NGI and GDI regarding the New Contracts, it was terminated by NGI on 23 May 2014. 1. These arguments to a large extent became academic by reason of what happened as a result of conduct by NGI during final submissions and my findings recorded later. 2. NGI initially maintained all of its claims against GDI and others in respect of its caveatable interest and/or its damages case against GDI. It relied on the existence (in the alternative) of various types of trust to found its caveatable interest. 3. It also relied on estoppel to found its caveatable interest. 4. It denies any liability under s 74P of the RPA. 5. It denies it abandoned the Short Form Deed and alleges breaches by GDI. It submitted the Deed applied to the New Contracts, and that GDI was in breach of the Deed. 6. In addition it alleges breaches of the Corporations Act 2001 (Cth) by Ms Lin. Legal Principles Whether NGI had a caveatable interest 1. Section 74F(1) of the RPA makes express reference to "a legal or equitable estate or interest in land." In Re Pile's Caveats [1981] Qd R 81 Dunn J stated that "the existence of a prima facie equity to relief involving land is not necessarily the same as the prima facie existence of an interest in land." In S Lindsay, Caveats Against Dealings in Australia and New Zealand (The Federation Press, 1995), it was said at 153 that "an interest in the land must ultimately trace back to an interest created by or otherwise binding upon the registered proprietor." 2. NGI initially relied upon the existence of an express or resulting trust to support the claim that there exists a caveatable interest. It relied on a number of authorities in doing so, including Calverley v Green (1984) 155 CLR 242 and Bahr v Nicolay (No 2) (1988) 164 CLR 604. These authorities are discussed later in the judgment, as are those relied upon by the third defendant's new legal team. 3. It was said in Municipal District of Concord v Coles (1905) 3 CLR 96 at 108 that "[t]he lodging of a caveat is really in the nature of the initiation of litigation, and only those persons should be entitled to initiate litigation who are entitled to litigate the matter of the dispute which is set up by the caveat." It is clear that a caveat may only be lodged by a person who claims an interest in land, such as: * A person claiming an interest under a contract for purchase or unregistered transfer: Re Wadham (1879) 13 SALR 70; * A person claiming an easement over the land: Re Paul (1902) 19 WN (NSW) 114; * An equitable mortgage holder or the holder of an equitable charge: Avco Financial Services Ltd v White [1977] VR 561. 1. A person who merely has an interest in the proceeds of the sale of land does not have a sufficient interest in the land to caveat, except in circumstances where he has a right to compel sale: Davies v Uratoriu (1995) 6 BPR 13,917. 2. Further authorities raised by the parties are discussed in the consideration of the arguments below. 3. The new legal team representing the third defendant put a number of submissions in support of a purchaser's lien. They cited Hewett v Court (1983) 149 CLR 639 at 645 and 659 as authority for the proposition that upon part-payment of the purchase price, a lien arises upon and by reason of part-payment of the purchase money. Further, they submitted that the lien existed even if the contract is not capable of specific performance: 650, 659, 664. A purchaser's lien, they said, is a charge over the land and thus a caveatable interest. They cited a variety of authorities for that proposition, including Rose v Watson (1864) 11 ER 1187. 4. The new legal team also submitted that the position of a "sub-purchaser" or assignee is analogous to that of a purchaser, citing Aberaman Ironworks v Wickens (1868-69) LR 4 Ch App 101 (Aberaman Ironworks v Wickens) at 109-10; Shaw v Foster (1871-72) LR 5 HL 321 (Shaw v Foster) at 349-50 and Valerica v Global Minerals (2001) NSW ConvR 55-963 at [13]. These authorities are dealt with further below. Section 74P of the RPA 1. Section 74P of the RPA provides as follows: 74P Compensation payable in certain cases (1) Any person who, without reasonable cause: (a) lodges a caveat with the Registrar-General under a provision of this Part, (b) procures the lapsing of such a caveat, or (c) being the caveator, refuses or fails to withdraw such a caveat after being requested to do so, is liable to pay to any person who sustains pecuniary loss that is attributable to an act, refusal or failure referred to in paragraph (a), (b) or (c) compensation with respect to that loss. (2) Compensation referred to in subsection (1) is recoverable in proceedings taken in a court of competent jurisdiction by the person who claims to have sustained the pecuniary loss. (3) A person who is a caveator is not entitled to bring proceedings under subsection (1) (b) if that person, having had an opportunity to do so, has failed to take all reasonable steps to prevent the caveat from lapsing. 1. In Beca Developments Pty Ltd v Idameneo (No 92) Pty Ltd (1990) 21 NSWLR 459 there was some divergence in the construction of this section. Clarke JA held that in order for a claim under this section to succeed, it needed to be demonstrated that the caveator did not have a caveatable interest, that the caveator did not have an honest belief based on reasonable grounds that such an interest existed, and that the caveator deliberately lodged the caveat to infringe the interest of the registered proprietor or other interested person. Waddell CJ in Eq held that the plaintiff in such a case must not only show that the caveat was lodged without reasonable grounds, but also that the caveator had no caveatable interest. 2. A person who places a caveat on property accepts the risk that he or she may be liable for loss attributable to wrongful lodgement of the caveat. The vendor is expected to seek to mitigate their loss by seeking to have the caveat removed in a timely fashion, but that is his or her only obligation: Lee v Ross (No 2) (2003) 11 BPR 20,111. 3. When considering whether a caveator had reasonable cause for lodging a caveat, the court will consider "whether the caveator has an honest belief, based on reasonable grounds": Lee v Ross at [85] 4. In Bedford Properties Pty Ltd v Surgo [1981] 1 NSWLR 106 Wootten J considered at 109 that: The drastic nature of the power is relevant in considering what is "reasonable cause" for its use, just as the dangerous character of a thing is relevant to deciding what is reasonable care in handling it. Before exercising such a power, a person can reasonably be expected to get proper advice, and be reasonably sure of his ground. If he does not, he may find that he has acted at his peril. This is all the more so when he knows, as Mr Richards knew, and indeed intended, that his action will prevent an important transaction involving a large sum of money. 1. In Arkbay Investments Pty Ltd v Tripod Funds Management Pty Ltd [2014] NSWSC 1003 Robb J said at [107]: 17 The onus is on the plaintiffs to show that the caveator acted without reasonable cause. For there to be reasonable cause it is not necessary that the caveator actually have a caveatable interest, but it is necessary that the caveator have an honest belief based upon reasonable grounds that the caveator has such an interest. Wootton J in Bedford Properties noted at 108 that an honest belief on the part of the caveator based on reasonable grounds may not be sufficient to provide a reasonable cause for lodging or maintaining a caveat, if the caveat is lodged "not for the protection of his interest but for an ulterior motive and without regard to its effect on transactions to which the caveator had agreed." 1. In Mahendran v Chase Enterprises Pty Ltd (2013) 17 BPR 32,733 at [52]-[53], Barrett JA (with whom Emmett and Gleeson JJA agreed) considered: 52 Had the matter been approached in that way, the central question would have been whether the lodgment of the caveat by Chase was "without reasonable cause"; and that would have led to an inquiry of the kind suggested by the following passage in the judgment of Biscoe AJ in Natuna Pty Ltd v Cook [2007] NSWSC 121 (at [195]): "'Reasonable cause' for the lodgement of a caveat exists where the caveator has an honest belief, based upon reasonable grounds, that the caveator has a caveatable interest. In order to establish liability under s 74P, the onus is on Mr Cook [the registered proprietor] to prove, first, that Natuna [the caveator] had no caveatable interest and, secondly, that Natuna did not have an honest belief based on reasonable grounds that a caveatable interest existed. As to the second issue, the test is partly subjective and partly objective. It is subjective in that it requires an examination of the caveator's actual belief and whether it was honestly held. It is objective in that it requires that the belief be held on reasonable grounds: see Lee v Ross (No. 2) (2003) 11 BPR 20,991; [2003] NSWSC 507 at [21]-[23]; Beca Developments Pty Ltd v Idameneo (No 92) Pty Ltd (1990) 21 NSWLR 459 at 469 - 470 (CA); Bedford Properties Pty Ltd v Surgo Pty Ltd [1981] 1 NSWLR 106; Northstate Carpet Mills Pty Ltd v B R Industries Pty Ltd [2006] NSWSC 1057 at [61]. A caveator may have reasonable grounds on which to believe that it has a caveatable interest even though it is mistaken and it is ultimately held that it did not: Ceda Nominees Pty Ltd v Registrar of Title [1982] ANZ ConvR 524." 53 The Court of Appeal of Western Australia has adopted the "honest belief based upon reasonable grounds" test in relation to the corresponding legislation of that State: Brogue Tableau Pty Ltd v Binningup Nominees Pty Ltd v [2007] WASCA 179; (2007) 35 WAR 27 at [81]. Whether NGI abandoned or abrogated the agreement 1. In Summers v The Commonwealth (1918) 25 CLR 144, Isaacs J considered at 151-152 (footnotes omitted): Whatever the terms of a contract may be, it is possible for the parties so to conduct themselves as mutually to abandon or abrogate it. A position not altogether dissimilar arose in the case of De Soysa v. De Pless Pol. There, neither party had repudiated or refused to perform the contract, nothing in the nature of rescission had occurred, but, said Lord Atkinson for the Privy Council: -"One party to a contract is not bound to give to the other unlimited time after a day named to do that which the other has contracted to do. There must be some point of time at which delay or neglect amounts to refusal … In truth, the projects seem to have been to a great extent, if not altogether, abandoned by all the parties concerned." In my opinion, that is the legal position here. Informally, but effectively, the parties have so acted in relation to each other as to abandon or abrogate the contract. 1. In Ryder v Frohlich [2004] NSWCA 472 McColl JA (with whom Hodgson and Ipp JJA agreed) made the following observations regarding abandonment: 135 Where it is plain from the conduct of parties to a contract that neither intends that the contract should be further performed the parties will be regarded as having so conducted themselves as to abandon or abrogate the contract: DTR Nominees Pty Limited v Mona Homes Pty Limited [1978] HCA 12; (1978) 138 CLR 423 at 434 (per Stephen, Mason and Jacobs JJ with whom Aickin J agreed); Summers v The Commonwealth [1918] HCA 33; (1918) 25 CLR 144 at 151 – 152 per Isaacs J. The inference of abandonment will be drawn where "an 'inordinate' length of time has been allowed to elapse, during which neither party has attempted to perform, or called upon the other to perform, a contract made between them … What is really inferred in such a case is that the contract has been discharged by agreement, each party being entitled to assume from a long-continued ignoring of the contract on both sides that … 'the matter is off altogether' ": Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420 at 432 per Dixon CJ and Fullagar J. 136 Whether there is abandonment or abrogation of a contract is a matter of fact to be inferred from an objective assessment of the conduct of the parties: see CIC Insurance Limited v Bankstown Football Club Limited (1995) 8 ANZ Ins Cas ¶61 – 232 per Kirby P; Wallera Pty Limited v CGM Investments Pty Limited [2003] FCAFC 279 at [2] per Ryan J, at [30] – [32] per Kiefel J; at [57] per Gyles J; Marminta Pty Limited v French [2003] QCA 541 at [22] per Jerrard JA, Williams JA and Philippides J agreeing. 137 The underlying premise of the abandonment cases is that a period of time elapses during which neither party to the contract manifests any intention to perform the contract, leading to the inference that the contract has been abandoned. It is clear that the question whether an "inordinate length of time has been allowed to elapse" is relative. In DTR Nominees Pty Limited v Mona Homes Pty Limited the High Court was prepared to infer abandonment after a period of less than five months had elapsed during which neither party took any steps to perform the contract. In Fitzgerald v Masters it was held that a contract for the sale of land had not been abandoned even though proceedings for its specific performance were not commenced until 26 years after its execution. Conflict of Interest 1. Two issues regarding conflict arise in this case. The first is the issue of "solicitor-client" conflict, being a conflict between a solicitor's duty to her or his client and his or her personal interest. The second is the question of "client-client" conflict, where a conflict of loyalty arises between a solicitor's duty to each client when she or he "attempts to serve two masters at the same time in the same transaction": Farrington v Rowe McBride & Partners [1985] 1 NZLR 83, 89 (Richardson J), cited in Maguire v Makaronis (1997) 188 CLR 449 (Makaronis) at 466 and 471 (Brennan CJ, Gaudron, McHugh and Gummow JJ). 2. In Clark Boyce v Mouat [1994] 1 AC 428 at 435-6 it was said that: [i]nformed consent means consent given in the knowledge that there is a conflict between the parties and that as a result the solicitor may be disabled from disclosing to each party the full knowledge which he possesses as to the transaction or may be disabled from giving advice to one party which conflicts with the interests of others. 1. Fully informed consent (by the person to whom the fiduciary duty is owed) is a defence to breach of fiduciary duty: see Chan v Zacharia (1984) 154 CLR 178, 204 (Deane J). Where there is a conflict of duties, it is necessary that informed and effective assent be demonstrated in order "to escape the stigma of an adverse finding of breach of fiduciary duty, with consequent remedies": Makaronis at 466 (Brennan CJ, Gaudron, McHugh and Gummow JJ). 2. The onus of proof lies on the fiduciary: see Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 384, 398 (Isaacs J) and the cases cited therein. 3. In order for informed consent to be demonstrated the person to whom the duty is owed must have full knowledge of the precise nature of the fiduciary's interest in a certain transaction or the existence and scope of the potential conflict to the fiduciary's duty of undivided loyalty to the client: Woolworths Ltd v Kelly (1991) 22 NSWLR 189, 212 (Samuels JA). Street CJ explained the requirement as follows in Law Society of New South Wales v Harvey (1976) 2 NSWLR 154 at 170: Where there is any conflict between the interest of the client and that of the solicitor, the duty of the solicitor is to act in perfect good faith and to make full disclosure of his interest. It must be a conscientious disclosure of all material circumstances, and everything known to him relating to the proposed transaction which might influence the conduct of the client or anybody from whom he might seek advice. To disclose less than all that is material may positively mislead. Thus for a solicitor merely to disclose that he has an interest, without identifying the interest, may serve only to mislead the client into an enhanced confidence that the solicitor will be in a position better to protect the client's interest. The conflict of interest may, and usually will, be such that it is not proper, or even possible, for the solicitor to continue to act for and advise his client. A solicitor, who deals with his client while remaining his solicitor, undertakes a heavy burden. 1. In Makaronis, the joint judgment provided as follows at 466 (footnotes omitted): What is required for a fully informed consent is a question of fact in all the circumstances of each case and there is no precise formula which will determine in all cases if fully informed consent has been given. The circumstances of the case may include (as they would have here) the importance of obtaining independent and skilled advice from a third party. 1. In Spellson v George (1992) 26 NSWLR 666 (Spellson) Handley JA recognised at 669 that consent "may take various forms". Young AJA considered at 682 that where what is in issue is whether X has consented to Y's act and has communicated that consent, what the court is concerned with is whether X did in fact consent and communicate that consent by words or action or both. In Spellson the Court accepted that the degree of knowledge required, in the context of a breach of trust, to demonstrate that a beneficiary had "full knowledge of all material facts" is that stated by Wilberforce J in Re Pauling at 108: …the court has to consider all the circumstances in which the concurrence of the cestui que trust was given with a view to seeing whether it is fair and equitable that, having given his concurrence, he should afterwards turn round and sue the trustees: that, subject to this, it is not necessary that he should know that what he is concurring in is a breach of trust, provided that he fully understands what he is concurring in, and that it is not necessary that he should himself have directly benefitted by the breach of trust. 1. Full disclosure will include the nature and extent of a fiduciary's interest in the proposed dealing or transaction: Castlereagh Motels Ltd v Davies-Roe (1966) 67 SR (NSW) 279, 286 (Jacobs and Asprey JJA). In O'Reilly v Law Society of New South Wales (1988) 24 NSWLR 204, Kirby P considered at 208 that the law requires "full candour and appropriately complete disclosure" before an apparent conflict on the part of the solicitor will be excused. Unclean hands 1. Courts approach the application of equitable maxims with caution. As was said by Mason CJ and McHugh J at 557 of Corin v Patton (1990) 169 CLR 540 at 557, a maxim "is not a specific rule or principle of law. It is a summary statement of a broad theme which underlies equitable concepts and principles. Its precise scope is necessarily ill-defined and somewhat uncertain." 2. The circumstances in which this maxim operates, as observed by Campbell J in Black Uhlans Inc v NSW Crime Commission (2002) 12 BPR 22,421 (Black Uhlans), can be derived from the judgment of Eyre LCB in Dering v Earl of Winchelsea (1787) 1 Cox 318 at 319: It is not laying down any principle to say that his ill conduct disables him from having any relief in this court. If this can be founded on any principle, it must be, that a man must come into a Court of Equity with clean hands; but when this is said, it does not mean a general depravity; it must have an immediate and necessary relation to the equity sued for; it must be a depravity in a legal as well as in a moral sense. 1. In Black Uhlans Campbell J described these "two tests" -- firstly, an immediate and necessary relation to the equity sued for; and, secondly, a depravity in a legal as well as in a moral sense -- as "a necessary condition for the application of the 'unclean hands' maxim, but not a sufficient condition". His Honour continued by saying that "[e]quitable relief is always discretionary, and other factors can influence the exercise of the discretion": see [181]. 2. Campbell J went on to summarise, as follows, applications of the clean hands maxim (at [160]): Some examples of the circumstances in which the maxim has been the basis on which a case has been decided illustrate the breadth of application of the maxim. Thus, specific performance of a contract will not be granted at the suit of a plaintiff who has made a relevant misrepresentation to the defendant: Cadman v Horner (1810) 18 Ves Jun 10; 34 ER 221; Wall v Stubbs (1815) 1 Madd 80; 56 ER 31. Unclean hands can be a ground for refusing relief against forfeiture of a lease: Litvinoff v Kent (1918) TLR 298; Gill v Lewis [1956] 2 QB 1; [1956] 1 All ER 844. It can be a ground on which a court declines to enforce a trust: Gascoigne v Gascoigne [1918] 1 QB 223; Re Emery's Investment Trusts; Emery v Emery [1959] Ch 410; [1959] 1 All ER 577; Tinker v Tinker [1970] 1 All ER 540; [1970] P 136. It can be a basis upon which the beneficiary of a trust, who has led the trustee to commit a breach of trust, can be denied a remedy for that breach: Cory v Gertcken (1816) 2 Madd 40; 56 ER 250. It can provide a ground for refusing an injunction to enforce a negative contractual stipulation, if that contract has been procured by a misrepresentation of the plaintiff: Hewson v Sydney Stock Exchange Ltd [1968] 2 NSWR 224. It can provide a basis for refusing an injunction to enforce a restrictive covenant, if a person entitled to the benefit of the covenant has represented it will not be enforced, and that representation is acted upon by the person bound by the covenant: Greater Sydney Development Association Ltd v Rivett (1929) 29 SR (NSW) 356 at 360–1. Where the plaintiff and the defendant are both bound by restrictive covenants arising under a common building scheme, and the plaintiff is in serious breach of the covenant, unclean hands provides a basis on which the plaintiff cannot obtain an injunction to require the defendant to observe the restrictive covenant: Goddard v Midland Railway Co (1891) 8 TLR 126. It can provide a basis for refusing an injunction to prevent passing off, where the reputation which the plaintiff seeks to have protected has itself been built up by deceptive means: Kettles and Gas Appliances Ltd v Anthony Hordern and Sons Ltd (1934) 35 SR (NSW) 108. It can provide a basis for refusing equitable relief to prevent a breach of copyright where the work contained false statements calculated to deceive the public: Slingsby v Bradford Patent Truck and Trolley Co [1905] WN 122; [1906] WN 51. Further, some cases have held that it can provide a basis for refusing equitable relief in circumstances where a plaintiff has engaged in, or advocated, immorality of some kind: Bodly v - (1679) 2 Ch Cas 15; 22 ER 824; Glyn v Weston Feature Film Co [1916] 1 Ch 261, and cases referred to in Ashburner's Principles of Equity, 2nd ed, p 467; cf now Stephens v Avery [1988] 1 Ch 449; [1988] 2 All ER 477. 1. The requisite nexus between the alleged misconduct and the equity sought was dealt with by Wootten J in Dow Securities Pty Ltd v Manufacturing Investments Ltd (1981) 5 ACLR 501 at 508: The equity here arises out of [the plaintiff's] substantial and bona fide claim under the 1976 agreement; no part of its case depends on asserting the loan transaction [which the defendant contended was unlawfully made], liability under which is admitted... [The plaintiff's] rights, viz, to have its counter-claim determined by due process, exist, if at all, by reason of circumstances wholly independent of the misconduct; the wrong it complains of, viz, the threat to wind it up when it has not in fact "neglected" to pay its debt, is wholly independent of the alleged misconduct. The right which the court of equity is asked to protect or assist was not itself brought into existence or induced by the conduct complained of. 1. Scrutton LJ, in Moody v Cox and Hatt [1917] 2 Ch 71 at 87-88 remarked that "equity will not apply the principle about clean hands unless the depravity, the dirt in question on the hand, has an immediate and necessary relation to the equity sued for." 2. More recently, Hodgson JA (with whom Allsop P agreed) made the following observations in Kation Pty Ltd v Lamru Pty Ltd (2009) 257 ALR 336 at [28]: The relief sought was equitable relief. The court has the discretion whether or not to grant such relief, but there are principles guiding the exercise of that discretion. Some of those principles relate to the circumstances in which equitable relief may be refused because of unclean hands; and these principles require that the bad conduct in question have "an immediate and necessary relation to the equity sued for". However, this is not a requirement that the relation be of the nature of contributing to or constituting the equity sued for; and since this requirement is not a rule of law but merely an aspect of principles guiding the exercise of discretion, it should not in my opinion be given a narrow or technical construction. 1. The position in Australia appears to be that the disentitling conduct need not have been directed to or practised on the person against whom relief is sought. In Carantinos v Magafas [2008] NSWCA 304 at [53] and [57], Hodgson JA, with whom Campbell JA and Handley AJA agreed, said: 53 Mr Kelly submitted that the [proposition that the discrediting conduct must have been directed at the defendant] was not supported by the decision of Campbell J in Black Uhlans Inc v New South Wales Crime Commission [2002] NSWSC 1060. This proposition was mentioned at paragraphs [161] to [162] only as a matter of legal history; and it was rejected by Campbell J at para [177], referring to Kettles & Gas Appliances Ltd v Anthony Hordern & Sons Ltd (1934) 35 SR(NSW) 108 and Armstrong v Sheppard & Short Ltd [1959] 2 QB 384 at 397. … 57 In my opinion, the primary judge was in error in holding that the disentitling conduct must have been done to or directed at the defendant. In this regard, it is sufficient to refer to Kettles and Armstrong. Credit 1. A trial judge is in no way restricted in his or her assessment of a witness. He or she is not bound to accept any of that which the witness attests to, or indeed may only accept part thereof: Cubillo v Commonwealth (No 2) (2000) 103 FCR 1 at [118]-[123]. Nor is a judge bound to accept the testimony of a witness where there has been no cross examination. 2. I am mindful of the remarks of Gleeson CJ, Gummow and Kirby JJ in Fox v Percy (2003) 214 CLR 118 at [30]-[31] where they said: 30. It is true, as McHugh J has pointed out, that for a very long time judges in appellate courts have given as a reason for appellate deference to the decision of a trial judge, the assessment of the appearance of witnesses as they give their testimony that is possible at trial and normally impossible in an appellate court. However, it is equally true that, for almost as long, other judges have cautioned against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses. Thus, in 1924 Atkin LJ observed in Société d'Avances Commerciales (Société Anonyme Egyptienne) v Merchants' Marine Insurance Co (The "Palitana"): "... I think that an ounce of intrinsic merit or demerit in the evidence, that is to say, the value of the comparison of evidence with known facts, is worth pounds of demeanour." 31. Further, in recent years, judges have become more aware of scientific research that has cast doubt on the ability of judges (or anyone else) to tell truth from falsehood accurately on the basis of such appearances. Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility. 1. Whilst it is too simplistic and arguably erroneous for a trial judge to be solely influenced in his or her findings by contemporaneous documents, they will often have a potent part to play in that process, especially when they were created against interest. If they appear, of course, to be self-serving, they may need to be viewed with some care. Effective cross examination will usually play an important part in assisting a judge to come to a view about the facts, importantly when inconsistencies are exposed which are not capable of rational explanation. In any fact finding exercise, however, a judge must always be astute, in particular when drawing inferences, carefully to distinguish in his or her mind between what is a reasonable inference as opposed to what may amount to no more than mere speculation: Jones v Sutherland Shire Council [1979] 2 NSWLR 206 at 222. 2. The rule in Browne v Dunn (1893) 6 R 67 (HL) was described as follows in Allied Pastoral Holdings Pty Ltd v FCT [1983] 1 NSWLR 1 at 16 by Hunt J: It has in my experience always been a rule of professional practice that, unless notice has already clearly been given of the cross-examiner's intention to rely upon such matters, it is necessary to put to an opponent's witness in cross-examination the nature of the case upon which it is proposed to rely in contradiction of his evidence, particularly where that case relies upon inferences to be drawn from other evidence in the proceedings. Such a rule of practice is necessary both to give the witness the opportunity to deal with that other evidence, or the inferences to be drawn from it, and to allow the other party the opportunity to call evidence either to corroborate that explanation or to contradict the inference sought to be drawn. The credit of the principal witnesses 1. The substantial factual dispute in the proceedings was between representatives of the first and third defendants and their sometime solicitor, the fourteenth cross-defendant. That evidence came from three witnesses: Ms Lin on behalf of GDI, Ms Gai on behalf of NGI, and Mr Geering, the solicitor. None of the witnesses was entirely satisfactory. Ms Gai 1. I did not find Ms Gai to be a satisfactory witness. It seemed to me she had an entirely misconceived agenda. It was to resist the obvious, remain obstinate in the face of overwhelming evidence to the contrary, and hence not to make sensible concessions when they should have been made. 2. She gave inconsistent and frankly implausible accounts of important meetings. 3. She, for example, along with Mr Geering, obviously thought it would be forensically advantageous for NGI's case if she was seen to distance herself as far as she could from knowledge of Mr Fong as a possible joint venture partner with GDI. In addition, given her relationship with Mr Geering, I am simply not satisfied she was able to or did give independent evidence on any important issue. 4. In passing, although I will return to it, I am satisfied she clearly intended on 23 May 2014 to terminate the Short Form Deed, despite her denial that she had such an intention. The email she insisted she herself drafted is objectively clear, unequivocal and sophisticated. Her denial as to its intended effect was false, in my view, in so far as this is relevant. 5. The difficulty for NGI, and in particular Ms Gai, is that Ms Lin was not really tested on some of the important events by counsel then appearing for NGI. A decision not to cross examine will often carry with it a clear concession that to do so would have been considered of no utility, especially when counsel making the forensic choice is senior or experienced counsel. Mr Geering 1. I am satisfied that Mr Geering was from time to time during the relevant events in a position of hopeless conflict. He either could not see it or did not want to – perhaps mesmerised by his ambition to develop the project and profit from it. 2. His evidence was at times, if truthful, breathtakingly disingenuous. I cannot, however, accept he was that unsophisticated or inept. He plainly on occasions, to my mind, made his evidence up. He had, it seems to me, relinquished or substantially compromised his role as a lawyer and was attempting simultaneously to fulfil various other roles. I am satisfied he found it convenient, frequently, to appear to concede that in retrospect there was a conflict in circumstances where I would have expected a most junior lawyer would have immediately seen a problem at the time. I was therefore not satisfied his concessions were genuine. 3. As an example, he clearly knew of the potential involvement of Mr Fong from, at the very latest, early April 2014. He, like his partner Ms Gai, pretended not to know. The truth was, I consider, that he was out of touch with commercial reality so far as the development was concerned. In a cavalier, almost reckless fashion he proceeded undeterred with a project whilst out of his depth commercially and financially, while at the same time purporting to deliver legal services to clients with differing and conflicting agendas. Unsurprisingly, he failed on all counts. Ms Lin 1. Ms Lin purported to recreate in considerable detail conversations with Ms Gai and Mr Geering, more often than not without the benefit of any contemporaneous notes of such conversations. I find it difficult to accept that her recollection is, or could as a matter of practical reality be, that accurate. True it is that the conversations reproduced took place only a year or so prior to the trial. On the other hand, she did have the benefit of emails and text messages to corroborate some important encounters. 2. In fairness, she perhaps did have a very good reason to recall the detail. She was the only person who had actually invested any of her own funds, as it were, in the project, and was focussed on ensuring they were not lost. However, I consider on occasions she clearly embellished some conversations. That said, on balance I am satisfied that she substantially told the truth. She saw risks early in 2014 with the project, which caused a change of heart on her part as to GDI's involvement in the joint venture. She lost confidence, quite rightly, in Mr Geering and Ms Gai's ability to consummate the purchase, let alone the development. She saw they were out of their depth, and with some justification. The factual narrative in greater detail, and findings 1. I am satisfied that from about 2012 Ms Gai, Mr Geering and Ms Lin had established GSVC for the purpose of attracting Chinese investors to Australia and earning fees on the funds they invested. Mr Geering acceded to that proposition in his evidence (T466/1-9). 2. During the year 2012 to at least the end of May 2014 the three held various percentages of the shares in GSVC. Ms Gai owned 40%, Mr Geering 20% and Zoom held the remaining 40%. 3. Except for possibly the period January-February 2014, Ms Gai and Mr Geering were in a personal relationship, marrying in November 2014 (T467/25-29). 4. In early 2013 I am satisfied that Ms Gai, Mr Geering and Ms Lin decided to establish NGI. It was to be a wholly owned subsidiary of GSVC and it was formed for the purpose of being a trustee and manager of the Income Fund. A little later the Property Fund was established and NGI became the trustee and manager of that fund as well. 5. Until 22 April 2014 the directors of GSVC and NGI were Ms Gai and Ms Zhu. Mr Geering incorporated Austleg on 26 July 2013. At all times he has been the principal lawyer carrying on business via that company. From September 2013 he was Austleg's sole director (T466/1-4 and T467/44-50). 6. Mr Geering had retainers for both NGI and GDI and was hopeful that he personally would profit from GSVC's commercial activities, including from fees earned by NGI and monies invested in the Income Fund and the Property Fund. Again, he accepted that proposition unequivocally in his evidence (T466/14-16). 7. Mr Geering provided GDI with the Costs Agreement on 9 December 2013. Mr Geering sent this to GDI and accepted that in [2] of his letter he referred to the "current matter". He agreed that reference was to GDI's acquisition of the Turramurra Properties (T468/20-26). Mr Geering also accepted that he intended his retainer to apply to any future matters that he might have been instructed upon as well (T468/36-38). 8. The Costs Agreement which Geering had proposed, and which had been entered into, contained a representation that he would not continue to work for GDI if on reasonable grounds he believed that he may have a conflict of interest. He accepted, unsurprisingly, that given this clause, while he continued to act for GDI he was representing to it that in fact there was no conflict in relation to the matters on which he had been engaged (T469/1-20). 9. On 17 December 2013 GDI entered into the Old Contracts and the C21 Deed with a global price of $15.1 million. Under the C21 Deed GDI was required to pay Century 21 $1,451.511 in relation to costs Century 21 claimed to have incurred in obtaining the development consent for the Turramurra Properties. 10. On exchange, GDI paid $1.51 million as a deposit. Completion date for the Old Contracts and the C21 Deed was 17 March 2014. The Old Contracts also contained a special condition which allowed their novation to another purchaser simultaneously with completion (CB6/1872 at 1882, special condition 48). 11. Ms Lin sent an email to Mr Geering and Ms Gai on 22 December 2013. She referred to the 90 days for the settlement of the land with "GS" needing to raise $9 million and "GD" needing to raise $7 million. She said "the property market is hot and will stay hot in the next 12 months, so sale the trust units ismour [sic] priority not the development units. Sale the development units will help us get the bank loan and also lock into the profit. But it is not good to lock into profit earlier in a raising market". The email went on in some considerable detail to set out a strategy for marketing and raising capital. 12. On 24 December 2013 Ms Gai and Ms Lin took Ms Zhang for lunch at the Zilver restaurant. The three discussed the possibility of Ms Zhang in effect becoming an investor in the Turramurra project. Ms Zhang is said to have expressed the view that she thought the project would do very well. To that end she wanted to withdraw $1 million from her $6 million investment in the Income Fund and transfer the balance of $5 million into the Property Fund for the purposes of directly investing in the Turramurra project. Subsequently, on 6 January 2014, Ms Zhang met Ms Lin in her office and she signed the mandate for the investment of her money. 13. On 28 December 2013 Mr Geering forwarded to Ms Gai and Ms Lin what he described as the "first draft" of Heads of Agreement. The agreement was to provide for a joint venture between GDI and NGI (as trustee for what was described as the "soon to be settled" Gold Stone Future Investment Property Fund – North Shore). Ms Lin sent an email to Mr Geering and Ms Gai on 2 January 2014. Her comments were directed to the proposed draft Heads of Agreement and various aspects of it. 14. It seems on or about 15 January 2014 Mr Geering drafted a letter which was to be sent to prospective investors in the Property Fund. The draft letter (which apparently was never sent) announced that GDI and the Property Fund had agreed to form an incorporated joint venture to develop the particular site and that it was envisaged that GDI and the fund would ultimately each own 50% of the joint venture. 15. I am satisfied Mr Geering acted for both GDI and NGI in relation to the proposed joint venture, including advising them on and preparing draft Heads of Agreement. 16. In cross examination Mr Geering accepted, in my view appropriately, that in doing so he was in a position of conflict between his duties to GDI and NGI. He was taken to a number of clauses. For example, in relation to cl 2.8.2 of the draft Heads of Agreement, he accepted that that particular provision was beneficial to NGI but potentially detrimental to GDI. He also accepted that the advice a solicitor might have given GDI about cl 2.8 too would be quite different to the advice that a solicitor might have given NGI about the same clause (T483/30-50). During further cross examination on the topic he accepted that looking at the matter now he could see his position of conflict (T484/29-34). 17. By around 27 January 2014 the proposed structure of the joint venture had changed and the parties intended that NGI would become the registered proprietor of the Turramurra Properties, with GDI being a lender to the development project. These matters were discussed at a meeting between Ms Gai, Ms Lin and Mr Geering on that day, which apart from about a 20 minute break started around 10.55am and concluded at 3.30pm. It covered other matters such as who would be the project manager and what fees would be paid in that regard. There were also detailed discussions concerning an interior designer, consulting architect and the sales of the completed apartments. 18. I am satisfied that by the middle of February 2014, at a meeting attended by Ms Gai, Mr Geering and Ms Lin, a discussion took place as to the commercial terms of what was to become the Short Form Deed. During the meeting I am also satisfied Ms Lin told Ms Gai and Mr Geering that GDI no longer wished to develop the Turramurra Properties because of the perceived risks involved. I also accept that Ms Gai stated that NGI had the capacity to complete the purchase of the Turramurra Properties and develop the project, and was happy to receive the $5.5 million loan from GDI or GSC to complete the purchase. In cross examination Ms Gai accepted that at this meeting she also said that she was confident that NGI would have all the monies to complete the Old Contracts by the end of February or early March 2014 (T281/37-40). Further, she accepted that because there had been so much interest in the project NGI may be able to reduce the amount of the loan from GDI or GSC to less than $5.5 million (T281/46-49). 19. On 24 February 2014 GDI, NGI, GSC and Ergo Investment entered into the Short Form Deed. 20. In substance, the Short Form Deed provided that NGI would secure funding arrangements for the purchase price (namely $15.1 million payable under the Old Contracts and the C21 Deed plus stamp duty). All parties, directors, related entities and associates promised each other to use best endeavours to assist NGI to obtain that funding. After NGI had secured the funding GDI would seek to novate the Old Contracts to NGI under special condition 48. Importantly, if the novation was successful NGI as trustee for the Property Fund would own the Turramurra Properties and be entitled to the profit and liable for any losses occasioned thereby. In addition, it was intended that the deposit which had been paid by GDI under the Old Contracts would be assigned to NGI and NGI would reimburse GDI for it and issue GDI with 750,000 units in the Property Fund. Then GSC or GDI would loan NGI up to $5.5 million and interest of 20% per annum (if the loan was from GSC) or 15% per annum (if the loan was from GDI). Lastly, NGI would reimburse Ergo Investment for payments made to third parties to further the project and the contracts of those third parties would also be novated to NGI, and NGI would engage Ergo Investment to conduct the sales and marketing of the project. 21. Mr Geering accepted that he had drafted the operative clauses of the Short Form Deed on behalf of all parties and the language of the Deed was largely, if not entirely, his (T488/26-42). Mr Geering accepted that he had left cl 2.1 completely uncertain as to the time for performance by NGI of its obligation to secure funding for the purchase price (T495/37-39). He either did not intend, or perhaps did not direct his mind to whether, NGI should be obliged to secure funding by the completion date as opposed to only imposing on NGI an obligation to make reasonable efforts to do so. He accepted that he gave no advice to either GDI or NGI that the time for performance of NGI's obligation under cl 2.1 was uncertain. 22. He also accepted that had he been acting for GDI alone in respect of the joint venture with NGI it would have occurred to him to advise GDI on the need for certainty as to the timing of performance by NGI of its obligation to secure funding for the purchase price under the Old Contracts (T496/24-29). 23. Further, he accepted that had he been acting for GDI alone it would have been obvious to him that it was in GDI's interests that the time for performance by NGI of the obligation to secure funding be fixed and made certain (T498/29034). 24. He also accepted that if advising GDI alone it would again have been obvious to him to advise GDI to include in the Short Form Deed a clause that gave it a clear right to terminate the Deed if NGI did not secure funding for the purchase price by the required time, and in addition it would have been obvious to him to advise GDI to include a term in the Short Form Deed to the effect that NGI would be liable in damages if it did not secure funding by the required time (T499/4-11). He also accepted that he would have advised GDI that it was at risk if the required time for performance of NGI's obligation to secure funding for the purchase price was not the date for completion of the Old Contracts (T499/13-26). 25. Mr Geering accepted that he did not advise GDI on any of these matters (T499/9-12). 26. The following exchange occurred when Mr Geering was cross examined by counsel for GDI: Q. Mr Geering, at the time you drafted this deed, you surely by then appreciated that there was a conflict between your duties to GDI and NGI. A. No, not at that time, I didn't see. Q. Looking at the matter now, you can see that there was, can't you? A. Yes, I can see a conflict now. Q. There was also, it follows, doesn't it, a conflict between your own personal interest and your duties to GDI. A. Well, that's right, but my clients were aware of that. Q. Mr Geering, you never said to anyone from GDI that your advice to GDI might be adversely affected by your acting for GDI or your personal interest in NGI, did you? A. No, I didn't, no. 1. Mr Geering gave some confused evidence in relation to whether or not he had told Ms Lin he was not advising GDI on the Short Form Deed. However, he had earlier of course conceded (T488/40-41) that he had drafted the Short Form Deed on behalf of both parties, and had drafted the very words of the document. 2. Later in his cross examination he asserted that Ms Lin had in effect told him that she did not wish him to advise GDI on the Deed (T497/23-34). He was simply unable to explain why such a conversation was not included in any of his affidavits. I must confess, I formed the distinct impression that Mr Geering was simply making that evidence up. In those circumstances his evidence on that topic was, in my view, not the result of any confusion on his part but, I regret to say, deliberately untrue, and based on a realisation of the predicament he was in. 3. Between the end of February and 22 April 2014 NGI made a number of efforts to secure debt financing so as to be able to complete the purchase of the Turramurra Properties. In late February Ms Lin and Ms Gai approached a Mr Michael Feehan (Mr Feehan) to assist NGI in sourcing finance. 4. On 26 February 2014 Ms Lin sent an email to Mr Schiller (of Century 21). She informed him that NGI would be nominated as the party to complete the contracts. She went on, however, to indicate that the Development Approval (DA) was not included in the sale contract, nor were certain conditions attached to the DA, which she asserted amounted to a deficiency in the contract. She proposed fresh contracts be issued with a version of the DA attached, and that there should be a simultaneous rescission of the Old Contracts with GDI and an exchange of a new version of the contracts with the three month completion period. She also proposed that the original deposit paid under the Old Contracts be replaced with a new deposit cheque, and that 30% of the total contract price be released to the Vendors as partial payment by 17 March 2014. In addition, she proposed that the owners of each of the Properties could continue to live in the premises rent free until the start of construction. 5. On 27 February 2014, however, Mr Yahl, solicitor for the Vendors, responded. He rejected much of what Ms Lin had said and further rejected any right to terminate the Old Contracts for any reason. He asserted that they were binding and enforceable in their current form. 6. On the same day Mr Feehan, on behalf of NGI, submitted a funding application to CAG a finance broker. At that time NGI was seeking a loan of up to $7 million for up to 12 months secured by registered first mortgages over the Turramurra Properties. 7. On 8 March 2014 Mr Geering sent a letter to GDI in which he indicated that he had consulted with Mr Stephen Climpson of Counsel and discussed a number of matters with him. This largely involved the alleged costs of obtaining the DA. He indicated he would write a letter to Mr Yahl and provide a copy to Ms Lin for comment. 8. On 10 March 2014 Mr Geering sent a letter to Mr Yahl. The letter purported to complain about the costs of the DA assessed by Century 21. The letter further asserted that Mr Geering's clients had been induced to act to their detriment by the misleading nature of certain representations concerning the costs of the DA. 9. On the same day Mr Yahl responded to Mr Geering describing the latter's letter as a "lame attempt" to vary the contractual arrangements. Mr Yahl required confirmation that the contract would be completed in accordance with arrangements, on 17 March 2014. On 11 March 2014 Mr Geering sent a further letter confirming that his clients were ready to complete on 17 March 2014. He suggested a time and venue and invited the preparation of settlement and adjustment sheets. 10. Early in the morning of 12 March 2014 Ms Lin sent a text message to Mr Geering. She confirmed that the contracts would be novated to NGI. She further stated that GDI had not prepared for settlement but was prepared to fund $5.5 million as per the agreement between the parties that whereby GDI would provide a funds to assist NGI in meeting the purchase price. She informed Mr Geering that her husband had concluded four sales contracts. 11. Later that day Ms Lin sent a further text message to Mr Geering. She indicated that she had received an offer of $7 million at 8.74% for up to 12 months, and she said there were eight apartments that had been sold. 12. On 12 March 2014 Mr Geering sent an email to Ms Gai and Ms Lin. In it he indicated that he had sent a notice to the Vendors' solicitors purporting to novate the sale from GDI to NGI. He confirmed that he had also sent correspondence to Century 21's solicitor asking them to substantiate the $1.5 million for the DA costs. He further discussed the possibility of lodging caveats. 13. Later in the afternoon on 12 March 2014 Ms Lin responded to Mr Geering. Again, she indicated that GDI was not in the position to complete the contracts. She proposed that NGI should complete the contracts and that GDI would provide up to $5.5 million as per the Short Form Deed. She asserted that GDI had formally assigned its rights to NGI under the agreement. She expressed the view that the deposit paid under the contracts by GDI would be dealt with in accordance with the "Agreement" and therefore she asserted NGI would have a caveatable interest. That email was also sent to Ms Gai. 14. On 13 March 2014 Mr Yahl sent two letters to Mr Geering. In both he rejected comments made by Mr Geering and also indicated that any attempt to novate did not comply with special condition 48. He simply reiterated that the contracts were to be completed by 17 March 2014. 15. On 13 March 2014 Ms Lin sent an email to Mr Geering indicating that she had had some private discussions with Mr Schiller from Century 21, who had told her that he had at least two of the Vendors who supported rescission of the original sales contracts and issuing fresh contractual documents with NGI. She also indicated that the two Vendors had asserted they were prepared to negotiate a term allowing a further extension of time before completion. 16. On 14 March 2014 NGI executed a brokerage agreement with CAG. Ultimately, of course, NGI did not obtain finance through that entity. 17. On the same day Mr Chu, a solicitor employed by Mr Geering, wrote to Lane & Lane (Mr Yahl's firm), enclosing six draft contracts with NGI as the nominated transferee. 18. On 15 March 2014 Mr Geering sent an email to Ms Lin and Ms Gai. He indicated that although the settlement date was to be Monday 17 March 2014, settlement would not occur on that date. The advice was that the Vendors' solicitors would likely issue a notice to complete, which would make time of the essence, requiring settlement somewhere around 30-31 March or 1 April 2014. He proposed that there be a "without prejudice" meeting with Mr Yahl. He further indicated that the purpose of the meeting was to attempt to persuade Mr Yahl that there was capacity to complete the contract, but also to attempt to negotiate an extended settlement period. He also suggested that the CAG funding proposal be disclosed, but that finance would not be available for another 21 days. He also proposed that "to sweeten things a bit" some extra money might be offered to the Vendors. 19. On 17 March 2014 a number of things occurred. First, Ms Lin sent an email to Mr Darmali. She provided him with an attached submission to CAG concerning the funding application. However, it is clear that she had had discussions with him about an "investor" either taking over the development in a straight sale or doing a joint venture. This email was not sent to either Ms Gai or to Mr Geering. 20. On the same day Mr Yahl sent an email to Mr Geering indicating that he had attended at the appointed time and place for the settlement, which clearly had not occurred. He indicated that he had tried to make contact with Mr Geering and, unsurprisingly, asserted default on the part of the purchaser otherwise reserving all rights. 21. I have already referred to an email sent by Ms Lin to Mr Darmali on 17 March 2014 attaching the CAG funding application and other materials. On the same day Ms Lin had a meeting with Ms Gai and Mr Geering. Mr Geering has a diary note of the meeting. The meeting would appear to have taken place in the morning for approximately one and half hours from about 10.30am. The email, incidentally, to Mr Darmali was sent that afternoon at 3.45pm. 22. It is plain that at the meeting Mr Geering discussed two funding options: the CAG option identified as "Plan A" and the "David" option identified as Plan B. The only relevant David at this point was Mr David Darmali. Mr Darmali was the person to whom Ms Lin had been communicating in relation to Mr Fong for the purposes of either a sale or a joint venture. It seems highly likely, and indeed I am satisfied, that Ms Lin did in fact discuss Mr Fong's possible involvement with Mr Geering and Ms Gai when they met on 17 March 2014. Mr Geering, of course, puts a different complexion on that meeting. He accepted that the reference to David was a reference to Mr Darmali, (T509/15-20). He denied, though, that he understood that Mr Darmali was seeking additional investors, but rather just debt financing (T509/22-27). He did accept, however, in cross examination that he knew Ms Lin was seeking additional investors for the Turramurra project and that he thought it was appropriate for her to do so (T509/29-33). 23. On 19 March 2014 Mr Geering responded to Mr Yahl and attempted to resurrect the misrepresentation case. Mr Geering later that day drew Mr Yahl's attention to the fact that one of the Vendors had died. 24. On 20 March 2014 Mr Yahl responded dealing with the deceased vendor. Further, on 20 March 2014 Mr Yahl corresponded with Mr Geering yet again asserting a lack of substance in the misrepresentation case and inviting Mr Geering to commence proceedings if he chose to do so. Mr Yahl also forecast the service of a notice to complete. Mr Geering's strategy was pathetically obvious, amateurish, and doomed to fail. 25. Is it clear that by 22 March 2014 Ms Lin and her husband gave consideration to authorising Mr Fong (as proposed investor) and Mr Darmali to obtain relevant information from the architect for the development so Mr Fong could undertake due diligence. 26. On 28 March 2014 further correspondence again passed between Mr Geering and Mr Yahl over the alleged misrepresentations. 27. On 2 April 2014, a Mr Richardson from ER Finance Pty Limited (ER) made an offer of finance to Ms Lin. Copies were provided to Ms Gai and Mr Darmali. On 4 April 2014 NGI made an application for finance with Eclipse. The amount of funds sought was in the order of $6 million with a proposed draw down date of 17 April 2014. Somewhat strangely, the application was approved, but in a letter dated 3 April 2014. It was approved, however, subject to a number of conditions. One was that NGI provide evidence it had sufficient funds to complete the purchase otherwise. 28. NGI was also to provide evidence as to its income together with accounting materials both in respect of the corporate entity, but also in respect of Ms Gai and Ms Zhu. Appropriate valuations and legally binding documentation was also necessary. 29. On 4 April 2014, in a letter to Mr Geering, Mr Yahl complained about his inability to serve the notices to complete. 30. On 5 April 2014 Mr Geering sent an email to Ms Gai and Ms Lin. He referred to the notices to complete and to the fact that their service would make time of the essence so that the new settlement date was to be 22 April 2014. He advised that if completion did not occur on this day the Vendors could terminate, claim the deposit, sue for damages, or seek specific performance. He indicated he had a meeting organised with Mr Yahl for Tuesday 8 April 2014. 31. I am satisfied that from about 7 April 2014 Ms Lin, Ms Gai and Mr Geering were well aware that the Eclipse loan would not be available until around 28 or 29 April 2014. 32. On 7 April 2014 Mr Geering sent an email to Ms Lin and Ms Gai indicating that he had had a conversation with Mr Scott (from Eclipse) to that effect. The consequence of this was that NGI would not be able to draw down the facility until after that date and hence there would not be a completion on the settlement day. Importantly, Mr Geering accepted that as at 8 April 2014, when he met with Mr Yahl, he did not have approval from Eclipse. More to the point, he accepted that Eclipse may have refused the application (T515/2-4). I note in passing that Eclipse gave unconditional approval for the loan in late April 2014 but the offer of finance was ultimately withdrawn on 21 May 2014. 33. On 8 April 2014 Ms Lin sent a text message to Mr Geering. The message read "I think we can also do stage settlement. The money in NGI account does not gear much return. That give us time for other arrangements and opportunities." Later that morning she sent an email to Mr Geering and Ms Gai to the same effect. 34. Later that day, Mr Yahl sent a detailed email to Mr Schiller following his meeting with Mr Geering of that morning. He told Mr Schiller that he had informed Mr Geering that if Mr Geering wanted an extension of time for his clients they would have to expect a significant sum of money would need to be released as the deposit to his clients and that he would not recommend any figure more than $8 million. Mr Yahl addressed other more detailed terms and conditions, which he had discussed with Mr Geering. On the same day Mr Yahl sent a detailed letter to Mr Geering outlining the terms of his discussion and asking Mr Geering to accept that Mr Yahl had accurately recorded the matters they had discussed. 35. On 9 April 2014 Ms Lin sent a text message to Mr Geering indicating that "Victor", meaning Mr Fong, was committed to taking over the development and giving "us" a fixed return. She asked Mr Geering to call her. Shortly thereafter she sent a further text message indicating that "Victor's" solicitor "Mark" would make contact with Mr Geering. These two communications, of course, need to be seen in their context. As early as 12 March 2014 Ms Lin had informed Mr Geering and Ms Gai that GDI did not have the funds to settle the Old Contracts, and that NGI would do so with GDI providing funding of up to $5.5 million as per the Short Form Deed. It may well be that Ms Lin assumed that NGI would have been able to secure the funding for the purchase price under the Old Contracts by the then proposed completion date of 17 March 2014 or some other agreed completion date. I am satisfied, however, that Ms Lin was concerned that NGI would not be able to provide funding for the Old Contracts within the appropriate time frame. She was clearly making efforts to see if funding was available from other investors including potential joint venture partners. The two that she had contact with were Wuthering Steel Group and Mr Fong. I am satisfied that Mr Geering and Ms Gai were aware of these efforts, but it is not entirely clear when, for example, they first became aware. I think nothing, however, turns on this in the end. 36. However, it would appear in early March 2014 Ms Lin told Ms Gai and Mr Geering that she had been introduced to a representative of a group of Chinese investors who wanted a $300,000 referral fee if they decided to participate in the Turramurra Project. Ms Lin had sent text messages to Mr Geering on or about 13 March 2014 informing him of contact with the group. 37. I am satisfied that Mr Geering agreed to assist Ms Lin in the drafting of a referral agreement and, indeed, that Ms Gai agreed to assist by preparing an information memorandum and a feasibility study. I am satisfied that on 10 March 2014, shortly after the documents were prepared, Mr Geering sent Ms Lin and Ms Gai a feasibility study which Ms Lin then forwarded to the representatives of the Wuthering Steel Group. This proposition was put to Ms Lin and she accepted it in her evidence (T138/41-T139/7). 38. Ms Lin received two proposals from the Wuthering Steel Group. Neither was proceeded with. Mr Geering accepted in his evidence that he was aware of the Wuthering Steel Group from about March 2014, and that he had been told about them by Ms Lin. He indicated, however, that he was not sure as to their precise status. Frankly, I am not prepared to accept Mr Geering on that particular matter (T500/26-36). He did accept that he recalled a feasibility study being distributed to a number of potential investors in the Turramurra project and further accepted that he was interested, as at mid-March 2014, in any proposals for joint ventures obtained by Ms Lin (T508/1-5). 39. Mr Geering did say in his evidence, however, that he did not consider that Ms Lin had kept him informed of all proposals or expressions of interest and that he did not learn about Mr Fong until "much later" (T508/15-16). I cannot accept the accuracy of that evidence. 40. It is plain, however, that he was well aware of the Wuthering Steel Group's interest by reason of the text messages he had received from Ms Lin on or about 13 March 2014. 41. Ms Gai accepted that she was aware of the Wuthering Steel Group, although she could not recall when she first became aware of them. She certainly understood that Ms Lin attempted to introduce the Group (T296/49 – T297/5). 42. There is little doubt that Ms Lin's actions in raising the possibility of a staged settlement (which she did twice on 8 April 2014) were in the context of exploring her other opportunities, which was the context of a proposal from the Wuthering Steel Group (Exhibit 14XD-1/136). It is plain and obvious that both GDI and NGI were exploring a number of options, including an extended time for completion. 43. Ms Lin expressly told Mr Geering, by at least 9 April 2014 on any view, of the existence of Mr Fong (Exhibit 14XD-1/143). 44. On 10 April 2014 (at 11.48am) Mr Darmali sent an email to Mr Fong, Ms Lin and Mr Cai summarising an agreement in principle between them and attaching a Joint Venture Agreement between Mr Fong and GDI (CB6/1721-1728). 45. Later on 10 April 2014 (at 2.04pm) (CB8/2400A-00151) Mr Geering sent an email to Ms Lin and Ms Gai offering strategic advice as to how to handle Mr Fong and advising against him or any lawyer of his contacting Century 21 or Mr Yahl for the Vendors. It read as follows: I would strongly advise against Victor or his legal rep contacting the agent (C21) or Lane and Lane. And I think this should be made very clear to Victor immediately. In my opinion such contact will jeopardize the "new deal" and could "spook" the vendors and or their solicitor, or worse, give the Vendors some leverage against us to extract more money from us or other conditions. I understand that my number has been given to Victor's solicitor. Please encourage Victor to solicitor to contact me, ASAP. Also, I will not be letting on to Mr. Scott this afternoon, that Victor is interested. We want to keep Mr. Scott keen. 1. It is plain at this point that Mr Geering was told that Mr Fong was committed to taking over the development and he must have known about at least the substance of the proposed agreement. 2. An issue that arises in the proceedings is whether Mr Geering received a copy of the email of 10 April 2014 that had been circulated by Mr Darmali. Mr Geering denied he had received the email. Indeed, in his evidence he asserted that the first time he had ever seen it was in Ms Lin's affidavit materials and that he did not receive it on or about the date it bore (T159/45-50). Clearly, and for very good commercial reasons, Mr Geering did not want his negotiations with Mr Yahl and others to be interrupted by a third party, like Mr Fong, showing a keen interest in investing. In particular, I am satisfied he was concerned knowledge of that fact might cause the Vendors to attempt to extract even more money. But he knew about it at the time and, frankly, he pretended he did not. His email of 10 April 2014 otherwise does not make sense. 3. Later that afternoon of 10 April 2014 at 2.20pm Ms Lin informed Mr Geering by text message that an offer had been received from "Victor" (Exhibit 14XD-1/143). Mr Darmali had circulated the offer at 11.48am that morning. There is no evidence that Mr Geering in fact received Mr Darmali's email of 10 April 2014. I am satisfied, however, that he either received it or became aware of its contents. However, in my view, nothing really turns upon this because, from at least March 2014, Mr Geering was aware that Ms Lin had approached an investor (who although not then named was Mr Fong) in relation to participating in the Turramurra project. By 10 April 2014 Mr Geering was fully aware that the substance of Mr Fong's proposal was that he take over the project with NGI being a lender to his special purpose vehicle (T528/15-19). That is not, however, what Mr Geering wanted. 4. Mr Geering was also aware by the afternoon of 10 April 2014 that "Victor" had made an offer. The point is fairly made that neither Mr Geering nor, to his knowledge, Ms Gai ever told Ms Lin to stop seeking out investors or indeed procuring offers from them. I am satisfied that their choosing not to dissuade her was largely driven by a desire to remain commercially flexible. During March NGI was having difficulty raising funds and other options clearly needed to be explored. By April NGI had not put in place, nor does it seem attempted to put in place, any finance that might be necessary for the actual development of the site. Mr Fong, it seems, on the other hand had the ability to do just that. 5. Following Mr Geering's meeting with Mr Yahl, Mr Geering had a good deal to discuss with Ms Lin and Ms Gai. A number of matters had been dealt with between the two and, as I have already noted, Mr Yahl confirmed the various topics discussed and the attitude of his clients in his detailed letter to Mr Geering of 8 April 2014. 6. On 11 April 2014 Ms Lin, Ms Gai and Mr Geering met to discuss the contents of Mr Yahl's letter of 8 April 2014. Each of Ms Lin, Ms Gai and Mr Geering give accounts of what they say occurred at the meeting. Mr Geering has a file note. 7. There is little doubt that each of the persons concerned was keen to preserve her or his own commercial position. I am satisfied that at about this time the parties were finding each other's positions somewhat awkward, if not possibly threatening. Ms Lin was clearly risk averse and, since the time of the Short Form Deed, had taken the position that GDI did not wish to develop the project. She had obviously formed the view that Mr Fong was eminently suitable either to have as a joint venture partner or, alternatively, to take complete control of the project. Ms Gai, of course, had always expressed the opinion that NGI would be in a position to complete the purchase. Mr Geering was not, I am satisfied, along with Ms Gai, willing to allow control of the project to slip out of their hands. The parties were clearly pulling in separate directions and, on one view, had been for some little time. Mr Geering was either oblivious to this or simply foolishly turned a blind eye. 8. Ms Lin, I am satisfied, was anxious and indeed frustrated, at the very least, by the sale not completing and, more importantly, GDI being in a situation where it could risk losing its deposit. Again, it seems to me inconceivable that Mr Fong's proposal to take over the project was not discussed at the meeting and I am satisfied that it would have been. Mr Geering's file note of the meeting records somebody saying "I am not paying the penalty because we are in default" (T534/8-26). Mr Geering accepted that it is something Ms Lin may well have said in connection with the proposed increase in the purchase price (T544/9-16). 9. The file note also records consideration of the options of releasing monies, or not releasing them and releasing them for the limited purposes of buying property and paying off mortgages. The references to these matters are cryptic but relatively clear. Given her attitude at this time, and her anxiety about Mr Geering and Ms Gai exercising control over the project, I am satisfied that Ms Lin would have expressed her annoyance not only at the prospect of paying a penalty but at releasing an increased amount of money by way of a deposit. 10. That afternoon at 6.30pm Ms Lin sent an email to Mr Fong's solicitor enclosing copies of the Old Contracts and requesting that the solicitor speak to Mr Geering before he spoke to Mr Yahl. That aspect, at least, of the documentation corroborates Ms Lin's assertion of what she said took place at the meeting. 11. Mr Geering said in his evidence that he was certain that Mr Fong was not discussed at the meeting, but that was really based on their being no reference to him in his file note (T544/18-21). Ms Gai likewise denied Mr Fong was raised as a point of discussion (T323/10-14). Mr Geering's assertion that Mr Fong was not discussed because there is no mention in his file notes needs to be looked at in my view with some degree of scepticism. First, his file note is missing half a page from the first page of four (Exhibit D2-4). It was put to Mr Geering that it was unlikely that the portion of the page which had been cut away could relate to anything other than what was said at the meeting of 11 April 2014. He would not accept that proposition, and gave other possibilities (T544/45-T545/15). 12. On the other hand, Ms Gai gave what I regard to be somewhat implausible accounts of what was said at the meeting. The accounts she gave in her first and second affidavits are quite inconsistent. In her first affidavit (Gai 1 [36]) she set out a brief account of what occurred. She only attributed to herself a comment to the effect that NGI would be willing to advance $6 million up front to be released to the Vendors provided there was a three month extension free of interest. She also alleged that she had said that if NGI released the $6 million she would like the novation to take place straight away. Ms Gai recalls Mr Geering correcting her suggestion that the novation would occur on settlement. Ms Gai also recalls Ms Lin confirming what Mr Geering had said indicating that there was nothing to worry about and that 14 days prior to settlement novation notices would be issued. 13. In her second affidavit (Gai 2 [CB7/2155] at [15]) Ms Gai suggested that Mr Geering said at the meeting that the Vendors wanted $6.5 million to be released (being $6.49 million rounded up to $6.5 million) together with an additional $200,000. She suggests in that affidavit that Ms Lin simply indicated that they currently had $6 million in the bank and the interest rate was "only" around 2.5%, which was not a good return, and that therefore that money should be given to the Vendors to buy extra time. Ms Gai suggested at the meeting that she did not want to release $6.5 million as they only had $6 million. At the end of the conversation Ms Gai suggests that Ms Lin indicated that she would give "you" the additional $500,000 to make up the $6.5 million. The two versions are not only quite different, but also inconsistent. Ms Gai would not accept, however, that there was a difference between the accounts. When one views her cross examination she simply refused, in my view, to address the differences and went out of her way in an argumentative fashion simply to obstruct or alternatively refuse to address any questions directed to having her explain the difference (T326/11-47). Eventually, however, she did accept that the account she gave in her second affidavit was different, but refused to accept that either was false (T327/5-14). I am not prepared to accept that her evidence was necessarily dishonest, but she certainly prevaricated and gave every impression that she really had very little, if any, basis upon which to choose one recollection over the other as being the more accurate. At a minimum, her evidence is wholly unreliable in this regard. 14. As at the 11 April 2014 meeting I am satisfied Mr Geering accepted that GDI was at risk of breaching its obligations to the Vendors under the Old Contracts by NGI's failure to secure funding for the purchase price. He accepted that he was aware that NGI's failure to raise funds required for completion put GDI at risk of loss. He accepted therefore that he was aware at the time of the meeting that GDI being in breach of its obligation to complete was as a result of NGI's failure to raise funds required for the completion of the purchase (T548/10-30). He also accepted, unsurprisingly, that he was personally interested in NGI's position (T5458/34-37). Although he insisted that he did not appreciate at the time that there was any conflict between his own personal interest and his duties to GDI, looking at the matter now he could see that quite clearly there was a conflict (T548/36-45). Again, I regard his so-called concession as disingenuous. 15. Mr Geering also accepted that he was duty bound to advise GDI at this time as to its rights against NGI for failing to secure funding for the purchase price, and that he failed to give such advice (T548/47-549/45). 16. I am satisfied that at the meeting of 11 April 2014 it is likely that both Ms Lin and, for that matter, Ms Gai, expressed displeasure about releasing monies to the Vendors. I am also satisfied Ms Lin complained to Ms Gai about NGI's failure to secure funding for the purchase under the Old Contracts and the C21 Deed. I am satisfied that Ms Lin would have expressed her concerns that GDI could lose its deposit because NGI was unable to complete the Old Contracts and was concerned that an extension of at least three months would be necessary to find a solution. By 11 April 2014 I am satisfied that Ms Lin would have said at the meeting that she wanted to proceed with Mr Fong so far as the project was concerned, allow him to take over the project, and organise it to completion, paying GDI and NGI a financial return, to remove all of GDI's risk. I am also satisfied that it was agreed at the meeting that Mr Geering would be able to tell Mr Yahl that a further $6 million would be released to the Vendors but only for the purpose of the Vendors purchasing real estate or paying down mortgages. I accept Ms Lin stated that Mr Fong's lawyers had asked for a copy of the Old Contracts so that he could explain them to Mr Fong, and that she would send them to him on that day. 17. During April 2014 Mr Geering and Mr Yahl continued to negotiate an arrangement for the rescission of the Old Contracts and entering into new contracts with an extended completion date. 18. On 17 April 2014 Mr Yahl sent a letter to Mr Geering on a without prejudice basis indicating what he stated were his clients' final instructions (Exhibit 14XD-1/171). In substance his instructions were that there would be a mutual rescission of the Old Contracts and the C21 Deed and simultaneous entry into six "new contracts" with certain terms and conditions. The total purchase price was to be $15.3 million apportioned across the contracts with a completion date of 22 July 2014 with time being of the essence. GDI was to be the purchaser, an additional $6.49 million was to be released to the Vendors on exchange, and there was to be an amended special condition 48 requiring the service of any notice requesting novation to take place at least 14 days before the completion date. There was also required to be a new special condition requiring GDI to pay the Vendors' selling agent $100,000 per additional unit approved for development, and GDI was to agree to pay the Vendors' legal costs estimated to be $20,900 plus GST. 19. Further on 17 April 2014 Mr Darmali sent an email to Ms Lin and Mr Fong outlining his understanding of the proposed changes to the joint venture with Mr Fong in relation to the Turramurra project. 20. On the same day Ms Lin sent an email to Mr Darmali and Mr Fong, copied to Mr Geering. In substance the email stated that either NGI or GSC could be the funding partner with Mr Fong's special purpose vehicle. A short time later Mr Geering sent an email replying to Ms Lin indicating that the matter needed to be discussed. 21. On 17 April 2014 Ms Lin, Ms Gai and Mr Geering had two meetings. 22. At the forefront of the discussion was undoubtedly the terms of Mr Yahl's letter to Mr Geering of 17 April 2014. Ms Lin in her affidavit (Lin 1 [CB6/1443 and following]) at [155] and [156] sets out in some detail what she says occurred at the meeting. She says that Mr Geering having explained in broad terms what was being required by the Vendors, she commented that she thought the Vendors were getting "everything". She proposed that if the Vendors wanted an increase in price and the payment of the solicitors' costs then she was opposed to releasing the money and at least insisted that it be placed into a trust account. She recalls asking Ms Gai how the $6 million would be protected (which was to be released as part of the $8 million). Mr Geering indicated that he could not protect the parties and that it was a good deal. Ms Lin said she was angry at the deal and said that all they needed was a little more time so that Mr Fong could come on board or someone else could contribute cash. She wanted to get out of the deal and she did not want to be involved in the deal any further, nor do any further business with Mr Geering. That was her account of the first meeting on that day. 23. I observe that Ms Lin was not cross examined by counsel for NGI on her version of this meeting. She was, however, asked questions by Mr Geering's counsel. Ms Lin was asked whether she was seeking to have an assurance that Mr Fong had the financial wherewithal to complete the arrangement. She agreed with that proposition. But again, there was no challenge to what she had asserted took place at least at the first meeting on 17 April 2014. I accept her account as truthful. 24. Ms Lin at [156] of her first affidavit refers to what she says occurred at the second meeting on the day. She said that Mr Geering had told her he had negotiated some terms and he would like both Ms Gai and Ms Lin to look at the document before he sent it. Ms Lin said she indicated to Mr Geering that she would rely upon his professional judgment, she would be quite prepared to receive GDI's deposit back, and he and Ms Gai could do the development themselves. She said that Ms Gai asked why the contracts were still in the name of GDI and Mr Geering explained that there was a stamp duty issue. Ms Lin said that she indicated again that she wanted Mr Fong "on board", and she wanted to novate the contracts to him, to which Ms Gai responded that he did not have any cash. Ms Lin also indicated to Mr Geering that he should stop speculating with investors' money and that Ms Zhang and others were not "guinea pigs". She also asserts that during this meeting she told Mr Geering he was in a conflict and that if he wanted to do the development he should use his own money not Ms Lin's or that of investors. She also asserts that she said that Mr Geering and others did not have the monies to pay for the increased deposit and she was concerned GDI would lose its deposit. Further she asserted that she told Mr Geering that he was greedy and gambling with investors' money, and that there was a conflict of interest. 25. Again, NGI's counsel did not put any contrary version of that conversation to Ms Lin. 26. However, Mr Geering's counsel challenged Ms Lin. It was put to her that she did not make reference to needing more time to get Mr Fong on board. She rejected that proposition. It was also put to her that she did not say she wanted Mr Fong to come in and to have the contracts novated to an entity associated with him. Again, she rejected that proposition (T177/5-24). She appeared to agree with the proposition that as at 17 April 2014 GDI was in no position to have the contracts novated to Mr Fong (T177/44). It was put to her that it was nonsense that Mr Geering told her that they did not have a common goal or common purpose and the affidavit was an attempt simply to reconstruct history in a way which suited her case. She rejected those propositions (T178/26-34). 27. I do not entirely accept what Ms Lin says occurred at the second of the meetings of 17 April 2014. For example, I am not satisfied that Ms Lin, as she alleges, accused Mr Geering at this meeting of being in a conflict. I am, however, prepared to accept that she was anxious and annoyed about the arrangement and, in particular, at the prospect of having to part with the deposit. There is no doubt in my mind, however, that Ms Gai and Mr Geering were very keen to proceed with the arrangements and have fresh contracts executed. I accept and I am satisfied that Mr Fong was clearly discussed at the meeting and I am equally satisfied that either Ms Gai, but more importantly, Mr Geering indicated that NGI would give GDI the same deal as Mr Fong was offering. I am also satisfied that Ms Lin told Ms Gai and Mr Geering that she wanted to novate the contracts to Mr Fong and that this was because he could put more money into the project than NGI or GDI and that he was an experienced developer. She had obviously formed that view prior to this meeting and I see no reason why she would not have expressed her views accordingly. I have little doubt equally that both Ms Lin and Ms Gai were unhappy about the Vendors' precise demands, including the imposition of no restrictions on how they might use the monies released to them. 28. I am satisfied both meetings probably became heated. The text messages Mr Geering and Ms Lin sent each other on 18 April 2014 are in a somewhat apologetic tone, which I think corroborates that they became short with each other at the respective meetings. 29. I am not satisfied that Mr Geering told Ms Lin that they did not appear to have a common goal or purpose any longer, and that perhaps they should get out of the deal. I have little doubt, however, he was likewise annoyed, but in large part he was the cause of the unrest because, somewhat unrealistically as Ms Lin saw it, he wanted to keep control of the project. 30. Part of the reason why I do not accept that Ms Lin accused Mr Geering of a conflict or that Mr Geering told Ms Lin there was no longer a common goal or purpose is that the contemporaneous documents such as they are simply do not support the fact that relations were so strained at this point that remarks of that sort were likely to have been made. I am satisfied both Mr Geering and Ms Lin have embellished these events. The first occasion when, for example, Ms Lin, at least in writing, accuses Mr Geering of being in a conflict is in her email to him of 5 May 2014, to which I shall return. It is sufficient for present purposes for me to say that if Ms Lin felt strongly about the issue of conflict I would have expected her to record something at or about 17 April 2014, as she later did, if indeed she had accused Mr Geering prior to 5 May 2014. 31. More relevantly on 18 April 2014 she sent a text message to Mr Geering (Exhibit 14XD-1/184). It reads as follows: HI Kristjan, understand you want to do this development. I believe option A is the low risk cheaper option and open the opportunity for large sum of "dumb money". Will keep this development opportunity for GS. I have a good track record of keeping my promise. 1. Mr Geering responded wishing Ms Lin a Happy Easter. He also said: I have never questioned your integrity and you have always done what you said. I am in the middle of my reply to Lane and Lane, I want to send it today. 1. It is submitted that "option A" in Ms Lin's text was not NGI continuing with the Turramurra project on its own, and it is submitted Mr Geering did not understand it to be that. I agree with that submission. NGI continuing with the Turramurra project on its own, I think it is tolerably clear, could not be described as low risk. Indeed, Mr Geering accepted that Ms Lin told him that in her view NGI attempting to go it alone was a risky option (T589/27-30). 2. Ms Gai accepted that had NGI completed the purchase of the Turramurra Properties with the $6 million contributed by investors in the Property Fund, a loan from Eclipse of $6 million, and a loan from GDI or GSC of $4 million and, assuming the Short Form Deed applied, NGI would have had to pay interest of around $400,000 per annum on the Eclipse Loans, incur an interest liability of $600,000 to $800,000 per annum on the loan from GDI or GSC, and repay the costs incurred by GDI and Ergo Investment in acquiring the Properties. In addition, it would have to pay a further several million dollars in contractor costs to get the project ready for construction, together with around $2.2 million including GST (on marketing costs) and, in due course, service the interest payments on the construction loan (T329/15-T331/11). 3. These expenses would have had to have been met in circumstances where NGI's only asset would have been the Turramurra Properties, and they would have been mortgaged to Eclipse to secure the loan from it (T331/13-24). NGI had no sources of income, but merely a hope or expectation of raising further funds from investors in the Property Fund. Ms Gai accepted that NGI had been seeking additional investors in the Property Fund since January 2014 and had only managed to attract a further four who had invested a grand total of $1 million (T331/33-36). 4. Ms Gai accepted, it seemed to me unequivocally, that although there was some confidence about making sales and getting investors she had to accept that by the middle of April 2014, NGI would not have been able to meet its operating costs and service the loans it needed without significant further investment (T331/44-50). Unsurprisingly, she had to accept as well that without significant further investment NGI would not have been able to pay the interest on the Eclipse loan (T332/10-12). However valuable the investment might ultimately turn out to be, there were real practical financial impediments ahead. Ms Lin, who impressed me as commercially astute, was obviously alive to these risk factors earlier in the year, hence the changed position in relation to GDI as evinced in the Short Form Deed. 5. Further if NGI proceeded alone this did not open up the opportunity for a large sum of "dumb monies from the property fund investors". NGI had been unsuccessful in the latter part of four months in attracting new or substantial investors. Mr Geering, on the other hand, said that he understood Ms Lin's text messages as indicating that there would not be a joint venture with Mr Fong and that NGI would proceed with the Turramurra project on its own. I am not persuaded that the text message should be construed in that way. Ms Lin does not agree with that proposition, but in any event it would have been cold comfort for Mr Geering given the perils that would obviously lie ahead if NGI were to go it alone. When one looks at the email from Mr Darmali of 17 April 2014 the position advanced by Mr Geering is, I think, quite frankly nonsensical. 6. Mr Darmali's email goes into some considerable detail and certainly does not suggest that Mr Fong would not be proceeding. 7. GDI submits, I think with some force, that "option A" was, in fact, the option of using the three month extension of the completion date for the purchase of the Turramurra Properties under the New Contracts to get further equity for the project through a joint venture with someone like Mr Fong or to onsell the properties. In the text, Ms Lin of course refers to keeping the development opportunity for GS (meaning NGI's parent GSVC). I think it is reasonable, as submitted, to infer that this was intended to be a specific reference to NGI rather than GSC being the funding partner for Mr Fong if a joint venture with him could be secured. What Ms Lin was in effect saying, in my view, was that she was going to give NGI the opportunity to partner with Mr Fong, if they wanted. 8. By 17 April 2014 I think it is fair to say that Ms Lin could reasonably have concluded that Mr Geering and Ms Gai were going to a significant amount of trouble, potentially to the disadvantage of GDI, to ensure the opportunity was not lost to NGI. I accept Ms Lin was extremely anxious about that, especially with the release of such a large sum of money effectively unconditionally. 9. Mr Geering and Ms Gai, I am firmly of the view, in their evidence attempted to downplay their increasing anxiety. They obviously thought it best suited their case. Ms Gai simply denied Ms Lin's account of the meetings without giving any version herself (Gai 2 [16]-[17]). Her responses, when taken to various matters, were entirely unsatisfactory. She tried to suggest that she took little notice of Mr Darmali's letter of 17 April 2014. I simply do not accept that as a truthful response. Nor do I accept her as truthful when she asserted that she did not speak to Mr Geering about it. It clearly must have been the subject of discussion between herself and Mr Geering. I rather think she was concerned to deny any real knowledge of the proposed joint venture with Mr Fong, and deliberately chose in her evidence to be obstructive. I am satisfied that there is little doubt that Ms Gai was well aware of Mr Geering giving consideration to a joint venture with Mr Fong on behalf of NGI in late April or early May 2014. 10. Although it does not make an explicit reference to the meeting or meetings on 17 April 2014 Mr Geering's memorandum of 27 April 2014 refers to meetings prior to exchange of the New Contracts, which were said to be heated, and further a reference that Ms Lin would exit GSVC. 11. There is an issue as to whether Ms Lin told Mr Geering and Ms Gai at the meeting on 17 April 2014 that her mother would resign as a director of NGI and GSVC and relinquish her shareholding. Both Mr Geering and Ms Gai deny that that was said. They also deny that Ms Gai said in response that if Ms Lin's mother resigned as a director she would have to give up her shareholding. Their evidence on the issue is unconvincing but I am inclined on balance to accept their denials. 12. However, I am satisfied that Mr Geering's evidence in relation to the 17 April 2014 meeting is on balance unreliable. He denies, selectively, parts of Ms Lin's account. That in and of itself is quite telling. In cross examination, however, he sought to deny additional parts of her account, but that emerged for the very first time in the witness box. He rejected the proposition that his denials were selective because at the time he prepared his affidavit he simply could not recall one way or another so as to deny other aspects of Ms Lin's account (T575/35-39). He gave what I regard to be an entirely disingenuous and implausible response that had he sought to deny everything that he could imagine denying it would have meant a very long affidavit. Mr Geering is a solicitor. That type of answer in my view is unworthy of a person holding a practising certificate. I cannot accept his explanation as sincere or truthful. 13. Some of Mr Geering's denials were simply, in my view, nonsense. For example, he denied there was any discussion about Mr Darmali's email of 17 April 2014 at any meeting between himself, Ms Gai or Ms Lin (T561/14-18). In my view it is inconceivable that there would not have been a discussion about this issue and I am satisfied there was. This is especially so when Mr Geering admitted that the email was important. It was clearly important or he would never have sent an email to Ms Lin and Ms Gai expressing the need to "discuss this" (Exhibit 14XD-1/176). He said that, assuming it were possible to do so, he would have wanted to discuss the email with Ms Gai and Ms Lin at the same time (T561/9-12). Whilst he accepted the theoretical proposition he persisted in denying that he actually did discuss it with him. Again, I simply do not accept his evidence as truthful. 14. Mr Geering accepted that when he received Mr Darmali's 17 April 2014 email he was in a conflict of interest (T572/15-19). He also accepted that he gave no thought at the time to inviting GDI to seek its own independent advice (T572/35-37). 15. In addition, Mr Geering also accepted that he gave no advice to GDI at this time about its rights against NGI under the Short Form Deed, and that he did not turn his mind to the matter (T584/4-T585/20). He also accepted that he was duty bound to turn his mind to the question of GDI's rights against NGI under the Short Form Deed, and by failing to do so and to give GDI advice on the matter he failed to perform his duties as GDI's solicitor (T584/17-19). 16. On 22 April 2014 Ms Lin, Ms Gai and Mr Geering had a further meeting to discuss their reply to a letter which had been received from Mr Yahl that morning. The letter was a response to Mr Geering's letter to Mr Yahl of 19 April 2014. 17. 22 April 2014 was an important day. It was the date for completion under the Old Contracts after the issue of the notices to complete. 18. It was, however, plain that the Old Contracts were not going to be completed on that day because NGI had not secured funding for the purchase price. Ms Gai accepted that (T366/13-18) as did Mr Geering (T593/47-49). As a result, if the Vendors' demands were not met the Turramurra Properties would likely be lost and GDI would lose its deposit and would potentially be liable for damages to the Vendors. Again, this was accepted by Ms Gai (T369/10-33) and by Mr Geering (T594/1-9). 19. Neither Ms Gai nor Mr Geering's enthusiasm for the Turramurra project had waned by this date. They thought it was a good development site and a good one for NGI to be involved in. Ms Gai accepted this (T3661-11), as did Mr Geering (T593/37-45). 20. NGI clearly had a role to play in ensuring that the Vendors' demands were met. It had to agree to release $6 million to them, otherwise the project would likely be lost and GDI would suffer damage. Ms Gai understood that that would be the consequence of NGI failing to meet its obligations under the Short Form Deed. Ms Gai understood that in these circumstances NGI might be liable to GDI for the loss this caused it (T370/3-6). 21. It seems to me that Ms Gai and Mr Geering caused NGI to pay over the $6 million to the Vendors' agent as a matter of sheer pragmatism in order to preserve the possibility of participating in the Turramurra project and avoid GDI suffering loss for which NGI might be liable. It kept alive a profit making opportunity. 22. The arrangements between the parties at the time, in particular how the Turramurra project would proceed and precisely what role NGI would play, I think were in a state of flux. There had been no agreement on these matters at the time because it was intended that the extension of the three months would be used to settle the arrangements between the parties and for other opportunities to be pursued, including perhaps, more importantly, a possible joint venture or sale to Mr Fong or someone else. Ms Lin's email of 17 April 2014 explicitly refers, for example, to NGI being a funding partner for the special purpose vehicle proposed by Mr Fong. A reference in the email to taking the "heat off this deal" is clear indication that it would give the parties time to settle fresh arrangements. 23. In Ms Lin's affidavit of 17 October 2014 (CB6/1500) at [159] she gave evidence that Mr Geering had said at the meeting that an exchange needed to happen that afternoon and he recommended that it just be done and that the question of whether, after exchange, a joint venture could be entered into with Mr Fong, or the same deal with NGI, could be looked at after exchange had taken place. I accept that account. 24. On the question of the meeting of 22 April 2014, again, no questions were put to Ms Lin by counsel for NGI. However, Mr Geering's counsel put to Ms Lin that in the day or two preceding 23 April 2014 Ms Gai on behalf of NGI and Ms Lin had agreed to provide the $6 million on the basis that the contracts would be novated to NGI. She rejected that proposition (T173/45-49). She did, however, agree that as at 23 April 2014 there was nothing in place with Mr Fong and she also accepted that she required assurances from Mr Fong that he was willing to go ahead. She also agreed that he had not committed himself to the project, so far as she was concerned, by 23 April 2014 (T174/5-10, 44-46). 25. Ms Gai, on the other hand, gave numerous accounts of the meeting of 22 April 2014 in her affidavits. In her first affidavit she said at the meeting Ms Lin had told her that GDI would novate the New Contracts to NGI once NGI paid the $6 million to the Vendors (Gai 1 [40]). The likelihood of Ms Lin having said this, in my view, is low, and I am not satisfied that she did. The novation of the New Contracts could not have occurred pursuant to the relevant provision prior to completion. That was not due to take place for another three months. There was no contractual provision, therefore, pursuant to which GDI could immediately novate the New Contracts to NGI. The other difficulty is that the Short Form Deed obliged GDI to novate the Old Contracts to NGI only after NGI had secured funding for the purchase price. In reality, it was NGI's failure to secure the funding that had potentially placed the whole project in jeopardy. 26. In her second affidavit Ms Gai gave evidence that prior to 23 April 2014 there was a meeting at which the directors of NGI put to the shareholders a proposition as to whether they would consent to the release of $6 million in accordance with the Short Form Deed (Gai 2 [18]). 27. In cross examination Ms Gai said that only she, Mr Geering and Ms Lin were present (T350/30-35). In her affidavit she had said that the majority of shareholders voted in favour of the proposition (Gai 2 [18]). 28. When tested in cross examination about this issue her evidence was internally inconsistent, and I detected again that she had deliberately avoided directly addressing the question. What is important is that the paragraph in her affidavit (Gai 2 [18]) is quite precisely drawn and it says, amongst other things, that the "[d]irectors of NGI at the time, put a proposition to the shareholders as to whether the shareholders would consent to release $6 million in accordance with the Short Form Deed" (CB7/2156). It goes on (CB7/2157) to state "when the proposition was voted on the majority shareholders voted in favour of releasing the $6 million". 29. In cross examination she gave me the distinct impression that she had little if anything to do with the drafting of her affidavit, and especially the paragraphs under consideration. That to one side, she had great difficulty in answering or, in my view, with engaging with the terms of many of the questions on the topic which were straight forward. More to the point, she insisted at numerous points in her cross examination (T351/20-40) that everyone at the meeting voted in favour of the resolution, hence the vote was unanimous. That, of course, is quite inconsistent with her evidence in [18]. There is simply no documentary evidence that such a meeting ever took place. Ms Gai gave entirely unsatisfactory answers about whether or not there were notes of the meeting, equivocating between them existing and her not being able to recall (T352/5-23). In any event, no notes, minutes, or any other record of any other meeting held on or prior to 23 April 2014 was produced. I am in the position where I simply cannot accept Ms Gai's version of what allegedly took place at the meeting. I regard her evidence not just to be confused, but to be quite untruthful. 30. Ms Gai purported to give yet another account of a meeting with Mr Geering and Ms Lin prior to NGI releasing the $6 million but said to have taken place "on or about 21 April 2014". The substance of the discussion is along similar lines but different in the sense that it is asserted that Ms Lin gave an assurance to Ms Gai and Mr Geering that the Short Form Deed was to bind them and that the contracts would in due course be novated to NGI, in reliance upon which Ms Gai indicated that she would agree to release the $6 million. I simply cannot accept that either as a reliable account. It was an important issue, I accept. However, Ms Gai made no note of such a conversation, nor is it corroborated in an email, text message of any other form of documentation. When added to the complete absence of any record of the company in relation to the alleged meeting, I am by no means satisfied that such a conversation took place and I reject the evidence that it did. 31. Mr Geering's evidence of the 22 April 2014 meeting is in Geering 2 at [81]-[82]. At [81] he denied saying that the possibility of doing a joint venture with Mr Fong would be looked at after settlement. However, he based his denial on the claim that after receiving Ms Lin's 18 April 2014 text message he believed that she wanted NGI to do the Turramurra project. I do not accept that as a reliable account and I reject it. At [82] Mr Geering claimed that Ms Lin said that if NGI released $6 million to the Vendors the New Contracts would be novated to it. I am not satisfied, again, that that is accurate or truthful, and I reject it. 32. For reasons I have already alluded to I do not regard Ms Gai as providing corroboration for Mr Geering. In addition, this was an important meeting yet Mr Geering, who must have been acutely aware at this point about the divergent interests, did not have accurate, in my view, corroborating material supporting his version of that conversation. His conduct can perhaps, on one view, be best explained on the basis that he was behaving as businessman and not a solicitor during the course of the meeting and there may be some force in that. However, he was at least still the solicitor for NGI. It would have been very much in NGI's interest for there to be a clear contemporaneous note to that effect. This was a momentous occasion on any view, and if he is telling the truth that could not have escaped his attention. 33. In this regard NGI refers to two documents. They are what may be described as Mr Geering's handwritten and typed timesheets of 22 April 2014. 34. The handwritten document and the typed document overlap to some degree. First the typewritten document (Exhibit 14XD-1/212) purports to cover two meetings which took place on 22 April 2014, one seemingly between 5 and 7am in the morning and the other between 12.30pm and 6.38pm that afternoon. The handwritten document (Exhibit 14XD-1/121-11A) purports only to deal with the conference which took place in the afternoon of 22 April 2014. 35. The typed script, however, contains the following item: …NGI will provide $6M, GD to novate NGI as per s f deed, went through lane and lane's email this afternoon. 1. The handwritten note likewise has the following notation: …We discussed funding for NGI + novation from GDI to NGI as per the Short Form Deed. 1. It may be recalled that on 22 April 2014 Mr Yahl in his letter in response, for example, rejected the suggested deletions and amendments to special condition 48. He reiterated that the purchaser must comply with the strict requirements of the clause if it intended to novate prior to the date of completion. 2. Mr Ashhurst SC, counsel for MVGDD, cross examined Mr Geering on his 22 April 2014 notes (T457.15-462.47). What clearly emerges from that evidence is that the notes record no more than the fact of discussion. There is no reference to anything agreed or resolved and, perhaps more importantly, there is no indication of what was in fact said and precisely by whom. This is important because Mr Geering had a practice of keeping contemporaneous file notes during meetings in which he considered matters being stated may have been important to his clients (T461.37-41). He specifically identified the handwritten note dated 22 April 2014 as a time sheet. That is, it was simply intended to record work he had done (T461.50-462.1). The purpose of the document was not intended to be an accurate record of what was said (T462.4-8). 3. Perhaps even more significantly, Mr Geering understood the difference between a discussion and an agreement and he accepted that he was unlikely to have used the word "discussed", as he did in both documents dated 22 April 2014, if any agreement had been reached (T462.29-35). He could not explain, if they were significant, why he did not take a contemporaneous file note of those meetings (T462.26-28 and 462.47-48). It would seem reasonable to infer, and I do, that he simply did not attach sufficient importance to the meetings to take a contemporaneous note. 4. Mr Geering denied the latter suggestion. I am unable to accept his denial. It is entirely contrary to his practice and/or common sense. If it was important, he would have realised that at the time and sought to record there and then, for posterity, what precisely unfolded at the meeting(s). 5. The time for completion of the settlement was meant to be 5pm on 22 April 2014. Again, the purchase did not complete. On 22 April 2014 at 6.05pm Mr Yahl sent an email to Mr Geering indicating that he would extend the time for completion until 10am the following morning. On the same day Ms Zhu (Ms Lin's mother) told Ms Gai that she intended to resign as a director of NGI. 6. On 23 April 2014 at approximately 6am Mr Geering wrote to Mr Chu. The note referred to arrangements for the exchange of the contracts and collection of bank cheques. Later that day the Old Contracts were rescinded and the replacement contracts for sale were entered into. $6 million was advanced from the Property Fund, simultaneously with the release of the $1.5 million deposit. 7. In due course Mr Geering prepared a memorandum dated 27 April 2014, which he sent to Ms Gai and Ms Lin. The accuracy and truthfulness of this document is very much in issue in the proceedings. Amongst other matters it is noted in [2] that it was agreed that on the basis of the loan facility granted to the Property Fund, GDI would "assign all of its rights with respect to the land and the project (if any) to [the Property Fund] and novate the [N]ew [C]ontracts to [the Property Fund] through its trustee, New Galaxy Investments Pty Ltd … which will be the registered proprietor of the land on completion of [N]ew [C]ontracts". GDI submits that the document was dishonestly contrived by Mr Geering. It submits that in particular [2] could not be true for the simple reason that Mr Geering and Ms Gai accepted that there was no new agreement entered into between NGI and GDI at the meeting of 22 April 2014 (Gai T260/17-261/33; Geering T448/23-44). GDI also makes the point that neither Ms Gai nor Mr Geering gave any evidence of any new agreement being made between NGI and GDI after entry into the Short Form Deed. Further, as I understand it, GDI submits that the document could not be a distillation or summary of the Short Form Deeds. For example, [6] and [7], it is submitted by GDI quite correctly, do not reflect the terms of the Short Form Deed. 8. It is submitted that [3] is false because NGI had not secured funding from Eclipse prior to 23 April 2014 or indeed as at 27 April 2014. It is further submitted that [5] is false because of the assumption in the memorandum of 27 April 2014 that the resignation of Ms Lin's mother was without warning. I was invited to find that Mr Geering and Ms Gai were told about that at the meeting on 27 April 2014. I am not satisfied as to that fact, however. 9. Not only does GDI submit that the memorandum of 27 April 2014 is false, but that I should place no reliance at all on the timesheets, handwritten or typescript, as supporting any kind of agreement or actionable representation. First, it is said that the typed timesheet is the only one of its kind that Mr Geering produced and he was unable to explain why it was created, although he said he did so because he did some extra work he wanted added. He denied he prepared it or the 27 April 2014 memorandum simply for the purposes of leaving a typed record which might assist Ms Gai in any dispute she might have with Ms Lin (T458/35-50). 10. Mr Geering, of course, could not escape the proposition that if his memorandum of 27 April was accurate then at the time he wrote that he had recalled heated meetings between himself at least and Ms Lin prior to the exchange of the New Contracts. He appeared to accept that meetings between himself and Ms Gai and Ms Lin were heated (T582/32-38). Mr Geering, however, would not accept that the heat which arose at the meetings was because Ms Lin wanted to engage a joint venturer, namely Mr Fong, and that he and Ms Gai had rejected that idea. I reject that evidence. I am satisfied it was raised as a topic which undoubtedly caused an angry response on the part of Mr Geering and/or Ms Gai. 11. As far as the handwritten time sheet was concerned, Mr Geering accepted that he created it at the end of the day on 22 April 2014, rather than it being a note taken contemporaneously during discussions between himself, Ms Gai and Ms Lin (T457/32-34). It is submitted by GDI that the reason he did not make a contemporaneous file note was due to the fact that nothing was concluded at the meeting. He refused to accept, in cross examination, that the note was not an accurate reflection of what had been said at the meeting (T462/26-48). However, if what was said and allegedly recorded by Mr Geering was of moment I would expect the preservation of these events would have been different. In other words, instead of leaving the documents as time sheets I would have expected Mr Geering to have formally recorded such an agreement, if any had been made. The memorandum of 27 April 2014 fails, by reason of its inconsistencies, to conform with that description. I am satisfied that the timesheets of 22 April 2014 are of no assistance to NGI in any contractual or representational case sought to be made by reference to them. Given their content and their intended purpose I think they carry no weight. 12. For example, Mr Geering denied that at the meeting of 22 April 2014 he was in a conflict of interest in continuing to act for both GDI and NGI in relation to the Turramurra project. He agreed, in my view implausibly, there was a conflict on 17 April 2014 and a divergence of views as it were, but by 22 April 2014 he asserted that he had been assured by Ms Lin that NGI and GDI were still participating in the joint venture and NGI would have the contracts novated to it (T600/17-29). In my view, Mr Geering's position on this is clearly untenable. I consider he was in a position of conflict on both occasions. 13. GDI submits that Mr Geering's denial of there being any conflict on 22 April 2014 is a dishonest answer on his part. It submits that it was obvious at that date that the interests of NGI and GDI were not aligned. Further, it is submitted by GDI that it remained in a precarious position by reason of NGI's failure to secure funding for the purchase price and the course the joint venture would take had yet to be resolved. Mr Geering, GDI again submits, falsely denied he was in a conflict in failing to advise GDI of its rights against NGI in relation to the Short Form Deed as at 22 April 2014 (T603/6-9). He must have appreciated the conflict, otherwise he is breathtakingly incompetent, which I find hard to accept. 14. It is submitted by GDI that any reasonably competent solicitor acting for GDI in the circumstances where the Old Contracts had not been able to be completed because of NGI's failure to secure funding for the purchase price would have given GDI advice as to its rights against NGI, including its rights to terminate or rescind the Short Form Deed. I agree. 15. In relation to Mr Geering's 27 April 2014 memorandum, Ms Lin makes no bones about it. In her affidavit (CB6/1506 at [177]) she asserts that the memorandum of 27 April 2014 was fabricated "for Mr Geering's own financial benefit". 16. There is little doubt Ms Lin received it and it was put squarely to her in cross examination by Mr Geering's counsel that she never expressed disagreement orally or in writing to Ms Gai or to Mr Geering. She asserted that she did speak to them and express her disagreement with the memorandum (T187/45; T188/1). I am satisfied she would have done that. However, at [178] Ms Lin asserted that after the first contract was rescinded and, as she puts it GDI was no longer bound by the Short Form Deed, she told Mr Geering and Ms Gai that GDI was prepared to novate the contracts to NGI if NGI could afford to purchase the Properties. 17. Whilst it is fair to say that Mr Geering and Ms Gai clearly wanted to keep the project alive for NGI and themselves and thereby get an extension of time, for any number of commercial reasons it was not in Ms Lin or GDI's interest to have the Vendors purport to rescind by reason of a failure on the part of GDI to respond to the notice to complete. True it was NGI had not arranged its finance by 22 April 2014, but Ms Lin was in no mood to forfeit GDI's deposit either. There is little doubt, as I have said, that she was risk averse, and this is one of the underlying assumptions which underpinned the Short Form Deed. However, I am prepared to accept that Mr Geering and Ms Gai were not so averse to risk. They could see a development with potential for significant profit. But, as I have also said, if the contracts had been rescinded on or by 22 April 2014 the big loser would have been GDI. A three month extension even at a price clearly suited NGI and, in turn, Ms Gai and Mr Geering. 18. As I have already observed, I have been invited to find that Mr Geering's memorandum of 27 April 2014 was a falsely created document. 19. Mr Geering is a solicitor who, in my view, perhaps found it somewhat difficult from time to time to distinguish between his ethical obligations and his commercial objectives. However, I am not so certain that he would stoop to deliberately creating a document to be used in subsequent litigation. He did not impress me as being that foolish. No attempt was made by GDI, or anyone else for that matter, to get access to Mr Geering's hard drive in order to challenge whether the document dated 27 April 2014 was created on the date it bears. For what it is worth, there is simply no evidence that it is anything other than a contemporaneous document. In the circumstances I am not prepared to find that he did dishonestly contrive it. On the other hand, the memorandum of 27 April 2014 is clearly and in important respects at best erroneous. As such, it is on one view the memorandum of an incompetent solicitor who may find distinguishing fact from fiction difficult. In short it provides, in my view, on balance, little solace for Mr Geering or NGI, and I would give it little if any weight. 20. On 23 April 2014 the Vendors, Century 21 and GDI entered into a Deed of Release under which those parties released and discharged each other from all claims arising out of or in respect of the Old Contracts and the C21 Deed (Exhibit 14XD-1/214). The Vendors and GDI also exchanged the New Contracts. Those contracts had a completion date of 22 July 2014, a global purchase price of $15.3 million, and then required the release of a total of $8 million, (including the $1 million deposit released under the Old Contracts) to the Vendors on exchange. On exchange NGI paid $6 million to Century 21, the Vendors' agent. GDI itself released an additional $490,000 to the Vendors. On the same day Ms Lin also handed Ms Zhu's letter of resignation as a director of NGI and GSVC to Ms Gai. 21. In the period following 23 April 2014 there are a number of important emails. There is little doubt that Mr Geering was by now actively engaging with Mr Darmali about the possibility of Mr Fong becoming part of a joint venture. Mr Geering was seeking access to Mr Fong's feasibility studies and asked Mr Darmali to authorise Mr Fong to hand over that material. 22. On 29 April 2014 Mr Geering met with Mr Fong and Mr Darmali to discuss Mr Fong's proposed involvement in the project. Mr Geering agreed that the meeting took place and it was for the purpose of discussing a possible joint venture with Mr Fong (T604/19-26). He accepted that although he was still acting for GDI and NGI at the time he went to the meeting as a shareholder of NGI in pursuit of his own personal interests and indeed he saw no difficulty with this (T604/43-605/21-32). This obviously shows a rather muddled view of Mr Geering's ethical and legal responsibilities. 23. The following day, 30 April 2014, Mr Geering sent an email to Mr Darmali, which was copied to Ms Gai and Ms Lin, in which he sought Mr Fong's feasibility study for the Turramurra project. On 1 May 2014 Mr Darmali responded saying that he did not think he could pass it on without Mr Fong's consent and that Mr Fong had indicated that there was no need to provide it to Mr Geering unless there was a signed agreement to work together. 24. In an email of 2 May 2014, without being able to obtain Mr Fong's feasibility statement, Mr Geering showed his irritation by reminding Mr Darmali that it was not GDI that controlled the site but NGI to whom the contracts were to be novated on settlement. 25. On the same day Ms Lin was again seeking to persuade Ms Gai and Mr Geering of the benefit of Mr Fong being part of the joint development. 26. On 2 May 2014 Mr Geering, in a somewhat irritated tone, replied to Mr Darmali's email expressing surprise that Mr Fong was not prepared to expose his feasibility study prior to an agreement being signed because the study would be part of any due diligence process. In the same email Mr Geering also asked whether any future proposal from Mr Fong was likely to be of the nature as that set out in Mr Darmali's earlier email of 17 April 2014. Mr Geering accepted that he asked that question because he wanted to know what sort of proposal Mr Fong might offer in relation to a joint venture between NGI and himself or his company. These exchanges satisfy me that Mr Geering was obviously seeking a greater level of detail so as to explore a proposal for a joint venture with Mr Fong. He may have been more than a little distressed earlier but now, with more time on his hands, this was precisely what Ms Lin was suggesting might occur in a calmer climate. 27. On 2 May 2014 Ms Lin suggested to all parties that they meet and discuss options and advance the proposition that to have Mr Fong as a joint venturer would not detrimentally affect either GDI or NGI. Clearly at this point NGI was taking a proactive role in seeking to explore and secure, if it could, a joint venture with Mr Fong. 28. The various emails to which Ms Gai was copied, in my view, seriously undermine Ms Gai's assertion that NGI was never interested in and never contemplated a joint venture with Mr Fong. She must have been privy to Mr Geering seeking Mr Fong's feasibility study and why he was doing so. 29. It is apparent GDI had welcomed Mr Geering exploring a joint venture with Mr Fong. 30. In the end, however, Mr Fong was not prepared to enter into a joint venture with NGI, because, according to Ms Lin, he had no interest in working with it. 31. Later that day (2 May 2014) Ms Lin sent an email to Ms Gai, Mr Geering and Mr Cai stating that GDI did not see any benefit in completing the New Contracts early as it had essentially agreed to pay $200,000 extra and released Century 21 in relation to its alleged misleading conduct for the new completion date. Ms Lin also stated that she believed Mr Geering had a conflict of interest acting for GDI, and that GDI would be appointing its own legal representatives. A little earlier on 2 May 2014 Mr Fong sent an email to Mr Darmali indicating that he had met the previous day with Ms Lin, Mr Cai and Mr Darmali and that he had made a decision that he was willing to purchase the development site outright. 32. On 5 May 2014 Ms Lin sent an email to Ms Gai and Mr Cai, with a copy to Mr Geering, alleging a conflict on the part of Mr Geering and indicating Ms Lin would appoint new lawyers for GDI. 33. On 9 May 2014 Ms Lin sent an email to Ms Gai, Mr Geering, Mr Cai and Mr Darmali stating that, as far as she understood the position, Mr Fong had no interest in working with NGI. On 10 May 2014, in response to a query from Mr Geering, Ms Lin sent an email to Mr Geering, copied to Mr Darmali, Ms Gai and Mr Cai, stating that GDI proposed to enter into a joint venture with an experienced developer like Mr Fong (Exhibit 14XD-1/251). 34. On 13 May 2014 Ms Lin sent an email to Mr Geering on behalf of GDI saying again that GDI believed he had a conflict of interest in acting for it and would appoint its own legal representative to act for it on the Turramurra project (Exhibit 14XD-1/251A). Ms Lin's email also referred to a new lawyer being appointed for GDI. 35. On 13 May 2014 Ms Lin sent another email to Mr Geering, Mr Darmali, Ms Gai and Mr Cai stating that for the best interests of the investors in the Property Fund and GDI, GDI would not assign the new contracts to NGI and would assign them to a company more suitable to develop the Turramurra properties (Exhibit 14XD-1/252). 36. On 14 May 2014 Ms Zhang signed a letter stating that she wanted to redeem her investment in the Property Fund and authorising Ms Lin as her agent. On the same day Ms Lin sent an email to Ms Gai and Mr Geering stating that she had been appointed by Ms Zhang to request the redemption of that investment. 37. On 20 May 2014 Ms Zhang made a declaration written in both Mandarin and English stating that she wanted to redeem her Property Fund investment and authorising Ms Lin to act as her agent to deal with the redemption and get her investment back. 38. On 22 May 2014 a meeting took place between Ms Lin, Mr Cai, Ms Gai, Mr Geering, Mr Darmali, Ms Zhang and a Mr Gerry Jing (Ms Zhang's son) to discuss Ms Zhang's redemption request. Mr Darmali circulated an email later that day according to an agreement between Ms Zhang and NGI, that NGI would accept Ms Zhang's redemption request and offer her redemption in the form of assets within the Property Fund subject only to limitations on the Property Fund's constitution. 39. Ms Gai accepted that NGI needed to do this at the meeting on 22 May 2014 (T383/19-33). She also accepted that NGI could not complete the purchase of the Turramurra Properties without Ms Zhang's $5 million investment (T384/17-20). It seems to me that NGI was prepared to accept Ms Zhang's redemption request because it was no longer seeking to have the New Contracts novated to it. 40. In addition on 23 May 2014 Ms Gai sent an email to Ms Lin and Mr Darmali. The email was one she allegedly composed herself. It was relevantly in the following terms: Dear Louise & David, It's clear that your side has repudiated the Agreement with NGI and accordingly it is terminated. NGI wishes that the process of the Fund's divestment be completed without delay. … Kristjan emailed Caverstock this morning advising of the Fund's divestment. It would be good idea that you can confirm this by email to the. 1. GDI submits, and I agree, that the "Agreement" Ms Gai was referring to in the email was whichever agreement then existed between GDI and NGI in relation to the Turramurra Properties. Further, that can only have been the Short Form Deed because Ms Gai and Mr Geering accepted no other agreement was ever made. During her cross examination Ms Gai, on occasions, appeared to deny this, claiming in her email she was referring to an offer of some kind, not an agreement (T384/48-385/28). Objectively her email, in my view, could not be construed in the way she suggests. 2. Ultimately, however, she agreed that the "Agreement" she had in mind when she sent the email was the one in respect of which NGI was to develop the site solely, and that an aspect of that agreement was that GDI had to novate the New Contracts to NGI (T385/30-42). In later evidence she tried to deny that she was intending to terminate that agreement by her email. Upon the assumption she was telling the truth, however, I consider she was clearly intending to terminate the agreement which conformed with that description. 3. It is also clear in my mind that the references to the "Funds Divestment" were references to the Property Fund divesting itself of any interest it had in the Turramurra project. But that is made abundantly clear by reference to Mr Geering's email to Caverstock of that morning advising of the "Funds Divestment". Mr Geering's email (CB6/18-44) is clear and unequivocal. It says in terms that the Fund is in the process of divesting itself of its position in the Turramurra development. The email was copied to Ms Gai, Mr Darmali, Ms Lin, and Mr Gocher. Ms Gai in her affidavit (Gai 2 [26]) asserts that Mr Geering was not authorised to send such an email. That would appear to be quite false. In her email of 23 May 2014 set out above she made explicit reference to the email sent by Mr Geering. There is no mention of any lack of authority on Mr Geering's part. 4. It seems to me that the evidence is overwhelmingly in favour of the proposition that by her email of 23 May 2014 Ms Gai purported to terminate the Short Form Deed and that the process of the Funds' divestment in the Turramurra project was to be completed expeditiously. Objectively, it is the most reasonable construction. 5. Ms Lin replied to Ms Gai's 23 May 2014 email on the same day (CB6/1837). In her reply Ms Lin denied that GDI had repudiated "the Agreement" with NGI and asserted there was no contractual arrangement between them at all. Accordingly, NGI and GDI were in firm agreement that there was no longer any contract between them. NGI, on the one hand, because it believed it had terminated the agreement and GDI, on the other, because whatever agreement may or may not have been in existence, it considered there was no such agreement in place as at that date. 6. There is an email exchange between Ms Lin and Ms Gai on 12 June 2014. I think it is quite telling. Ms Lin sent an email to Ms Gai referring to six sales advices for apartments in the Turramurra development which Ms Gai had emailed to Mr Cai, identifying NGI as the vendor. Ms Lin said that to her understanding NGI was not the vendor. Ms Gai replied to this explaining the sales advices had been provided so that Mr Cai could copy the purchaser and apartment details and update the other details in them. Ms Gai's email also explained that she had not sent the sales advices previously because the property "was going to be developed by NGI" and that she had only sent them because Mr Cai had asked for them. Although Ms Gai denied it, I accept that it is relatively plain that Ms Gai accepted and agreed that NGI was not going to develop the Turramurra project. 7. Entirely consistently with that position, on 17 June 2014 Austleg sent a letter and tax invoice to MVGDD enclosing the master contract for sale of "off the plan" apartments in the Turramurra project with MVGDD now listed as the vendor (CB6/1853-1854). 8. In early July 2014 GDI and MVGDD entered into a deed which provided that on certain terms GDI would novate the New Contracts to MVGDD (Novation Deed). One of the terms of the Novation Deed was that GDI would indemnify MVGDD for all costs and losses due to any third party commencing legal action so as to preclude MVGDD from commencing the Turramurra project. 9. On 3 July 2014 Minter Ellison, NGI's former lawyers, sent a letter to Dib Lawyers, who were then acting for GDI, asserting that NGI had obtained the required funding and wished to exercise its right to novation pursuant to the Short Form Deed (CB5/13-73). 10. On 7 July 2014 Minter Ellison sent a further letter to Dib Lawyers attaching new contracts identifying the new purchaser as New Galaxy Developments Pty Ltd (CB5/1375). 11. On 7 July 2014 MBP Legal, GDI's then lawyers, sent six copies of the proposed new contracts to the Vendors, nominating MVGDD as the new purchaser (CB2/301). 12. On or about 21 July 2014 NGI caused caveats to be lodged over the Turramurra Properties, claiming an equitable interest therein (CB2/380). 13. On 22 July 2014 Mr Fong attended settlement and the evidence supports the view that he was ready, willing and able to complete the New Contracts. However, NGI did not remove caveats placed over the Turramurra Properties and so settlement did not proceed. The parties' respective cases The plaintiffs 1. By amended statement of claim filed in court on 9 March 2015 the first to tenth plaintiffs (the plaintiffs) sought declarations and orders for the removal of the six caveats placed on the plaintiffs' properties by the third defendant NGI. The plaintiffs also sought an order for specific performance of those contracts. For reasons I have already stated those claims are now academic. 2. The plaintiffs contended that there had never been a legitimate basis for the caveatable interest claimed by NGI over the plaintiffs' land. They submit that whatever rights NGI might have against GDI, they did not amount to a relevant interest in the plaintiffs' properties and hence there never was a caveatable interest. Accordingly the plaintiffs seek compensation against NGI for the losses which they have individually suffered owing to the lodgement and thereafter the refusal to withdraw the caveats under s 74P of the RPA. 3. I have described the circumstances in which the caveats were withdrawn. However, the issue of whether there was a caveatable interest is a live one because of the plaintiffs' claim for compensation. Relevant facts 1. The plaintiffs have not been concerned with the factual disputes which have distracted the other parties. Essentially, the factual material relied upon by them is uncontroversial. 2. The relevant contracts were entered into on 23 April 2014. The proposed purchaser was GDI. Upon exchange the plaintiffs received $8 million by way of a bank cheque. 3. Prior to the scheduled completion of the sale on 22 July 2014 MVGDD lodged caveats over the plaintiffs' properties by reason of the novation provision in special condition 48 which the plaintiffs accept was validly exercised by GDI. 4. The day before, however, NGI had lodged six caveats over the Properties. The plaintiffs have never had, they submit, any form of contractual or other legal relationship with NGI and hence NGI had no entitlement to lodge these caveats. 5. Despite the plaintiffs' requests, NGI's caveats were not removed and this prevented settlement occurring on 22 July 2014. The plaintiffs submit that NGI's caveats prevented them from completing the sale of their property, which has in turn caused personal dislocation and financial cost. 6. The plaintiffs, of course, sought an order that MVGDD specifically perform the New Contracts and in that regard they adopt MVGDD's submissions in their entirety. No caveatable interest 1. As I have already indicated, the plaintiffs submit that NGI, given the equity it had and asserted did not have a caveatable interest and never did. 2. The plaintiffs submit that the basis for the alleged equitable interest is that NGI paid GDI the sum of $6 million as a contribution to the purchase price pursuant to the agreement it had with GDI. Without debating the terms of the alleged agreement the plaintiffs submit that it is sufficient to observe that the payment of this money by NGI was not as a result of any dealing between the plaintiffs and NGI. The payment was made pursuant to a contractual or personal right said to exist between GDI and NGI. 3. As the plaintiffs point out, by reason of s 74F(1) of the RPA and its express reference to "a legal or equitable estate or interest in land", a caveat may only be lodged to protect an interest in land. It cannot be lodged to protect a mere contractual or personal right. The plaintiffs submit that it follows as a matter of fundamental principle that a caveatable interest must be supported by an equitable interest in the land present at the time the caveator lodges the caveat. A potential interest or an interest which merely involves land is not sufficient. 4. The plaintiffs accept that whilst caveats may be lodged to protect a claim under a constructive or resulting trust, the mere existence of a trust is insufficient to support a caveat. Any beneficiary must be able to show that the trust in question conferred a beneficial interest in the land thought to be caveatable. 5. In addition, the plaintiffs submit that a caveator will not be beneficially entitled to an interest in the land even though it might be able to show an implied trust entitling it to monies advanced and received. 6. The plaintiffs submit further that the caveats placed on the Vendors' title by NGI are not expressed as amounting to a beneficial interest in the Vendor's land. All that is said is that by reason of a "private agreement" between GDI and NGI whereby $6 million was advanced towards the purchase price of the Vendors' properties, a resulting or constructive trust was formed. However, the caveats say nothing more than that and the plaintiffs thereby contend that, in the absence of any interest created by the Vendors either by express agreement or conduct, an interest of the kind asserted by NGI must be restricted to an interest in the $6 million advanced to GDI. Any trust, it is submitted, is an interest in the money and not an interest in the Vendors' land. The plaintiffs, I consider, contend quite correctly that there has never been any contractual relationship between the plaintiffs and NGI, and NGI does not otherwise assert one. The plaintiffs point out that the plaintiffs were not a party to the Short Form Deed and were unaware of its terms. 7. It is submitted that it is wrong in principle to suggest that a stranger could lend money to a purchaser of some land and through that loan assert a proprietary interest in that land. If that were correct, the plaintiffs contend, then any third party financier or mortgagee would always have a valid caveatable interest over a Vendors' land by reason merely of having advanced monies to the purchaser. 8. However, in this case NGI asserted for various reasons that it had a right to compel GDI to novate the contracts to it and hence was entitled to specific performance and thereby to become the registered proprietor. It in effect alleges that, amongst other things, its interest in the Turramurra Properties was at all times held on constructive trust for NGI by GDI. Alternatively, it submits there was an implied or resulting trust in NGI's favour in relation to the Properties or, alternatively again, that NGI had an equitable charge or lien over the property. For any one or more of these reasons it is submitted it had a caveatable interest. Constructive and resulting trust – NGI's case 1. The plaintiffs submit that NGI's submission on these issues proceeds on a flawed premise. NGI submits that the mere existence or creation of a trust relationship (be it constructive resulting or otherwise) will always give rise to a proprietary interest or estate in land and hence a caveatable interest. The plaintiffs point out that trusts can exist over many kinds of property; chattels, real property and contractual promises as examples. What the plaintiffs submit is important, and what is clearly correct, is the central issue of the identification of the trust property if a trust is found to arise or is to be imposed by a Court. 2. The plaintiffs submit, in my view again correctly, that the caveatable interest must be grounded either in some agreement entered into by the registered proprietor or by an interest binding upon the registered proprietor. 3. Again, as the plaintiffs correctly point out, NGI does not point to any agreement with the plaintiffs. It therefore has to establish an interest which otherwise binds the plaintiffs. 4. The plaintiffs submit that not only has there never been any agreement with them, but NGI has failed to point to any action on the plaintiffs' part other than exchanging contracts with GDI and obtaining a deposit from it. The plaintiffs submit, correctly, that the thrust of NGI's submission is that NGI's money was received ultimately by the plaintiffs, albeit as a result of the alleged agreement with GDI, which thereby creates a caveatable interest. The plaintiffs point out that such a proposition, namely that such a relationship (with the receipt by GDI of NGI's money) could lead to a caveatable interest, was unsupported by any authority. 5. The plaintiffs submit that NGI's reliance upon the decision of the High Court in Calverley v Green is misconceived. They accept that it is an authority which stands for the proposition that a constructive trust may be imposed in certain cases where there is a contribution to the acquisition of a property. They contest, however, that the mere creation of a constructive trust gives rise to a caveatable interest. In any event, as the plaintiffs correctly point out, the facts in Calverley v Green involved a dispute between a de facto husband and wife. The question for the Court there was how to divide property in respect of which both persons had made a contribution. 6. The plaintiffs, again in my view correctly, submit that NGI never had any legal title to the plaintiffs' property and that they (obviously) made no contribution to the acquisition of the Properties by the plaintiffs. I agree that Calverley v Green does not assist NGI. 7. NGI also relies upon the decision of the High Court in Bahr v Nicolay (No 2). Again, the plaintiffs correctly submit that the authority is of no assistance to NGI. On the facts of that case the land which was owned by the Bahrs had been sold to Nicolay under a lease back/option arrangement which allegedly entitled the Bahrs to buy their land back at a later date. Nicolay in the meantime had onsold the land to a third person who became the registered proprietor. However, the third person, Mr Thompson, knew about the contract between the Bahrs and Nicolay, and indeed apparently had expressly acknowledged it. Whilst Mr Thompson initially acknowledged that he was bound to sell the property back, he later changed his mind. In the circumstances, the Court held that the Bahrs had an equitable interest in the land created by, first, a specifically enforceable agreement between them and Nicolay and, second, the agreement between Nicolay and Thompson, which had been made expressly subject to the Bahrs' rights and in circumstances where the Court found an intention to create an express trust over those rights. 8. In that case, as the plaintiffs point out, the Bahrs had an equitable interest in the land arising from the contract they had entered into with Nicolay with the option to repurchase. The option clearly gave rise to an equitable interest. On the other hand, Thompson had bought the land expressly acknowledging the pre-existing equitable rights held by the Bahrs to buy back the land. 9. The Bahrs' rights against Thompson arose, the plaintiffs submit, in my view quite correctly, from the intention as reflected in the agreement between Nicolay and Thompson to create an express trust over the Bahrs' rights. This was, according to the Court, an intention which was shared by all of the parties. 10. NGI's assertion is that it handed over $6 million with an intention of acquiring some beneficial interests in the Turramurra Properties under the New Contracts. The difficulty here, as the plaintiffs point out, is that the intention should properly be seen as unilateral on NGI's part unless, in some way or other, the plaintiffs could be held responsible for procuring that intention. 11. The plaintiffs again accept and submit that the first defendant had an equitable interest in the land by virtue of their contracts for purchase with the plaintiffs. The plaintiffs submit, in my view correctly, that that equitable interest did not "migrate" to NGI simply because NGI provided money to GDI. The plaintiffs certainly did not expressly acknowledge any rights on the part of NGI as a result of the contribution of the $6 million. Importantly, as the plaintiffs point out, the link between the respective parties' interests in Bahr v Nicolay (No 2) was the contractual acknowledgement in favour of the party entitled to the equitable interest. Here, as they point out, NGI had no such acknowledgement. To the contrary, the plaintiffs only ever dealt with GDI and there is simply no evidence that the plaintiffs were ever privy to such, if any, arrangements that might have existed between NGI and GDI. In my view their analysis is clearly correct. 12. However, NGI also relies upon the decision of the High Court of Justice in the UK in Lysaght v Edwards (1876) 2 Ch D 499. As the plaintiffs point out, the case stands for the somewhat fundamental proposition that ownership of the estate in equity is transferred on the execution of the contract to the purchaser. In such circumstances the vendor becomes constructively a trustee for the purchaser. The plaintiffs correctly point out that what the case is not authority for is that a vendor conveys an equitable interest to a party other than the purchaser merely by the purchaser receiving money from the third party. This must be so especially where the vendor has no knowledge of the arrangements. 13. The plaintiffs submit, again correctly, in my view, that merely because GDI promised by accepting $6 million ultimately to convey its beneficial title in the Properties to NGI by way of novation does not mean somehow or other this created an equitable interest in the land and hence gave NGI a caveatable interest. The plaintiffs submit that such a proposition is legally insupportable. Further, they submit that it is unacceptable to leap from an in personam claim by NGI against GDI to an equity in the plaintiffs' land. Consistently with their case all along, the plaintiffs submit that what NGI has is nothing more than a personal equity enforceable against GDI. 14. Likewise, the plaintiffs submit that even assuming there is an equitable estoppel between NGI and GDI as a result of the Short Form Deed, the plaintiffs were never a party to that document or any other agreement and never made any promise to NGI. The plaintiffs submit that it is entirely illogical that an equitable interest in their land arose because NGI allegedly acted to its detriment upon a promise given by GDI but not the Vendors. 15. The plaintiffs also submit that there is no equitable charge or lien over the land. They submit that an equitable charge arises out of an agreement between parties which involves the provision of land as security. The most common scenario is either an express agreement or conduct which involves the provision of security. In this instance the plaintiffs submit that GDI had no land, but an equitable interest in the plaintiffs' land. The plaintiffs submit that that does not amount to an equitable charge. There is no debt or other obligation assumed by the plaintiffs to NGI. Indeed, they submit they did not even agree to charge their property in favour of GDI. That is, in my view, again plainly correct. GDI's response to NGI's position 1. So far as the caveats are concerned GDI is entirely aligned with the plaintiffs, but put some additional arguments. In that regard GDI adopts the plaintiffs' final submissions as to why the various arguments advanced by NGI could not amount to a caveatable interest in the Turramurra Properties. 2. GDI submits that NGI's submissions in relation to the question of constructive trusts appear to proceed upon the basis that a portion of GDI's equitable interest in the Turramurra Properties as purchaser under the New Contracts was held on behalf of NGI pursuant to a constructive trust or, alternatively, that NGI had an enforceable equity against GDI for the novation of the New Contracts to NGI or for the return of $6 million on completion of the contracts and damages for loss of profits. 3. GDI submits that these contentions ought to be rejected. GDI likewise relies upon Bahr v Nicolay (No 2) and the fact that NGI had no entitlement to specific performance of the Short Form Deed. 4. So far as the resulting trust is concerned, GDI submits that the factual basis for the contention that such a trust exists is the contribution of $6 million towards the purchase price. However, as GDI points out, it is the Vendors, not GDI, who are the registered proprietors of the land. Unless NGI can establish that it contributed $6 million towards the Vendors' acquisition of the land it is submitted, in my view quite correctly, that the contention must fail. GDI accepts that any claim by NGI that it has a resulting trust would, if at all, be appropriately brought against GDI only if the New Contracts completed without NGI being returned its $6 million. 5. GDI reiterates that no equitable estoppel arises and relied upon its earlier submission. GDI also reiterates that NGI had no equitable charge or lien over the Turramurra Properties. GDI otherwise adopted the argument that the plaintiffs are simply not indebted to NGI arising from any payment or promise of payment. 6. GDI makes the point that NGI submits that the Short Form Deed applies to the New Contracts. GDI has not submitted to the contrary but seeks to take advantage, understandably, were I otherwise persuaded that MVGDD was correct and that it should not apply to the New Contracts. I have dealt with this argument. NGI's further submissions on caveatable interest 1. Upon my granting leave NGI, in the submissions filed on 12 June 2015, made further submissions on whether it had a caveatable interest. 2. In addition to what had previously been put NGI submits that upon making the payment of $6 million NGI acquired not just rights in personam but also an equitable lien, which constituted a charge over the land itself. 3. NGI submits that the $6 million was not advanced or lent to GDI, but in fact paid to the Vendors as payment of the purchase price in the expectation that the contracts would be novated to, and the land acquired by, NGI. They accepted there were no loan documents or terms recorded and that Ms Lin disavowed the payment as a loan (Lin 17/10/24 [18(b)]). 4. The argument, however, proceeds that the $6 million was part payment of the purchase price by a third party. Hence it is said a lien arises not by reason of any contract but upon payment. Further, it is said the lien arises independently of any promise to grant the same. 5. It is then submitted that the lien exists even if the contract is not capable of specific performance. Therefore it is said the lien constitutes a charge over the land and thus a caveatable interest. Further, it is submitted, the lien is not lost if the payer's rights to acquire the land are terminated, even if done so at the fault of either the vendor or the purchaser. 6. In effect it is submitted that the rights of the sub-purchaser or "assignee", as called, are analogous to a purchaser. For the purposes of what I regard as a somewhat ambitious and novel submission, reliance is placed on Aberaman Ironworks v Wickens. Reliance is also placed on Shaw v Foster and Valerica v Global Minerals. 7. In Aberaman Ironworks v Wickens at 109-10 Lord Cairns considered: I have next to advert to the demand which is made on the part of the Plaintiffs for a lien in respect of the purchase-money which has been paid. That question stands thus:-£50,000 was paid by Wickens to Bailey on account of the purchase of the estate. According to the decisions which were referred to-the case of Wythes v. Lee, and the case of Rose v. Watson-Wickens, in the event of the purchase going off, would have a lien for this £50,000 upon the Aberaman estate belonging to Bailey. In like manner the company, in their turn, for the purchase-money which they paid Wickens would, in the event of their contract going off, have a lien upon any interest which Wickens might possess in the Aberaman estate; and, according to the decisions to which I have referred, Wickens, to the extent of the £50,000 he paid, had become in equity the owner, by way of incumbrance, of a corresponding amount in value on the Aberaman estate. It appears to me, therefore, upon the authority of those decisions, to be clear that the company, supposing the £50,000 had not been repaid by Bailey to Wickens, would have been entitled to maintain a bill against Wickens and Bailey to prevent the money getting back into the hands of Wickens. In point of fact, when the bill was filed, the £50,000 had in part been repaid to Wickens, but part of the amount remained in specie in the form of a bill of exchange of Bailey's which had not been paid. 1. In Valerica v Global Minerals it was said by Windeyer J, quoting Shaw v Foster, at [13] that: Against this Mr Leslie, the solicitor for Valerica argues that Valerica has had since 9 November 1995 an equitable interest in the land by derivation and, as chargee over Ostabridge's rights against AMES is entitled to seek specific performance of the contract. He cites the judgment of Lord O'Hagan in Shaw v Foster (1872) LR5HL 321 at 349 where after referring to the nature of a uncompleted contract for sale it was said that: And it is farther very clear that the interest so vested in the purchaser may be the subject of charge or assignment, and that the sub-assignee or incumbrancer may enforce his rights against the vendor, at all events if he assumes the position of the vendee, and fulfils the duties and sustains the liabilities created by the contract. This statement was cited with approval by Hudson J in Naismith v Smith (1954) VLR 567 at 574 and I accept it as correct. 1. These cases amongst others, it was said, were authority for the proposition that a third party who contributes money towards the acquisition of the property, notwithstanding the absence of dealings between the third party and the vendor, nevertheless acquires rights against the vendor's property in rem. Here it is said the position of NGI is stronger because payment was direct to the Vendors' agent. The submission proceeds that the position of an assignee or sub-assignee is similar to that of a sub-purchaser. 2. Several points should be noted concerning Aberaman Ironworks v Wickens. First, the parties identified no other cases that dealt with this decision in any detail. It has been cited in three instances in the UK, but has not received any treatment by the Australian courts. Secondly, the contractual arrangements in that case were quite different to those in the present case. Finally, in that case the sub-purchaser was trying to retrieve monies paid to the immediate purchaser (Wickens), and it is clear in my view that what was being discussed was a lien over the purchase monies, not the land. 3. In S Lindsay, Caveats Against Dealings in Australia and New Zealand (Federation Press, 1995) it was said at 103 (footnotes omitted): In Field v Fitton the court (McMullin, Bisson and Gallen JJ) suggested that a subpurchaser who has not taken an assignment of the rights of the original purchaser has no caveatable interest, in reliance upon Catchpole v Burke. It is submitted that Catchpole v Burke does not support the proposition that a subpurchaser does not have a caveatable interest. In this case, the trial judge considered that since s 41 of the Land Transfer Act (NZ) provides that no unregistered instrument shall pass any interest or estate in land, a subpurchaser, having only a contractual right under the agreement, cannot even by a decree of specific performance obtain a vesting in it of any estate or interest in the land. However, all three members of the Court of Appeal considered that it was not clear that a subpurchaser had no caveatable interest, but it was not necessary to decide the issue. More recently, in Metcalfe v Skyline Holdings Ltd it was assumed without comment that a caveat lodged by a purchaser from a purchaser was valid. The general principle that a caveat is supported by an interest in land, not by a relationship with the registered proprietor, discussed at pp 66-67, indicates that a subpurchaser has a caveatable interest. 1. In GR Northcote, Fry on Specific Performance (Stevens and Sons, 6th ed, 1921) the following is said at 91 (emphasis added, footnotes omitted): Again, a stranger to the contract may so mix himself up with it by setting up a claim to some benefit resulting from it, as to render himself liable to be made a party to proceedings for the enforcement of the contract; as, for instance, by claiming to be interested in the purchase-money under an arrangement antecedent to the contract. 1. At 672-3, the author goes on (footnotes omitted): The lien is not strictly confined to a case of simple purchase: it extends to the case of a lease, and entitles an intended lessee who has entered under the contract and expended money to a lien on the lessor's interest: it extends, too, to a sub-purchaser: so that where A. sold to B. and received part payment from him, and B. sold to C. and received part payment from him, C. was held entitled to a lien on B.'s interest in A.'s estate. This lien in the case of a purchaser extends to (i) all instalments of the purchase money; (ii) interest thereon at 4 per cent. per annum; (iii) sums paid under the contract as interest on the unpaid purchase money; (iv) interest thereon; (v) the costs of an unsuccessful action by the vendor against the purchaser; and (vi) the purchaser's costs of investigating the title as well as his costs of action. 1. In this case it is first said that the third party having the benefit of a right to novation also acquires on part payment of purchase monies a corresponding lien by way of charge over the land. Here the Vendors, it is submitted, were by 9 June 2014 aware that the $6 million was being provided by NGI. 2. Finally, NGI submits that the termination, if that be what happened to the Short Form Deed, does not alter the lien which arose independently of contract, and that there is a charge impressed upon the land that is and remains enforceable against the Vendors. That may be so, but it of course begs the question. 3. The plaintiffs accept that a purchaser of real property obtains an equity in the vendor's property upon exchange of contract. Further, that a purchaser's lien arises upon termination or rescission of the contract of sale and secures repayment of amounts paid by the purchaser by way of deposits and instalment payments of the purchase price. The second defendant, it is submitted, has an entitlement to specific performance against the fourth defendant for novation. Only if the contract is terminated or rescinded could the first defendant claim a purchaser's lien in respect of the deposits etc. As the contract has not been terminated no party, it is submitted, can claim a purchaser's lien: Kimberley NZI Finance Ltd v AR Barr Investments Pty Ltd [1990] ANZ ConvR 438 at 441. 4. It is submitted that a person who lends money to a purchaser without more does not by that fact alone obtain an equitable interest in the land. 5. It is said that NGI fails to explain with any clarity why it should be characterised as a sub-purchaser. Further, on the facts, the plaintiffs submit that NGI simply cannot differentiate itself from any other money lender or a person otherwise bound in contract with GDI. 6. I consider the plaintiffs are, as a matter of principle, correct. The payment of the monies by NGI on exchange of contracts on 23 April 2014 does not constitute payment to the plaintiffs. The money was clearly not paid by GDI to the Vendors as the agent of NGI. The money was paid to allow GDI to comply with the contractual arrangements. I agree that such a payment cannot as such make NGI a sub-purchaser, whatever that term is intended to mean. 7. It may be accepted that the vendor upon exchange of contracts becomes a trustee of an estate in land for the purchaser. But that does not confer a secondary interest in the land to any person contributing money to the purchaser or the purchase price, nor can it give rise to a charge in favour of the person advancing the money towards the purchase price. 8. Aberaman Ironworks v Wickens is not, it seems to me, authority for that which NGI contends. First, Lord Cairns did not find that the lender procured a lien over the vendor's land. The vendor was not a party to the suit. 9. I do not consider either Aberaman Ironworks or Shaw v Foster establishes that part payment of a purchase price charged the relevant defendant's interest as if they were a purchaser of the land. There is nothing in either authority to support a proposition that an equitable interest was created in the vendor's land. 10. GDI supports the plaintiffs' contentions on this point. GDI accepts that if a purchaser pays the whole or part of the purchase price under a contract of sale, then that purchaser will, in the absence of an express or implied agreement to the contrary, have the benefit of an equitable lien over the property to secure repayment to him of any part of the purchase price which may become repayable if the sale goes off, provided the purchaser is not at fault: Hewett v Court (1983) 149 CLR 639 at 645 (per Gibbs CJ), 653-4 (Wilson and Dawson JJ) and 663-4 (Deane J). 11. But, as GDI points out, the $6 million was paid at a time when GDI was the purchaser, and the payment was to assist GDI. That is clearly correct. NGI was not and has never been the purchaser. 12. I agree with GDI that Aberaman Ironworks v Wickens does not support NGI's argument for a lien such as to give it a caveatable interest in the land. In my view GDI correctly submits that Aberaman Ironworks v Wickens was only concerned with the equitable lien of a purchaser of real property over the vendor's interest in the property where the purchaser had paid whole or part of the purchase price under a contract for sale of the property. Wickens, of course, had such a lien over the vendor's interest in the Aberaman estate because he was the purchaser of the estate from the vendor and had paid part of the purchase price under the contract for sale between them. In turn the company had such a lien over Wickens' interest in the estate because it was a purchaser of that estate from Wickens and had paid part of the purchase price under the contract for sale between them. As is correctly pointed out, here NGI was never a purchaser of the Properties, whether from the Vendors, GDI, or anyone else. NGI stands in an entirely different position to the relevant party in Aberaman Ironworks v Wickens. 13. As far as Shaw v Foster is concerned, that authority, GDI says, again in my view correctly, does no more than establish that a purchaser may charge or assign the purchaser's lien and, if that is done, the chargee or assignee may, if all obligations are fulfilled, enforce the purchaser's lien. But here GDI has never, nor has it been alleged that it has, charged its purchaser's lien in favour of NGI or assigned its purchaser's rights to NGI. There is no claim as such and no evidence to support it. Compensation under s 74P(1) of the RPA 1. The plaintiffs contend that, pursuant to s 74P(1), if NGI lacked reasonable cause to lodge the caveats and has refused or failed to withdraw the caveats it is liable to any person who suffers pecuniary loss. 2. The plaintiffs accept that to establish liability they must show, first, that NGI had no caveatable interest and, second, that it did not have an honest belief based on reasonable grounds that a caveatable interest existed. 3. As to the second issue they submit that the test is partly subjective and partly objective. It is subjective, they say, in that it requires an examination of the actual belief held as to the caveatable interest and whether such belief was honestly held. The plaintiffs contend that it is also objective, in that it requires that the belief be held on reasonable grounds. 4. The plaintiffs submit that there is simply no evidence given by NGI (relevantly Ms Gai or Mr Geering) as to any belief held by the company that it had a caveatable interest in the plaintiffs' land as at 21 July 2014. They also point out that there has been no evidence adduced from lawyers acting for NGI in respect to any advice given which may have encouraged Ms Gai on behalf of NGI to believe the company had a legitimate right to maintain the caveats on the title. They submit that in the absence of such evidence an inference should be drawn that NGI had no reasonable ground to believe that it had a caveatable interest. 5. The plaintiffs point to a number of features of the case that they submit militate against a conclusion that NGI could have had any objective belief that it had a reasonable basis such as would entitle it to maintain a caveat as follows: 1. NGI was never the named purchaser or even the novated party under either the New or Old Contracts; 2. NGI never had any form of contractual relationship with the Vendors; 3. On 23 May 2014 Ms Gai sought expressly to terminate NGI's agreement with GDI pursuant to which the caveatable interest was later claimed; 4. That both Ms Gai and Mr Geering knew that the Property Fund was seeking to divest itself of its interest in the Turramurra project; 5. That NGI agreed to release $6 million to the Vendors on 23 April 2014 on an unconditional basis without seeking or insisting upon any form of security over the plaintiffs' land or seeking to obtain the plaintiffs' contractual consent to the lodgement of a caveat; 6. NGI's decision not to seek security by way of a charge over the Vendors' land before lodging the caveats was contrary to its stated intention as expressed in the Heads of Agreement entered into with GDI on 28 December 2013; 7. At a meeting between Ms Gai, Ms Lin and Mr Geering on 11 April 2014 the concept that NGI would seek to secure a proprietary interest over the Vendors' land in return for the release of the $6 million was not even canvassed; 8. NGI disposed of the funds and the asset ($6 million) without documenting that act, not because of the belief that it had a proprietary interest in the Vendors' land but because it knew and feared that NGI would not secure the funding for the purchase by the completion date and that in any event GDI would lose its deposit of $1.5 million, in which case GDI would be liable to the Vendors for damages and consequently NGI might be liable to GDI for any loss GDI may have suffered as the result of the settlement not completing; 9. NGI's decision to advance (and thereafter to release unconditionally to the Vendors) $6 million in investors' funds was done to ensure the retention of the Turramurra Properties, with an awareness that it did not finally resolve how the project would proceed after the exchange of the New Contracts on 23 April 2014; 10. Lastly, as the plaintiffs put it, NGI has at no stage justified or adequately explained how its alleged proprietary interest in the plaintiffs' land arises – not in its opening written submissions or in its opening oral submissions or even by Day 6 of the hearing when pressed by the Court to justify its claim for specific performance after the conclusion of Ms Gai's evidence. 1. The plaintiffs contend that the above factors, together with the absence of any evidence from NGI as to its subjective intentions or belief, invite a finding that there was no "reasonable cause" for the lodgement by NGI of the caveats on 21 July 2014. The plaintiffs submit that the caveats were lodged as a "panicked" attempt by NGI to gain itself some leverage and maintain the status quo while it worked out some commercial arrangements. NGI's submissions 1. NGI submits that no compensation should be awarded against NGI for two reasons. 2. First, even if NGI had no caveatable interest in the land, GDI was not lawfully able to novate the contract to MVGDD and it was not able to complete the purchase without first discharging NGI's charge over GDI's equitable interest in the land. Because all parties were, NGI asserts, aware of NGI's payment of $6 million, it is not open for any of them to claim compensation. 3. The true impediment to compensation (albeit seemingly not appreciated by anyone) was, it is submitted, NGI's charge over GDI's interest in the land. 4. It is also submitted that the Court should not award compensation here as the values of the subject Properties have increased by an amount equivalent to or greater than the losses attributable to the caveat. I should say immediately there is simply no evidence of this. 5. I should say, I agree with the plaintiffs that s 74P(1) does not require the loss to be solely attributable to NGI's refusal to withdraw the caveats after being asked to do so. However, as a matter of practical reality, it was NGI's caveats which prevented the settlement at all relevant times from taking place. The moment the caveats were withdrawn, immediate steps were taken to organise a settlement. Intimate knowledge of the history of the matter points, in my view, to NGI's caveats as being the significant, if not sole, impediment to settlement occurring. 6. GDI makes the same point, with which I agree, that the undisputed evidence is that the only matter which prevented settlement was NGI's caveats. 7. Again, as GDI points out, upon completion the $6 million would have been repaid. The $6 million was paid to the Vendors and thus on completion any charge in favour of NGI would have been discharged. GDI is clearly correct. 8. In response to NGI's allegation that it had reasonable grounds to believe that it had acquired an interest in the land by virtue of the Short Form Deed and by handing over $6 million the plaintiffs respond as follows. 9. First, NGI provided money to GDI for the purposes of facilitating GDI's contract of sale. That arrangement remained always one between GDI and NGI. It rose no higher than that. 10. However, the plaintiffs further contend in reply that purely on an objective basis there was no reasonable basis for the belief, certainly on behalf of NGI, for lodgement of the caveats. The plaintiffs point out that even if NGI's evidential onus of proof under s 74P(1) is low, NGI was uniquely in possession of evidence as to its belief regarding the existence of a caveatable interest. They point out, however, that NGI never gave such evidence. 11. As the plaintiffs point out, silence can hardly discharge even a low onus of proof. In addition, the plaintiffs submit that they have established sufficient evidence from which a negative proposition may be inferred, in which case NGI then carries an evidential burden to advance in evidence those particular matters available to it. The plaintiffs submit there is no obligation to cross examine a witness on a topic the witness fails to address. 12. The plaintiffs point out that, as NGI's solicitor, Mr Geering could have set out the basis upon which he was instructed to lodge the caveat. They submit that his silence, that is by giving no positive evidence about the basis upon which the caveat was lodged or any belief associated with it, hardly assists NGI. They submit I should draw the inference that nothing meaningful could be said about it. I do not consider the onus could be discharged by the mere lodgement of the caveat. That, in my mind, does not carry with it any greater significance than that the solicitor was instructed to lodge a caveat or perhaps advise that it be done. It says nothing about the belief of anybody from NGI. And it certainly does not permit the court to examine whether or not the belief asserted by anyone from NGI was one based upon reasonable grounds. 13. Here NGI knew or must have known that the lodgement of the caveats would prevent the plaintiffs from selling their homes. It also knew that it had no agreement of any kind with the plaintiffs such as to obtain an equitable interest in their land. GDI, on the other hand, did have an equitable interest which arose specifically from the contracts for sale of land. 14. The plaintiffs also submit that NGI could have but did not seek security over the land when it provided $6 million to GDI. 15. NGI accepts that Ms Gai did not depose to NGI's honest belief. However, it points to what it describes as "indirect" evidence as to the issue sufficient to deny the suggestion caveats were drafted to gain some leverage or inappropriate advantage. 16. It is pointed out that Ms Gai gave instructions to her then lawyers to take steps to ensure NGI's interest was protected (Gai 21/9/14 [61]-[62]). She was advised that caveats should be lodged. 17. It is further submitted that it should be inferred that this was entirely reflective of Mr Geering's advice. If I may say so, so what. Given his utter lack of independence, even if it could be implied he gave advice I would not give that factor any weight. Indeed, given his failure to give advice on any number of topics I am not satisfied such an interpretation is reasonably open here. That does not really fill any gaps when it was always open to Ms Gai and/or Mr Geering to say something about the topic and yet they chose not to. 18. The plaintiffs submit that it does not go without saying that the decision to lodge caveats was a genuine one. They point out, correctly, that a person can hold a genuine belief without it being a reasonable one. They submit that the reasonableness must be assessed objectively. I agree. 19. The plaintiffs point out that the objective evidence points overwhelmingly to there being no reasonable basis for NGI believing it was entitled to lodge a caveat, nor reasonable to maintain it after having been asked to withdraw it. 20. I agree with the plaintiffs. I do not consider that NGI had a reasonable basis to lodge the caveats or to maintain them. It had no caveatable interest but, more to the point, it lodged them, in my view, without giving any thought at all to their validity. It defiantly maintained them until final submissions and then withdrew them. NGI, in my view, is liable to a claim for compensation under s 74P(1) of the RPA. MVGDD 1. There are no causes of action pleaded against MVGDD. 2. In the amended statement of cross-claim, however, filed on behalf of NGI, certain relief is claimed against MVGDD. First. there is a claim for compensation or an account of profits ([6]). Next, a declaration is sought that MVGDD had no caveatable interest over the Properties ([7]). An order that MVGDD deliver executed withdrawals of caveats is sought or, in the alternative, an order that the caveats lodged by it be set aside ([9] and [10]). This is no longer relevant on questions of liability but may be relevant on costs. It is not entirely clear to me that any of this relief claimed has any ongoing relevance. 3. Further, an order was sought that MVGDD be restrained from taking any further steps to interfere with the settlement of the land and lastly that it be ordered to pay damages pursuant to s 74P of the RPA. Likewise, this is no longer relevant on any issue other than potentially costs. MVGDD's contentions 1. MVGDD had submitted that for three reasons NGI was not entitled to specific performance of the Short Form Deed. As a result of what transpired at the trial these submissions became otiose. For completeness, however, I propose to deal briefly with the arguments. There may be some costs consequences. 2. First, it is contended that the Short Form Deed expressly stated that it applied only to the Old Contracts. It is pointed out that Mr Geering conceded there was no variation of the Short Form Deed agreed to by the parties (T448/40 and T460/41). 3. Secondly, it is submitted that, pursuant to special condition 48(ii) of the New Contracts, the time that the purchaser (GDI) must serve the "request for novation" expired on 7 July 2014 (14 days prior to the completion date nominated in the New Contracts) and that that date had passed, which makes the order for specific performance futile. 4. Thirdly, it is submitted that if there was an agreement still in existence between NGI and GDI regarding the New Contracts, it was terminated by NGI on 23 May 2014. 5. It is contended by MVGDD, I think correctly, that the only serious dispute between the parties on the first issue is whether general condition 1.2(g) of the Short Form Deed which relevantly provides that a reference to any agreement is a reference to that agreement "as amended, novated, supplemented, varied or replaced from time to time", as such should be construed as applying to the New Contracts. 6. It is contended that the first difficulty with the argument that clause 1.2(g) operates so as to include the New Contracts is that the New Contracts cannot be seen as an amendment, novation, supplement, variation or replacement for the Old Contracts. It is pointed out that the New Contracts were for a greater purchase price of $15,300,000 (compared with $15,100,000), included the release of an $8 million deposit, and were for a different completion date. It is submitted that the New Contracts did not replace the Old Contracts and that they were an entirely new formulation of terms between the Vendors and GDI. It seems to me that this argument is not tenable just on the language of the clause. The notion of "replace" in my mind involves a substitution, but I don't think it follows that it needs to be in precisely the same terms. The parties to the contract remain the same, namely the Vendors and GDI. I do not, therefore, think that part of MVGDD's argument is correct. 7. The next argument advanced is said to be that as a rule of construction a general provision should give way to a specific provision. Justice White dealt with some of these issues in Belvino Investments No 2 Pty Ltd v Australian Vintage Ltd [2014] NSWSC 978 at [39]-[40]. It is said that pursuant to cl 4.1 of the Short Form Deed NGI was responsible for funding the "purchase price" – which was in the amount of $15 million. It was submitted that it could not have been objectively intended at the date of the Short Form Deed that NGI was responsible for financing this "purchase price" whatever that sum may be, for example, so that if GDI had negotiated a new purchase price very much in excess of that already agreed it could not be the parties' objective intention that NGI would have novated to it those contracts for the much greater sum. Again, I am not persuaded by this argument. I think it ignores the commercial reality namely that at the time the Short Form Deed was entered into GDI and NGI at least objectively appeared to be motivated by and focussed upon a common purpose, namely the acquisition of the Properties in a time frame that better suited their commercial objectives. In any event, Mr Geering, who was acting for both parties at the time, was hardly going to agree to a figure which was not the subject of a consensus between his clients NGI and GDI. 8. The next point that is put is that there is a concession by Mr Geering that there had been no agreement between the parties to vary the terms of the Short Form Deed so as to cause it to operate in relation to the New Contracts. Again, I do not find this an attractive argument. This proposition revolves around what the Short Form Deed properly construed means. Mr Geering's subjective intention is quite irrelevant on that point. 9. The next point that is made, however, is that the New Contracts made time of the essence. Completion was to have occurred by 22 July 2014. 10. The novation clause of each contract, special condition 48, provided that the contracts could be novated and that the mechanism for doing so was that the purchaser was obliged to serve a request for novation in writing at any time prior to 14 days before the completion date. To make it explicit that time was of the essence special condition 48 also provided that if one were not served prior to such time then the right to serve a novation notice was lost. 11. GDI was the purchaser. It never served a novation notice on the Vendors novating to NGI. The time, therefore, in which such a notice could have been served has expired. In those circumstances it is submitted that it would be futile for the court to order specific performance of any agreement between GDI and NGI in relation to this notification. Futility, it is submitted, is one very potent fact which will normally stand in the way of an order for specific performance. On 13 May 2014 Ms Lin notified Ms Gai, Mr Cai, Mr Darmali and Mr Geering that GDI would not assign the New Contracts to NGI, and she indicated unequivocally that GDI would assign the contracts to a company which was more suited to developing the site. It was the reason on one view of the facts that clause 48 was not complied with. The reality is that the time had passed by which the novation could have occurred. On that basis, I consider it would have been futile to order specific performance, although NGI may have had a damages claim. 12. The last point which is made which, in my view, is of substance, is that NGI through Ms Gai terminated any contractual relationship between NGI and GDI on 23 May 2014. Ms Lin's response was that there was no contractual relationship and, more to the point, NGI conducted itself thereafter as if there was none. In my view that is a reason which clearly stood firmly in the way of a grant of specific performance. I deal with this issue in detail below. GDI's position in relation to the plaintiffs' and MVGDD's claims 1. GDI does not oppose the relief sought by the Vendors save as to costs. It notes two matters. 2. First, it submits that upon novation of the New Contracts to MVGDD the contracts between the Vendors and GDI would be rescinded. On rescission GDI accepts that the Vendors would be required to pay to GDI the $6.49 million which was released to them as part payment of the purchaser price under the New Contracts. It is submitted the same would not apply in respect of the $1.5 million deposit which had been released to the Vendors by reason of special condition 48(vii) of the New Contract. 3. Secondly, any liability to the Vendors for penalty interest under special condition 39 of the New Contracts will only arise on completion of those contracts. If novation of the New Contracts occurs then the contracts between the Vendors and GDI will not complete. Accordingly, GDI will not have any liability to the Vendors for penalty interest under special condition 39. 4. As against the Vendors and MVGDD, GDI seeks declarations that it has properly exercised its right to novate the New Contracts to MVGDD and that MVGDD is the new purchaser of the Turramurra Properties. Those parties consent to that relief being granted and, indeed, it corresponds to that being sought by the Vendors. The relief would be granted unless NGI's specific performance or estoppel claims succeed, which it is submitted they should not. GDI's claims against NGI 1. GDI's claims against NGI focus upon the enforceability of the Short Form Deed. GDI seeks declarations that the Deed has been terminated or abandoned or alternatively an order for its rescission pursuant to ss 237(2) and 243 of the ACL. GDI also seeks damages against NGI pursuant to s 236 of the ACL for misleading conduct and for compensation pursuant to s 74P of the RPA. Termination or abandonment 1. In passing, GDI makes the point that NGI has not really engaged with GDI in its written submissions and has simply not dealt with the claims for breach of fiduciary duty, misleading or deceptive conduct, and unconscionable conduct. GDI somewhat provocatively submitted that it assumed the claims were abandoned. Abandoned or not, there has been no real attempt to articulate any counter propositions in relation to the submissions made by GDI on these topics. On that basis, I do not propose to address those arguments. 2. However, in relation to its submission on abandonment, GDI rests its claim for relief largely upon Ms Gai's email of 23 May 2014 to Ms Lin and Mr Darmali in which she purported to terminate the Short Form Deed for GDI's repudiation and Ms Lin's reply of the same date denying any repudiation of the Short Form Deed but otherwise agreeing there was no contractual relationship between NGI and GDI. 3. I have already accepted that on a fair and reasonable reading of the email there is little doubt that it must refer to the Short Form Deed. Ms Lin's immediate response, I think, is only open to one interpretation, namely an acceptance by her that there was no binding contractual relationship then between the parties. 4. Ms Gai's email is carefully drafted (almost as if by a lawyer), although she firmly denied any assistance. She denied, as did Mr Geering, that anyone other than she had drafted it. That to one side, the email evinces a clear intention on the part of NGI no longer to be bound by the Deed, and, as GDI points out, Ms Lin's reply amounts to a clear election on the part of GDI to accept the repudiation. Objectively, in my view, it could not reasonably be construed otherwise. 5. GDI appropriately refers to other conduct which, taken together with the email, I consider makes it clear that neither party intended to be bound by the agreement. 6. Of course, at the 22 May 2014 meeting NGI agreed to accept Ms Zhang's redemption request and allow her to redeem her investment in the Property Fund. Admittedly with the qualification that it was consistent with the Property Fund's constitution. 7. On 23 May 2014 Mr Geering sent an email to Caverstock advising that the Property Fund was divesting itself of its position in the Turramurra development. This divestment, of course, was explicitly foreshadowed in Ms Gai's 23 May 2014 email. In particular, on behalf of NGI she indicated that the divestment was to be completed without delay. 8. On 12 June 2014 there was a further email exchange between Ms Lin and Ms Gai regarding sales advices. It would appear to be common ground that NGI was not going to be the vendor of the apartments. 9. Lastly, on 17 June 2014 Mr Geering sent a proposed costs agreement to MVGDD thanking them for their instructions. Attached was a copy of a "draft master sale contract for "The Platinum" Turramurra". The contracts nominated MVGDD as the vendor. 10. I agree with GDI's submission that that conduct is simply inconsistent with the continued performance of the Short Form Deed and indicates that the parties to that agreement did not intend that it should be further performed. Either the Short Form Deed has been abandoned or the parties had abrogated their agreement. I do not think, rationally, this conduct can be given any other alternative interpretation. NGI's position on termination or abandonment 1. NGI correctly submits that one should look at the parties' conduct as a whole. It contends that it is simplistic to assert that NGI abandoned the Short Form Deed because it did nothing of the sort from the date it advanced the $6 million. It submits that its hands were tied to the extent that no novation could take place without GDI issuing a novation notice. NGI submits that the Short Form Deed was a "poorly drafted document". Indeed, it submits that from NGI's perspective the Deed does not represent the best interests of either GDI or NGI. 2. NGI submits that the 23 May 2014 email should not be seen, objectively or otherwise, as Ms Gai purporting to terminate the Short Form Deed. The email, NGI submits, should be seen as NGI terminating some other agreement to do with funding. This submission was only put orally by NGI's counsel. I cannot accept that submission as tenable. 3. NGI submitted implausibly, if I may say so, that the "agreement" referred to by Ms Gai related to an entirely different agreement. I do not accept that. More to the point, NGI makes no attempt to deal with the subsequent conduct of Ms Gai and Mr Geering in relation to the divestment issue. In my view that was a plain concession that nothing could be rationally said in respect of those submissions. Additional submissions by NGI 1. The new legal team for NGI, like the old, submitted that the agreement Ms Gai purporting to terminate was not the Short Form Deed. Unlike the old team, the new team had a new theory. 2. The new team accepts that an available inference from the surrounding context was that Ms Gai was purporting to terminate the Short Form Deed. But NGI submits there is other material to which it is suggested the Court was not taken. 3. NGI says in April to May 2014 there were ongoing discussions between GDI and NGI as to the future development of the land, the management of the development, and engagement of an architect and other consultants. NGI refers to a miscellany of emails of 29 and 30 April 2014 and 1 May 2014 where diverse matters, on one view, were discussed. 4. NGI submits that GDI's (ie. Ms Lin's) response that there was no contractual agreement is critical because as the Short Form Deed was an existing contractual relationship Ms Lin must, therefore, have been referring to something else. 5. The new NGI team submits that this something else was the informal and unidentified arrangement between the parties by which steps had been and were to be taken in connection with the development. 6. The new team says Ms Gai was struggling, in effect, in her evidence to articulate an "agreement of sorts" which was yet to be consummated. She was seeking to put to an end this arrangement, not the Short Form Deed. 7. Lastly, the new team says it is not really conceivable that NGI would have terminated the Short Form Deed without immediately seeking the return of the $6 million. Therefore, it was the "loose arrangement" with respect to the development and its funding that was brought to an end by Ms Gai's email of 23 May 2014. 8. There are, of course, many answers to this. In any event, I am unable to agree with the new team's theory. It is, I consider, as farfetched and speculative as the old team's submission. 9. Having heard Ms Gai give evidence and having, more than once, carefully considered her email of 23 May 2014, I cannot accept she was purporting to terminate some loose or informal arrangement. The likelihood is that by 23 May 2014, NGI had had enough of GDI and vice versa. Neither side thought nor wanted any longer to be bound by any existing contractual arrangements, and in my view Ms Gai was unequivocally terminating the Short Form Deed. The mere fact she did not specifically address the $6 million is, in my view, not to the point. 10. As is pointed out by GDI, Ms Gai, who claimed sole authorship of the 23 May 2014 email, did not refer to any informal or loose arrangement but "the Agreement", and the only agreement, Ms Gai and Mr Geering both accepted, that existed at that time was the Short Form Deed. The other consideration is that, well and truly by 23 May 2014, Mr Fong was on the scene and GDI had long since ceased communicating with Mr Geering or Ms Gai about engineers, consultants and the like. 11. The terms and tone of the email of 23 May 2014 do not suggest termination or, more accurately, the discontinuation of some loose arrangement. 12. Of the emails referred to in the new team's submissions, it is submitted that some are not in evidence. That said, they are weeks before 23 May 2014. I have to say I fail to see the relevance of them. Of much greater relevance is what Ms Gai, and for that matter Mr Geering, did after 23 May 2014, and what is simply not addressed by the new team is Ms Gai's reference to the Property Fund divesting itself of the interest in the development and Mr Geering's email to Caverstock of the same date to the same effect. 13. In addition, Ms Lin's email that there was no contractual relationship is, I consider, as GDI points out, totally consistent with Ms Lin's belief that the Short Form Deed did not apply to the New Contracts. 14. Lastly, as GDI submits, I consider correctly, the explanation for NGI not immediately seeking the return of the $6 million is that those funds had been contributed by investors whose investments were to be transferred to GDI, or a property fund associated with it, so they could remain involved in the development. There were never any monies of Ms Gai or Mr Geering in the project to be refunded. Rescission of the Short Form Deed due to Geering's conflict 1. GDI puts an alternative case that if there has been no abandonment or abrogation and the Short Form Deed remains on foot the Short Form Deed is liable to be rescinded on the basis that NGI entered into it with knowledge of Mr Geering's breaches of his fiduciary obligation to GDI. This topic clearly gives rise to a consideration of the extent of Mr Geering's retainer, fiduciary obligations, and alleged breaches thereof. To some extent these matters have been covered. 2. However, GDI submits that there is no doubt that Mr Geering acted as the solicitor for both GDI and NGI in relation to the preparation of the Short Form Deed. They point out that in his oral evidence Mr Geering accepted that he drafted the Deed on behalf of both parties, and that the language of the Deed was largely if not entirely his. He also admitted to documenting the Short Form Deed on behalf of both parties in his defence to GDI's cross-claim. 3. GDI also submits that, in any event, Mr Geering's retainer with each of GDI and NGI extended to advising them on the Short Form Deed as well as documenting it. Mr Geering certainly accepted that he had been acting generally for GDI and NGI, including advising them on the proposed joint venture in relation to the Turramurra project prior to the preparation of the Short Form Deed. GDI points out that while Mr Geering sought to say that his retainer to act for GDI in relation to the proposed joint venture was varied, his evidence in that respect was inconsistent, should it be believed, and I accept that proposition. 4. GDI further submits that given Mr Geering acted for both GDI and NGI in preparing the Deed there was an obvious conflict between his duties to GDI and his duties to NGI, as well as a conflict between Mr Geering's duties to GDI and his own personal interest. Mr Geering accepted this himself. He said that he did not see a conflict at the time (I have serious misgivings about the truthfulness of that answer) but he could see the conflict "now". When asked questions about the conflict between his personal interests and his duties to GDI his answer, rather glibly, was that his clients were aware of that. But he had to accept that he never said to anyone at GDI that his advice to GDI might be adversely affected by his acting for NGI or his personal interest in NGI (T500/10-24). 5. In addition, GDI submits that it and NGI had different interests in relation to the Short Form Deed. It contends that it was in GDI's interest that the time for performance of NGI's obligation to secure funding for the purchase price under the Old Contracts and the C21 Deed be fixed, and it was in NGI's interest that it not be. It is further contended by GDI that GDI and NGI's interests had diverged. Again, they refer to Mr Geering's acceptance that had he been acting for GDI alone (rather than GDI and NGI) it would have been obvious to him to advise GDI that it needed certainty as to the time of NGI's funding obligation and that it would be at risk if the time was not the date for the completion of the Old Contracts. In addition, it would have been obvious that clauses would need to be inserted in the Short Form Deed which gave GDI a clear right to terminate the Deed and which made NGI liable to pay damages to it if NGI did not secure the required funding within the time for performance of its obligations. 6. Mr Geering, of course, alleges that GDI gave its express or implied consent to him also acting for NGI in relation to the documentation of the Short Form Deed. What Mr Geering has to show if he can, of course, is informed consent. That in turn means consent given in the knowledge that there is a conflict between the parties' respective interests. Mr Geering never expressly confronted that issue as he should and so any suggestion, I consider, of fully informed consent is fanciful. 7. I should at this point digress. Mr Geering contends for certain findings. In many instances they are contradicted by GDI. Those differences and my findings have already emerged. 8. However, in this context Mr Geering expressly attacks Ms Lin's credit. I have already expressed some scepticism about her ability without contemporaneous notes to recreate some of the detail that she purports to do in her affidavit. But that is and was a somewhat preliminary observation. Each item where conflict arises needs to be looked at. The submission in relation to Ms Lin was, as far as I understand it, that she had in fact given informed consent to Mr Geering acting for GDI and NGI in all relevant respects. 9. But in particular, Mr Geering submits that Ms Lin overstated her so-called limited comprehension of English in order to assist her case in some way. I do not accept that submission. It is clear from my observation of Ms Lin in the witness box and, in a number of respects, her emails and texts, that she is not fluent in English. Mr Geering further submitted that Ms Lin sought to downplay her knowledge of law and business. However, she is not legally qualified. She did do a course for the purposes of becoming a registered conveyancer and for that purpose she clearly had to have some familiarity with the notion of conflict of interest. Mr Geering, on the other hand, is a fully qualified lawyer of some experience, particularly in property and commercial matters. I do not regard the criticism of Ms Lin at this level as fair or, frankly, realistic. 10. Mr Geering also submits that in her affidavit evidence Ms Lin deliberately attempted to distance herself from the activities of NGI. I do not see that as a valid criticism. It is plain and obvious these once friends and colleagues have had an acrimonious falling out over money. Both sides as I have observed them have embellished and occasionally over embellished their positions. 11. In particular, Mr Geering criticises Ms Lin on the basis that she tried to distance herself from what might be described as unhelpful emails. I am satisfied that for a time, in my view, she may well have had confidential discussions with Mr Fong or Mr Darmali about Mr Fong's possible involvement. However, she was entirely transparent about Mr Fong's commitment and interest in the project from at least 9 April 2014. Her text message to the effect that Mr Fong was committed to take over the development is clear, unequivocal, and betrays earlier discussion which must have taken place between Mr Geering and Ms Lin on the topic. 12. Mr Geering makes a number of submissions to the effect that Ms Lin gave false evidence and otherwise lied in various respects. I am simply not able to accept that submission. She was pursuing a strategy unequivocally but, then again, so was Mr Geering. In a sense they were both trying to out manoeuvre each other. Ms Lin had made it very clear from early in 2014, hence the recital in the Short Form Deed, that she was concerned about the commercial risk that might flow to GDI if it was involved in the development. That position did not change. But one thing that is clear in my mind is that Mr Geering was in a position of conflict as outlined, from time to time wittingly or unwittingly, and although in many respects sophisticated I am satisfied Ms Lin never gave her informed consent. 13. Mr Geering submits that the evidence available does not make out the allegation that he had a general retainer with GDI including a retainer to advise in respect of the Turramurra development. I reject that submission. It is plain that a solicitor may well be obliged to advise a client even in circumstances where the client makes no explicit request to that effect. But here Mr Geering proffered a form of the Deed and, in doing so, in my opinion, implicitly represented to GDI and NGI that it was appropriate for their particular circumstances. Neither Ms Gai, nor Ms Lin, were capable of drafting such a document, and it was incumbent upon Mr Geering and, in my view, part of his retainers, to explain the terms of that document, especially if, as here, it might impact differently on each client. 14. Although his initial costs agreement on one view may be construed as limited to the conveyance so far as GDI was concerned, it became apparent prior to or at least at the time when he was called upon to draft the Short Form Deed that not only were NGI and GDI's interests diverging, but that it was no longer a simple case of sale and purchase. For example, at the time he prepared the draft Heads of Agreement I am satisfied Mr Geering was retained to act for both GDI and NGI in relation to the proposed joint venture generally. So far as the evidence goes there is nothing in my mind which suggests that position changed. 15. There is no reason why I should not accept Mr Geering's concession that not only did he owe a duty to GDI, but that he breached that duty by failing to give it certain advice as alleged. 16. GDI puts it bluntly that Mr Geering's conflicts between his duties to GDI and NGI and his personal interest had the effect of imposing significant restrictions upon him. That potential was never disclosed, it is submitted, to GDI. Ms Lin gave evidence, which I accept, that she trusted Mr Geering and believed that as GDI's lawyer he would not prefer the interests of NGI over those of GDI. Mr Geering was clear in his evidence that he had never told GDI that his capacity to advise it might be adversely affected by his acting for NGI or his own personal interest in NGI. 17. As is clear from what I have already said, Mr Geering disputes the extent of the retainer alleged by GDI. He contends that he had a retainer concerning the conveyance but no retainer to advise GDI generally in relation to the Short Form Deed or as to GDI's rights in respect of it. It is contended by Mr Geering that he understood that his retainer in respect of the Short Form Deed was a joint retainer from GDI and NGI to document their agreement in accordance with their joint instructions. He said he did not consider that it was part of his role to advise either independently. He accepts he was jointly retained on the drafting of the Heads of Agreement. 18. Mr Geering invites me to find that there is not any proof of any retainer to advise GDI concerning the Short Form Deed generally. 19. I have to say I find those submissions untenable and more than a little out of touch with reality. Not once does Mr Geering in his submissions on the retainer make any reference to his own personal interests and the possible conflicts with GDI. In a somewhat cavalier manner he seeks to brush aside any admissions made by him as to what may have occurred to him as appropriate or what he would have done had he been acting for GDI alone and hence independently. 20. Mr Geering was clearly in a muddled position. On any view of his evidence he did not think through the matter carefully. He refrained from giving independent advice to GDI and I accept he was in no position to do so because he was so conflicted. Leaving his own personal interest to one side, in proposing the terminology of the Short Form Deed he was in substance giving advice that the terms and conditions drafted by him were appropriate for each of the parties, that is GDI and NGI. As was pointed out in cross examination there are a number of obvious points at which conflicts could and indeed did arise. For him to give a rather glib response that the parties wanted to save money, as, in part, an excuse, was really not exculpatory, in my view, at all. 21. Mr Geering accepts that if there was a duty to advise GDI generally or, if I may say so, in respect of the Short Form Deed, he did not provide that advice and therefore his breach of duty is not disputed so far as that failure to advise is concerned. 22. Mr Geering accepts, however, that he should have advised GDI that it was in their interest to seek to include in the Short Form Deed a clause which required NGI to obtain its required funding by the date for completion under the Old Contracts, and in addition a clause which gave it a right to terminate the Deed and claim damages if funding was not obtained by that time. 23. Mr Geering denies, of course, any obligation to advise GDI as to whether it could terminate the Deed in the period leading up to 23 April 2014. He says GDI did not tell him that it wanted to terminate the Deed nor did it seek advice about that. 24. He says in any event that any failure to advise on that matter goes nowhere because GDI had no right to terminate the Short Form Deed and could not have done so irrespective of what advice was given. 25. Contrary to that submission, Mr Geering accepted in his evidence that he breached his duty to GDI in failing to advise it at or around the time of the 11 April and 17 April 2014 meetings as to its rights to terminate or rescind the Short Form Deed. Mr Geering refused to make the same concession in relation to the 22 April 2014 meeting because he claimed then that he thought the joint venture between GDI and NGI was proceeding and that their interests no longer diverged. I do not accept that evidence. He was clearly put on notice by at least 22 April 2014 that things were not proceeding smoothly. His attitude in response is better described as cavalier rather than as a genuine belief that the parties were in harmony. 26. I regard that response, again, as rather glib. The whole problem for Mr Geering is that he clearly regarded Ms Lin as a professional colleague and friend. Ms Gai was much more. She was his partner and ultimately became his wife. He was personally involved in NGI commercially through GSVC and it is plain that from the very moment the Short Form Deed was contrived he must have perceived that he was in some difficulty in keeping relations between the respective interests at a professional level. That position plainly and obviously and, if I may say so, predictably soured in the very short time between February and May 2014. 27. In relation to his role as a fiduciary, Mr Geering accepts that he was (albeit, he says, unknowingly) in breach of his fiduciary obligations to GDI by acting for it in respect of the preparation of the Short Form Deed in circumstances where he was also acting for NGI on the same transaction. He accepts there were potential conflicts between GDI and NGI in respect of the preparation of the document and that their interests differed or may have differed in that respect. 28. Mr Geering also accepts that he should have realised he should not have been acting for both parties for the preparation of the Short Form Deed up until the entry into the New Contracts on 23 April 2014. Mr Geering contends that at the relevant time he did not appreciate that there was a conflict and believed the commonality of interest between GDI and NGI and the joint instructions that he received meant that he was able to accept instructions from those entities. If I may say so, at the time that was breathtakingly naïve of him if I believe him, and I have reservations about the truthfulness of his evidence. In any event, Mr Geering now recognises and accepts that he should have obtained GDI's express consent to this position after advising GDI as to the possible conflict and differences of interest between it and NGI. 29. Finally, GDI submits that NGI's knowledge of Mr Geering's breach of fiduciary duty cannot be controversial. Mr Geering's knowledge of course as agent is appropriately attributable to NGI. 30. Mr Geering raises, however, quite correctly, the question of the appropriate remedies. 31. On the question of whether Mr Geering's breach of his fiduciary obligations gives GDI a right to rescind the Deed, I think it is best to describe Mr Geering's response as somewhat torturous. He submits that the claim is misconceived because NGI was not in breach of a fiduciary obligation even if it appreciated Mr Geering's alleged conflict. He points out that he, let alone NGI, did not appreciate the difficulty at the time. In my view that is not a response of any substance. 32. Mr Geering submits that GDI should not be entitled to the relief it seeks against NGI for rescission of the Short Form Deed. This is academic as I have found in any event that it was abandoned. 33. However, I agree with GDI that it is not entirely clear why Mr Geering has made any submissions at all in this respect given he is not party to the Short Form Deed. Presumably, as GDI points out, it is because of Mr Geering's personal interest in having the New Contract novated to NGI. To that extent, in my view, he has no legitimate forensic interest and he is simply meddling. 34. Mr Geering submits that restitution is not possible because NGI will need to be compensated for time and funds spent in procuring finance. I regard this as absurd. Restitution is plainly possible. Even if NGI did need to be compensated in that respect, that could presumably be accommodated by a calculation. However, NGI has advanced no claim for damages against GDI or anyone else on that basis. Further, as GDI points out, there is no evidence of any substantial cost incurred by NGI in procuring finance for the Turramurra development. 35. Insofar as Mr Geering submits that he had to be aware of his breach of his fiduciary obligation, clearly that is incorrect as a matter of law. Frequently, incompetent solicitors in flagrant breach of their fiduciary obligations have not the faintest idea that they are breaching them. 36. Insofar as it may be suggested that GDI was in breach of its obligations under the Short Form Deed by reason of its dealings with Mr Fong, I do not regard that as having any substance. As I have said, by 9 April 2014 at the latest and highly likely much earlier Mr Geering was well aware of Mr Fong. Indeed, I am satisfied he was aware of the commercial imperatives which required him and NGI to remain flexible in the event that something went wrong, notwithstanding Ms Gai's confidence to the contrary. 37. It seems to me that Mr Geering was in clear breach of his fiduciary obligations, in particular in relation to the advice which he gave, at least implicitly, in relation to the Short Form Deed and its appropriateness for GDI. 38. NGI makes no submissions in relation to this aspect of the case. 39. Accordingly, in my view, GDI would otherwise have been entitled to rescission of the Short Form Deed had it not been abandoned. Rescission by reason of NGI's misleading and deceptive conduct and damages 1. Had it remained on foot, GDI submitted that the Short Form Deed was liable to be rescinded pursuant to s 237(2) of the ACL and that NGI is liable under s 236 of the ACL to pay damages. 2. The liability of NGI is said to arise because it induced GDI to enter the Short Form Deed by misleading conduct on the part of NGI. 3. NGI's misleading conduct is said to be comprised of Ms Gai representing to Ms Lin at a meeting between the two of them and Mr Geering in or around the middle of February 2014, prior to the entry into the Short Form Deed, that NGI had a capacity to complete the purchase of the Turramurra Properties and to develop the project with a loan of $5.5 million from GDI or GSC. 4. There is no contest that such a representation was made (Lin 1 [66]; Gai 1 [24], T280.3-21, T487.30-32). 5. Ms Gai, in my view, by making such a representation, was indicating NGI would have the funds required to purchase the Turramurra Properties by the date for completion of the Old Contracts, or at least by any new completion date fixed as a result of the service of notices to complete. This must of necessity have carried with it a representation that NGI had the capacity to complete the purchase pursuant to the Old Contracts. 6. I am satisfied that Ms Gai represented NGI would have the capacity to complete the purchase by the end of February or early March. In that regard, I accept Ms Lin's evidence to that affect. I also accept she reasonably relied upon such a representation. 7. The representation was, of course, made with regard to a future matter for the purposes of s 4(1) of the ACL. That matter was that NGI would be able to complete the purchases in accordance with the Old Contracts. Unless NGI had reasonable grounds for making such a representation it is to be taken to have been misleading. NGI is therefore obliged to assert positively that it had such reasonable grounds, otherwise the issue will be determined against it. 8. To complete the purchase with a loan of up to $5.5 million from GDI or GSC, NGI needed $10.5 million of its own. There is simply no evidence that, at the time Ms Gai made the relevant representation, there was any realistic likelihood of achieving that outcome. The evidence on this topic is, in reality, non-existent. 9. It seems to me that pursuant to s 4(2) of the ACL, Ms Gai's representation should be taken to be misleading. 10. The reality is that NGI at the time of Ms Gai's representation had not made any application for a loan from any lender. The Eclipse loan only became available after 22 April 2014. NGI could not at the relevant time have reasonably believed it would or could raise $10.5 million from investors. 11. As I have already said, I accept Ms Lin's evidence that Ms Gai's representation induced Ms Lin to have GDI enter the Short Form Deed. As I have repeatedly said, I do not regard Ms Lin as anything other than risk averse, especially having decided by February 2014, not to be involved in the development of the project. Had it remained on foot, in my view, GDI would have been entitled to have the Short Form Deed rescinded by reason of NGI's misleading conduct. 12. I am therefore satisfied GDI suffered loss as a result of being enticed to enter the Short Form Deed. It is appropriate to deal now with GDI's claim in damages against NGI. Damages 1. GDI's claim against NGI on this aspect of the case is that in the absence of the Short Form Deed, one of two things might have occurred. GDI submits that either it would be have novated the Old Contracts to a joint venture vehicle (like MVGDD) which would have completed the contracts on or around 22 April 2014. Alternatively, it would have entered into the contracts and secured an arrangement for an extended settlement, novating the contracts to the likes of MVGDD and completing on 22 July 2014. I will deal with each of the scenarios in turn. 2. There is, of course, a dispute as to when Mr Fong was first on the scene and when Mr Geering and Ms Gai first knew about him. 3. GDI submits Mr Fong was around from about 12 March 2014. There is no doubt GDI and NGI were making efforts to secure funding. By 22 March moves were underway to assist Mr Fong in a due diligence exercise. 4. However, by 8 April 2014 Ms Lin was contemplating the possibility of a staged settlement to gain time to explore other opportunities. By 9 April 2014 Ms Lin informed Mr Geering that an offer had been received from Mr Fong and that he was committed to taking over the deal. The terms of that offer were, of course, contained in Mr Darmali's email of 10 April 2014. A draft agreement was obviously in existence. 5. True it is that all parties were distracted in arranging an extension of the settlement date and/or funding. However, at 17 April 2014 there was certainly no finality in any proposed arrangements with Mr Fong. The respective parties were seeking various assurances from each other and other important detail was still being discussed. 6. By 2 May 2014 there was still no agreement with Mr Fong and he was being quite protective of the results of his feasibility study. Finally, at 5.15pm on 2 May 2014 Mr Fong was willing to sign to "purchase" the site. He, however, made it clear that there were conditions to be attached to the purchase. By late May, however, Mr Fong and others had reached an in-principle agreement. 7. Mr Fong was not called to give evidence. I am simply not satisfied, especially having not heard from him, that he would have moved any sooner to come to a satisfactory arrangement. He is, I am prepared to infer, an experienced developer who had undoubted access to considerable resources. However, I do not consider Ms Lin or anyone else would have been able to hurry Mr Fong into making up his mind. He would clearly, and unsurprisingly, want to get the best deal, and I am not satisfied he would have necessarily reached agreement so as to enable settlement of the purchase on 22 April 2014. 8. I am not satisfied the negotiations with Mr Fong were sufficiently advanced so as to permit GDI to complete the contracts by 22 April 2014 with him as a joint venture partner. 9. Although there is evidence that GDI had capacity, on one view, to complete on the basis of its own monies on 22 April 2014, I am not satisfied it would have done so. I consider Ms Lin would, however, have likely sought and obtained an extension of time for completion. Although GDI may have advanced some of its own funds to achieve that, I consider it would not have wanted to acquire the Properties in its own right. It would have waited until Mr Fong had agreed terms so as to have him as a joint venturer with GDI and to have him acquire the Properties on or before 22 July 2014, which on the evidence I consider was the most realistic time frame. 10. I am therefore satisfied on the evidence that GDI would, in all likelihood, have obtained an extension from the Vendors for completion in July. I am also satisfied it would have been able to do the same or a substantially similar deal as was otherwise negotiated with Mr Yahl. It would, I am satisfied, have then novated the contracts to MVGDD. 11. In that regard, GDI, in my view, is therefore entitled to damages, calculated in their Schedule (page 2, "alternative damages claimed against NGI") and in the manner outlined. Apart from the costs of the proceedings, I agree reference out will be necessary for some items. 12. In addition, GDI claims damages under s 74P of the RPA. These caveats, of course, prevented completion of the New Contracts as novated to MVGDD on 22 July 2014. Those losses, as I understand GDI's submission, would be identical as the alternative damages claim referred to above. In any event, they are entitled to these damages. NGI's Cross-claim NGI's cross-claim against both GDI and Ms Lin As against GDI 1. NGI's claims against GDI fall into two main categories. First, there are those claims by which NGI sought to ensure that the New Contracts were novated to it. The claims in this category were those for specific performance of the alleged agreements between NGI and GDI and the claim that the Vendors and GDI were estopped from novating the New Contracts to any person other than NGI. For obvious reasons none of these any longer has relevance. I have already determined that the Short Form Deed had ceased to have effect and GDI was entitled in any event to rescind it. 2. NGI's primary claim for specific performance was based on the Short Form Deed, with which I have dealt. 3. It did however plead the existence of a second and third agreement. Although now also academic I should express some views in the event there are costs consequences. 4. The second agreement was said to be a partly express, partly implied agreement made orally and in writing between NGI and GDI between mid-March and 22 April 2014. In essence, it was alleged that GDI would negotiate with the Vendors for an extension of time to complete the Old Contracts and that NGI would then be substituted as the new purchaser under those contracts at a later date pursuant to the Short Form Deed. In my view and on my findings there was simply insufficient evidence to make out this agreement. Ms Gai and Mr Geering were certainly unaware of such an agreement. 5. So far as the third agreement is concerned, it was alleged to be both express and implied and to have been made orally on 17 April 2014 between NGI, GDI and the Vendors. The essence of that agreement was that the purchase price would be increased by $200,000 and $5 million would be paid by NGI to the Vendors. In consideration for this the New Contracts would be novated to NGI as contemplated by the Short Form Deed and the $6 million advanced by NGI and any other amounts advanced by GDI would be released to the Vendors. The problem with this alleged agreement is that it suffered from the same evidentiary insufficiency. I am not satisfied there was ever such an agreement. 6. The second category of claims are those concerned with the recovery of the $6 million which NGI paid to the Vendors as part payment of the purchase price under the New Contracts. Claims in this category are for breach of constructive trust, misleading or deceptive conduct, and unconscionable conduct. Estoppel 1. NGI alleges that GDI is estopped from novating the New Contracts to a party other than NGI, and/or denying NGI's interest in the Turramurra Properties. Again, these submissions are academic, but again, because of possible costs consequences, I will make some comments about these claims. 2. The alleged estoppel is based upon NGI's allegation that it acted in reliance on what are termed the "February and April 2014 representations" and what are said to be the first, second and third agreements in advancing the sum of $6 million to the Vendors. 3. The "February representations" are alleged to have been made by GDI when entering in the Short Form Deed. The substance of the representations is said to be that upon demand, NGI would be substituted as the new purchaser under the Old Contracts. 4. The "April representations" are alleged to be to the same effect as the alleged third agreement, which is said to have been made orally and in writing on 17 April 2014 between NGI, GDI and the Vendors. The substance of the representations is said to be that the purchase price of the Properties would be increased by $200,000 and an amount of $6 million would be paid by NGI to the Vendors. In consideration for this, the New Contracts would be novated to NGI as contemplated in the Short Form Deed and the $6 million advanced by NGI and other amounts advanced by GDI would be released to the Vendors. 5. GDI submits that the NGI estoppel claim should be rejected. First, it submits that with the exception of the Short Form Deed the representations and agreements on which NGI is said to have relied were never made. In short, it is submitted that the representations do not emerge from the words of the Deed and, as far as the second and third agreements are concerned, GDI submits that the evidence does not establish that they were ever made. This has consequences which GDI submits are fatal so far as the alleged April representations are concerned as well. 6. The difficulty, as has already been adverted to, in relation to the allegation as to the existence of a second and/or third agreement is that from Ms Gai and Mr Geering's perspective, as far as their evidence goes, the Short Form Deed was the only agreement ever made between GDI and NGI. 7. There is one further difficulty which emerged in the running of the trial. Ms Lin was simply not cross examined at all as to the alleged conversations that had occurred. It is, I consider, reasonable to conclude this was a deliberate forensic choice. In the circumstances I would infer that NGI in effect abandoned such allegations or had no faith in them. 8. Next, GDI submits that the Short Form Deed itself could not on any view support the claim for estoppel because the Deed had been terminated or GDI was entitled to have it rescinded. I agree. 9. In addition, GDI submits with considerable force that NGI has not established that it relied to its detriment on any of the alleged February or April representations or the Short Form Deed, or the alleged second or third agreements. GDI submits, correctly in my view, that even if the alleged representations and agreements were made, there could be no detriment because the $6 million NGI paid over has at all times in effect been secured by contractual charge in favour of GDI over the Properties and which on rescission of the New Contracts GDI is obliged to transfer to NGI. 10. In any event, GDI opposes the estoppel claim on the basis that NGI has unclean hands, in the sense that it engaged in misleading conduct which induced GDI to enter into the Short Form Deed and, it contends, had knowledge of Mr Geering's breach of his fiduciary duty to GDI. 11. GDI submits that this is a case where it would have been necessary to mould a remedy to reflect the minimum relief necessary to do justice between the parties. GDI submits that here the minimum relief would have been for GDI to transfer the $6 million to NGI on the rescission of the New Contracts when they were novated to MVGDD. GDI accepts it was always bound to do this. In doing so NGI, it is submitted, would have been restored to the position it was in before it paid the $6 million to the Vendors, allegedly in reliance on the February and April representations or the Short Form Deed or the second and third agreements. GDI submits that in all the circumstances that would have been the appropriate remedy. However, because of the circumstances in which the caveats were removed I ordered that when settlement occurred the $6 million be paid into court. Breach of fiduciary duty 1. NGI alleged that GDI breached its fiduciary duty to NGI. NGI alleged that that fiduciary duty is owed on the basis that GDI holds $6 million on trust for NGI. 2. NGI, of course, alleges GDI breached its duty by dealing with the property other than in NGI's best interests, making use of it improperly to gain an advantage for itself and MVGDD or any other party, and simply acting contrary to and to the detriment of NGI's interests. 3. As GDI points out, the particulars to this aspect of NGI's cross-claim limit the conduct to the making of the Short Form Deed, the alleged second and third agreements and the alleged February and April representations. 4. GDI submits that NGI's breach of fiduciary claim should be dismissed for a number of reasons. 5. First, GDI submits that NGI has not proved the existence of an express trust. GDI submits that the allegation appears to be based on an email from Mr Cai to Mr Geering on 3 May 2014 indicating in terms that GDI held $6 million on trust for NGI. GDI submits that it was never the beneficial owner or even the recipient of the $6 million, which NGI paid directly to the Vendors' agent. GDI made no admission or declaration of an express trust. The evidence, GDI submits, could not amount to an admission. 6. In addition, GDI submits that even if it owed NGI a fiduciary duty of the kind asserted, various matters pleaded are not capable of amounting to a breach of such a duty. The reason simply put is that all of the conduct alleged in the cross-claim occurred significantly before NGI paid $6 million to the Vendors and so significantly before GDI's alleged fiduciary duty could have existed. I agree with that observation. 7. In any event, GDI submits that the breach goes nowhere because it is not said that the breach has caused NGI any loss. Nor is it alleged that GDI profited from the alleged breach of duty, for which profits it might be liable to account. Lastly, GDI again relies upon the unclean hands of NGI as a discretionary reason for refusing any relief. The unclean hands is the same conduct to which I have previously referred. 8. I am not satisfied GDI had any fiduciary obligation to NGI. Nor am I satisfied GDI was in breach of such a duty, even if it existed. Breaches of the Corporations Act by Ms Lin as alleged by NGI 1. NGI submits that from 29 April 2013 to 22 April 2014 Ms Lin was a de facto or shadow director of NGI, in that the directors of NGI were accustomed to act in accordance with her instructions or wishes, on the basis that Ms Zhu was Ms Lin's nominee director of NGI. It is submitted that NGI and its directors acted in accordance with the instructions and wishes of Ms Lin. She signed off on NGI's bank accounts. She advanced negotiations, assisted and undertook steps to secure the $6 million finance facility with Eclipse, and undertook further actions or negotiations which were necessarily relied upon by NGI. 2. As a de facto or shadow director of NGI, NGI submits that Ms Lin owed duties contained in ss 180, 181 and 182 of the Corporations Act. 3. NGI submits that she breached her duties as a shadow director by causing or inducing NGI to pay $6 million on terms which do not "completely" establish or secure the interests of NGI and in circumstances where the payment was made with the object of enabling MVGDD to acquire the Turramurra Properties and where the payment was not in NGI's best interests. 4. Further, it is contended by NGI that Ms Lin breached her duties as a shadow director pursuant to s 182 of the Corporations Act by causing or inducing NGI to pay $6 million and so using her position to gain advantage for herself, MVGDD or GDI, or to cause detriment to NGI. 5. It is contended further by NGI that the alleged breaches caused damage within the meaning of s 1317H of the Corporations Act. 6. NGI submits the claim against Ms Lin should succeed for a number of reasons which point to her giving NGI instructions and are supportive of the proposition that NGI was accustomed to act in accordance with her instructions in relation to the Turramurra Properties transaction. 7. NGI contends that on 22 December 2013 Ms Lin wrote a substantial email to Ms Gai and Mr Geering in relation to strategy and what needed to be done in terms of finance and marketing. It is true that she did, in fact, write a detailed email on strategy. However, her opening line is to this effect: From my meeting with CBRE on site and Frank the Project manager referred by Stanley on Saturday. Here is my understanding of the Project GD and Gs's position. 1. It is clear that she may have been addressing other positions but she certainly was directing her attention, it does seem to me, to GDI. This evidence hardly qualifies as her doing anything more than stating some obvious matters. 2. NGI submits that in January 2014 Ms Lin was involved in drafting and marketing the information memorandum to attract investors to NGI's Property Fund. That may well be so but, again, I do not consider it goes very far. 3. On 24 March 2014 Ms Lin gave instructions to a Mr Richardson, a mortgage broker, in relation to NGI procuring finance. Of course, the Short Form Deed, which was executed by the parties on 24 February 2014, obliged all parties (including GDI) to use best endeavours to assist NGI to obtain funding (cl 2.8). Again nothing, in my view, turns on that piece of evidence. 4. NGI submits that Ms Lin through her husband procured pre-sales for the units on the Turramurra Properties, which noted NGI as the vendor. Again, her husband's role in assisting to procure pre-sales would fall comfortably within cl 2.8. 5. It is submitted by NGI that notwithstanding "the above", meaning the examples to which I have just referred, Ms Lin gave evidence that her mother was her nominee. NGI submits by implication this can only accord with the view that Ms Lin wanted her interest recognised and that she influenced NGI's board to the extent that she thought fit. I do not understand this submission. Reference is made to an email of 12 March 2014. A portion of it is quoted in the submissions. Again, I do not see any force in the argument. A nominee director may act with the interests of their appointer in mind, provided that they do so in the genuine belief that they are also acting consistently with the interests of the company as a whole: Re Broadcasting Station 2GB Pty Ltd [1964-5] NSWR 1648 at 1662-3. 6. In particular, NGI submits that Ms Lin breached her respective statutory duties in a number of ways. First that she was acting contrary to the interests of NGI when she began negotiating with MVGDD about the possibility of a joint venture. I do not regard that as tenable. At the stage she was negotiating with MVGDD she informed Mr Geering and Ms Gai about Mr Fong's existence, and was recommending him as indeed in the best interests of all concerned, including NGI. 7. NGI submits that it having advanced $6 million, Ms Lin, with that knowledge, knowingly assisted MVGDD to acquire the Turramurra Properties through a joint venture without the knowledge of NGI. I neither accept nor indeed understand that submission either. 8. NGI submits that Ms Lin instructed her mother to resign as a director on 22 April 2014. That resignation was not accepted until put in writing on 23 April 2014, by which time NGI had advanced the funds. I have already dealt with the dispute as to when Ms Lin told Mr Geering and/or Ms Gai about the resignation of her mother at [23]. 9. NGI further asserts that Ms Lin's only concern was protecting GDI's deposit and minimising GDI's exposure to the project. I do not accept that, but she did so it seems to me, in any event, with the knowledge of Mr Geering and Ms Gai. It is further submitted that Ms Lin failed to exercise due care and diligence by preferring a third party, namely MVGDD, over NGI. Again, I do not accept that. There is simply no evidence of that. 10. NGI submits that up until 23 April 2014 Ms Lin remained silent about the proposed joint venture agreement GDI had or was proposing to have with Mr Fong, which was contrary to the interests of NGI. For reasons I have explained above, I do not accept these propositions. 11. NGI submits that Ms Lin gained an advantage for GDI contrary to the interests of NGI because GDI gained the benefit of the $6 million without seeking to properly account for NGI's monies. Further, it is submitted that GDI gained an advantage of extending the date for completion, which enabled it to have more time to finalise or undertake negotiations with Mr Fong. This submission rather misses the point. NGI was in no position to settle and itself needed more time. Mr Geering was pushing for terms and conditions which not only was Ms Lin unhappy about, but which had the effect of providing NGI with a further opportunity to raise finance. 12. NGI submits that the strategy adopted by Ms Lin was to allow Mr Fong more time to acquire the balance of finance he required for the project. Further, at no time prior to 22 April 2014 as "a director of NGI" did Ms Lin inform Ms Gai or Mr Geering that she no longer regarded the Short Form Deed as being enforceable. In addition, NGI submits that Ms Lin did not discharge her duties towards NGI in good faith and for a proper purpose. It is said she continued to negotiate with Mr Fong notwithstanding she was aware that NGI had received conditional approval from Eclipse for a loan of some $6 million in circumstances where, it is contended, Ms Lin knew it would put NGI in a position where it had the funds to complete the project. 13. One further difficulty arises in relation to a number of the allegations put in support of the alleged breaches of the Corporations Act. Many of these matters were simply not put to Ms Lin in cross examination and ample opportunity was provided for that to occur. In these circumstances I can attach little weight to them. 14. GDI submits that for various reasons the claim against Ms Lin for breach of the statutory duties as a de facto or shadow director should be rejected. 15. First, GDI submits the evidence does not establish that Ms Lin was a de facto or shadow director of NGI as alleged. The basis upon which Ms Lin is alleged to have been a de facto or shadow director is that the directors of NGI were accustomed to act in accordance with her instructions or wishes. The point is made by GDI that at the time the directors of NGI were Ms Gai and Ms Zhu. Accordingly, it is contended it must be shown that both Ms Gai and Ms Zhu were accustomed to act in accordance with Ms Lin's instructions or wishes. GDI accepts that the evidence does establish that Ms Zhu was accustomed so to act but submits, I think correctly, that there is no evidence whatsoever to the effect that Ms Gai did so. Indeed, my own observation of Ms Gai is that she was quite independent and indeed headstrong. If anything, I consider it likely that she acted on Mr Geering's suggestions. 16. Secondly, GDI submits that the evidence does not establish that Ms Lin caused or induced NGI to pay $6 million. GDI makes the point that the payment was made on 23 April 2014. By that time, Ms Lin had told Ms Gai and Mr Geering that she would relinquish her shareholding in GSVC (NGI's parent) and that her mother would resign as a director of NGI and GSVC. Indeed, Ms Lin handed her mother's letter of resignation to Ms Gai on 23 April 2014. In addition GDI submits that Ms Lin did not give Ms Gai or Mr Geering any assurance that GDI would novate the New Contracts to NGI if it paid $6 million towards the Turramurra Properties. GDI submits, again I believe correctly, that NGI advanced that amount in order to preserve the possibility of participating in the Turramurra project, and without any assurance as to novation. GDI submits, again I think correctly, that all parties understood that the person or entity to whom the New Contracts were to be novated would depend on how matters progressed over the three months leading to completion of the New Contracts and, in particular, on whether a joint venture with Mr Fong could be agreed. 17. GDI submits that even if Ms Lin did cause or induce NGI to pay $6 million she did not do this in her capacity as a shadow or de facto director of NGI. GDI submits that it is apparent that the decision to pay $6 million was a decision of NGI's management not a decision of its directors. Had the decision been one of NGI's directors it is submitted there would be a record of it in the NGI Minute Book and there is simply none. Again I think that is correct. 18. GDI submits that even if Ms Lin caused or induced NGI to pay $6 million as a shadow or de facto director of NGI, the evidence does not establish that this amounted to a breach of her duties under ss 180 or 181 of the Corporations Act. At all times the $6 million was secured by the contractual charge over the Turramurra Properties created by cl 2.8 of the New Contracts and GDI has held that charge on trust for NGI. GDI also further points out that the payment of $6 million benefitted NGI because it preserved its ability to participate in the project. It prevented the Properties from being lost, it is submitted by GDI, and prevented NGI being liable to GDI for the loss of GDI's deposit and any damages liability GDI had to the Vendors. Again, I think that is correct. 19. GDI submits that even if Ms Lin caused or induced NGI to pay $6 million as a shadow or de facto director of NGI, the evidence does not establish that this amounted to a breach of her duties under s 182 of the Corporations Act. GDI submits that the payment did not cause a detriment to NGI for the reasons already set out, namely that it preserved its commercial opportunities by doing so. GDI submits that to the extent that NGI has suffered a detriment from being without the use of the $6 million, that detriment is being caused by its conduct in lodging caveats over the Turramurra Properties, for which GDI correctly submits Ms Lin has no responsibility. 20. Again, in addition, GDI submits that as the payment of the $6 million was necessary to prevent NGI being exposed to liability to GDI, it cannot be said that causing or inducing it to be made was an improper use of Ms Lin's position as a shadow/de facto director of NGI. GDI further submits, I consider correctly, that the payment did not confer any advantage on MVGDD because MVGDD had always been obliged to pay the full purchase price (less the deposit of $1.5 million) on completion. 21. In the alternative, NGI asserts that Ms Lin acted as agent of NGI. 22. GDI correctly points out that as a condition of the grant of leave to amend its cross-claim to raise this case, NGI was required to provide particulars of that alleged agency. Particulars were provided in a letter dated 23 February 2015. 23. The particulars provided alleged a certain agency relationship between Ms Zhu (as principal) and Ms Lin (as agent). Importantly, however, they do not assert any relationship of agency between NGI and Ms Lin. GDI, in my view, therefore correctly points out that the facts and matters particularised are incapable of supporting the agency relationship as alleged and hence the case must fail. In my view, that is undoubtedly correct. 24. NGI's claim on this aspect of the case fails. GDI's claims against Mr Geering 1. GDI advances two claims against Mr Geering. The first is that Mr Geering breached his fiduciary duty of undivided loyalty to GDI by acting for both GDI and NGI in relation to the Turramurra project. The second is that Mr Geering breached his retainer and/or was negligent in drafting the Short Form Deed and then failing to advise GDI of certain matters. Breach of fiduciary duty 1. I have already adverted to the arguments advanced by the relevant parties as to the breach by Mr Geering of his fiduciary duty in the context of GDI's claim for rescission of the Short Form Deed by reason of Mr Geering's breaches. 2. Following execution of the Short Form Deed, GDI submits that Mr Geering continued to act for GDI and NGI in relation to the Turramurra project until his retainer was terminated by Ms Lin on 13 May 2014. GDI submits that he continued at all times to have a conflict between his duties to GDI and his duties to NGI as well as conflict between his duties to GDI and his own personal interest. I agree. 3. As a result, Mr Geering simply failed to give GDI advice as to its rights as against NGI. GDI seeks equitable compensation from Mr Geering (in the alternative to common law damages) for its loss or damage. Breach of retainer/negligence 1. GDI alleges that Mr Geering breached an implied term of his retainer with GDI to exercise reasonable care and skill in the provision of professional legal services to it and/or his common law duty of care to the same effect. GDI alleges that it suffered loss or damage as a result of Mr Geering's breaches of those obligations. 2. GDI contends that Mr Geering's retainer was a general one to act for it, including to advise it in relation to the Turramurra project with NGI. Again, I agree. GDI contends that the scope of that retainer remained without any variation prior to Ms Lin's termination of the retainer on 13 May 2014. I consider that to be correct. GDI also relies upon admissions made by Mr Geering in the course of his evidence as to the scope of the retainer. In particular, GDI contends that he breached his duties to exercise reasonable care and skill in that he failed to advise GDI that it needed certainty as to the time frame for performance of NGI's funding obligation under cl 2.1 of the Short Form Deed and that it would be at risk if that time was not the date for completion of the Old Contracts. I think Mr Geering really conceded this. 3. Further, it is submitted that he failed to advise GDI to include in the Short Form Deed clauses which gave GDI a clear right to terminate the Deed and made NGI liable to pay damages to GDI if NGI did not secure the required funding within the time for the performance of its obligation. Again, Mr Geering appeared to concede this. 4. He also conceded he failed to advise GDI at or around the time of the 11 April and 17 April 2014 meetings as to its rights against NGI including as to termination and rescission of the Short Form Deed by reason of NGI's failure to secure funding for the purchase of the Turramurra Properties under the Old Contracts. 5. GDI also submits that Mr Geering breached his duty to exercise reasonable care and skill in the provision of legal services for GDI by failing to advise it at around the time of the 22 April 2014 meeting as to its rights against NGI for failing to secure funding for the purchase of the Turramurra Properties under the Old Contracts. Again, I agree with that submission. The duty and the breach on my findings are I consider obvious. 6. GDI contends that had Mr Geering given GDI the advice referred to previously, then by at least 22 April 2014 it would have been open to GDI to terminate the Short Form Deed and it would undoubtedly have done so, leaving it free to novate the Old Contracts to MVGDD or some other joint venture vehicle with Mr Fong with the result, it contends, that those contracts would have been completed on or around 22 April 2014. 7. Had those events occurred, GDI contends the sequence of events set out in GDI's submissions would have occurred. I accept GDI would have novated the contracts to MVGDD, but that those contracts would not have completed until 22 July 2014. Causation 1. Notwithstanding my comments and findings about Mr Geering's various breaches of duty or retainer, or negligence, there are a number of complex causation arguments that arise. 2. GDI submits that Mr Geering was negligent in failing to advise GDI to include in the Short Form Deed a right to terminate if NGI did not comply with its funding obligations under cl 2.1 by the date for completion of the Old Contract and, further, in failing to include a term expressly conferring a right to terminate on GDI in the Short Form Deed. This is in addition to his failing to advise GDI as to its rights to terminate or rescind the Short Form Deed. 3. GDI submits that but for that negligence by at least 22 April 2014 GDI would have terminated or rescinded the Short Form Deed. 4. In summary, the four causation arguments concern: 1. Whether NGI would have agreed to a term of the Short Form Deed that required it to secure funds by the completion date of the Old Contracts; 2. Whether, if NGI had agreed to such a term, it would have reserved a right to negotiate an extension of the completion date, and then would have negotiated that extension using the $6 million and would have been able to complete the New Contracts; 3. Whether GDI would have terminated or rescinded the Short Form Deed on 22 April 2014 had it been properly advised; and 4. Whether the Short Form Deed came to an end in any event because it either did not apply to the New Contracts, or it was repudiated by NGI, or it was terminated or abandoned, such that no loss was suffered by GDI. 1. Additionally, an issue arose as to the appropriate basis for the calculation of any loss and the relevant differences (if any) between the principles of common law damages and equitable compensation. 2. Mr Geering's final submissions at [121] onwards deal with the application of s 5D(1) of the Civil Liability Act 2002 (NSW) in the context of these proceedings. At [123] Mr Geering submits that factual causation requires proof that the defendant's negligence was a necessary condition of the occurrence of a particular harm and that a necessary condition is a condition which must be present for the occurrence of the harm. Causation Issue 1: Whether NGI would have agreed to a term of the Short Form Deed that required it to secure funds by the completion date of the Old Contracts 1. This issue is dealt with in Mr Geering's final submissions at [120(a)] and [193]-[199] and GDI's submissions in reply at [72], in addition to the transcript commencing at T679. Mr Geering's position is that it is improbable that NGI would have agreed to the incorporation of any such term into the Short Form Deed as the completion date was only three weeks away when the Short Form Deed was executed. 2. It is GDI's position that if NGI had not agreed to such a term, GDI would never have entered into the Short Form Deed had it been properly advised. GDI argues that the evidence discloses that Ms Gai was confident NGI would be able to fulfil its funding obligations in early March (Lin 1 [66], T281.37-40). However, even if it is accepted that NGI would not have agreed to such a term, GDI submits that in that situation the most likely outcome is that there would have been no Short Form Deed at all and the probability is that GDI would have novated to MVGDD or another joint venture vehicle involving Mr Fong. Causation Issue 2: Whether, if NGI had agreed to such a term, it would have reserved a right to negotiate an extension of the completion date, and then would have negotiated that extension using the $6 million and would have been able to complete the New Contracts 1. This issue is dealt with in Mr Geering's submissions at 120(b)-(e) and by Mr Darke SC for GDI at T679-680. This issue was not addressed in writing by GDI. 2. Mr Geering submits that it would have been NGI's position that had they agreed to such a term they would have reserved a right to negotiate an extension of the completion date, and then would have negotiated that extension using the $6 million and been able to complete the New Contracts. 3. GDI's position is that NGI's $6 million was not sufficient to secure the negotiated extension; $490K was required from GDI. GDI submits that there is no basis for concluding GDI would have contributed those funds if an alternative was terminating or rescinding the Short Form Deed and novating to Mr Fong. 4. Again, on the evidence as a whole, I consider the latter the more likely. NGI did not have ready access to additional funds. Causation Issue 3: Whether GDI would have terminated or rescinded the Short Form Deed on 22 April 2014 if properly advised, or whether it needed NGI's $6 million 1. This is dealt with in Mr Geering's submissions at [120](f)-(j)] and in GDI's submissions in reply at [52] and [53]. As is observed by Mr Gyles SC at T575 for Mr Geering, there are three possible bases on which this advice could have been given. First, on the basis of the Short Form Deed as drafted. Secondly, on the basis of the Short Form Deed as it would have appeared had it been drafted by independent solicitors and, thirdly, on the basis of misrepresentation. Grounds for termination 1. The first basis on which GDI is said to have had a right to terminate is because NGI did not comply with its funding obligations under cl 2.1: GDI reply submissions [50](a)]. Mr Geering contends, however, that there is no express obligation in the Short Form Deed to have the money available by the completion date and further contends that termination on that basis would have been inconsistent with cl 2.8 (see T757). GDI submits that the Short Form Deed should be construed in a way that obligated NGI to secure funding by the completion date of the Old Contracts (see T672). 2. Mr Geering also submits that, on one view of the equitable obligations involved, NGI was entitled to assume that GDI would not terminate if GDI was not in a position to fund the whole purchase price (T783). 3. The second basis on which GDI is said to have had a right to terminate is that its entry into the Short Form Deed was procured by a misrepresentation. Mr Geering submits that, first, there are issues of fact regarding what the representation was (see T763-4). Furthermore, he submits that there is no evidence of reliance (see T766) because it is evident that at that stage Ms Lin did not have any confidence in NGI. 4. Finally, Mr Geering submits that if GDI's submissions are accepted and it is concluded that they would have been able to find $6 million, the question becomes one of loss. GDI's willingness/capacity to terminate 1. GDI's position, as set out at T680-1, which submission I accept, is that Ms Lin had funds available, such that even if MVGDD could not have settled the Old Contracts, GDI could have used its own resources to procure the Vendors' entry into the New Contracts. 2. Mr Geering submits that Ms Lin would not have been willing to lose the deposit, and she would have used NGI's money to extend the contracts and to avoid that eventuality (see T772). He submits that GDI was bound to complete and had nobody other than NGI who was able to supply the requisite funds (T785). I do not accept that. 3. A key issue in this regard is whether or not either of Mr Fong or Ms Lin would have been able to contribute the relevant monies to complete the purchase. For reasons already expressed, I am satisfied that by 22 April 2014 the position was that Mr Fong was not ready but he would have been by 22 July 2014. Mr Geering submits that there is no evidence that Mr Fong would have been able to step in at this stage to complete the contracts as at the relevant time he was not committed to the project, let alone willing to contribute millions to it (see T763, 791). At T775 Mr Gyles SC for Mr Geering puts it as follows: "Yes. We say that Mr Darke cannot prove first of all that Mr Fong was willing to go ahead until 2 May, and second, that even if he was willing that he would have been able to complete the sales or even provide enough money to keep Mr Yahl happy on 22 April. We say that that is the position irrespective of anything Mr Geering did or didn't do, because that negotiation took place unfettered by the short form deed, and what is obvious from the transaction was that the person setting the pace on that transaction and in control of that transaction was Mr Fong, and so it was a question of timing that suited him and he wasn't in a position to commit until 2 May." 1. Mr Geering submits that as no evidence has been put on by GDI concerning Mr Fong's capacity and willingness to contribute, an inference should be drawn that he was not able/willing to do so (see T773). 2. Furthermore, Mr Geering says that Ms Lin would not have invested her own or her husband's money in the development (T793). He says that Ms Lin's preference would have been to use NGI's money (T794). He goes on to consider NGI's financial position at the time (T796). I do not accept that submission and I am satisfied that is precisely what Ms Lin would have done. 3. GDI submits that there is no question that had Ms Lin been properly advised, the $6 million would not have been advanced in the way that it was (see T817). Again, I am satisfied that is correct on the evidence. Causation Issue 4: Whether the Short Form Deed came to an end in any event and no loss was suffered by GDI 1. This issue is dealt with in Mr Geering's submissions at [126]-[136] and by GDI's submissions in reply at [55]-[56]. GDI says that but for the negligence of Mr Geering, there would have been a clear and unequivocal termination or rescission of the Short Form Deed. GDI submits that the result of Mr Geering's negligence has been that the relevant parties have been "ensnared" in these proceedings. Again, I consider this to be correct. Relevance of fully informed consent 1. Mr Geering submits at [184]-[191] of his submissions that the relevant counterfactual is what would have happened if Mr Geering had sought fully informed consent. At T683-4 GDI submits that this is the wrong approach - the concern is not that Mr Geering did not have fully informed consent (although that would constitute a defence to the alleged breach of fiduciary duty), but rather that he was acting with divided loyalty. I agree. 2. At T684 GDI deals with Mr Geering's submission that, had he sought Ms Lin's consent on a fully informed basis, she would have given it. GDI says that this is not the correct question to be asked - what is relevant is what would have occurred had GDI had a solicitor acting who was not in breach of his fiduciary duties (see also T706). Again, I agree. 3. At T685 GDI submits that, even were Mr Geering's approach accepted, his submissions are not factually correct and Ms Lin would not have given her consent to Mr Geering acting if she had been fully informed. This is echoed in GDI's submissions in reply at [67]-[69], which point to Ms Lin's evidence that if she had been advised by Mr Geering that he was in a position of conflict, she would have obtained separate legal advice and representation: T93.5-94.10. Again, I consider that to be the better view of the evidence. Equitable compensation and common law damages 1. Mr Geering's position on this is largely based on arguments about causation. Mr Geering submits that there is no relevant difference between the causation test in the case of breach of fiduciary duty and pursuant to s 5D of the Civil Liability Act. 2. In addition, GDI deals with this issue at [66] of its submissions in reply, citing Nicholls v Michael Wilson & Partners Ltd [2012] NSWCA 383 at [174], where it was said that questions of causation flowing from loss as a consequence of breach of fiduciary obligations are to be determined in a different way from questions of causation arising in the context of common law negligence. This is because the objective of equitable compensation is to restore persons who have suffered loss to the position in which they would have been if there had been no breach of the equitable obligation. Unlike damages at common law, the loss as a consequence of the breach is to be assessed with the full benefit of hindsight. It should be noted that where equitable compensation is sought for breaches of fiduciary duty, it is necessary to identify criteria which supply an adequate or sufficient connection between the equitable compensation claimed and the breach of duty. 3. Mr Geering relied in particular on Hart Security Australia Pty Ltd v Boucousis [2014] NSWSC 1654 (Hart v Boucousis), referring to [182] onwards on the question of causation. 4. At T755, Mr Geering submits, referring to [192] of Hart v Boucousis, that whether or not common law damages or equitable compensation are in question, GDI would need to prove the following in order to "build the necessary bridge between breach and loss" (see also T757): 1. GDI had or should have had a right to terminate the Short Form Deed on 22 April 2014; 2. GDI would have exercised that right and partnered with MVGDD; 3. On that scenario, MVGDD would have provided $16 million to complete the contracts and repay GDI its deposit, if not then it would have provided an additional $9 million by 22 July 2014, or GDI itself would have provided the $6.5 million needed to keep the contracts on foot at 22 April 2014. 1. Mr Gyles SC went on to say: We say that if GDI cannot prove these matters, the case against Mr Geering fails. If GDI cannot prove that the contracts would have been completed or extended on 22 April, it cannot prove that any breach by Geering caused any loss to it. In fact, if the contracts had not been completed or extended on 22 April, GDI would have been materially worse off because it would have lost its deposit. That is the curiosity of the case so far as Mr Geering is concerned, your Honour, which is that we would say that Geering's alleged breach meant that it didn't lose its deposit because its breach, Mr Geering's alleged breach, gave GDI access to NGI's funds to enable the contracts to be extended or, more accurately, the old contracts to be rescinded and the new contracts entered into, and an avoidance of the losing of the deposit. 1. On the second day of submissions, there was some discussion as to whether Mr Geering should have advised GDI on 17 April 2014 that it could terminate the Short Form Deed. On the third day, it was clarified that GDI's case is predicated on the basis that Mr Geering should have advised GDI on 22 April 2014 that it could terminate the Short Form Deed. 2. NGI contests that, on a proper construction of the Short Form Deed, NGI had an obligation to provide the purchase monies by the date for completion of the contract and argues that a term would have been included if that was what was intended. This issue is discussed from T757, and I observed at T759 that the Short Form Deed does not bind the hands of the Vendors, such that it is not really a matter for GDI and NGI to set a timeframe. Further, at T761 Mr Geering submits that where the Vendors were willing to provide an extension of time for completion, it would have been in breach of an obligation of good faith were GDI to seek to terminate the Short Form Deed for anticipatory breach. 3. At T763, Mr Gyles SC on behalf of Mr Geering says: "I'll move on. But we say the first hurdle that has to be crossed by Mr Darke's client is to establish that a prudent solicitor, whether Mr Geering or otherwise, would have advised GDI that it had a right to terminate the short form deed. We say that a prudent solicitor would not have given that advice because that right had not yet crystallised and would never have crystallised because we know that the date for completion of those contracts would have been extended and MGI [sic] would have found the money by that date. 1. GDI accepts that it is necessary for GDI to show that the losses for which equitable compensation is sought would not have occurred if there had not been a breach of fiduciary duty (see T816). 2. Mr Geering submits that his breach of duty was acting for GDI without its fully informed consent, and so the relevant counterfactual is what would have happened had fully informed consent been sought. Mr Geering submits, in effect, that GDI would have given its consent or at least would not have engaged a different solicitor. 3. GDI submits that this argument is fundamentally flawed. First, obtaining fully informed consent is not an aspect of the alleged breach by Mr Geering of his fiduciary duty. That duty is the fiduciary duty of undivided loyalty. Obtaining fully informed consent is merely a defence to an allegation of breach. I accept GDI's submissions that framed that way, the counterfactual is erroneous. 4. It seems to me the question is not what the position would have been had Mr Geering sought GDI's informed consent, but rather whether there is a sufficient connection between GDI's claim for equitable compensation and Mr Geering's failure to act in accordance with his duty. It seems to me on the evidence there is more than ample connection between the two. 5. In any event, Ms Lin gave unequivocal evidence that if she had been advised by Mr Geering that he was in a conflict GDI would have obtained separate legal advice and representation (T93/5-94/10). I would accept that evidence. 6. Mr Geering also submits that he had no fiduciary obligation to provide advice to GDI in respect of the joint venture with NGI. I have already rejected that submission. Clearly, in my view, his retainer did extend to providing such advice. His duty, in my opinion, extended to both matters which came within the scope of the relevant retainer. 7. Mr Geering submits that he did not act otherwise than in accordance with his instructions, nor did he prefer NGI's interests over GDI's. I do not consider that either of these propositions is an answer to the claim for equitable compensation. Whether Mr Geering consciously or otherwise preferred NGI's interests over GDI's I consider he plainly did, in fact, prefer NGI's. By his own admission he failed to give GDI advice which he would have given had he not been in a conflict. I think this is testament to his preference. 8. Mr Geering also contends that NGI would never have agreed to a term in the Short Form Deed requiring it to perform its funding obligation under cl 2.1 by the date for completion of the Old Contracts. Again, I consider this submission quite contrary to the evidence. At the time of entry into the Short Form Deed Ms Gai said that she was confident that NGI would be able to perform its funding obligation by the end of February or early March 2014. However, had GDI been properly advised then it would have refused to enter into the Short Form Deed unless NGI agreed to perform its funding obligation by the time for completion of the Old Contracts. In that event there would have been no Short Form Deed and the probabilities are that GDI would have novated the Old Contracts to MVGDD (or another joint venture vehicle with Mr Fong) with a settlement date of 22 July 2014. 9. In its submissions in reply GDI points out a number of errors in Mr Geering's submissions. They are to be found in [200]-[202]. First, it is pointed out that Ms Lin did not give evidence that she instructed Mr Geering to release the $6 million to the Vendors on 22 or 23 April 2014. GDI points out that the evidence at T163.1 to which Mr Geering refers concerns the events of 17 April 2014. Secondly, it is submitted that GDI did have access to $6 million as at 22 April 2014. Thirdly, GDI's case does not turn on establishing that Mr Geering was disadvantaged specifically by allowing the release of $6 million to the Vendors. 10. NGI's alternative case, of course, depends heavily on an assertion that the Short Form Deed was varied on a number of occasions between its execution (on 24 February 2014) and 22 April 2014. As GDI points out, none of that is relevant given that it was ultimately abandoned. In any event, I am invited not to accept the submission for the following reasons. 11. Both Ms Gai and Mr Geering, when cross examined by counsel for MVGDD, asserted that the Short Form Deed was never varied. In addition, both Ms Gai and Mr Geering accepted that no new agreement was ever made between NGI and GDI. GDI makes the appropriate submission that there is simply no evidence of any variations. 12. The difficulty, which GDI has pointed out more than once, with Mr Geering's memorandum of 27 April 2014, is that it is not a mere statement of the Short Form Deed. The difference is that in [2] of the memorandum it is stated that NGI is entitled to a novation of the New Contracts having contributed $6 million to the purchase of the Turramurra Properties, whereas under the Short Form Deed NGI had to contribute at least $10.5 million to be so entitled. The memorandum by reference to the loan amounts and interest rate stated in the paragraphs are very different to those set out in the Short Form Deed. As GDI points out, if that is correct there must be a new agreement but presumably one in respect of which Ms Gai or Mr Geering had no knowledge. 13. GDI opposed specific performance for any number of reasons partly due to the fact that the Short Form Deed according to them, with which I agree, had been abandoned. The remedy and the facts surrounding it had, from NGI's point of view, ceased to have any relevance, as outlined above, except on questions of costs. 14. However, GDI says that, had Mr Geering complied with his duties, the following would have been the case (see T816): 1. GDI would not have entered into the Short Form Deed, perhaps at all, but certainly not without a term that gave GDI express protection if NGI failed to secure funding before the completion date; 2. NGI's $6 million would not have been released to the plaintiffs in circumstances where there was uncertainty as to GDI and NGI's respective rights; and 3. GDI's interest would have been sufficiently protected so that if NGI was unable to raise the funds, GDI could have dealt with other parties such as Mr Fong. 1. Again, I am satisfied that on the evidence these were the probable consequences, and I would make findings to that effect. Conclusions concerning causation 1. GDI submits that it would have novated the Old Contracts to MVGDD or some other joint venture vehicle with Mr Fong and those contracts would have completed at or about 22 April 2014, or it would have novated the New Contracts to MVGDD and those contracts would have completed on or about 22 July 2014. In either case the present litigation would not have ensued. For reasons which I have already discussed I consider the New Contracts but for the Short Form Deed would have completed by 22 July 2014. 2. GDI submits, I consider correctly, that but for Mr Geering's failure to advise in respect of the drafting of the terms of the Short Form Deed it would not have suffered the loss and damage adverted to earlier in GDI's submissions [191(a)(ii)] and [191(c)]. It is true, as GDI points out, that Mr Geering's submissions about the difficulties with GDI's claim for damages appear to be predicated on the proposition that GDI had no choice but to use NGI's $6 million as at 22 April 2014 because there is no evidence MVGDD was in a position to settle the Old Contracts and GDI would have been unable to raise the $6 million itself. 3. I consider, for reasons I have already expressed, that the above statement is probably correct. Certainly as at 22 July 2014, GDI had, I am satisfied, access to substantial funds itself. Ms Lin gave evidence which was not challenged (Lin 2 [13]) that she had available with her husband a $2.4 million facility with Westpac. In addition she had available cash funds in excess of $5 million and GDI submits it could have used its own resources to procure the Vendors' entry into the New Contracts had MVGDD not been available to do so. I am satisfied on the evidence that GDI had sufficient resources but I am not satisfied GDI would have used them to complete by 22 April 2014. More probably GDI, I consider, would have much preferred to lock in Mr Fong and use his resources and expertise, for reasons to which I have already referred. 4. Mr Geering, as discussed above, further contends in substance that the circumstances which GDI contends would have occurred but for Mr Geering's breach of duty, namely the termination of the Short Form Deed, occurred in any event including when (as GDI contended in answer to NGI's case for specific performance) in May 2014 the Short Form Deed was terminated or abandoned, therefore Mr Geering contends his conduct cannot have caused any loss. 5. I cannot accept this submission. GDI in my view correctly points out that but for Mr Geering's incompetence the Short Form Deed (had it been entered into at all) would have included a term conferring on GDI an express right of termination in the event that NGI did not meet its funding obligations under cl 2.1 by the date of completion of the Old Contracts and GDI would have been advised to exercise and would in fact have exercised that right. As to the latter, I think that that is a reasonable inference given the animosity between the parties, certainly during April and May. In those circumstances, I think it is fair to say that the Short Form Deed would have been terminated in any event. 6. GDI submits that in any event, even had it asserted at the relevant time that the Short Form Deed could not be enforced because it had been abandoned, this litigation would not have been avoided unless Mr Geering had inserted a clear and unequivocal provision permitting GDI to terminate the Deed. Claim for breach of fiduciary duty 1. Mr Geering accepts that he breached his fiduciary duties to GDI. What is left, as GDI points out, are questions of equitable compensation, rescission and "unclean hands" defences. Unclean hands 1. Mr Geering submits that GDI should be refused equitable relief as it approaches the court with unclean hands. Something similar has been advanced by NGI. The difficulty with this is Mr Geering's awareness, and for that matter NGI's awareness, that as at 22 April 2014 and, if I may so, much earlier, one option for completing the New Contracts involved a joint venture with Mr Fong or a company associated with him. From the very moment the Short Form Deed came into existence Ms Lin not only did not wish to take the risk herself, as the days wore on she made it abundantly plain she did not think Mr Geering or NGI was up to the task of developing the property. Because of changed events, however, NGI's argument is academic. Professional standards defence 1. Mr Geering pleads that if he is found to be liable, then this liability Is an occupational liability within the meaning of the Professional Standards Act 1994 (NSW) (PSA). Mr Geering submits that as a solicitor with a practising certificate he is and was at all material times a member of an "occupational association" for the purposes of s 4 of the PSA. 2. Mr Geering submits that at all material times a scheme for limiting the occupational liability of practising solicitors was in force, being the Law Society of NSW Scheme (Scheme). Clause 5 of the Scheme provides that it commenced in 2012 and was intended to remain in force for a period of five years. 3. Clause 3.2 of the Scheme requires that members prove they held insurance cover insuring them in respect of the liability to which the cause of action relates. Mr Geering submits that at all material times Mr Geering was part of a law practice of less than 20 principals which generated total fee income of under $10 million. It is agreed that this is the case (T629/35-40). As such pursuant to the Scheme Mr Geering was required to hold insurance cover of a minimum of $1.5 million. He submits he did so, relying on Exhibit KG-3 to his affidavit sworn 5 March 2015. As a consequence, he submits that any liability to GDI should be limited to $1.5 million in damages. 4. GDI submits that Exhibit KG-3 is not sufficient to demonstrate that the professional standard defence should apply. The policy relied upon by Mr Geering purports to provide cover of $2 million for any one claim for the period "2014/15". The problem is that it is not entirely clear what the relevant period is. The schedule to the policy leaved blank item 3, "period of insurance". 5. I am not satisfied on the evidence that Mr Geering did hold the required insurance pursuant to cl 3.2 of the Scheme. However, given the importance of this matter to Mr Geering I am prepared to hear further argument on this matter, if necessary. Contributory negligence 1. Mr Geering submits that if GDI suffered loss it was at least partly due to its own conduct and therefore any liability Mr Geering is found to have to GDI should be reduced to reflect the causal effect of that conduct. 2. I consider there are a number of conceptual difficulties, though, with such a claim. First, I do not see how it can apply to a claim of breach of fiduciary duty. 3. In any event, the factual matters upon which Mr Geering bases the defence, it seems to me, do not make good the proposition. What Mr Geering has to show, it seems to me on authority, is that GDI's conduct involved a departure from exercising a reasonable standard of care for its own safety. The difficulty Mr Geering faces is that he was acting for GDI giving it advice and indeed it entered the Short Form Deed based upon his advice. I do not see in those circumstances how the defence of contributory negligence could possibly apply. Damages 1. Mr Geering submits that if he is liable in damages to GDI then in respect of the first lien, being the loss of the use of the $1.5 million, interest should only be allowed on $510,000 and Mr Geering should only be liable for interest and not be liable for the principal amount of $186,959.94. 2. GDI accepts that interest should only be awarded on $510,000 from the date of the repayment of the $1 million by MVGDD to GDI, which occurred on 7 July 2014. It, in my opinion rightly, maintains its submission that interest should be awarded on the $1 million from 22 April 2014 to 7 July 2014. Further, GDI submits that the interest that should be awarded pursuant to rates prescribed by the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). GDI accepts, however, that if NGI fails to get specific performance then Mr Geering would not be liable for the $510,000 plus interest. 3. GDI claimed an amount of $186,959.94 predicated on a basis that seems to me is no longer relevant. If need be I will hear the parties further on this matter. 4. Mr Geering submits that his liability should not extend to indemnifying GDI for any interest GDI might be found liable to pay NGI on the amount of $6 million. GDI submits that this is based on a misconceived causation argument. I agree. 5. Mr Geering submits that his liability should not extend to indemnifying GDI for any liability GDI is found to have to MVGDD pursuant to the novation deed. Again, I accept GDI's submission that this is misconceived. The notion that losses arising from litigation which have ensued as a consequence of Mr Geering's breach of duty are too remote is, in my view, plainly wrong. 6. Mr Geering submits that GDI's claim for indemnity from Mr Geering for any costs liability it is found to have in the proceedings is misconceived. I accept he should have such liability. The damages against Mr Geering (payable to GDI) should be assessed in accordance with Schedule 2 as prepared by GDI on this aspect of the case. Conclusion 1. In relation to the case put by the plaintiffs, I am satisfied that NGI did not have a caveatable interest in the Turramurra Properties and, further, that NGI did not have reasonable cause to lodge the caveats. As a consequence, I am satisfied that the plaintiffs are entitled to compensation pursuant to s 74P of the RPA. 2. Insofar as GDI initially sought declarations concerning its entitlement to novate, those declarations are now academic. 3. In relation to the claims made by GDI against NGI, I accept that the Short Form Deed was terminated or abandoned. It is therefore not necessary for GDI to seek an order for its rescission. However, had I been required to make a finding in that regard, I consider that GDI would have been entitled to rescind the Short Form Deed on the basis of Mr Geering's breach of his fiduciary obligations. 4. I am also satisfied that GDI would have been entitled to rescind pursuant to the Australian Consumer Law on the basis of the fact that entry into the Short Form Deed was induced by NGI on the basis of misleading or deceptive conduct, and that GDI is entitled to damages under s 236 of the Australian Consumer Law. 5. I am satisfied that, had GDI not entered into the Short Form Deed, then the contracts would have been novated and completed on 22 July 2014. 6. I am also satisfied that GDI would be entitled to damages pursuant to s 74P of the RPA for pecuniary loss attributable to the lodgement and refusal to withdraw NGI's caveats over the land. 7. The majority of the claims made by NGI in their cross-claim are now academic. Had I been required to decide the matter, I would have found that the second and third agreements as alleged did not exist. I would also have found that NGI's claim that an estoppel arose was unsuccessful. 8. Even if NGI had established that GDI owed it fiduciary duties, I consider that the conduct alleged in the cross-claim occurred significantly before any such duty could have come into existence. 9. In relation to GDI's claims against Mr Geering, I am satisfied that Mr Geering breached his fiduciary duties. I am also satisfied that he breached his retainer by failing to exercise reasonable skill and care. For the same reasons, I am satisfied he breached his duty of care to GDI. In relation to causation, I am satisfied that but for Mr Geering's failure to give proper advice regarding the Short Form Deed GDI would not have suffered loss and damage on the basis that the contracts would have completed on 22 July 2014. 10. I am satisfied that GDI is entitled to equitable compensation from Mr Geering. As outlined at [625] onwards, I do not accept Mr Geering's submissions regarding damages. ********* 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: 21 August 2015