Supreme Court New South Wales Medium Neutral Citation: Upside Property Group Limited v Tekin [2016] NSWSC 1260 Hearing dates: 5 and 6 July, 10 and 11 August 2016 Date of orders: 12 September 2016 Decision date: 12 September 2016 Jurisdiction: Equity Before: Darke J Decision: Statement of Claim is dismissed with costs. Catchwords: CONVEYANCING – Breach of contract for sale and remedies – Repudiation – Delay in completion of contract – Pursuit by parties of options in relation to property other than completion of contract – Whether conduct of purchaser amounted to repudiation of contract – Whether vendor entitled to terminate contract CONVEYANCING – Breach of contract for sale and remedies – Repudiation by vendor – Whether purchaser ready, willing and able to complete contract at time of repudiation REAL PROPERTY – Valuation of land – Methods of valuation – Use of offers as evidence of market value – Whether offers capable of use to establish floor in market value – Whether valuer's reasoning adequately disclosed in valuation report Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), r 14.11 Cases Cited: Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345; [2012] HCA 17 Auxil Pty Limited v Terranova [2009] WASCA 163; (2009) 260 ALR 164 Baiyai Pty Limited v Guy [2009] NSWCA 65 Blatch v Archer (1774) 1 Cowp 63; 98 ER 969 Browne v Dunn (1893) 6 R 57 Carr v JA Berriman Pty Limited (1953) 89 CLR 327 Cordelia Holdings Pty Limited v Newkey Investments Pty Limited [2004] FCAFC 48 Crawley v Short (2009) 262 ALR 654; [2009] NSWCA 410 DTR Nominees Pty Limited v Mona Homes Pty Limited (1978) 138 CLR 423 Expectation Pty Limited v PRD Realty Pty Limited (2004) 140 FCR 17; [2004] FCAFC 189 Foran v Wight (1989) 168 CLR 385 Goold v Commonwealth of Australia (1993) 42 FCR 51 Hadley v Baxendale (1854) 9 Ex 341; 156 ER 145 Henderson v Amadio Pty Limited (No 1) (1995) 62 FCR 1 Hensley v Reschke (1914) 18 CLR 452 Jones v Dunkel (1959) 101 CLR 298 Laurinda Pty Limited v Capalaba Park Shopping Centre Pty Limited (1989) 166 CLR 623 McDonald v Deputy Federal Commissioner of Land Tax (NSW) (1915) 20 CLR 231 MMAL Rentals Pty Limited v Bruning (2004) 63 NSWLR 167; [2004] NSWCA 451 Neeta (Epping) Pty Limited v Phillips (1974) 131 CLR 286 Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 Sharjade Pty Limited v Commonwealth [2009] NSWCA 373 Sindel v Georgiou (1984) 154 CLR 661 Stockl v Rigura Pty Limited [2004] NSWCA 73; (2004) 12 BPR 23,151 Category: Principal judgment Parties: Upside Property Group Pty Limited (Plaintiff) Celal Tekin (Defendant) Representation: Counsel: Mr P Reynolds (Plaintiff) Mr A Cornish (Defendant) Solicitors: BC Lawyers (Plaintiff) Low Doherty & Stratford (Defendant) File Number(s): 2015/133351 Publication restriction: None Judgment Introduction 1. These proceedings arise from a contract for the sale of four parcels of now vacant land at 10-16 Cecil Avenue, Castle Hill ('the property'). The contract was entered into on 21 October 2014 between the plaintiff, Upside Property Group Pty Limited ('Upside'), as purchaser, and the defendant, Mr Celal Tekin, as vendor, for a price of $7.8 million plus GST. The parties entered into a Side Deed on the same day. 2. Mr Tekin claims that he validly terminated the contract on 13 March 2015 due to the failure of Upside to complete the contract which failure, he says, amounted to a repudiation of the contract. Upside claims that, for various reasons, Mr Tekin had no entitlement to terminate the contract, and thus the termination was invalid. Upside says that the conduct of Mr Tekin in purporting to terminate amounted to a repudiation of the contract, which Upside accepted on 19 March 2015. Upside seeks substantial damages (of about $4 million) to compensate it for loss which it says it suffered as a consequence of the repudiation of the contract. No claim is pressed in respect of the deposit that was paid by Upside. The Court was informed that the deposit had been repaid to Upside prior to the hearing. 3. Mr Tekin says that even if he was not entitled to terminate, Upside has not made out its claim for damages. Mr Tekin contends that Upside has failed to show that it was ready, willing and able to perform its contractual obligations, and in any event has failed to establish that a loss was suffered. Summary of salient facts 1. Mr Tekin progressively acquired the four parcels of land in the period from 1992 to 2003. The area of the four parcels is about 4,850m2. 2. In 2011, Mr Tekin obtained a development approval for the construction of twenty-two townhouses on the property. Work commenced on excavation of the basement area of the development, but the work stopped in about April 2012 due to a lack of finance. 3. Upside was incorporated on 20 October 2014. Mr Denis Harsany became the sole director of the company. He negotiated the terms of the contract with Mr Tekin. 4. It is apparent that Mr Tekin was under some financial pressure in 2014. A default judgment had been obtained against him by ADN Investments Pty Limited for about $250,000 in respect of the excavation work that had been carried out at the property. A bankruptcy notice had been served upon Mr Tekin in respect of that debt. 5. The contract was entered into on 21 October 2014. It provided for a deposit of $780,000, payable in instalments. The first instalment of $300,000 was payable within 7 days and was to be immediately released to Mr Tekin. It is clear that Mr Tekin intended to use those funds to discharge his debt to ADN Investments Pty Limited. The $300,000 was paid by Upside by effecting various payments to or at the direction of Mr Tekin in the period 27 October 2014 to 31 October 2014. 6. The completion date stipulated in the contract was 1 December 2014. Clause 15 of the contract provided that if the parties did not complete by that date a party could, if otherwise entitled to do so, serve a notice to complete. Special Condition 7 provided as follows: For the purpose of Clause 15 a "Notice to Complete" shall mean a notice requiring the other party to complete this Contract no earlier than fourteen (14) days after the service of the Notice. The vendor and Purchaser acknowledge and agree that the serving of such a Notice shall for all purposes make the time for the obligation of the parties to complete this Contract of the essence and further that the time period referred to in the notice shall in all circumstances be reasonable and sufficient notice. Notwithstanding any other clause herein, service of such Notice may be effected by facsimile transmission and shall be deemed to be served on the day the facsimile transmission has been completed. 1. Clause 5.1 of the contract provided that if the purchaser is entitled to make a requisition it must serve it within 21 days of the contract date if it is a requisition that arises out of the contract or is a general question about the property or title. Special Condition 3(a) provided: The purchaser agrees that the only form of general Requisition on Title that the purchaser shall be entitled to pursuant to Clause 5 shall be in the form of Requisitions on Title annexed. Two pages of standard requisitions on title were annexed to the contract. 1. On 30 October 2014 the solicitors for Upside sent an email to the solicitors for Mr Tekin which included the following: We hereby serve and raise the requisitions on title in the form annexed to the contract for sale. 1. The terms of the requisitions were not themselves included within, or attached to, the email. The requisitions were not answered by Mr Tekin. The solicitors for Upside sent an executed transfer to Mr Tekin's solicitors on 20 November 2014. 2. As noted earlier, a Side Deed was entered into on the same day as the contract for sale. Upside and Mr Tekin were parties to the Side Deed, together with Assure (NSW) Pty Limited and Mr Harsany. Assure (NSW) Pty Limited is the owner of all the shares in Upside. It is the trustee of a trust the beneficiaries of which include members of Mr Harsany's family. Relevantly, the Side Deed provides: 2. The parties are to enter into the Contract for the Sale in relation to the Property together with this Deed. The purchase price of the Contract is $7,800,000.00. 3. It is intended that the parties will complete the Contract on or before 1 December 2014. Prior to completion, the parties are free, subject to the terms and conditions of this Deed, to market the Property for re-sale by the vendor or sub-sale by the purchaser to a third party. 4. The Vendor is entitled to market the Property for re-sale following exchange of contracts and up to the time of settlement on the following basis: (a) In the event that the Property is re-sold on or up to the time of settlement as a result of marketing and introduction of a subsequent purchaser(s) or a third party by the Vendor: (i) the Purchaser and Vendor will rescind the Contract; and (ii) the Vendor must simultaneously enter into a new contract with the subsequent purchaser(s) or third party. (b) In the event that the Property is re-sold on or up to the time of settlement as per this clause 4(a), the Vendor agrees and covenants to pay to the Purchaser: (i) A sum equivalent to 30% of the difference of the selling price and $7,800,000.00 if the selling price is between $7,800,000.00 and $8,800,000.00; or (ii) A sum of 100% of any amount above $8,800,000.00 if the selling price is more than $8,800,000.00. … (d) The manner in which the Vendor may market the Property shall be mutually agreed between the Vendor and the Purchaser. In addition, the final selling price and whether or not any offers that might be made shall be accepted shall be subject to mutual agreement between the Vendor and the Purchaser. (e) In the event the Vendor receive an offer from a subsequent purchaser or a third party in respect of the Property, the Vendor will inform the Purchaser of details of the offer within a reasonable time. (f) Re-sale pursuant to this clause 4(a) will only proceed if both the Purchaser and the Vendor agree on all terms and conditions of the re-sale contract. 5. In the event that the Vendor fails to achieve a re-sale of the Property to a subsequent purchaser or third party prior to the completion date of the Contract, Assure (NSW) Pty Ltd (ACN 133 819 619), a 100% shareholder of the Purchaser and of which Denis Harsany is the sole director, will transfer 25% of its shareholdings in the Purchaser's company to the Vendor on or prior to settlement. In the event that a 25% shareholding of the Purchaser's company is transferred to the Vendor pursuant to this clause 5: (a) The Purchaser, the Shareholder and Guarantor warrants that there will not be any change of Directors or shareholdings of the company without the Vendor's written consent, at any time while the Vendor remains a shareholder. (b) The Purchaser, the Shareholder and the Guarantor indemnify the Vendor in respect of any claims made against the Vendor as a direct result of its shareholding in the Company. 6. The Vendor and the Purchaser, the Shareholder and/or the Guarantor or their nominees agrees that in the event the Purchaser is to acquire any shares held by the Vendor in its company, the acquisition price of the said shares will be no less than $1,000,000.00 7. The Vendor agrees and acknowledges that the Purchaser is entitled to market the Property for sub-sale following exchange of contracts and up to the time of settlement. (a) The Vendor agrees and acknowledges that the Purchaser shall have absolute discretion over the manner in which the Purchaser may market the Property and the Purchaser shall have the absolute right to decide the final price for sub-sale and whether or not any offers that might be made shall be accepted. 8. Nothing in this Deed shall prevent the Purchaser from proceeding with a sub-sale to a subsequent purchaser(s) or any third party (a) The parties acknowledge and agree that the Purchaser does not require consent from the Vendor in order to proceed with any sub-sale in any manner as it sees fit. (b) If the Purchaser proceeds with a sub-sale of the Property and if in addition to the purchase monies being paid by the Purchaser to the Vendor pursuant to the Contract, then the Purchaser must pay to the Vendor an additional sum of One Million Dollars ($1,000,000.00) (plus GST). (c) As an alternative to the payment of the sum of $1,000,000.00 (plus GST) as referred to in clause 8(b) above, the Vendor can elect to require a 25% shareholding in the Purchaser as to referred to in clause 9 hereof. 9. In the event of a sub-sale of the Property by the Purchaser, Assure (NSW) Pty Ltd (ACN 133 819 619), a 100% shareholder of the Purchaser and of which Denis Harsany is the sole director, will transfer to the Vendor a 25% shareholding of the Purchaser's company to the Vendor on or prior to settlement. In the event that a 25% shareholding of the Purchaser's company is transferred to the Vendor pursuant to this clause 9: (a) The Purchaser, the Shareholder and the Guarantor warrants that there will not be any change of Directors or shareholdings of the company without the Vendor's written consent, at any time while the Vendor remains a shareholder. (b) The Purchaser, the Shareholder and the Guarantor indemnify the Vendor in respect of any claims made against the Vendor as a direct result of its shareholding in the Company (c) The payment of an additional sum of $1,000,000.00 as referred to clause 8(b) will not be applicable in the event that the Vendor receives a transfer of 25% shareholding of the Purchaser's company pursuant to this clause 9. … 11. The Purchaser and the Vendor agree and acknowledge that the caveat by WRV Development Pty Ltd (ACN 159 153 572) on the Property may be released on the following basis: (a) The Vendor will pay to WRV Development Pty Ltd (ACN 159 153 572) an amount of $160,000.00 on or prior to settlement, representing full payment of monies advanced in respect of the caveat referred to in this clause; and (b) Whether or not the Vendor achieves a re-sale of the Property as per clause 4 of this Deed, Assure (NSW) Pty Ltd (ACN 133 819 619), a 100% shareholder of the Purchaser and of which Denis Harsany is the sole director, will pay any shortfall amount following the payment referred to in clause 11(a) required to have the said caveat released on or prior to settlement. The Shareholder must also pay any interest payable in respect of the full amount advanced by WRV Development Pty Limited to the Vendor. (c) The Shareholder and the Guarantor indemnify the Vendor in respect of any claim made against the Vendor by WRV Development Pty Limited. … 13. Subject to the terms of the Contract, this Deed constitutes the whole agreement between the parties to the exclusion of any and all other agreements representations or warranties. No amendment to this Deed shall be binding unless agreed by the parties in writing and signed by the parties. … 1. Also on 21 October 2014 Mr Tekin signed an exclusive agency agreement with Ray White Castle Hill (Mr Jason Keen) for the period to 11 November 2014. The agreement was also signed by Mr Harsany for Upside as an "interested party". 2. Mr Harsany deposed that following entry into the contract and Side Deed it was and remained his intention to either: 1. seek with Mr Tekin a purchaser of the property, with the profit to be distributed in accordance with the Side Deed or as agreed between them; or 2. apply with Mr Tekin for a refinance of Mr Tekin's debts, with a view to him retaining the property until about April 2015 when it would be put up for auction, with the profit to be distributed as agreed between them; or 3. cause Upside to purchase the property. 1. On 14 November 2014 Mr Tekin and Mr Harsany sent a letter to Mr Keen of Ray White Castle Hill, giving formal notice of termination of the exclusive agency agreement. Details were sought concerning any offers received from prospective purchasers. 2. On 18 November 2014 Ray White Castle Hill sent a Sales Advice to Upside's solicitors. The advice contained details of a proposed sale of the property by Upside to Guang Sheng Gong Pty Limited for $11.2 million. Mr Harsany deposed that he spoke to Mr Tekin about the offer, including that it involved settlement in 12 or 18 months' time. Mr Harsany says that Mr Tekin told him that he could not wait that long. Mr Tekin himself deposed that he regarded the offer as unsatisfactory due to the long completion time. 3. Mr Tekin had the same view in relation to a further offer which was made at about that time by Jin Investments Pty Limited. On 20 November 2014 Ray White Castle Hill sent a Sales Advice to Mr Tekin's solicitors. The advice contained details of a proposed sale of the property by Mr Tekin to Jin Investments Pty Limited for $10.888 million. Mr Harsany deposed that he spoke to Mr Tekin about the offer, including that it involved settlement in 8 months' time. Mr Harsany says that Mr Tekin was again not happy about the proposed settlement period. 4. Mr Harsany and Mr Tekin had a meeting on about 24 November 2014 at Chatswood Chase. According to Mr Harsany there was some discussion about the refinancing option. In his second affidavit he deposed that Mr Tekin said words to the following effect: If we are going to go for the refinance, we should go to auction around April with a reserve of $12 million. By then we should have some more news from Council. 1. In his first affidavit, Mr Harsany deposed that there was a discussion to the following effect at the meeting: Mr Harsany: "I am happy to go with either option but I need time to prepare the funds if you really want to settle. About three weeks." Mr Tekin: "Mmmmm let's give it one more try. I don't want to lose all the benefit with rezoning with all the stress I've had over the years. How long is it going to take?" Mr Harsany: "Hopefully a couple of weeks, but I'll check with Jason. We definitely need to do it before Christmas." Mr Tekin: "Ok. Let me know." 1. Mr Tekin did not, in his affidavit, directly challenge that version of the conversation. However, in cross-examination he did not accept that Mr Harsany said he was happy to go with either settlement of the property or a refinance of the loans, or that he said he would need about three weeks to obtain funds for a settlement. Mr Tekin gave evidence that he knew Mr Harsany was going to get money from an "aunty", and that Mr Harsany told him they were having some problems. 2. Mr Tekin also disagreed, in cross-examination, with the balance of the asserted conversation, including that he told Mr Harsany "to give it one more try", and that he didn't want to "lose all the benefits with rezoning". I interpolate here that at that time there was considerable speculation abroad concerning the possibility of a re-zoning in the near future which would significantly increase the development potential of the property. 3. Nonetheless, Mr Tekin does accept that he had some discussion with Mr Harsany in late November 2014 about refinancing. Mr Tekin deposes that a conversation to the following effect took place: Mr Harsany: "I have been unable to sell the property. I would like to see if I can refinance the debt." Mr Tekin: "I want the contract to complete as I need money now." Mr Harsany: "I will see what other alternative I can come up with." 1. It appears that Upside approached Centenary Advisory Group Pty Limited ('Centenary') in late November 2014 to secure its services to obtain finance of up to $5 million, such finance to be secured by a first mortgage over the property. Centenary issued a form of Service Agreement to Upside on 1 December 2014, for execution by Upside as borrower and Mr Tekin (incorrectly spelt as "Tenkin") as mortgagor. The service agreement was later executed by Upside and Mr Tekin. Mr Tekin gave evidence that he signed it in January 2015. 2. On 28 November 2014 Upside's solicitor, Mr Shing Lam of BC Lawyers, sent a letter to Mr Tekin's solicitors, Low Doherty & Stratford. The letter included the following: We note that settlement for this matter is currently due on Monday, 1 December 2014. We are instructed that there has been a slight delay in finalizing matters relating to finance. Accordingly we request that your client kindly allow the settlement date to be extended for 2 weeks without penalty interest. The new settlement date requested is Monday, 15 December 2014. Please kindly seek confirmation of the above from your client. We look forward to your urgent response and thank you in anticipation of the same. 1. On 1 December 2014 Mr Harsany sent an email to Mr Tekin's solicitor, Mr Phillip Stratford. The email was in the following terms: Hi Phillip, Jerry [Mr Tekin] has asked me to describe the current status of plans moving forward on 10-16 Cecil Avenue, Castle Hill. We currently have 3 scenarios on the table and I will describe them in the order of what is likely to take place – 1. I have a letter of offer for refinancing being issued today which will allow Jerry to payout all of his existing commitments and have some cashflow for living. My company will be the borrower with Jerry only required to come on board with the property as a guarantor. Jerry will have his $8.8Mil locked in with an extra $100K per Month up to 7 Months should we on-sell after the refinance takes place. From there onwards, we will have a 50/50 share on net profits. I will be paying a deposit amount of $4,500,000 in total by Feb end from the refinance prior to Xmas and the balance in Feb when my project in Berowra completes. Our goal will be to actively apply for spot rezoning, hold for rezoning or on-sell as it is getting closer to rezoning. I will ask Shing to prepare an agreement describing the above prior to settling refinance. 2. On-sell the property prior to settlement of refinance. We still have a number of potential buyers and agents that we are negotiating with. 3. For Upside Property Group to settle the property as per the current arrangements. Please note we need 3 weeks from a decision being made to settle this contract for funding to be available. It would be my request to extend the settlement period by this length of time while we confirm the refinance facility and/or the on-sell. To assist with the existing mortgage holders we have forwarded a letter requesting a settlement extension which you will be able to forward as required. 1. Later on 1 December 2014 Mr Lam sent an email to Mr Stratford which included the following: If your client would like to settle the current contract with Upside Property Group prior to the Christmas period, our client will need confirmation of this by close of business today. As we understand it, our respective clients have come to an agreement to refinance the property instead of settle. Should the case be that your client prefers to settle by Christmas, our client will need sufficient notice of this, and hence your client's confirmation will be required today. 1. On 3 December 2014 Mr Tekin's solicitors wrote to Upside's solicitors in the following terms: We refer to previous correspondence herein and note that the Deed of Variation of Contract was not returned to our office. We have been instructed our client requires settlement of this matter to take place forthwith. Please note that we have been instructed to issue a Notice of Complete. 1. On 3 December 2014 Mr Lam sent an email to Mr Stratford which included the following: As referred to in the email below, our respective clients had previously agreed on Monday of last week to refinance the property instead of settle. Should your client now prefer a settlement as a change of plan, our client would require an extension of the settlement period for 2 weeks beyond the Christmas period. … Please kindly advise your client about the above as a matter of urgency, as the purchaser would require sufficient time to be able to make those arrangements before Christmas. If your client would still like to proceed with refinance as was previously agreed, our client would require written confirmation from your client as fees will need to be expended for the refinance. We note that it is in the interests of all parties that the above issues be confirmed or dealt with as a matter of urgency due to shortage of time. 1. The email also included details of an "alternative sale" that had been negotiated for a purchase price of $10,933,000. 2. On the morning of 4 December 2014 Mr Tekin sent an email to Mr Harsany which included the following: We both agreed and will always agree that holding it to seek for rezoning will give us best results in terms of $. If you remember I find it very hard to keep on going like this mainly psychologically. Therefore I said maybe I can hang in there for 6 months due to holiday to Turkey in 2 weeks. On my return I could get a Kebab Shop and I am happy. I always, always, said I could not go like this without being occupied with something especially a Kebab Shop which I am good at. 1. On 4 December 2014 Mr Tekin's solicitors sent a facsimile to Upside's solicitors. Enclosed with the facsimile was a Notice to Complete dated 4 December 2014 which required completion of the purchase by no later than 3:30pm on 18 December 2014. It was further stated in the facsimile that consideration would only be given to the proposed sale described in the email of 3 December 2014 if certain conditions were met. It was stated that Mr Tekin required confirmation in relation to those matters by 8 December 2014. 2. Later on 4 December 2014 Mr Lam sent an email to Mr Stratford. The email included revised details concerning the "alternative sale" that had been described in Mr Lam's email of the previous day. Mr Stratford was requested to prepare all necessary documents in order for the transaction to proceed. Mr Lam's email also included a response to some of the conditions set out in Mr Stratford's letter sent earlier that day. Mr Lam sent a further email shortly thereafter, stating that the proposed purchaser was Daheng Property Pty Limited. 3. In December 2014 Richardson & Wrench were retained as a selling agent for the property. An open selling agency agreement was signed by Mr Tekin on 15 December 2014. On 12 December 2014 Richardson & Wrench sent a letter to Mr Tekin's solicitors providing details of a proposed purchase at a price of $10.2 million. The identity of the purchaser was "to be advised". A draft Deed of Variation to the Side Deed was prepared in connection with that proposed sale. The amendments would have had the effect that, upon completion of such re-sale, Mr Tekin would pay Upside the sum of $1,150,000 pursuant to clause 4(b)(ii) of the Side Deed. The respective solicitors for Mr Tekin and Upside appear to have communicated with each other in the period from 12 December 2014 to 17 December 2014 concerning this transaction. However, neither the sale nor the associated variation to the Side Deed proceeded. 4. It appears that the proposed sale to Daheng Property Pty Limited was being considered as at 17 December 2014. On that day Mr Lam sent an email to Mr Stratford advising that it had been agreed between their respective clients that they would proceed with that sale, subject to certain changes. Mr Lam stated that he would amend the Deed of Variation to reflect the terms of that sale. That was done, and Mr Lam sent a revised draft Deed of Variation to Mr Stratford late in the afternoon of 17 December 2014. The draft was the subject of further communications between the respective solicitors on 18 December 2014. Mr Tekin's solicitors also made contact on 18 December 2014 with Zhang Partners, the solicitors for the proposed purchaser. 5. The time stipulated in the Notice to Complete that was served on 4 December 2014 expired at 3:30pm on 18 December 2014 without completion taking place. There was no evidence of any communications between the parties concerning a settlement of the contract at or around that time. Indeed, there was no evidence of any communications concerning the Notice to Complete following its service until Mr Tekin sought to rely on it on 13 March 2015. 6. On 19 December 2014 Zhang Partners sent an email to Mr Tekin's solicitors. The email included a number of requests, including a request that the purchase price be reduced to $9,930,000. Mr Harsany deposed that he discussed the revised offer with Mr Tekin, and Mr Tekin told him that he did not wish to further deal with the proposed purchaser as the offer was too low. Mr Tekin did not deny that such a conversation occurred. He stated, however, that there was an additional reason, possibly related to the proposed purchaser's requirements concerning insurance, why the transaction did not proceed. It does appear, from emails sent between Mr Tekin's solicitors and Zhang Partners, that negotiations broke down on about 22 December 2014 over the issues of price and insurance. 7. On 22 December 2014 CEG Direct Securities Pty Ltd ('CEG Direct') issued an indicative letter of offer in respect of a loan of $3.5 million in favour of Assure (NSW) Pty Limited. The loan was proposed to be secured by a first mortgage over the property. 8. On 23 December 2014 Mr Harsany sent an email to Mr Stratford (copied to Mr Tekin). The email included the following: As the purchasers we were expecting to come through have now both fallen over, Jerry has asked me to write to you in regards to our plans for refinancing his property so we can alleviate his pressures with the existing lenders. It seems pertinent to do this as we can't rely on potential buyers to hold of [sic – off] the banks. I have proposed to arrange a loan with the company attached who I have current dealings with and have found to be quite professional. The reason for choosing this company is not only due to my good relationship with them, I believe they will be able to process the refinance within a couple of weeks. We could look at other more conventional lenders however this would take much longer and expose Jerry to more risk with HSBC. In summary my company (Assure) that owns Berowra would be the borrower and I would also be a personal guarantor. I would be asking Shing [Lam] to prepare a development management agreement to cover both of our interests and responsibilities which would be forwarded to you for review. The amount applied for is $3,500,000 for a period of 6 Months with a possible extension to 12 Months if the rate is ok and if required. I need to confirm distribution of funds with Jerry however this is a proposed list in order of priority to be paid from the loan settlement – 1. HSBC - $1,680,000 2. La Trobe - $520,000 3. WRV (John Lee) - $330,000 4. Interest to be held - $210,000 5. Other Debts of Jerry's - $160,000 6. Cashflow for Jerry - $300,000 7. Upside Deposit Refund - $300,000 Should the funding be reduced due to an unfavourable valuation, I would propose reducing the list from the bottom up. It's critical for me to try to refund the Upside deposit as this will tie up all of my borrowing capacity and ability to pay other commitments. The formula for our deal in essence would be as described previously with $8.8 Mil locked in for Jerry with a net profit share of 50/50 for any amount obtained above that. 1. On 7 January 2015 Mr McDonald of Richardson & Wrench sent an email to Mr Harsany which contained details of an offer for the property for a price of $11.9 million (including GST). The identity of the purchaser was not disclosed. Mr Harsany deposed that he discussed this offer with Mr Tekin who said, in effect, that the offer was not acceptable as it would not yield a net amount of $10.5 million. Mr Tekin denies that such a conversation occurred. In any event, according to Mr Harsany the offer was later withdrawn. 2. On about 13 January 2014 Mr Tekin obtained an offer of finance from Chifley Securities Pty Ltd in respect of a loan of $3.3 million to be secured by a first mortgage over the property. Mr Tekin sent the offer to Mr Harsany on 20 January 2014, asking for his views. Mr Harsany provided brief comments on the offer later that day. 3. On 16 January 2015 CEG Direct issued an unconditional approval to Assure (NSW) Pty Limited for a loan of $2,510,000. This loan was to be secured by a first mortgage over the property, as well as a second mortgage over a property in Abbotsford where Mr Tekin resides. 4. It appears that on about 20 January 2015 Mr Harsany decided that he wanted to proceed to enter into the Service Agreement with Centenary. It further appears that he then requested Mr Tekin to execute the agreement. Mr Tekin obtained some legal advice about the agreement on 21 January 2015. He signed the agreement shortly thereafter. As noted earlier, the agreement was also signed by Mr Harsany on behalf of Upside. 5. By 12 February 2015 Centenary had obtained a conditional approval from Eclipse Prudent Mortgage Corporation Limited for a loan of $4 million to Mr Tekin and Upside as borrowers, with Mr Harsany as a guarantor. One of the conditions of the approval concerned the provision of evidence of the borrower's current income and capacity to meet interest payments. There was a similar condition in respect of the guarantor. Neither this, nor any of the other refinancing proposals, proceeded. 6. On 13 March 2015 Mr Stratford sent a letter to Mr Lam enclosing, by way of service, a Notice of Termination of the contract. The notice recited that a Notice to Complete had been served upon Upside on 4 December 2014 and that Upside had failed to comply with it. The notice went on to state that the deposit referred to in the Notice to Complete of $300,000 was forfeited, and that the contract was terminated. 7. On 19 March 2015 Mr Lam sent a letter in response in which the validity of the Notice to Complete was challenged on numerous grounds. It was asserted that the purported termination of the contract was a wrongful repudiation of it. The letter went on to state that Upside had elected to terminate the contract on the basis of such wrongful repudiation. Determination Was Mr Tekin entitled to terminate the contract on 13 March 2015? 1. The first issue to consider is whether Mr Tekin was entitled to terminate the contract on 13 March 2015. The asserted ground for the termination was the failure of Upside to comply with the Notice to Complete that had been served on 4 December 2014. However, Mr Tekin accepts that, contrary to Special Condition 7 of the contract, the Notice to Complete failed to give a period of no less than 14 days after service of the notice for completion of the contract. Thus, the failure to complete by the time specified in the notice was not a failure to comply with the contract in an essential respect. 2. Mr Tekin nevertheless contends that the conduct of Upside in the period from 1 December 2014 to 13 March 2015 amounted to a repudiation of the contract. In particular, it was submitted that the circumstances in which Upside delayed completion of the contract throughout that period, including by actively seeking to avoid the performance of its obligations under the contract, should be seen as repudiatory. Emphasis was placed on the following matters: 1. that Upside knew from the Notice to Complete that Mr Tekin asserted an entitlement to terminate the contract if it was not completed by 18 December 2014; 2. that Upside wished to avoid completion of the contract; and 3. that Upside thus sought to persuade Mr Tekin to participate in a refinancing of his debts rather than require completion of the contract. 1. It was submitted that the inference to be drawn from the conduct of Upside throughout the period is that Upside was saying that it was not going to complete the contract unless and until it found it convenient to do so (see Carr v JA Berriman Pty Limited (1953) 89 CLR 327 at 349; Laurinda Pty Limited v Capalaba Park Shopping Centre Pty Limited (1989) 166 CLR 623 at 633-4). 2. The conduct of Upside must be considered in its commercial context. That context includes the Side Deed which envisaged that the parties might pursue a re-sale of the property by Mr Tekin or a sub-sale of the property by Upside. Further, by 1 December 2014 there had been some discussion between Mr Tekin and Mr Harsany about refinancing the debts on the property. That course, which was not contemplated by the Side Deed, is likely to have been a matter raised by Mr Harsany. I note, however, that it was not put to Mr Harsany in cross-examination that he raised the matter or thereafter sought to pursue it for the purpose of avoiding or delaying the performance by Upside of its obligations under the contract for sale. 3. As at 1 December 2014 Upside was not in a position to complete the contract. Mr Harsany's email of that day suggested that completion was but one "scenario". Other suggested "scenarios" were a refinancing with a view to seeking a re-zoning of the property and on-selling prior to the settlement of a refinance. 4. Mr Tekin's response, through his solicitors, was to call for completion of the contract for sale. That was made plain through their letter of 3 December 2014 and the facsimile sent on 4 December 2014 which enclosed the Notice to Complete. However, Mr Tekin's conduct in this regard was not unequivocal. The email he sent to Mr Harsany on 4 December 2014 contained the suggestion that he was open to the idea of holding the property for a period in order to seek a re-zoning. Further, it is clear that until at least 19 December 2014, Mr Tekin was engaged in negotiations concerning a possible sale of the property to a third party. 5. Those negotiations had come to an end by about 22 December 2014. Mr Harsany thereupon commenced to pursue a refinance involving a loan of $3.5 million. Details of this were sent to Mr Tekin and his solicitor on 23 December 2014. There is no evidence that Mr Tekin signified that this course was unacceptable to him. I note that in January 2015 Mr Tekin himself was seeking to obtain finance through Chifley Securities. Moreover, despite the issuing of the Notice to Complete and the expiry of the time it gave for completion, it appears that neither Mr Tekin nor his solicitors thereafter made any call for the completion of the contract. Indeed, no such call was made at any time before Mr Tekin purported to terminate the contract on 13 March 2015. Mr Tekin effectively conceded as much in cross-examination. In light of that concession I do not accept Mr Tekin's evidence to the effect that he told Mr Harsany in January 2015 that he needed finalisation of the contract urgently. 6. In the early months of 2015, at least until early March 2015, the parties seemed to have proceeded with their refinancing efforts without particular regard or advertence to the existence of the contract for sale. It appears from certain text messages sent between Mr Tekin and Mr Harsany that by early March 2015 the refinancing was not proceeding. Some of the text messages sent by Mr Harsany (for example on 5 March 2015 and 13 March 2015) seemingly refer to the possibility of going ahead and settling the sale. Upside, at least, was apparently treating the contract as still on foot. 7. I do not agree that the conduct of Upside in the period from 1 December 2014 to 13 March 2015 should be regarded as repudiatory. Viewing the conduct as a whole, I would not draw the inference that Upside was effectively saying that it would only complete the contract if it found it convenient to do so. It seems to me that despite the service of the Notice to Complete, both parties conducted themselves in a manner suggesting that completion of the contract was not required, at least for the time being. Other options in relation to the property, whether a sale to a third party or a refinance transaction, were pursued instead. The conduct of the parties bears some resemblance to, but does not go so far as, a mutual abandonment of the contract (DTR Nominees Pty Limited v Mona Homes Pty Limited (1978) 138 CLR 423 at 434). 8. The pursuit of other options may have suited Upside. Mr Harsany gave some evidence in cross-examination that he preferred not to have to borrow. However, I do not think that the conduct of Upside can fairly be said to have evinced an intention no longer to be bound by the contract. 9. I did not understand Mr Tekin to submit that repudiation should be found merely on the basis of the delay between 1 December 2014 and 13 March 2015. In any event, the circumstances described above do not in my view amount to such "gross and protracted" delay as to warrant such a conclusion (Neeta (Epping) Pty Limited v Phillips (1974) 131 CLR 286 at 302; Sindel v Georgiou (1984) 154 CLR 661 at 671). The delay is largely explained by the parties' mutual pursuit of other options instead of proceeding to completion of the contract, but without, as I have said, going so far as to abandon the contract. 10. Mr Tekin has failed to establish that Upside had repudiated the contract by 13 March 2015. Accordingly, his purported termination of the contract on that day was wrongful and itself a repudiation of the contract. It is not necessary to deal with the other arguments raised by Upside against the validity of Mr Tekin's purported termination, including the argument based on Mr Tekin's failure to answer requisitions. Was Upside ready, willing and able to perform its obligations under the contract? 1. The next issue to consider is whether Upside was at the time of the repudiation of the contract ready, willing and able to perform its contractual obligations. 2. It is incumbent upon Upside, as a party seeking damages for the other party's breach of contract, to establish that it was itself ready, willing and able to perform its obligations, including the payment of the purchase price (see Foran v Wight (1989) 168 CLR 385 at 400-401 (Mason CJ), 430-431 (Brennan J), 438-439 (Deane J) and 451-452 (Dawson J); Sharjade Pty Limited v Commonwealth [2009] NSWCA 373 at [68] and [122]). Proof of that matter is a condition precedent to the right to recover damages (Hensley v Reschke (1914) 18 CLR 452). 3. Uniform Civil Procedure Rules 2005 (NSW) r 14.11 relevantly provides that if it is a condition precedent necessary for a party's case in any pleading that the party is ready and willing, or was at all material times ready and willing, to perform an obligation, a statement to the effect that the condition has been satisfied is taken to be implied in the party's pleading. 4. The rule applies to Upside's Statement of Claim which contains no express averment of readiness and willingness. However, Mr Tekin clearly placed the matter in issue by the terms of his Defence (in particular, paragraphs 35(b), 37(f) and 39). The onus remained upon Upside to establish that it was ready, willing and able to perform its obligations. This was accepted by Upside. 5. In the context of this case, where Mr Tekin repudiated the contract on 13 March 2015, it was for Upside to prove that at that time it was ready, willing and able to proceed to complete the contract. 6. Upside adduced practically no evidence of its ability to proceed to complete the contract by paying the remaining balance of the purchase price ($7.5 million) and GST ($780,000), a total of $8,280,000. Mr Harsany's affidavits are silent as to the financial position of Upside at any relevant time and the availability of sources of funds to complete the purchase. There is not even a conclusionary statement to the effect that at the time of the repudiation Upside was in a position to proceed to completion. No documentary evidence was adduced showing that Upside had obtained any approval for finance sufficient to complete the contract, or even that it had applied for such finance. 7. Instead, Upside pointed to evidence that largely consisted of statements made on its behalf in late 2014 and early March 2015 concerning settlement of the contract. It submitted that the Court should conclude, based on such evidence (which, it was said, was not challenged), that the test for readiness, willingness and ability to complete was satisfied. This evidence essentially consisted of: 1. statements made by Mr Harsany on about 24 November 2014 and 1 December 2014 to the effect that he would need about three weeks to obtain funding; 2. statements made by Mr Lam on 28 November 2014, 1 December 2014 and 3 December 2014 about a delay in finalising matters relating to finance and the timing of a settlement; 3. Mr Harsany's evidence in cross-examination that in early December 2014 he had a verbal approval for finance and needed four or five days to transfer the money from China, and that he could have settled the purchase in 2014; 4. text messages sent by Mr Harsany to Mr Tekin in March 2015 which refer to an aunty (or "ex-aunty") being keen to proceed to settle; and 5. evidence of an ability to raise finance on the security of the property. 1. One part of the evidence described above was challenged: Mr Harsany's statement in cross-examination that he needed four or five days to transfer the money from China. It was put to him that this was inconsistent with the position (said to be the true position) put forward by Mr Lam on 3 December 2014 that Upside required an extension of the settlement period for two weeks beyond the Christmas period. 2. It should be noted that Mr Tekin gave evidence in cross-examination to the effect that on 24 November 2014 Mr Harsany had told him that there were problems in getting the money from his aunty. Mr Tekin was challenged about this evidence, which did not appear in his affidavit. However, I am prepared to accept that Mr Harsany said something about difficulties in relation to the obtaining of funds. It is clear that Mr Harsany spoke about a need for time, and Mr Tekin's recollection is broadly consistent with Mr Lam's letter of 28 November 2014 which referred to a "slight delay in finalising matters relating to finance". 3. Mr Tekin emphasised the evidence concerning Upside's financial position. It was submitted, correctly, that this evidence made it clear that Upside, which was incorporated specifically for the purpose of entering into the contract, had no assets other than its rights under the contract and the Side Deed. Mr Tekin also referred to the fact that Upside obtained the funds for the deposit ($300,000) from other companies. I accept that the evidence showed that Upside was plainly reliant upon others for the funds required to complete the purchase. 4. Mr Tekin also referred to Mr Harsany's email of 23 December 2014 in which a proposed refinance for $3.5 million was discussed. The terms of the email show that it was contemplated that the refinance may enable the $300,000 deposit to be refunded to Upside. The email includes the following: It's critical for me to try to refund the Upside deposit as this will tie up all of my borrowing capacity and ability to pay other commitments. 1. Mr Tekin also referred to the evidence given by Mr Harsany in cross-examination to the effect that it would be preferable for the property to be sold to a third party rather than have Upside settle then on-sell, as this would avoid the need to borrow. 2. Upside submitted that it only had to establish that it was not at the relevant time presently incapacitated from future performance, or not "substantially incapable" of future performance. In this regard I was referred to the judgment of Brennan J in Foran v Wight (supra) at 425, 427 and 431, and also to the judgment of Dawson J in that case (at 452), where his Honour said that "in proving readiness and willingness where he has been absolved from tendering performance he may not have to prove a great deal". Upside further submitted that the facts in Foran v Wight showed that the bar was quite low. 3. However, it must be recognised that those statements of Brennan and Dawson JJ were made in the context of the discussion of the readiness and willingness requirement for a party seeking to rescind (that is, terminate) following a breach or repudiation by the other party. That requirement is not to be regarded as the same as the readiness and willingness requirement for a party seeking to recover damages for the other party's breach. That is made apparent by a number of passages in Foran v Wight (supra) where the requirements are treated as distinct. In particular, Brennan J (at 431) noted that the purchasers in that case were not seeking damages but were rather seeking to rescind for breach and recover the deposit, and that different questions were involved (see also Deane J at 438-9 and Dawson J at 454). 4. In Sharjade Pty Limited v Commonwealth (supra), Hodgson JA (at [64]) stated that it was necessary to keep distinct three questions, namely: 1. the availability of termination to put an end to obligations to perform a contract in the future; 2. availability of termination plus a cause of action for at least nominal damages; and 3. availability of termination plus a cause of action for substantial damages for loss of the bargain. 1. After discussing the various approaches taken in the High Court in Foran v Wight (supra) Hodgson JA continued (at [68]): …If the only question is whether a purported termination is effective to put an end to the contract so as to discharge both parties from future performance, then anticipatory breach by one will justify termination by the other whether or not the latter is ready and willing to perform. However, if the latter wants to obtain any relief on the basis of the termination, beyond mere discharge of future obligations, then as part of its cause of action it must prove readiness, willingness and ability. It is no longer necessary to explicitly allege this (UCPR 14.10 [sic]), but if it is put in issue, the onus lies on the plaintiff to prove it in order to establish such a cause of action. 1. As far as the particular facts of Foran v Wight (supra) are concerned, it should also be noted that two judges in that case expressed the view (in obiter) that on the facts as found the purchasers had not proven on the balance of probabilities that they would have been able to complete on the stipulated completion date (see Brennan J at 431 and Deane J at 438-9). 2. In approaching the evidence on this question, it is necessary to bear in mind that all evidence is to be weighed according to the proof which it was in the power of one side to produce, and in the power of the other to have contradicted (Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970). Clearly, the facts concerning Upside's ability to perform its contractual obligations constitute a matter peculiarly within its knowledge. Evidence about that matter should have been readily available. 3. Further, insofar as it is suggested that the source of funds is a person who is related or somehow otherwise connected to Mr Harsany (the sole director of Upside), it is relevant to note that the person was not called to give evidence. That person would be expected to be called by Upside (not Mr Tekin) to give evidence. There is good reason to think that evidence from such person would elucidate the question of Upside's ability to complete the contract. No explanation was given for the failure to call the person (see Jones v Dunkel (1959) 101 CLR 298; Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345; [2012] HCA 17 at [250], [259] and [263]-[264]). I infer that evidence from that person would not have assisted Upside's case. 4. I have considered the evidence relevant to this question, including the evidence referred to above. I am not satisfied that Upside has discharged its onus of showing that in March 2015 it was ready, willing and able to proceed to perform its contractual obligations, including by paying the money required to complete the contract. 5. There is an absence of direct evidence of any capacity to raise the necessary funds, which exceed $8 million. I have considered Mr Harsany's evidence in this regard: his claim that in December 2014 he had a verbal approval for finance and could have settled in that month; statements made in November and December 2014 about the availability (or present lack of availability) of finance; and statements made in text messages in March 2015. I do not think that this evidence, even when viewed as a whole, justifies any inference that in March 2015 Upside had a source of finance available to it which was likely to provide funds sufficient to enable completion of the purchase. The evidence is in my view vague, entirely lacking in detail, and not supported by any testimony from the suggested source of finance. Very little weight can be given to such evidence. 6. Moreover, no evidence was adduced about the suggested source of finance, apart from the descriptions of "aunty" or "ex-aunty" and the indication that funds would be coming from China. Significantly, there was no evidence as to the financial position of the aunty at the relevant time. Upside did not provide sufficient details to assess the likelihood that funding would have in fact eventuated or to confirm the timeframe within which such funds could have been produced. Even the name of the aunty remains unknown; although her name would not have met any of these shortfalls in Upside's evidence, this omission is characteristic of the very limited evidence adduced regarding Upside's purported source of funding. 7. The evidence concerning the efforts to raise finance on the security of the property does not take the matter much further. The only offers of finance were for sums much lower than the more than $8 million required. 8. Upside complained that it was not put to Mr Harsany in cross-examination that the company lacked the ability to complete in March 2015. Reference was made to the rule in Browne v Dunn (1893) 6 R 67 at 70-71. However, in circumstances where the issue of readiness and willingness was clearly raised by Mr Tekin in his Defence, and where Mr Harsany did not adduce any evidence of the existence of such ability in affidavits sworn after the filing of that Defence, I do not think there is any infringement of the rule, or any unfairness. There was no testimony of substance to contradict on the subject of Upside's ability to complete in March 2015. In those circumstances it is not the duty of a cross-examiner to venture into the vacant space when the witness, having had every opportunity to deal with the issue, has failed to do so. 9. Upside also suggested that it might have been able to complete the contract with the assistance of a third party purchaser. However, no specific evidence was adduced about the existence of such a purchaser, or regarding the terms upon which such a purchaser may have been prepared to act so as to facilitate completion. I am not persuaded that in March 2015 Upside was on that basis ready, willing and able to proceed to completion. 10. For the above reasons, I am not satisfied that in March 2015 Upside was ready, willing and able to proceed to perform its contractual obligations. Upside has thus failed to prove a matter that is a condition precedent to its claim for damages. It follows that the claim for damages must be dismissed. 11. In case that conclusion is incorrect, I will proceed to deal with the remaining issue of significance, namely, whether Upside has in any event established that it has suffered a loss as a result of Mr Tekin's breach. Has Upside established that it suffered loss as a result of Mr Tekin's breach? 1. This issue largely turns upon a determination of the value of the property at the time of the repudiation on 13 March 2015, compared to the contract price of $7.8 million. Upside contends that the property was worth $11.75 million on 13 March 2015; Mr Tekin contends that the property was then worth $6.8 million. 2. Upside primarily relies upon the evidence of Mr Malcolm Gunning. His reports, dated 27 October 2015 and 11 April 2016 were admitted after a general objection to their admissibility was withdrawn. However, Mr Tekin maintained a substantial attack upon Mr Gunning's evidence and submitted that little or no weight could properly be given to it. In essence, it was contended that Mr Gunning's reports failed to adequately disclose the reasoning that led to his conclusions and that he impermissibly sought to rely upon certain offers to purchase the property as direct evidence of value. 3. Before dealing with the content of his reports, it is necessary to consider the law in respect of the use of offers as evidence of value. 4. The relevant legal principles were discussed by Wilcox J in Goold v Commonwealth of Australia (1993) 42 FCR 51 at 57-60. After analysing the decision of the High Court in McDonald v Deputy Federal Commissioner of Land Tax (NSW) (1915) 20 CLR 231 in which an offer to sell certain land was held to be inadmissible on the question of its value, and referring to two subsequent decisions of single justices of the High Court in which the reasoning of McDonald (supra) was applied, Wilcox J stated (at 59-60): In at least three Australian cases, evidence of an offer to purchase the subject land has been admitted: see Blefari v The Minister (1962) 8 LGRA 1 at 5, Hustlers Pty Ltd v Valuer General (1967) 47 LGRA 269 at 277 (both decisions of Else-Mitchell J) and Phillipou v Housing Commission (1969) 18 LGRA 254 (Barber J). In none of these cases was the offer treated as direct evidence of value. … In the light of Barber J's analysis, it would be anomalous and unjust for the courts to adopt a blanket rule excluding offer evidence. Such a rule might exclude cogent evidence of the interest of a particular purchaser in the land being valued, a person who was willing to pay more than ordinary market price. Of course, before placing reliance upon a mere offer, a court must consider carefully the question of its genuineness. The offer might be a sham, designed to prop up an inflated compensation claim or to reduce rates and taxes; in either case without any cost to the offerer. It might be an attempt to manipulate the market for some other ulterior purpose, perhaps a purpose extraneous to the litigation. If the offer was genuine when made, it might not have led to a concluded contract, even if resumption had not intervened. The offer might have been withdrawn. The purchaser might have failed to complete the transaction. Because of matters such as these, even a genuine offer cannot be regarded as direct evidence of value. But it seems to me that, once the court is satisfied about genuineness, an offer by an arm's length party to purchase the land under valuation is something that the judicial valuer ought to take into account in considering the possibility of a sale at a price different from that indicated by conventional evidence, such as an analysis of comparable sales, or of a hypothetical development, or a calculation of the capitalised value of the rental return. How much weight should be given to such an offer is a question to be determined by reference to the facts of the particular case. In some cases, the appropriate weight may be minimal; in others considerable. … It is true that, in McDonald, Isaacs J went beyond the matter requiring the court's determination. Although they were obiter dicta, his comments about offers over other land must be accorded respect. But, in considering them, it must be remembered that his Honour was discussing the use of offer evidence as direct evidence of value, not the use of offer evidence as an indication of the existence of a person willing to pay a higher than market price. Bearing these matters in mind, it seems to me that, despite the absoluteness of some of Isaacs J's language, he should not be understood to have intended to exclude all offer evidence in all cases. 1. In Henderson v Amadio Pty Limited (No 1) (1995) 62 FCR 1 at 122, Heerey J referred to the statement of Wilcox J about not adopting a blanket rule excluding offer evidence and said: I respectfully agree with Wilcox J's comments. Although the present case is not concerned with the particular kind of issue as to which Wilcox J thought evidence of genuine offers might be relevant, his Honour shows that it is unsafe to assert in unqualified terms that a specified kind of evidence is per se inadmissible without careful analysis as to the purpose for which it is sought to be used in the instant case. 1. The Court of Appeal in Stockl v Rigura Pty Limited [2004] NSWCA 73; (2004) 12 BPR 23,151 cited (at [37]) the judgment of Wilcox J for the proposition that a genuine offer to buy the particular land the subject of the dispute may now be taken into account in certain circumstances. 2. In Cordelia Holdings Pty Limited v Newkey Investments Pty Limited [2004] FCAFC 48 the Full Federal Court stated (at [128]-[129]): It seems clear to us the decision of the High Court in McDonald, as applied by single Justices of the High Court in James Patrick & Co Pty Limited v Minister of State for the Navy [1994] Argus Law Reports 254 and Gregory v Commissioner of Taxation (Cth) (1978) 123 CLR 547, is determinative as to whether it is an error to take into account evidence of offers. Whatever weight may be properly given to evidence of offers for limited or general purposes, it is clear that such evidence is not permissible as direct evidence of value. Insofar as the trial judge used the evidence in that way he was, we consider, in error in doing so. To the extent that such evidence may be admissible in a general way, as to which see Wilcox J in Goold v Commonwealth (1993) 42 FCR 51 at 60 (Goold) and Heerey J in Henderson v Amadio (No 1) (1995) 62 FCR 1 at 122, it provided an insufficient additional basis upon which a conclusion as to value might have been arrived at. Moreover, even if such evidence is used in a general way, it would only be used if it were accompanied by an assessment of relevant factors such as the genuiness of the offer and whether it was made at arm's length (see Goold at 60). In this case, his Honour's findings do not disclose a consideration of that nature and we must conclude that the evidence of offers was wrongly taken into account and did not provide support for the judge's conclusion. 1. The issue was then considered by Spigelman CJ in MMAL Rentals Pty Limited v Bruning (2004) 63 NSWLR 167; [2004] NSWCA 451. That case concerned a question of fair market value of a parcel of 18.75% of the shares in a company to be purchased by the holder of the remaining 81.25% of the shares. Spigelman CJ (with whom Mason P and Hodgson JA agreed) held that the trial judge was correct to rely on an offer made by the majority holder as an element which determined assessment of fair market value to a very substantial degree (at [83]). At [87], Spigelman CJ expressed his agreement with the observations of Wilcox J in Goold v Commonwealth of Australia (supra) (at 59-60) and considered the scope of McDonald v Deputy Federal Commissioner of Land Tax (NSW) (supra) as a precedent. In the course of that discussion Spigelman CJ said (at [93]): Even if the reasoning in McDonald is applicable to an offer of sale or purchase the particular property the subject of valuation, it remains a decision about the admissibility of evidence. It is unnecessary to set out the passage of the judgment from the court delivered by Isaacs J in McDonald. It is sufficient to note that it focuses on the degree of inconvenience that may be associated with investigating the comparable nature of land the subject of the offer. That critical part of the reasoning would not apply to an offer with respect to the very land or property in issue. In such a case I would have thought that the relevance of the offer is sufficient to make it admissible, although its weight will depend on surrounding circumstances. 1. Spigelman CJ continued (at [95]-[97]): For present purposes it is not necessary to qualify the conclusion of the Full Court of the Federal Court in Cordelia Holdings supra at [128], that the line of authority commencing with McDonald should be accepted as establishing the proposition that "such evidence is not permissible as direct evidence of value". I note that Sugerman J had reluctantly accepted that he was similarly bound in Marcus Clark and Co Ltd v Commissioner for Railways (1949) 29 LVR 98 at 107-108. However, if there be any such general rule, the present case falls with [sic] a recognised exception to it. In the analysis by Wilcox J in Goold, particularly his Honour's reference to the judgment of Barber J in Phillipou, it is established that where a valuation must refer to the special potentiality of particular property for a specific purchaser, an offer by that purchaser to purchase that property is relevant. Both Barber J and Wilcox J refer to the cases of Inland Revenue Commissioners v Clay and Raja Vyricheria Narayana Gajapatiraju. As Wilcox J concluded in Goold (at 59-60), in a context in which a particular purchaser was willing to pay more than market value: " ...it would be anomalous and unjust for the courts to adopt a blanket rule excluding offer evidence. Such a rule may exclude cogent evidence of the interest of a particular purchaser in the land being valued, a person who was willing to pay more than ordinary market price." In my opinion, an offer by such a purchaser is not only relevant it is highly probative. Indeed, whilst allowing for the possibility of further bargaining, it is difficult to conceive what better evidence there could be. Expert evidence may establish that such an offer is inadequate but, unless there are special considerations, the offer clearly establishes a floor. 1. The topic was discussed further in the decision of the Court of Appeal in Western Australia in Auxil Pty Limited v Terranova [2009] WASCA 163; (2009) 260 ALR 164. Buss JA undertook an extensive review of the authorities at [12]-[43] and said (at [45]-[52]): Several propositions in relation to proof of the value of land are discernible from my review of the authorities. First, the general rule of admissibility is that an unaccepted offer to purchase land is not admissible as 'direct evidence' of its value. Secondly, the general rule does not exclude evidence of an unaccepted offer in each and every case. Thirdly, where evidence of an unaccepted offer to purchase land is sought to be tendered, the purpose for which the tender is made should be ascertained and analysed. Fourthly, although an unaccepted offer to purchase land is not admissible as 'direct evidence' of its value, the evidence may be admissible, in a particular case, for limited or general purposes. Fifthly, the limited or general purposes for which evidence of an unaccepted offer may be admissible include establishing: (a) that later sales sought to be relied on in assessing the value of the land were not forced sales; (b) the existence of a person who might be prepared to pay more than the ordinary market value of the land; (c) the demand in the market for the land in the context of evaluating whether a mortgagee of the land breached its duty of good faith in exercising its power of sale; (d) the special potentiality of the land for a specific purchaser where the offer has been made by that purchaser and in respect of that land. Also, an unaccepted offer to purchase land may be admissible for the general purpose of providing some assistance in determining the lower limit of the market value of the land in the case of a purchaser's actual unconditional open offer to purchase at a specific price or for the limited purpose of checking the methodology adopted by an expert valuer in his or her evidence. The illustrations I have given are not, of course, intended to be exhaustive. Sixthly, evidence of an unaccepted offer to purchase land should not, ordinarily, be accorded any weight unless the trial judge has found that the offer was genuine. Factors to be considered in evaluating the genuineness of an offer include, for example, whether the purchaser was willing and able to complete the purchase in accordance with the terms of the offer, whether the purchaser was at arm's length from the vendor, and why the offer was not accepted. It is unnecessary, in this appeal, to consider whether any difference or tension exists between the decisions of the Full Court of the Federal Court on the one hand and the decisions of the Court of Appeal of New South Wales on the other. 1. Miller JA expressed agreement with the reasons of Buss JA on the ground of appeal concerning the use of offers as evidence of value (see at [72]). 2. Newnes JA also extensively reviewed the authorities (at [130]-[155]). At [152] his Honour referred to the decision of the New South Wales Court of Appeal in Baiyai Pty Limited v Guy [2009] NSWCA 65, noting that that case involved a situation in which a contract had been entered into but did not proceed (see also Buss JA at [43]). I note, however, that it is not clear from the reasons in that case whether a binding contract was actually entered into or whether it was merely a situation where a contract on certain terms was issued but not entered into. In any event, Newnes JA continued (at [153]-[155]): In my respectful view, however, McDonald is authority that evidence of offers to purchase land is inadmissible as direct evidence of the value of the land. While the discussion in McDonald was, in its terms, directed to offers for comparable land, there was in fact no such offer in question in the case. The court had before it for consideration the admissibility of the offer made by the owner and the verbal offer made by a third party. As I have said, in concluding that the latter offer was inadmissible, the court must, in my view, be regarded as applying the reasoning in the case to that offer. I also do not, with respect, understand the essential reasoning of Isaacs J to have focused on the degree of inconvenience associated with investigating the comparable nature of land. As I understand the reasoning of Isaacs J, it was directed to the difficulties and uncertainties involved in determining whether an offer which did not lead to a contract represented the real value of the property, as opposed to the relative certainty which results when a contract has been entered into under which one party has parted (or is bound to part) with their money and the other with their land. In my respectful view, to the extent that what was said in MMAL might be thought to suggest to the contrary, the conclusion of the Full Court of the Federal Court in Cordelia is to be preferred, namely that McDonald is authority that evidence of offers to purchase land is inadmissible as direct evidence of the value of the land. That is not to say that such evidence is not admissible for other purposes in connection with the value of land, but that was not the issue in the present case. 1. Some of the statements made by Spigelman CJ in MMAL Rentals Pty Limited v Bruning (supra) (see, in particular, at [88] and [93]) appear broader than that which was laid down by the Full Federal Court in Cordelia Holdings Pty Limited v Newkey Investments Pty Limited (supra). However, Spigelman CJ made it clear that even if an offer is admissible on the question of value, the weight afforded to that offer depends upon the surrounding circumstances. I note further in this context that in Expectation Pty Limited v PRD Realty Pty Limited (2004) 140 FCR 17; [2004] FCAFC 189 the Full Court of the Federal Court said (at [90]): A vendor's open offer to sell at a particular price might be of some relevance to market value in the same way that an actual unconditional open offer by a purchaser with the means to effect the purchase might have some relevance to market value. A vendor's offer might set the top limit and a prospective purchaser's offer the bottom limit. (The discussion of the authorities in the Full Court in Cordelia Holdings Pty Limited v Newkey Investments Pty Limited [2004] FCAFC 48 at [121]-[129] exemplifies the difficulties inherent in evidence of this kind.) 1. I turn now to Mr Gunning's reports. His first report is dated 27 October 2015. I note at the outset that there are some deficiencies in the form of the report. For example, the terms of Mr Gunning's retainer and the accompanying information (as referred to in paragraph 1 of the report) are not included. Neither is the marketing submission dated 15 June 2015 that is referred to in paragraph 6 of the report. 2. As appears from paragraphs 7 and 14 of the report, Mr Gunning was requested to provide his opinion as to the market value of the property as at March 2015. In paragraph 8 he provides his opinion that the market in March 2015 was willing to pay $11,500,000 to $12,000,000 plus GST on reasonable terms. It is apparent from paragraphs 11 to 13 that Mr Gunning's opinion is to some extent based upon the view that development approval for approximately eighty home units may be expected under a proposed R4 High Density re-zoning of the site. 3. Mr Gunning explained his methodology in paragraph 15 of his report, which states: In ascertaining the market value of the subject property, I have: (a) Considered the offers made by interested third parties in respect of the subject property in late 2014 to 2015 (as identified by the Plaintiff); (b) Examined comparable unit site sales in Castle Hill about the same period for similar residential unit sites; (c) Spoken to residential unit builders and developers as to the price of a raw home unit site which is approximately 600-800 metres from the new Castle Hill railway station, about the same period; and (d) Considered the potential built unit sale price and formed an opinion of what developers and builder would purchase 10-16 Cecil Street Castle Hill on reasonable terms. 1. Mr Gunning expressed the opinion (at paragraph 16 of the report) that the above was the most appropriate method to adopt to calculate the market value of the property in March 2015. No explanation for that opinion was provided in the report. 2. In paragraph 17 of the report Mr Gunning sets out various assumptions which he assumed to be correct. Amongst the assumptions were the following: (d) A number of offers were received that were above $9,500,000 plus GST. Sales Advices were prepared and issued by Ray White Castle Hill for $11,200,000 plus GST on 18th November 2014 and $10,880,000 plus GST on 20th November 2014. Both offers did not proceed to a contract. … (h) A number of enquiries and offers were received by Richardson & Wrench. In particular Geoff McDonald had forwarded an offer, which he had received from an interested Purchaser (undisclosed), for $10,200,000 plus GST. The offer included a 42 days settlement and a 10% deposit to be released to the vendor on exchange of contracts. 1. Mr Gunning then proceeded to express (at paragraph 18 of the report) the opinion, on the basis that the offers that Richardson & Wrench and Ray White had put forward were genuine, that the current market value of the property at that time ranged from $9,500,000 to $11,200,000 plus GST. No further explanation for that opinion was provided in the report. I note, however, that paragraph 11 of Mr Gunning's report of 11 April 2016 indicates that he took the view that "actual offers from prospective arm's length buyers clearly provide an indication as to what a willing buyer is prepared to pay for the property at that time, and [are] therefore relevant to assessing market value at that time". 2. In paragraph 20 of his report of 27 October 2015, Mr Gunning listed 7 sales of land, with similar zoning to that of the property, which he considered in forming his opinion as to current market value. No explanation is given of how he dealt with each of the sales in relation to the forming of that opinion. I note that it emerged in cross-examination that Mr Gunning considered that the comparable sales showed a rate per m2 range of about $1,500 to $4,000, and that he thought a rate of about $2,500 per m2 might be reasonable for the property. 3. Mr Gunning stated, in paragraph 21 of his report, that he had spoken to residential unit builders and developers and sought their opinions concerning the current market price for home unit sites approximately 600-800 metres from the new Castle Hill railway station. Mr Gunning stated that the feedback he obtained was "that they would purchase on a per unit basis ranging from $140,000 - $150,000". 4. Mr Gunning then stated, in paragraph 22 of his report: I have considered the sale of similar zoned residential development land, the feedback from builder/developers (whom would be likely purchasers for the subject property) and the offers put forward by Richardson & Wrench and Ray White, and I have formed an opinion that the market in March 2015 would have been willing to pay $11,500,000 to $12,000,000 plus GST on reasonable terms. 1. Mr Gunning's second report, dated 11 April 2016, is largely a commentary upon the expert evidence to be relied upon by Mr Tekin, including the valuation evidence of Mr Phillip Mannell. Mr Gunning expressed the view that Mr Mannell took an unduly narrow approach "by dismissing the speculative buyers or the opportunity for an uplift in value prospective purchasers placed on the subject property". 2. In paragraph 15, Mr Gunning stated that his earlier report was "an opinion of the then current market's willingness to purchase the subject property as residential development site with the real opportunity for an uplift in density and/or zoning of the subject site". In cross-examination, Mr Gunning did not accept that he had concluded that a re-zoning of the property to R4 was certain. He accepted, however, that he came to the view that such a re-zoning was a very real proposition, or reasonably possible. He further stated that he considered that the offers that had been made for the property were all based on the potential uplift in zoning from R3 to R4. 3. Mr Gunning's view concerning a possible re-zoning from R3 to R4 was substantially based upon the Castle Hill Station Structure Plan ('CHSSP'). The CHSSP was a document issued in September 2013 by the Departments of Transport and Planning. One of the maps in that document (figure 19) shows the property to be within an area described as "High Density Residential". In another part of the document, the property is shown as within proposed areas for both medium density apartment living (3 to 6 storeys) and high density apartment living (7 to 20 storeys). 4. Ms Lisa Wrightson, a town planner called to give evidence by Mr Tekin, explained that under the current R3 Medium Density Zoning (under The Hills Local Environmental Plan 2012) the property had a maximum height limit of 9 metres. Ms Wrightson gave evidence of a meeting with planning officers of the Council in September 2015. She stated that: The staff consider the site in Cecil Avenue as being on the periphery of Castle Hill and on the lower end of the density spectrum for the locality. They did not advise that a planning proposal would be refused but it may be a difficult process depending on scale of development proposed and lack of supporting strategy documents from Council. 1. Ms Wrightson gave evidence that in order to increase the permissible density of the site there would need to be either a change in the height and permissible uses under the Local Environmental Plan or a change of the zoning to R4 High Density Residential in the Local Environmental Plan. Ms Wrightson considered that the timing for any such change (for which there could be no guarantee of approval) would be in the range of 1 to 2 years. 2. The reasoning that underpins Mr Gunning's opinions as to value is difficult to discern. The methodology he describes refers to various matters that he took into account. However, the extent to which, and the manner in which, those matters were considered and addressed in forming the opinions is obscure. The complaint that Mr Gunning's reasoning process is not adequately identified has considerable force, even though the general objection to the admissibility of his reports was ultimately withdrawn. His reports are silent, for example, as to how he took into account the seven sales he considered. 3. It seems to be the case that Mr Gunning placed a great deal of reliance upon the various offers to purchase the property that are referred to in his reports. The opinion as to market value expressed in paragraph 18 of his first report is apparently based solely upon offers (assumed to be genuine) made in the latter months of 2014. The opinion expressed in paragraph 22 of Mr Gunning's first report (as to the current market value of the property) apparently rests in part on those offers, which Mr Gunning regarded as based on the potential uplift in zoning from R3 to R4. 4. It is necessary to consider the purpose for which evidence of offers is sought to be used (see Auxil Pty Ltd v Terranova (supra) at [48]). It was submitted by Upside that Mr Gunning did not use the offers as direct evidence of value. It was nonetheless suggested that the offers, made by unrelated parties, were highly relevant to the ascertainment of market value "in that they demonstrate what an arm's length willing buyer is prepared to pay". That would seem to be the approach taken by Mr Gunning (see paragraphs 11 and 15 of his report of 11 April 2016). It was further submitted by Upside that the offers could be used to establish a floor in the market value. In that regard, reference was made to what Spigelman CJ said in MMAL Rental Pty Limited v Bruning (supra) at [97]. 5. In my opinion, the ways in which Upside seek to use the offers do involve using offers as direct evidence of value. I do not accept the submission made by Upside that an offer would only be used as direct evidence of market value if the amount of the offer was itself equated to market value. It seems to me that using offers to establish the existence of willing buyers in a market prepared to pay certain prices for a property, and thereby establish a floor in the market value, is to use the offers as evidence that goes directly to the question of value. That is the case even if the evidence is not the only evidence adduced or relied upon on the question. It should be noted that Spigelman CJ's statement (at [97]) concerning use of an offer to establish a floor were made in the context of a case where it was relevant to show that there was a specific purchaser willing to pay more than ordinary market price (cf the paraphrasing of his Honour's statement by Young JA in Crawley v Short [2009] NSWCA 410; (2009) 262 ALR 654 at [218]). Spigelman CJ regarded that situation as falling within a recognised exception to the general rule that offers not be permitted to be used as direct evidence of value. His Honour evidently considered that the offer in that case was being used as direct evidence of value. The present case does not fall within that exception. Here, the offers are not sought to be used to establish the interest of a particular purchaser or purchasers willing to pay more than the ordinary market price. Rather, the offers are said to establish what willing buyers in the market more generally are prepared to pay, and thereby establish a floor in market value. 6. I have come to the conclusion that the use of the offers in that manner would offend the general rule recognised in Cordelia Holdings Pty Limited v Newkey Investments Pty Limited (supra) and Auxil Pty Limited v Terranova (supra) that offers are not admissible as direct evidence of value. I do not think that the decision in MMAL Rentals Pty Limited v Bruning (supra) undermines that general rule given that Spigelman CJ expressly stated in that case (at [95]) that it was not necessary to qualify the conclusion reached in Cordelia Holdings Pty Limited v Newkey Investments Pty Limited (supra) at [128]. Further, the use of the offers proposed by Upside does not seem to me to fall within any established exception to the general rule. In my opinion it is not open to the Court to use the offers in the manner suggested. 7. Even if the offers were able to be used in the manner suggested by Upside, it would be necessary to consider the question of the weight that should be given to the offers. As the decided cases demonstrate, that would involve an assessment of the genuineness of the offers. 8. It may be assumed that the offers were genuine, in the sense of having been made bona fide by parties unrelated to Upside or Mr Tekin. However, virtually nothing is known about the offerors. I note that in one case the identity of the offeror was not revealed at all. More importantly, nothing is known about the ability of any of the offerors to actually complete a purchase in accordance with the offer made. That is a factor to consider in evaluating the genuineness of an offer (see Auxil Pty Ltd v Terranova (supra) at [51]). In circumstances where offers are sought to be used to establish what willing buyers are prepared to pay, the absence of such evidence reduces very significantly the weight that might otherwise be given to the offers. 9. I do not think it would be appropriate to accord any significant weight to the offers as evidence of what willing buyers in the market were prepared to pay for the property. To the extent that Mr Gunning places reliance upon the offers to purchase in that way, I am unable to accept his opinion of current market value. 10. I am also unable to accept Mr Gunning's opinion insofar as it is based on the "feedback" he received from builders and developers as to the prices they would pay on a per unit basis. The manner in which he derived the range of $140,000 to $150,000 was not explained. Further, Mr Gunning appears to have simply multiplied the figure of $150,000 by eighty (the number of units he considered could be built on the property if it was re-zoned to R4) to achieve a value of $12 million. In cross-examination he accepted that that was one of the methods he used. Mr Gunning thus valued the property on the basis that it had (or would have) a zoning different from the zoning it had in March 2015. I do not regard that as a suitable basis to value the property as at that date. Having regard to the equivocal nature of the CHSSP in relation to the future of the property, the fact that the CHSSP was as noted by Ms Wrightson a "strategy document" not an environmental planning instrument, and her evidence concerning the re-zoning process, a re-zoning of the property from R3 to R4 could only be regarded as a possibility, and something that would in any case take a considerable time to come to fruition. 11. Finally, I am not prepared to accept Mr Gunning's opinion insofar as it is based on the sales evidence. Whilst it emerged in cross-examination that he came to the view that $2,500 per m2 might be reasonable, his process of reasoning was not disclosed in his report, and was not explained in the witness box. 12. For the above reasons, I do not accept Mr Gunning's evidence that the property had a value of $11.5 million to $12 million as at March 2015. 13. Mr Tekin called valuation evidence from Mr Phillip Mannell. He provided a report dated 27 November 2015. In that report, Mr Mannell expressed the opinion that the market value of the property on 1 March 2015, "as is" with existing development consent, was $6.8 million excluding GST. That figure is equivalent to $1,402 per m2 of site or $309,091 per dwelling. (Mr Mannell also gave an opinion as to value as at 27 November 2015. However, as neither party contended that this was a relevant date, no separate attention was given to this opinion.) 14. Mr Mannell's report was an updated version of an earlier valuation report he prepared in respect of the property in April 2015. That earlier report, which followed an inspection of the property, was prepared on instructions from a prospective mortgagee. The earlier report was not adduced in evidence. However, Mr Mannell stated in cross-examination that the opinion as to value expressed in that report was the same as his opinion of the value as at 1 March 2015. 15. Mr Mannell adopted a direct comparison of comparable sales as his primary method of valuation. He also undertook a development feasibility approach (which he also referred to as a residual feasibility model) based on a 22 townhouse development in accordance with the existing development consent. This approach, which Mr Mannell did not adopt, suggested a value of $6.2 million excluding GST. 16. In undertaking his direct comparison approach, Mr Mannell considered market evidence consisting of five sales of development sites (four in Castle Hill and one in Homebush) and some single house sales in the area near Cecil Avenue. The development site sales are said to be a sample of recent development site acquisitions that have occurred in Castle Hill and close surrounds. Mr Mannell states that he placed more emphasis on those sales of R3 zoned land where the "speculative buyer is less likely to have played a role in investor/developer decision making". 17. In cross-examination, Mr Mannell said that he had "excluded speculation to R4" but did not "exclude speculation to R3". He said that he proceeded on the basis that a re-zoning of the property to R4 was extremely unlikely to occur. Mr Mannell gave evidence to the effect that he considered that the CHSSP was not clear enough for any property developer, acting prudently, to have placed much weight on the R4 possibility. At most, such a developer might place weight on the potential for the R3 zoning to be changed to allow some additional height. Mr Mannell said that he did take into account the potential for medium density to be allowed to go up to five to seven storeys within the R3 zoning. 18. In relation to the sale of a property at Garthowen Crescent, Castle Hill, Mr Mannell stated in his report that it was "considered to represent an above range sale based on speculative buying". He also stated that it was of less relevance than the first two sales analysed "but may provide some indication as to the value of the subject should zoning changes in the Structure Plan be implemented". In cross-examination Mr Mannell agreed that he gave this sale (which involved a price of $20,500,000) much less weight than the others, and regarded it as an "outlier". He pointed out that this property was referred to in the CHSSP as earmarked only for future R4 zoning. He also noted that the Garthowen Crescent property was fundamentally far superior to the subject property, primarily due to its close proximity to the Castle Towers Shopping Centre and the new railway station. Mr Mannell agreed that his selected amount per m2 was basically founded upon the other sales mentioned in his report. I note that Mr Mannell's approach in this regard seems to me to be adequately disclosed in the commentary contained in the market evidence section of his report. 19. Mr Mannell also gave evidence that he used the market evidence to derive his figure of $309,091 per dwelling. It is not clear from the report (pages 30 and 31) how that figure was derived. This aspect was briefly touched upon, but not explained, in cross-examination. 20. Upside attacked Mr Mannell's opinion on several grounds, primarily on the basis that, by excluding speculative interest arising from the prospect of the re-zoning of the property to R4, he took an unduly narrow approach to the market. It was submitted that Mr Mannell thus erroneously discounted the prospect of such re-zoning and the significance of the sale of the Garthowen Crescent property. It was put that Mr Mannell took an inappropriately limited approach by assuming that the property would be developed in accordance with the existing development consent. It was further submitted that Mr Mannell's opinion was affected by his original task and instructions to value the property for mortgage purposes, which entails a more conservative valuation approach. Upside also pointed to the offers to purchase and, advancing these as a check on Mr Mannell's opinion, submitted that his opinion was well below market. 21. I found Mr Mannell's explanation of his approach to speculation in the market to be plausible. He stated that in the circumstances a property developer, acting prudently, would not have placed much weight on the possibility of a re-zoning to R4. There is obviously room for debate concerning the concept of prudence, and Mr Mannell was criticised for resorting to it. However, the notion of a prudent purchaser is contained within the Australian Property Institute definition of market value used by Mr Mannell. Further, Mr Mannell's view concerning the possibility of re-zoning to R4 is supported by the evidence, including that given by Ms Wrightson. The location of the property towards the fringe of the CHSSP area, and the equivocal nature of that "strategy document" in relation to the property, suggests that the prospects of it being re-zoned to R4 were not at all strong. The evidence given by Ms Wrightson concerning her meeting with Council officers provides further support. Whilst this meeting occurred after March 2015, there is little reason to think that the points made concerning the site being on the periphery of Castle Hill and on the lower end of the "density spectrum" for the locality would not have been made in March 2015. 22. I note that Mr Mannell said, and I accept, that he did take into account the potential for medium density development within the R3 zoning to go up to five to seven storeys. 23. Mr Mannell's primary method of valuation was based on an analysis of comparable sales. It is an established valuation methodology. Moreover, his report adequately discloses how he analysed the sales to arrive at his opinion as to value. The only substantial challenge to this aspect of his report concerned the Garthowen Crescent sale. It is clear that Mr Mannell considered this sale but gave it very little weight. This was explained on the basis that the sale was a speculative and above range one, in relation to a property that was much more likely than the subject property to be re-zoned to permit high density development. It was further explained that the site was far superior to the subject property by virtue of its location. Those explanations also seem to me to be plausible. I have already referred to the evidence which suggests that the prospects of the property being re-zoned R4 were not strong. The Garthowen Crescent property on the other hand, was located near the main shopping centre, and was earmarked only for future R4 zoning. 24. I do not accept that Mr Mannell took a too limited approach by assuming that the property would be developed in accordance with the existing consent. As he explained in cross-examination, and as is apparent from his report, this assumption related only to his development feasibility approach. The development feasibility approach yielded a value which Mr Mannell did not adopt. His opinion is primarily based upon his direct comparison analysis. 25. I think that it is correct that Mr Mannell's approach was influenced by his initial task and instructions given when he valued the property for mortgage purposes in April 2015. However, as Mr Mannell explained, he viewed that task as one to ascertain the value of the property, which involves ascertaining the best price achievable in the particular market. That is, the task is always to assess the market value. He accepted that banks generally want valuers to be realistic. 26. I gained the overall impression from Mr Mannell's evidence that he is a careful and experienced valuer, likely to take a somewhat conservative approach. I think that his valuation of the property is the product of such an approach. Nonetheless, I do not accept that in this case he has proceeded in a manner that is unduly cautious. 27. I have already dealt with the offers to purchase. I have concluded that no significant weight should be accorded to these offers as evidence of what willing buyers in the market were prepared to pay for the property. For similar reasons, I am also of the view that no significant weight should be accorded to them as a check upon Mr Mannell's opinion or the methodology he employed. 28. I am prepared to accept Mr Mannell's opinion of the value of the property as at March 2015 as a reliable guide to the value of the property at that time. His opinion seems to me to be soundly based on orthodox principles. I am not convinced that any of the criticisms of his approach have substance, save that I think it is fair to regard Mr Mannell's opinion as a conservative one. 29. I should note that Upside also placed reliance upon what was described as a "convergence of evidence" about value. This was said to consist of the offers to purchase, the stated estimate of selling price given by Richardson & Wrench in December 2014 of $10 million, and some statements made by Mr Tekin about possible selling prices. It was submitted that this convergence of evidence was a reason to accept Mr Gunning's evidence in preference to that of Mr Mannell. However, I do not think that much weight should be given to such evidence. The offers have been considered above. The estimated selling price given by the agent at Richardson & Wrench is not supported by any reasoning and is not evidence able to be tested in any event. The opinions of Mr Tekin are irrelevant. The convergence of evidence has been considered, but it is clearly not sufficient to overcome the deficiencies in Mr Gunning's evidence or to cast significant doubt upon Mr Mannell's evidence. 30. I treat Mr Mannell's opinion as a conservative but reliable guide to the market value of the property as at March 2015. His figure of $6.8 million would need to be increased by almost 15% to reach the contract price of $7.8 million. Making every allowance for the conservative nature of the opinion, it cannot be concluded that the market value of the property in March 2015 was as high as $7.8 million. 31. Upside accepted that the correct measure of loss for the purposes of the first limb of Hadley v Baxendale (1854) 9 Ex 341; 156 ER 145 was the difference between the market value of the property and the contract price as at the date of breach. It follows from my conclusion above that such claim has not been made out. 32. Upside advanced an alternative claim, said to be in accordance with the second limb of Hadley v Baxendale (supra). It was submitted that it was in the contemplation of the parties at the time the contract was made that Upside might on-sell the property to a third party for a profit. That may be accepted, particularly bearing in mind the provisions of the Side Deed that deal with that possibility. 33. Upside placed reliance upon evidence given by Mr Harsany (which was not challenged) to the effect that, had settlement of the contract proceeded, he would then have accepted the highest of various offers to purchase made in the period November 2014 to January 2015. (These offers include some that seem not to have been considered by Mr Gunning). 34. However, there was no evidence adduced to show that any of those offers remained open for acceptance in March 2015. Indeed, the evidence shows that at least some of the offers did not proceed, and I note Mr Harsany's email of 23 December 2014 refers to two purchasers "now both fallen over". It also appears from Mr Harsany's affidavit that the offer made on 7 January 2015 was later withdrawn. 35. Moreover, it is again the case that virtually nothing is known about the offerors. The identity of the offerors who are said to have made offers on 12 December 2014 and 7 January 2015 is not disclosed. The evidence concerning the last of those offers consists of nothing more than a text message from a real estate agent that refers to having "a buyer talking around $11.5m". Nothing is known about the ability of any of the offerors to complete a purchase in accordance with any offer made. 36. The evidence falls well short of establishing on the balance of probabilities that had settlement of the contract proceeded, Upside would have then accepted an offer to purchase, entered into a contract for sale, and thereby derived a profit. The claim based on the second limb of Hadley v Baxendale (supra) has also not been made out. I note that Upside did not suggest that the damages claimed under that limb should be assessed on a loss of commercial opportunity basis. Had it done so, it would have been necessary to establish that it lost a commercial opportunity of more than negligible value (see Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 355). Conclusion 1. Upside's claim for damages (and interest) is rejected. In circumstances where the deposit has been repaid to Upside, the balance of the relief sought in the Statement of Claim either falls away or lacks utility. The appropriate order is that the Statement of Claim be dismissed with costs. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 September 2016