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  4. Laurel Star Pty Ltd v Babstock Pty Ltd - [2020] QDC 305

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Laurel Star Pty Ltd v Babstock Pty Ltd[2020] QDC 305

Laurel Star Pty Ltd v Babstock Pty Ltd[2020] QDC 305

DISTRICT COURT OF QUEENSLAND

CITATION:

Laurel Star Pty Ltd v Babstock Pty Ltd [2020] QDC 305

PARTIES:

LAUREL STAR PTY LTD ACN 624 444 864 as trustee for the Alan and Dorothy Marburg Family Trust

(first plaintiff)

AND

DOROTHY ANN MARBURG

(second plaintiff)

v

BABSTOCK PTY LTD ACN 010 443 124 as trustee for The Kenman Real Estate Unit Trust ABN 60 266 220 872

(first defendant)

AND

WAG PROPERTY MANAGEMENT PTY LTD ACN 136 174 242 as trustee for The WAG Unit Trust

(second defendant)

FILE NO/S:

2326/18

DIVISION:

Civil

PROCEEDING:

Trial

DELIVERED ON:

3 December 2020

DELIVERED AT:

Brisbane

HEARING DATE:

11 to 15 May 2020

Last submissions received on 27 August 2020

JUDGE:

Barlow QC DCJ

ORDER:

  1. Judgment for the first plaintiff against both defendants in the sum of $42,844.86.
  2. The defendants pay, or cause to be paid, to the first plaintiff the sums of $41,500 and $250, respectively comprising the balance of the deposit under each contract.
  3. Judgment for the plaintiffs on the counterclaim.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH – REPUDIATION AND NON-PERFORMANCE – REPUDIATION – WHAT AMOUNTS TO REPUDIATION –  contract conditional on the lessor agreeing to provide a new lease to the plaintiffs – plaintiffs contend that they validly terminated the contract, either due to not being able to secure a new lease of the premises, or because the absence of a lease was due to breach by the defendants of its obligation to secure a new lease – whether termination was valid

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH – REPUDIATION AND NON-PERFORMANCE – REPUDIATION – ANTICIPATORY BREACH – plaintiffs contend that they were entitled to terminate contract in anticipation that the defendant would be unable, at settlement, to provide the necessary documentation for each of the properties the management of which was to be transferred to the plaintiffs – whether the plaintiffs were entitled to rely on the circumstances one day prior to settlement as an anticipatory breach that entitled it to terminate the contract prior to settlement

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – one contract contained a clause which specified that it was dependent on settlement of another contract and provided rights to a non-defaulting party to terminate both contracts for default by the other party under either contract – other contract did not contain a similar clause – whether the latter contract was conditional on contemporaneous settlement of the first contract

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH – ALTERATION OF WRITTEN INSTRUMENT – defendants contend that the contracts were varied, partly in writing, partly by conduct – defendants contend that the variations discharged or altered their obligations – whether the contracts were varied

Property Occupations Act 2014, s 113, s 249

Residential Tenancies and Rooming Accommodation Act 2008, s 65

Butt v M'Donald (1896) 7 QLJ 68, applied

Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640, cited

DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423, cited

Foran v Wight (1989) 168 CLR 385, cited

Jones v Barkley (1781) 2 Dougl 684, cited

Jones v Dunkel (1959) 101 CLR 298, cited

Pacific Brand Sport & Leisure Pty Ltd v Underworks Pty Ltd (2006) 149 FCR 395, cited

Park v Brothers (2005) 222 ALR 421, cited

Rawson v Hobbs (1961) 107 CLR 466, cited

Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596, applied

Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359, cited

Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245, cited

COUNSEL:

AJH Morris QC for the plaintiffs

BJ Kidston for the defendants

SOLICITORS:

Sarinas Legal for the plaintiffs

Carter Capner Law for the defendants

Table of Contents

Introduction 1

A brief post-contractual chronology 3

The contracts 5

Business Contract 5

Rent Roll Contract 9

Structure of reasons 14

The interrelationship of the contracts 14

Was each contract contingent on settlement of the other? 14

Rectification of the Rent Roll Contract 17

Business Contract – lease or assignment of lease? 17

Variation or waiver of the Business Contract obligations? 18

Business Contract Variation Agreement 19

Lease waiver/dispensation 22

Termination of the Business Contract – no lease of the premises 22

Termination for lessor’s refusal to grant lease 26

Termination for breach 28

Laurel Star’s ability to complete the Business Contract 28

Termination for breach of the Rent Roll Contract 29

Did Laurel Star validly terminate the Business Contract? 29

Construction of the Rent Roll Contract 29

Requirements for an assignment 29

Variation or waiver of the Rent Roll Contract? 31

Documentation agreement 31

The allegations 31

The evidence 33

Was there a Documentation Agreement? 39

Appointment waiver/dispensation 40

Termination of the Rent Roll Contract 41

Was Babstock in anticipatory breach of the Rent Roll Contract? 41

Other grounds for termination of the Rent Roll Contract 44

Notice and other requirements of the Rent Roll Contract 45

Laurel Star’s readiness, willingness and ability to complete the Rent Roll Contract 46

Conclusion – did Laurel Star validly terminate the Rent Roll Contract? 49

The plaintiffs’ misrepresentation case 50

The counterclaim 50

The result 50

Introduction

  1. [1]
    The first plaintiff (Laurel Star) is the trustee of the Alan & Dorothy Marburg Family Trust (the Trust).  At relevant times, Alan Marburg was the sole director of Laurel Star.  The second plaintiff (Mrs Marburg) was the sole director of another company, D & A Marburg Investments Pty Ltd (Marburg Investments), which was formerly the trustee of the Trust.  Mr and Mrs Marburg are husband and wife.
  2. [2]
    The first defendant (Babstock) operated a licensed real estate business, trading as “Your Local Rental”.  As its name suggested, the principal (if not the only) role of the business was to manage rental properties on behalf of landlords.  The appointments of the business as rental agent for landlords and the details of the rented properties comprised a rent roll of substantial value.  The business was conducted by Babstock from premises leased to the second defendant (WAG).  It seems that Babstock in fact operated the business as undisclosed agent for WAG.[1]
  3. [3]
    Real Estate Dynamics Pty Ltd (RED) was appointed by one or both of the defendants as their agent to market and sell the business.  Dean Yeo was an employee of RED.
  4. [4]
    At some time in 2017, Mr and Mrs Marburg became interested in buying a real estate rental agency.  They came across RED, which drew the defendants’ business to their attention.  Mr Yeo provided to them a copy of a business sale information booklet (the Sale Information Booklet)[2] containing information about the defendants’ business.  Having read that document and after discussions with Mr Yeo, the plaintiffs offered to buy the business.
  5. [5]
    The plaintiffs contend that some of the information in the Sale Information Booklet was misleading or deceptive, as they were later to discover, but they relied on that information in deciding to purchase the business.  The defendants contend that the information was not misleading or deceptive and, in any event, the plaintiffs did not rely on it.
  6. [6]
    On 1 December 2017, Babstock, as seller, Marburg Investments, as buyer, and Mrs Marburg, as guarantor, entered into two contracts.  At that time, Marburg Investments was trustee of the Trust.  The first contract was for the sale of the business (other than the rent roll) for $5,000 (Business Contract).  The second contract was for the sale of the rent roll, then comprising 148 properties, for approximately $820,000 (Rent Roll Contract).[3]  The buyer’s obligations under the contracts were guaranteed by Mrs Marburg pursuant to the terms of a guarantee contained within each contract (Guarantees).[4]
  7. [7]
    Subsequently, Laurel Star became the trustee of the Trust and was substituted as buyer under both contracts.[5]  Consequently, although the contracts and the pleadings at times refer to the original buyer, I shall substitute Laurel Star in discussing the relevant terms.
  8. [8]
    On the afternoon of 10 May 2018, with settlement of the Business Contract and the first settlement under the Rent Roll Contract due to occur on 11 May 2018, Laurel Star purported to terminate both contracts.  Babstock rejected that termination, which it says constituted a repudiation, and affirmed the contracts.  On 18 May 2018, the defendants say that Babstock accepted Laurel Star’s ongoing repudiation and terminated the contracts.
  9. [9]
    The plaintiffs say that the contracts were terminated as Babstock was in default, largely in three respects:
    1. (a)
      first, the Business Contract required that the buyer be granted a new lease of the business premises and that had not occurred and was not going to occur;[6] 
    2. (b)
      secondly, there were issues with the rent roll, principally that at least 32 of the properties were not the subject of signed and completed entry condition reports (ECRs) and the defendants were therefore unable to comply with their contractual obligations under the Rent Roll Contract; and
    3. (c)
      thirdly, Babstock could not and would not provide to Laurel Star, at settlement of the Rent Roll Contract, assignments to Laurel Star of existing appointments of Babstock, duly executed by the owners.
  10. [10]
    There were other less significant matters which the plaintiffs say also meant that Babstock was in default of the Rent Roll Contract.
  11. [11]
    The defendants contend that they did not breach the Business Contract, notwithstanding that the landlord would not grant a lease to Laurel Star, because:
    1. (a)
      the contract was amended because the plaintiffs agreed that they would take over negotiations with the landlord and it was unnecessary for the defendants to secure an assignment or a lease;
    2. (b)
      alternatively, the plaintiffs agreed to take over negotiations and, even though that may not have constituted a variation of the contract, the plaintiffs waived the defendants’ obligation to secure such a lease and were estopped from denying that waiver;
    3. (c)
      furthermore, the landlord’s refusal to grant a lease was due to the plaintiffs’ conduct in their discussions with the landlord and therefore it was not a default on the defendants’ part for the lease not to be granted.
  12. [12]
    As for the Rent Roll Contract, the defendants contend that, although some (but not as many as the plaintiffs contend) of the ECRs and agency agreements had not been completed, or had been completed incorrectly, the defendants were in the process of having complete and correct documents executed by the tenants and the landlords and would have had those documents available by the first or the second settlement date.  Also, Babstock was not obliged to obtain assignments executed by the owners, as it had agreed with Laurel Star that it need only send notices of assignment to the owners.  Therefore, Babstock was not in breach of the contract.

A brief post-contractual chronology

  1. [13]
    The parties agree that the due diligence date under the Rent Roll Contract was extended from 15 to 22 December 2017[7] and the first settlement date was extended to 11 May 2018.[8]  They also agree that, by a written deed on 27 March 2018,[9] Laurel Star was substituted as buyer under each contract.  Notably, that deed described the contracts as “each signed contingently and contemporaneously” and as “the Contract Business Sale [sic] and the contingent and contemporaneously signed Agreement for Sale of Rent Roll.”[10]
  2. [14]
    On 22 December 2017, Laurel Star’s solicitors informed the defendants’ solicitors that “the due diligence provision has now been satisfied.”[11]
  3. [15]
    On 23 January 2018 the parties agreed in writing to extend the finance date to 2 February 2018 and the first settlement date to 4 April 2018, on terms that 50% of the deposits under the contracts be released to the seller and be non-refundable except on default by the seller.[12]
  4. [16]
    On 2 February 2018, the plaintiffs’ bank approved finance in the sum of $310,000 to assist with the purchase of the rent roll business.[13]  Two matters should be noted about the letter of approval.  The first is that it does not approve finance in an amount not less than the anticipated purchase price of $820,166.08, which was a condition of the Rent Roll Contract.[14]  The second is that there was no direct evidence that Laurel Star gave notice to the defendants that the finance approval condition had been satisfied or waived by the buyer.[15]  As will become apparent, nothing seems to turn on the latter, but the defendants rely on the apparent inadequacy of the finance amount and the absence of evidence that the required securities were given to the bank and that Laurel Star had sufficient other funds to complete the purchase, as constituting an absence of evidence that, when it purported to terminate the contracts, it was ready, willing and able to complete them.
  5. [17]
    On 5 April 2018, the parties formally agreed to extend the first settlement date to 18 April 2018.[16]  They later agreed to extend it to 27 April 2018[17] and finally to 11 May.[18]
  6. [18]
    On 4 May 2018, the plaintiffs’ solicitors wrote to the defendants’ solicitors attaching a list of 35 properties about which the plaintiffs were not satisfied with the paperwork and records.[19]  The defendants’ solicitors responded on 9 May 2018, attaching the defendants’ response to each concern and stating that any concerns that had not been addressed by the date of first settlement would be dealt with before the second settlement date.  In the same letter, the defendants’ solicitors went to say:

Instructions are to compel settlement of both transactions on the due date.  If however your client maintains a view that it is entitled to rely on the standard conditions in the business contract, not to complete that transaction, then the Seller may be prepared to allow the Rent Roll sale to settle independently.  Similarly, if it seeks a further short extension so as to finalise arrangements as regards business premises, the Seller may be prepared to acquiesce.

  1. [19]
    On 10 May 2018, the plaintiffs’ solicitors wrote a long letter to the defendants’ solicitors,[20] in which they reviewed the history of events leading to the contracts and since the contracts were made and to which they attached the contracts, the Sale Information Booklet and various items of correspondence.  They asserted that RED had made representations that had been shown to be false or misleading, as there was no agency agreement for four properties, there was no completed and signed entry condition report for 32 properties and 19 properties were outside the represented suburbs of Moggill and Bellbowrie.  They also contended that they had been unable to obtain a lease on the contracted terms.  They asserted that the buyer therefore rescinded both contracts “on the basis of the false and misleading representations and misleading and deceptive conduct which induced the Buyer into entering into the Contract [sic],” or alternatively for unconscionable conduct.  In the further alternative, they purported to terminate the Rent Roll Contract for breach by the seller.  Furthermore, they asserted that the buyer terminated the Business Contract because no lease of the premises had been obtained and, consequently, the Rent Roll Contract was also terminated under special condition 6.4 of the Business Contract.  Finally, they asserted that the Rent Roll Contract was void for uncertainty and, as the Business Contract was contingent on the Rent Roll Contract, it was also void.
  2. [20]
    On 11 May 2018, the defendants’ solicitors responded.[21]  They denied that the defendants had breached either contract or engaged in the alleged “misconduct.”  They provided a Dropbox link to ECRs for 17 properties and agent appointments for five properties about which Laurel Star had complained.  They said that ECRs for the balance of the properties would be available by the date of the second settlement.  They said that the seller was ready, willing and able to settle that day.  They asserted that Laurel Star’s purported termination of the contracts constituted repudiation.  Nevertheless, they said the seller wished to settle the Rent Roll Contract promptly and nominated the following Friday, 18 May 2018, for settlement of that contract.
  3. [21]
    On 18 May 2018, when the plaintiffs no doubt did not attend for settlement, it appears that the defendants’ solicitors wrote to the plaintiffs’ solicitors terminating both contracts for repudiation by the plaintiffs, although there is no evidence of that correspondence.[22]

The contracts

  1. [22]
    It is convenient to set out the terms of each of the contracts that are particularly relevant to the issues.

Business Contract

  1. [23]
    The Business Contract is dated 1 December 2017.[23]  The clauses most relevant to the issues are set out below.
  2. [24]
    The date for completion was 1 March 2018.[24]  Time was of the essence.[25]
  3. [25]
    The REIQ standard conditions of sale applied, subject to the special conditions.  The most relevant special conditions were clauses 5 and 6.

Due Diligence

5.1 This contract is subject to and conditional upon the Buyer conducting investigations and enquiries with respect to the Business the subject of this Contract and all matters relating to it including, but without limitation, the following: …

5.3 In the event the Buyer, in its absolute discretion, is not satisfied with the outcome of the due diligence enquiries then the Buyer may at any time up to and including 5:00pm on the day which is fourteen (14) days from the date of this Contract terminate this Contract by notice, in writing, to the Seller.  In the event this Contract is terminated in accordance with this Special Condition, the Buyer shall be entitled to receive a refund of the Deposit in full without deduction.

5.4 This Special Condition is for the benefit of the Buyer and may only be waived by the Buyer.

Contemporaneous Settlement

6.1 This Contract is subject to and conditional upon the Agreement for Sale of Rent Roll for the Rent Roll of the business known as BABSTOCK PTY. LIMITED ACN: 010 443 124 THE TRUSTEE FOR KENMAN REAL ESTATE UNIT TRUST TRADING AS YOUR LOCAL RENTAL, between the Seller and the Buyer dated on the same day as this contract (“the Other Contract”) settling contemporaneously with the settlement of this Contract on the first Settlement Date.

6.2 Either party may terminate this Contract should settlement of the Other Contract not be effected other than by reason of a default of that party under the Other Contract and the deposit shall be refunded to the Buyer without deduction.

6.3 A default by the Buyer under this Contract entitling the Seller to terminate this Contract shall be deemed to be a default by the Buyer under the Other Contract entitling the Seller to terminate the Other Contract and to exercise any rights under the Other Contract with respect to that default.

6.4 A default by the Seller under this Contract entitling the Buyer to terminate this Contract shall be deemed to be a default by the Seller under the Other Contract entitling the Buyer to terminate the Other Contract and to exercise any rights under the Other Contract with respect to that default.

  1. [26]
    The most relevant standard conditions, which were to be read with the items schedule, were the following:

24 Assignment of existing lease

24.1 If Item S is completed and despite Clause 15, this Contract is conditional upon the lease of the premises being in terms and conditions satisfactory to the Buyer.  … 

24.2 The Seller must on or before the date of Completion assign or cause to be assigned to the Buyer the lease of the premises and obtain the consent of the lessor and any mortgagee (if applicable) to such assignment …

24.3 The Contract is conditional upon the lessor and any mortgagee of the premises consenting to the assignment of the lease of the premises from the Seller to the Buyer.  If those consents are not given by the date of Completion, the Buyer may by notice in writing to the Seller terminate this Contract.  If so, all Deposit and other monies received by the Seller or the Deposit Holder on account of the Purchase Price shall be refunded to the Buyer by the Seller or the Deposit Holder as the case may be.

24.4 The Seller will apply for any consent referred to in Clause 24.2 and the Buyer will supply such references and do all things reasonably required by the Seller or the lessor in considering any such application, and both parties must use their best endeavours to obtain any such consents as expeditiously as possible, but in any event not later than the date of Completion.

25 New lease

25.1 If Item T is completed, this Contract is conditional upon:

  1. (a)
    the lessor of the premises granting to the Buyer or executing an agreement (which may be in the form of a letter of intent) to grant to the Buyer at the expense of the party nominated in Item T(o) a new lease of the premises containing such reasonable covenants and conditions as the lessor shall require, and including the matters set out in Item T on or before the date of Completion.  …

25.2 The Seller will apply for the lease referred to in Clause 25.1(a) … and the Buyer will supply such references and do all things reasonably required by the Seller or the lessor in considering any such application and both parties must use their best endeavours to obtain any such lease (which may be in the form of a letter of intent) … as expeditiously as possible, but in any event not later than the date of Completion.

25.3 If a new lease is not granted to the Buyer or the lessor does not sign an agreement for lease (which may be in the form of a letter of intent) … by the date of Completion then the Buyer may by notice in writing to the Seller terminate this Contract.  If so, all Deposit and other monies received by the Seller or Deposit Holder on account of the Purchase Price shall be refunded to the Buyer by the Seller or the Deposit Holder as the case may be.

29 Buyer’s default

29.1 If the Buyer:

  1. (a)
    fails to pay the balance of the Purchase Price as provided in Clause 6;
  1. (b)
     fails to comply with the terms or conditions of this Contract, then the Seller may;
  1. (c)
    affirm this Contract; or
  1. (d)
     terminate this Contract. …

35 Guarantee and indemnity

35.1 Where Item G is completed with the name or names of any person or persons (“the Guarantor”), the succeeding provisions in this Clause 35 have effect. …

35.3 In consideration of the Seller at the request of the Guarantor entering into this Contract, the Guarantor unconditionally …

  1. (a)
    guarantees the Buyer’s obligations; and
  1. (b)
    indemnifies the Seller against any loss or liability the Seller incurs arising from or connected with the Buyer’s Obligations.

38 Seller’s default

38.1 If the Seller fails: …

  1. (b)
    to comply with the terms or conditions of this Contract, then the Buyer may;
  1. (c)
    affirm this Contract; or
  1. (d)
    terminate this Contract. …

39 Entire agreement

39.1 This Contract contains the entire agreement between the parties with respect to its subject matter and supersedes all prior negotiations, understanding and agreements, whether oral or written.

39.2 This Contract shall not be modified, amended or supplemented except by an instrument in writing duly executed by the parties (any Guarantor excepted).

  1. [27]
    Item G of the items schedule provided that Mrs Marburg was the guarantor.
  2. [28]
    Item S of the items schedule was headed, “Particulars of the existing lease” and had inserted next to it the words, “See attached Schedule 3”.[26]  Schedule 3[27] was a copy of a disclosure statement from the lessor that set out what were said to be the principal terms of the existing lease between the landlord and WAG.  Most relevantly, it provided that the lease was for one year, expiring on 31 May 2018, at a base rent of $33,440 plus GST, with no option to renew.
  3. [29]
    Item T of the items schedule was headed, “Buyer’s requirement for new lease of premises” and it was also completed.[28]  Relevantly, it provided that the lease should be to Marburg Investments and should be for a term of one year at the same rent as under the existing lease to WAG and with an option period of three years.
  4. [30]
    Item R of the items schedule was also completed.[29]  That item was headed “Lease requirement of buyer” and the words “Assignment of lease” were inserted beside it.  Curiously, there appears to be no reference to item R in the standard terms of the contract.

Rent Roll Contract

  1. [31]
    The Rent Roll Contract[30] includes the following clauses:

1.  Interpretation

1.1 Definitions[31]

 In this Agreement the following expressions having [sic] the meaning stated unless inconsistent with the context:

1.1.1   “Act” means the Property Agents and Motor Dealers Act, Property Occupations Act (Qld) or any subsequent Act and includes any amendments and regulations made thereunder

1.1.2   “Adjusted Income” means the Income in respect of all Properties (ie being the Properties listed in Schedule 2 together with any further Property the subject of a new Appointment) in respect of which an Assignment is obtained before the relevant settlement date.

1.1.4   “Appointment” means an appointment under the Act or under the Property Agents and Motor Dealers’ [sic] Act for the Seller to act as managing rental agent for a Property.

1.1.6   “Assignment” means an assignment of the Appointment from the Seller to the Buyer notified in writing in such manner prescribed by the Act.

1.1.22   “New Appointment” means any Appointment produced by the Seller in relation to a property to be added to those listed in Schedule 2, after the date of this agreement and before the last settlement date.

1.1.23   “Property/Properties” means each property listed in Schedule 2 excluding any property rejected by the Buyer pursuant to Clause 3.2 or where the Appointment is withdrawn, cancelled or otherwise revoked prior to the relevant settlement date.

1.1.26   “Rent Roll” means the property management business of the Seller in respect of the Properties.

1.8 Whole Agreement

 The covenants and provisions contained in this Agreement comprise the whole of the agreement between the parties in relation to the Rent Roll and it is expressly agreed and declared that save as otherwise provided herein no further or other covenants or provisions whether in respect of the Rent Roll or otherwise are deemed to be implied in this Agreement or to arise between the parties by way of collateral or other agreement by reason of any promise, representation, warranty or undertaking given or made by any party to another party on or prior to the execution of this Agreement and the existence of any such implication or collateral or other agreement is hereby negatived.

3. Due diligence

3.1 Without derogating from the terms of Clause 10.7, the Buyer or the Buyer’s representative may, within fourteen (14) days from the date hereof (the Due Diligence Date), have access to the property management files relating to the Rent Roll including but not limited to a hard copy and electronic access to trust account software records for the purpose of inspection and verification of the information contained in Schedule 2.  The Buyer or the Buyer’s representative must conduct such inspection in or after office hours at the Seller’s business premises at a time agreed by the Seller and in the presence of the Seller or its representative.  The Buyer will keep all information obtained in the course of such inspection or as contained in this Agreement in strict confidence and shall not use such information for any purpose other than the conduct of the said due diligence examination.  The Buyer shall, for the benefit of the Seller, ensure that any representative of the Buyer shall, in a like manner, keep such information confidential.

3.2  The Buyer may, at the sole discretion of the Buyer, terminate this Agreement by notice in writing to the Seller by 5.00 pm on the Due Diligence Date in the event that the Buyer is not satisfied with its due diligence conducted in accordance with Clause 3.1 in which event all Deposit monies paid to the Deposit Stakeholder on account of the Purchase Price shall be refunded to the Buyer without deduction or in the alternative the Buyer may not later than 5.00 pm on the Due Diligence Date nominate in writing to the Seller any of the Properties which the Buyer reasonably believes that the Seller and/or the Property Owner has failed to comply with any requirements of the Act or the Residential Tenancies and Rooming Accommodation Act or the Residential Tenancies and Rooming Regulations and/or any other legislative requirement applicable to the renting out of the particular Property, whereupon the Seller shall attempt to rectify such defect to the reasonable satisfaction of the Buyer, however should the Seller fail to do so the Buyer may by notice in writing to the Seller given not earlier than four (4) Business Days prior to the applicable settlement date and not later than two (2) Business Days prior to the applicable settlement date elect to exclude such Property from this Agreement. …

3.5 The Buyer may by 5.00 pm on the next Business Day following the Due Diligence date give to the Seller a written notice requiring the Seller, in the fulfilment of the Seller’s obligations as set out in Clause 5.2, either for an identified Property or Properties or all Properties to either:

3.5.1 subject to the terms of the Seller’s existing Appointment, provide to the subject Property Owner/s a notice of assignment including the name and business address of the Buyer in accordance with the terms of the Seller’s Appointment or alternatively the Seller must procure from the subject Property Owner/s an agreement in writing to the assignment pursuant to the provisions of Section 113 of the Act;[32] or

3.5.2 procure the execution of a new Appointment from the Property Owner/s.

3.6 In the event that the Buyer does not give to the Seller a notice pursuant to Clause 3.5, then the Seller shall be at liberty to fulfil the Seller’s obligations pursuant to Clause 5.2 in such manner as the Seller may determine at the Seller’s sole discretion.

5. Appointment as Agent

5.1 The Seller warrants that it has been appointed to act as Real Estate Agent by the Property Owners and that the Appointments pertaining thereto are valid and subsisting under the provisions of the Act.

5.2 After Clause 3 and Clause 4 of this Agreement are satisfied and the Buyer has notified the Seller in writing of such satisfaction … the Seller shall take all reasonable steps to obtain in writing from each relevant property Owner an Appointment or an Assignment in favour of the Buyer in respect of each of the Properties and in each case on the same terms and conditions as the Appointment presently existing in favour of the Seller.

7. Notice to tenants

7.1 On or before five (5) Business Days prior to the settlement date or the date of any assignment as referred to in Clause 2.5 the Seller shall notify in writing the Tenant of the change of management of such Property and direct such Tenant to pay all future rental payments in respect of such Property from the date of such notice to the Buyer, and such written notice should include a statement as to the date to which the Tenant has paid the current rent.

7.2 The Seller’s obligation as set out in Clause 7.1, together with those set out in Clause [sic] 10.3 and 10.4, shall be conditional upon the Buyer producing written evidence, upon terms reasonably acceptable to the Seller, that the Buyer either has the necessary financial resources ready to effect the approaching settlement or that the Buyer’s financier has completed all of its required enquiries and documentation to facilitate the advance to the Buyer of any applicable finance facility.

7.3 Should the Buyer default in providing the written evidence referred to in Clause 7.2, then the Seller may at the Seller’s discretion extend the approaching settlement for a maximum period or periods not exceeding thirty (30) days and thereafter, in the event that the Buyer fails to comply with the terms of Clause 7.2, the Buyer shall, at the election of the Seller, be deemed to be in default of this Agreement.  Each of Clause 7.2 and Clause 7.3 are [sic] inserted for the benefit of the Seller and the benefit thereof may be waived by the Seller.

10. Delivery of documents

10.1 In consideration of payment of the Purchase Price, the Seller shall, on the relevant settlement date of each particular transferred Property, do everything necessary to transfer all the trust funds held by or on behalf of the Seller to the trust account nominated by the Buyer and deliver to the Buyer the following records, documents and items in relation to each particular transferred Property:

10.1.1 a printed or hardcopy of each of the documents required to be held by the Seller under the provisions of the Act or the Residential Tenancies and Rooming Accommodation Act, Residential Tenancies and Rooming Accommodation Regulations or such other legislation from time to time which may govern the conduct of the management of the Rent Roll and the Seller’s property history file;

10.1.2 by readable computer disk, if efficiently possible, or a printed or hard copy of all other records held by the Seller with respect to each transferred Property the subject of the Rent Roll including correspondence files, repair and maintenance details and details of payments made to the date of transfer of the transferred Property by Tenants; …

10.1.4  a new Appointment or Assignment in respect of each relevant transferred Property, duly executed by the relevant transferred Property Owner and, if applicable, in a form approved by the Buyer pursuant to Clause 6, appointing the Buyer as its managing agent for that property on terms no less favourable than the existing form; …

10.1.7 an original entry condition report signed by all required parties undertaken at the commencement of the current tenancy, as required by law, in respect of each transferred Property that is tenanted as at the applicable settlement date; …

19. Default

19.5 If the Seller is in default of one of the Seller’s material obligations under this Agreement including but not limited to a breach on the part of the Seller of a warranty stipulated in Clause 11.1 then:

19.5.1 the Buyer may by notice in writing require the Seller to rectify that default within seven (7) days from the date of that notice;

19.5.2 if the Seller fails to rectify such default within the time prescribed the Buyer may by notice in writing to the Seller:

  1. (a)
    affirm this Agreement and seek damages for that breach; or
  1. (b)
    terminate this Agreement and claim damages from the Seller for that breach and upon that termination the deposit paid by the Buyer will be refunded in full to the Buyer by the Deposit Stakeholder.
  1. [32]
    Additionally, other clauses provided to the following effects:
    1. (a)
      the purchase price was payable by multiplying the annual income from each property accepted by the buyer by a factor of 3.1;[33]
    2. (b)
      there were two settlement dates; the first was on 1 March 2018, on which date the purchase price payable in respect of each property to be included in the first settlement would be paid;  the second was 14 days later, on which date the purchase price payable in respect of each property to be included in that settlement would be paid;[34]
    3. (c)
      if the buyer had not received an appointment or an assignment in respect of any of the properties by the second settlement date, but such a document was received by it within a further 30 days, the parties could agree that the buyer take over the management of that property and pay an additional amount to the seller, or the seller could keep, terminate or assign to someone else the management of that property;[35]
    4. (d)
      the contract was conditional on the buyer obtaining approval, by 18 January 2018 (the Finance Date), of a loan sufficient to pay the anticipated purchase price of $820,166.08;[36]
    5. (e)
      two clauses dealt with the potential situation that the business was to be relocated from the current premises from which it was being conducted by the seller;[37]
    6. (f)
      within 90 days of the date the buyer paid the purchase price in respect of a specific property, the buyer could require the seller to produce any of the documents required under clause 10 (in essence, full records of the business) or to rectify any defects in any of the documents within 14 days of the buyer giving notice to the seller;  if the seller did not do so, then the buyer could rectify any defects or reproduce the missing document or, if the buyer could not reasonably perform its duties as managing agent in respect of that property, it could reject that property and be refunded that proportion of the purchase price;[38]
    7. (g)
      if any property owner terminated the buyer’s appointment as managing agent within 90 days of the relevant settlement date, the buyer was entitled to a refund of that proportion of the purchase price;[39]
    8. (h)
      time was of the essence of the contract;[40]
    9. (i)
      Mrs Marburg guaranteed the buyer’s obligations under the contract.[41]
  2. [33]
    There is no clause in the Rent Roll Contract providing expressly that it could not be amended except in writing signed by the parties.[42]

Structure of reasons

  1. [34]
    I propose to consider the issues concerning the contracts first, before dealing with the other claims.   I shall start with considering the interrelationship between the two contracts.  Then I shall consider the issues concerning the Business Contract, including its proper construction, whether it was varied or Babstock’s obligations under it were waived and whether Laurel Star validly terminated it.  I shall then consider the issues concerning the Rent Roll Contract, including whether it was varied or any of Babstock’s obligations under it were waived by Laurel Star and whether Laurel Star validly terminated it.

The interrelationship of the contracts

Was each contract contingent on settlement of the other?

  1. [35]
    One issue is the extent of inter-dependency between the contracts.  I have set out above[43] special condition 6 of the Business Contract.  It clearly makes that contract dependent on settlement of the Rent Roll Contract and provides rights to a non-defaulting party to terminate both contracts for default by the other party under either contract.
  2. [36]
    There is no equivalent, in the Rent Roll Contract, to special condition 6 of the Business Contract.  Therefore, on its face, although the Business Contract is conditional on contemporaneous settlement of the Rent Roll Contract, the latter is not conditional on contemporaneous settlement of the Business Contract. 
  3. [37]
    The defendants submit that the absence of such an “inter-dependence” clause in the Rent Roll Contract was clearly by design.  It was intended to enable (and, absent the seller’s default under that contract, to compel) the buyer to buy the rent roll even if, for whatever reasons other than the seller’s default, the Business Contract was not completed.  The location of the premises was not essential to the buyer’s ability to carry on the management of the rent roll.  That could be done from almost anywhere.  The business name itself, which may be more important to maintaining the rent roll, was not sold under the Business Contract, but under the Rent Roll Contract.[44]  Therefore, even if Laurel Star was entitled to terminate the Business Contract for any reason, it does not follow that it was also entitled to terminate the Rent Roll Contract (absent some independent right to terminate the latter).
  4. [38]
    In response to that submission, the plaintiffs submit that, applying the principles set out in Electricity Generation Corporation v Woodside Energy Ltd,[45] it would be “making commercial nonsense or working commercial inconvenience” to adopt a construction which has the effect that, despite lawful termination of the contract for the purchase of a business (including the right to occupy premises from which the business operated) which would enable Laurel Star to exploit the rent roll, it would still be bound to complete the contract for the purchase of the rent roll.  Both parties referred to the elucidation, in the judgment of the plurality in Electricity Generation Corporation v Woodside, of the method by which one construes a commercial contract.
  5. [39]
    It is not immediately clear whether the business name was sold under the Rent Roll Contract or under the Business Contract.  In the latter, the description of the business being sold was a real estate agency known as “Your Local Rental.”  The Business was defined as including the Business Assets, which themselves were set out as including the “goodwill, … intellectual property … and other assets set out in any schedule attached to this Contract … .”  It seems to me that the business name was intellectual property to which goodwill arguably attached and therefore the right to use it may have been sold under that contract.
  6. [40]
    On the other hand, clause 13.1.1 of the Rent Roll Contract expressly stated that the sale and purchase under that agreement did not include the transfer of any trading name except that set out in item 9 of the item schedule.  Item 9 said “YOUR LOCAL RENTAL.”  That indicates that the right to use that name was, as the defendants submitted, to be transferred under that contract, not the other. 
  7. [41]
    Reading the two contracts together, especially given the more specific terms of the Rent Roll Contract, I find that the trading name was to be sold under the Rent Roll Contract.
  8. [42]
    It would have been possible for Laurel Star to carry on management of the rent roll from somewhere other than the defendants’ premises and under a different name.  However, the latter in particular would have potentially been very inconvenient and it might well lose some of the business if the agency name changed.  Continuity in the reputation of the business was clearly likely to be important to any buyer of the rent roll, given the goodwill likely to be associated with it.  However, the location of the business was not so important.  Within reasonable geographical limits, it would have been possible for Laurel Star to operate the business, under the same name, from premises other than those occupied by Babstock, although clearly it may be more convenient to continue in the same premises.  That convenience, but lesser importance, was reflected in clauses 24 and 25 of the Business Contract, entitling the buyer to terminate the Business Contract if it did not obtain a lease of the premises.
  9. [43]
    The practical business links between, and the relative importance of, the two contracts were reflected in special condition 6 of the Business Contract, but that condition clearly showed that the more important contract was the Rent Roll Contract.  Either party could terminate the Business Contract if the Rent Roll Contract did not settle, but neither party had the right to terminate the Rent Roll Contract if the Business Contract did not settle except if the latter was caused by default of one party under that contract. 
  10. [44]
    Although the two contracts were separate, they were drawn and executed together.  They must be construed together.  They were so interwoven that the parties chose, by special condition 6, to provide each other rights in the Business Contract that might override their rights and obligations under the Rent Roll Contract.  It was unnecessary to include, in the latter contract, an equivalent to special conditions 6.1 and 6.2 of the Business Contract.
  11. [45]
    It was also unnecessary that the Rent Roll Contract had equivalent clauses to special conditions 6.3 and 6.4.  Even if there was no default under the Business Contract, but there was a default under the Rent Roll Contract, if the party not in default chose to terminate the latter contract then, under clause 6.1 of the Business Contract, that contract too would come to an end.  On the other hand, if the non-defaulting party chose to enforce the Rent Roll Contract, then the Business Contract would also, effectively, be enforceable by that party (subject, of course, to other rights of termination under the Business Contract). 
  12. [46]
    Consequently, the manner in which the two contracts were drawn makes it clear that each was dependent on there not being default under the other.  If there was default under one, then both contracts could be enforced or terminated (if the default enabled the latter consequence) by the non-defaulting party.
  13. [47]
    That deals with defaults, but one possibility in this case, that I shall consider shortly, is that the Business Contract may have been terminated simply under the buyer’s right to do so if not granted occupancy rights under a lease (whether assigned or new).  If the landlord simply did not agree to grant those rights, that would not be a default on the part of the seller, but would give rise to a distinct right in the buyer to terminate that contract.  In that circumstance, clauses 6.3 and 6.4 would have no application.  In the absence of an express discrete right to terminate the Rent Roll Contract, it is not clear that the latter agreement could be terminated if the Business Contract were terminated simply under clause 25 or clause 26.  There is nothing in either contract that makes the Rent Roll Contract conditional on the Business Contract being completed, other than in circumstances of default under the latter.
  14. [48]
    That seems to make commercial sense once one recognises that the rent roll could be managed from other premises. I find that that is the effect of the two contracts read together.
  15. [49]
    That being so, the plaintiffs could only rely on the termination of the Business Contract to terminate the Rent Roll Contract if the Business Contract was terminated as a consequence of the seller’s default, rather than as a mere consequence of not obtaining occupancy rights under a lease of the existing business premises.
  16. [50]
    The plaintiffs sought some support from the deed of amendment for the proposition that the terms of that deed, in describing the original contracts,[46] affected or reflected the proper construction of those contracts so that each was dependent on the other being completed and the termination of one would result in the termination of the other, whatever the circumstances.  I do not accept that proposition.  Although they were signed together and were, in some senses, contingent on each other, that deed did not purport to vary the contracts to make them contingent on each other in all respects.  The sole purpose and effect of that deed was to substitute Laurel Star for Marburg Investments as buyer.  Otherwise, the terms of the original contracts were expressly confirmed and they were effectively novated in those terms between the new parties.  If there was a misdescription, in the deed of amendment, of the effect of the original contracts, it had no effect on the proper construction of those contracts.

Rectification of the Rent Roll Contract

  1. [51]
    The plaintiffs originally contended that, if the Rent Roll Contract, properly construed, does not provide that it is dependent on the Business Contract completing, that is contrary to the parties’ intentions and this court ought to order that the Rent Roll Contract be rectified to provide clauses to that effect.[47]
  2. [52]
    However, in final submissions the plaintiffs did not press that contention.  Rather, they relied on their submission that it would be a nonsense to adopt a construction of the contracts having the effect that, despite lawful termination of the Business Contract, they would still be bound to complete the Rent Roll Contract.
  3. [53]
    Whatever my construction of the contracts, therefore, it is unnecessary to address the claim for rectification.  In any event, it does not seem to me to be a proposition that is so undeniably clear that the plaintiffs’ case for rectification could succeed.

Business Contract – lease or assignment of lease?

  1. [54]
    It is appropriate first to determine the proper construction of clauses 24 and 25 of the Business Contract.
  2. [55]
    As I have recorded above,[48] all of items R, S and T of the items schedule to the Business Contract were completed.  They appear to have enlivened both clauses 24 and 25, giving the buyer an entitlement to terminate the contract if it did not obtain either or both of an assignment of the existing lease and a new lease of the premises.
  3. [56]
    The plaintiffs submit that the defendants’ obligation was to secure a new lease of the premises in accordance with clause 25 and on the terms set out in item T.  The defendants contend that (subject to variation or waiver by the plaintiffs) their obligation was to secure an assignment of the existing lease in accordance with clause 24.  That construction particularly derives from the completion of item R by inserting “Assignment of lease” as the “lease requirement of buyer”.  The defendants contend that the completion of item T was obviously in error, given that election.
  4. [57]
    The contract must be construed in the light of the circumstances then existing and known to the parties.  As the details of the existing lease made clear, it was due to expire on 31 May 2018, while the two contracts were due to settle on 1 March 2018 (that is, with three months to run under the existing lease).  The sale under the Business Contract included the furniture and fitout in the premises.  It would have been of little use (or at least a substantial inconvenience) to the plaintiffs to have the use of the premises for only three months after settlement and then to have to move premises if the landlord would not grant them a new lease.  That explains the completion of both items S and T:  the contract was conditional on the landlord agreeing both to an assignment of the existing lease and to the grant of a new lease from the expiration of the existing lease.
  5. [58]
    Of course, the closer that the completion date came to the expiration of the existing lease, the less important the requirement for an assignment of that lease.  It would have been open to Laurel Star to waive the requirement for assignment if it could make a more informal arrangement with the seller and the lessor for the remaining term of the existing lease; for example, that it occupy the premises as licensee of the seller pending the commencement of a new lease on 1 June 2018.
  6. [59]
    I find that the proper construction of the Business Contract is that it was conditional on the lessor both agreeing to an assignment of the existing lease and granting a new lease, to commence on 1 June 2018, on the terms set out in item T or other terms satisfactory to Laurel Star. 

Variation or waiver of the Business Contract obligations?

  1. [60]
    The defendants contend that each contract was varied, or that Laurel Star waived some of Babstock’s obligations, by post-contractual conduct of the parties.  It is convenient to deal with the allegations concerning the Business Contract before considering other issues.

Business Contract Variation Agreement

  1. [61]
    The defendants allege that the Business Contract was varied[49] “in or about the period 13 February 2018 to 5 April 2018,” by an agreement made between Mr Kenman (a principal of the defendants) and Mr Marburg that:
    1. (a)
      Babstock was no longer required to procure the landlord’s consent to an assignment of the existing lease or the grant of a new lease of the premises;
    2. (b)
      Babstock would allow the buyer (initially Marburg Investments and later Laurel Star) to occupy the premises after settlement of the Business Contract; and
    3. (c)
      the buyer would reimburse Babstock for the cost of the rent payable under the existing lease until its expiration.
  2. [62]
    The defendants allege that the variation agreement was made by three emails written on 13 February 2018 and by the conduct of Mr Marburg meeting with Thomas Cher (a representative of the landlord) on 5 April 2018 to discuss a new lease and the conduct of Mr Kenman refraining from approaching the landlord to secure its consent to an assignment or a new lease.
  3. [63]
    The emails relied on as the written part of the variation agreement[50] were as follows:
    1. (a)
      At 8.16am on 13 February 2018, Mr Kenman wrote to Mr Marburg, saying:

Hi Alan,

Nice to catch up with you yesterday.  One of the requirements for you moving forward is the office leases.  As there will only be 2 months left in the lease from your purchase date, will you be looking at extending it?

I will need to see centre management shortly about change of owners as it takes a month or two for his solicitors.  He may not be overly happy about the cost of assigning the lease for a 2 month period.  If you are planning on a 3 year lease or similar, then now would be an ideal time to discuss with him.

Alternatively we can keep the lease in our name for the 2 months, until the end date (31st May 2018) and you reimburse us for the lease payments?

Please let me know your preference.

  1. (b)
    At 9.28am, Mrs Marburg responded, saying:

Good Morning Andrew,

Thank you for your email about the lease.

I think the best thing to do would be to keep the lease in your name and reimburse you for the lease payments.

Seems a lot easier to do this.

  1. (c)
    At 11.17am, Mr Kenman wrote:

Hi Dorothy,

Ok will do, happy for that to happen.

  1. (d)
    At 3:32pm, Mrs Marburg wrote:

Hi Andrew,

We would like to renew the lease but would like to talk to you first.

  1. (e)
    At 4:49pm, Mr Kenman responded:

Hi Dorothy, would be happy to meet or by phone, whatever your preference.

  1. [64]
    The following additional emails are also relevant to the defendants’ allegations, as they go to the conduct alleged to form part of the alleged variation.
  2. [65]
    On 5 March 2018, Mr Kenman and Mr Marburg exchanged the following emails:[51]
    1. (a)
      At 9.07am, Mr Marburg wrote:

Good morning Andrew,  …

Enquiring as to your suggestion when I should contact the centre management regarding taking over the lease.

Have you spoken with them as yet regarding your proposal to leave lease in your name until end of June?

  1. (b)
    At 10.20am, Mr Kenman responded:

Hi Alan,

I haven’t approached them thus far.  At this stage we were going to stay on the lease until May (as there was only one month until the lease end) with your business paying us accordingly for April and May.

If you have any other requirements, happy to organise a meeting with centre management to discuss.  Did you want to have a fixed lease option?  IE 3 or 5 years.

  1. (c)
    Mr Marburg replied:

Thank you for your prompt response.

I was enquiring about the lease mainly from the point of view of discussing with centre management about “cost options”.  I did not want to approach them before discussing with yourself.

  1. [66]
    On 13 March 2018, Mr Kenman wrote to the landlord’s representative, Mr Cher, saying:

I just wanted to confirm with you that I will be finalising my companies [sic] lease (WAG Property Management Pty Ltd) with you at the end of our current lease, on 31st May 2018.  The new owner of our business, Alan Marburg will be in touch with you shortly to discuss a further lease option.[52]

  1. [67]
    Mr Marburg met with Mr Cher on 29 March 2018.[53]  That appears to be the meeting relied on by the defendants as Mr Marburg’s conduct forming part of the alleged variation, although they have incorrectly assumed that it was on 5 April 2018. 
  2. [68]
    Mr Marburg did not give clear evidence about what he and Mr Cher discussed at that meeting.  It was put to him in cross-examination that he was negotiating the terms of a new lease.  He denied that and said he was simply conducting research, not negotiating.[54]  He provided little more detail about the conversation, only saying, in re-examination, that he was making general enquiries about what shops other than the existing premises were available, because he did not think he could conduct the business profitably from those premises if he secured only about 110 properties to manage (as he thought appeared to be likely at that stage) instead of all 148 referred to in the Rent Roll Contract.[55]
  3. [69]
    The defendants contend that Mr Kenman did not make or continue efforts on behalf of the defendants to obtain the landlord’s consent to a new lease.  They say that that conduct formed part of the alleged agreement.  In fact, as I will detail later, it seems clear to me that Mr Kenman at all times up to at least late April 2018 continued to try to persuade the landlord to grant a new lease to Laurel Star.
  4. [70]
    In any event, I do not consider that conduct of the kind alleged to have been undertaken by Mr Marburg and Mr Kenman, even if it had occurred, could possibly form part of an agreement.  At most, it might be evidence of post-amendment conduct that may be demonstrative of the alleged amendment having been agreed.
  5. [71]
    But neither the exchange of emails nor the defendants’ alleged conduct in not seeking a new lease, viewed together or separately, could or did constitute or evidence any amendment to Babstock’s obligations under the Business Contract.  They simply comprised conduct of both parties in accordance with their respective obligations:  that is, both using their best endeavours to secure a lease of the premises for Laurel Star.[56]
  6. [72]
    The defendants’ contentions that the parties agreed to the alleged amendment is also inconsistent with, and cannot succeed in the face of, clause 39.2 of the Business Contract.  While an exchange of emails expressly providing for and agreeing to an amendment to the contract may have been sufficient to constitute “an instrument in writing duly executed by the parties,” the emails relied on in this case do not evince any intention by either party to vary their obligations.  To the contrary, they evince both parties’ intention to act in accordance with their existing obligations.
  7. [73]
    The defendants’ contention that the contract was varied therefore fails.

Lease waiver/dispensation

  1. [74]
    In the alternative to the parties’ emails and conduct referred to above constituting a variation of the contract, the defendants contend that it constituted a waiver by Laurel Star of the defendants’ obligations to use its best endeavours to secure a new lease;  or Mr Marburg’s conduct in electing to deal with the landlord prevented Babstock from carrying out that obligation.
  2. [75]
    For the same reasons that there was no variation, I do not consider that the emails and conduct constituted a waiver of, or prevented Babstock fulfilling, that obligation. 
  3. [76]
    However, I do consider that Laurel Star waived Babstock’s obligation to use its best endeavours to obtain the landlord’s consent to an assignment of the existing lease to Laurel Star.  I have set out above[57] the exchange of emails that took place between Mr Kenman and Mr and Mrs Marburg on 13 February 2018.[58]  That exchange clearly indicated that, rather than Laurel Star taking possession under an assignment of the existing lease for its remaining term after settlement, the parties were content to adopt an informal arrangement whereby Laurel Star would take possession as Babstock’s licensee until the end of the lease.  That agreement was sufficient to constitute a waiver of Babstock’s obligation under clause 24 of the Business Contract.

Termination of the Business Contract – no lease of the premises

  1. [77]
    The plaintiffs contend that they validly terminated the Business Contract, either because they were entitled to do so because they did not secure a new lease of the premises, or because the absence of a lease was due to breach by Babstock of its obligation to secure a new lease, entitling the plaintiffs to terminate for repudiation by Babstock.
  2. [78]
    It is necessary, in order to consider the parties’ submissions about whether, and on what basis, Laurel Star was entitled to terminate the Business Contract because the landlord did not grant it a lease of the premises, to set out a chronology of the steps taken by each party and the landlord.
  3. [79]
    I have set out above the emails exchanged on 13 February and 5 March 2018 and Mr Kenman’s email of 13 March 2018 to Mr Cher.[59]
  4. [80]
    Both parties appeared to be working cooperatively toward discussions with the landlord to secure a new lease at the expiration of the current lease.  Clearly Mr Marburg was intending to meet the landlord’s representative to that end.  Mr Kenman did not object to that course.
  5. [81]
    Mr Marburg met with the lessor’s representative, Mr Cher, on 29 March 2018, although Mr Marburg said in his evidence that he did not meet Mr Cher for the purpose of negotiating a new lease, but rather he was “doing some research”.[60]
  6. [82]
    Subsequent to that meeting, Mr Marburg and Mr Cher exchanged the following emails:[61]
    1. (a)
      At 6:31am on Friday 6 April 2018, Mr Marburg wrote to Mr Cher:

Good Morning Thomas,

It was great to meet with you on Thursday last week regarding my taking over Shop 22 – Your Local Rental.

Further to that discussion, could you please provide a costing of a Lease for :

  1. 12 month period ;
  2. 2 year period, and
  3. 3 year period

Please also advise of time frame involving in setting up a lease.

  1. (b)
    At 1:32am on Saturday 14 April 2018, Mr Cher responded:

Good morning Alan,

In response to your email dated, 6th April 2018, we write to advise you of the following;

  1. Shop 22 is situated in a prime retail location at the main thoroughfare to Coles Supermarket.
  2. The Current Rental Rate that is paid by “Your Local Rental” is not based on a retail rate but is more in line with office rate.
  3. The Current Gross Rent is $2,786.67 (excluding GST) per month.
  4. The Proposed New Gross Rent will be $2,926.00 (excluding GST) per month. Please be advised that the Landlord reserved the rights to withdraw this offer after Friday, 27th April 2018.
  5. If you require a 2 years or 3 years Lease, the Gross Rent will be increased by 5% at each of the anniversary of the Lease.
  6. Upon receipt from you of the signed Letter of Offer to Lease and the Deposit, our Lawyer should be able to submit the Leasing Document to your Lawyer within 15 working days.
  7. Unless, there is a NEW executed Lease/Agreement in place before the close of business on Wednesday, 31st May 2018, the Landlord will require the existing Tenant to deliver vacant possession of Shop 22.

We await your response.

  1. (c)
    At 8:41am on Monday 16 April 2018, Mr Marburg replied:

Good Morning Thomas,

I trust you enjoyed a safe and relaxing weekend.

Thank you for that advice.

  1. (d)
    At 6:41am on Friday 20 April 2018, Mr Marburg wrote:

Good Morning Thomas,

Further to previous discussions, could you please advise of any other shops that may be available from June 2018.  In particular I may consider a “smaller area”, but possibly not less than around 50 sq.m.  Please also advise of area of each.

Also, please advise of lease costing for each over a 12 month, 2 year and 3 year periods.

To clarify your “point 5” in your previous e-mail of 14th April, is the lease amount the same whether the lease is a 12 month, 2 year or 3 year, or are the 2 year and 3 year leases at a reduced rate ?

  1. (e)
    At 11:42am on Friday 20 April 2018, Mr Cher responded:

Good morning Alan,

With reference to your email below, we write to advise that we do not have any Premises that will suit your requirements and WE ARE DEFINITELY NOT INTERESTED IM WASTING OUR TIME TO DEAL WITH SOMEONE THAT DOES NOT HAVE A SINGLE CLUE ABOUT THE MARKET PRICE OF RETAIL SPACE AND THE EXPERIENCE OF OPERATING A REAL ESTATE BUSINESS.

Therefore, we will be writing to the existing Tenant of Shop 22 to deliver vacant possession of Shop 22 by close of business on 31st May 2018.

Please do not contact us anymore as we have better things to do with our time.

  1. [83]
    The last email from Mr Cher almost beggars belief.  It was the height of rudeness and unprofessionalism.  No evidence before me can explain its terms. 
  2. [84]
    Notwithstanding that email it seems that, having been sent a copy of it, Mr Kenman arranged for the defendants’ office manager, Nicole Satherley, to speak to Mr Cher or someone else representing the landlord, who mitigated that position by reiterating the offer of 6 April.  Mr Kenman passed on that offer to Mr Marburg by email of 24 April 2018 and offered to assist him if required.[62]
  3. [85]
    Later that day, Mr Kenman wrote to his solicitor, Mr Carter, and copied Mr Yeo and Mr and Mrs Marburg.[63]  He said this:

Dear Peter

C.C Alan, Dean Greg

Ive [sic] spoken with Thomas the centre management from Bellbowrie.  He is obviously concerned over the negotiations with Alan.  For whatever reason I’m really not sure as Alan has always been a gentleman to deal with.  But unfortunately they have gotten off on the wrong foot.  Thomas has offered Alan the opportunity to take on a 12 month sub lease at the same price I was paying, as long as I stay as the main tenant, IE Alan will sub-lease from me.  That way I will guarantee consistency, Thomas and Alan will have 12 months to get to know each other, and I will have my proverbials on the line to assist.

There is also a vacant building at the Moggill post office and the landlord will also rent to Alan if required.  It is owned by the company that will be developing the second commercial retail shops in that location.

  1. [86]
    There was no evidence when or in what manner the offer of a 12 month sub-lease was made to the plaintiffs, although Mr Marburg acknowledged that it had been made.[64]
  2. [87]
    A short time later that afternoon, the plaintiffs’ solicitor at the time, Mr Cass, wrote to Mr Carter, seeking an extension of the first settlement date to 11 May.  In that letter,[65] Mr Cass also said,

For the record, we note by email late this afternoon that your client has acted in [sic] the best intentions by again reverting to the Lessor, towards a further option in resolution of the lease of the premises.

  1. [88]
    The email “late this afternoon” was clearly Mr Kenman’s email sent at 4.31pm, which Mr Yeo had forwarded to Mr Cass a few minutes later.[66]
  2. [89]
    On 26 April 2018, Mr Carter responded to Mr Cass’ letter of 24 April, agreeing to extend first settlement to 11 May.[67]  He went on to say,

Late Tuesday the landlord offered Alan the opportunity to take on a 12 month sub lease at the same rent as the seller pays on condition the seller remained as lessee.  After some communications today with the buyer or yourselves, that offer has apparently been withdrawn.  The landlord has now notified our client:-

…we seriously doubt that he will be able to maintain the required terms and conditions as the Lease and successfully operate the business.  At the end of the day, it might cause us more headache and money (legal cost) than what we will be collecting in the heavily discounted gross rent.  Therefore, I have been instructed to advise that the Lessor will not consent to any deal involving Mr Alan Marburg as a Tenant or a sub-lessee.

Our client contends that the buyer has not acted reasonably in relation to accepting the landlord’s offers of a tenancy.  The buyer was in fact offered a tenancy on reasonable commercial terms and did not accept.  The resulting lease issues are as a direct result of actions or inactions of the purchaser and do not – with respect – trigger any rights to termination to which your letter alludes.

That said, we are instructed the following other tenancy options are available to the Buyer:-

  1. there is a vacant building at the Moggill post office that is apparently available for rent.  It is owned by the company that will be developing the second commercial retail shops in that location;
  2. there is a vacancy at the Pullenvale shopping centre just up the road; and
  3. the Seller will make space available in its Graceville office on Oxley Rd at $10k p.a. plus a share of outgoings.
  1. [90]
    For reasons that nobody explained, the landlord had concerns about having Laurel Star as a lessee.  Although it wavered, it is clear that, by 26 April 2018, it had decided not to offer the Marburgs any lease, whether of these or other premises.  There was no evidence that it would have changed its mind by the proposed first settlement on 11 May 2018.  I find that it would not have been prepared to offer Laurel Star a lease of the premises, whether on the terms set out in the Business Contract or otherwise.

Termination for lessor’s refusal to grant lease

  1. [91]
    Regardless of whether the seller’s obligation to use its best endeavours to secure a lease was waived by the buyer, the Business Contract at all times remained conditional on the lessor agreeing to provide a new lease of the premises.  In the absence of any relevant variation, the only circumstance in which that condition would not apply in Laurel Star’s favour – entitling it to terminate that contract – would be if it resulted from Laurel Star’s own breach of its obligation to use its best endeavours to obtain such a lease.
  2. [92]
    In my view, Laurel Star did not breach that obligation.  Mr Marburg, on Laurel Star’s behalf, took appropriate steps, in conjunction with the defendants, to investigate whether Laurel Star could obtain a lease of the premises on the agreed terms.  Indeed, he went further and investigated whether he could secure other premises owned by the lessor, on terms that would be cheaper for Laurel Star.  He was unsuccessful.  In my view, Laurel Star used its best endeavours to secure a lease.  It must also be kept in mind that fulfilment of the condition required that the terms of any lease meet those set out in the contract at item T or other terms satisfactory to the plaintiff.  None of the terms offered by the lessor, but later withdrawn, matched those terms.
  3. [93]
    The lessor ultimately made it absolutely clear that it would not grant a lease to Laurel Star.  That being so, clause 25.3 of the Business Contract was enlivened.  In the absence of evidence that that refusal was a consequence of Laurel Star breaching its obligation to use its best endeavours to obtain such a lease, it entitled Laurel Star to terminate the Business Contract. 
  4. [94]
    The landlord’s decision not to grant a lease to Laurel Star was communicated to the parties several weeks before the proposed completion date.  The defendants submit that the contract only required that a lease be obtained by completion.  Laurel Star purported to terminate on the day before completion, at a time when its potential right to terminate on that ground had not materialised.
  5. [95]
    There is no evidence, from Mr Cher or any other source, that Mr Marburg did anything that would constitute a breach of Laurel Star’s obligation to use its best endeavours to secure a lease of the premises.  Mr Kidston, counsel for the defendants, submitted that Laurel Star did not call Mr Cher or anyone else for the landlord, nor provide an explanation for its failure to do so; therefore it can be inferred that the landlord’s evidence in this regard would not have assisted Laurel Star.[68]  I disagree.  There was no need for Laurel Star to call Mr Cher, who had made his attitude on the question of a new lease abundantly clear on two occasions.  Indeed, I consider that, if it might be expected that anyone would have called Mr Cher to give evidence, it would have been the defendants, in an attempt to prove that the lessor was in fact prepared to grant Laurel Star a new lease on the terms provided in the Business Contract.  The defendants’ failure to call him may give rise to an inference that his evidence would not have assisted their case.
  6. [96]
    It is unnecessary to draw an inference either way.  Not only did Mr Cher make it clear that the lessor would not grant a new lease to Laurel Star on any terms, his earlier indication of the terms of a new lease (set out in his email of 14 April 2018) demonstrated that it would not grant a lease on the terms required by the Business Contract.  The indicative terms were inconsistent with those terms, at least in requiring rent at a rate 5% over that provided for in the contract.
  7. [97]
    I disagree that Laurel Star could not terminate on this ground before completion.  The lessor had made it abundantly clear that it would not grant a lease to Laurel Star.  Absent the lessor clearly changing its mind by completion and it and Laurel Star agreeing on the terms of the lease, Laurel Star was entitled to act on the practical reality that it would not obtain a lease of the premises.  It would be for the defendants to demonstrate that the lessor would have provided such a lease.  They did not even attempt to do so.
  8. [98]
    As the lessor would not grant a lease to Laurel Star, Laurel Star appears to have been entitled to terminate the Business Contract.[69]

Termination for breach

  1. [99]
    Alternatively to the plaintiffs’ contention that Laurel Star validly terminated the Business Contract because the condition that it be granted a lease was not fulfilled, they also allege that Babstock breached that contract by not securing a lease.[70]  They contend that that breach entitled Laurel Star to terminate the contract.  (They go on to allege that any such breach of that contract was also deemed to be a breach of the Rent Roll Contract and therefore they were also entitled to terminate that contract for breach by the defendants.)
  2. [100]
    I disagree with this proposition.  Babstock was obliged to use its best endeavours to secure a lease, but it was not obliged to secure one with the result that, simply because the landlord did not agree to grant a lease, Babstock had breached its obligation.  It would only have breached its obligation if it did not use its best endeavours to obtain a lease of the premises for Laurel Star.
  3. [101]
    In my view, the steps taken by Babstock to attempt to persuade the lessor to grant a lease to Laurel Star constituted Babstock using its best endeavours to secure such a lease.  Indeed, it went further and, in the face of the lessor’s reluctance to deal with the plaintiffs, it sought to secure an alternative arrangement that may have been acceptable to both the lessor and Laurel Star.  It was unsuccessful in those endeavours.
  4. [102]
    Therefore, Babstock did not breach its obligations under the Business Contract.

Laurel Star’s ability to complete the Business Contract

  1. [103]
    The defendants contend that, for another reason, Laurel Star was not entitled to terminate the Business Contract on 10 May 2018.  The defendants contend that, even if clause 25.4 of the Business Contract was enlivened, Laurel Star was not entitled to rely on it, nor to terminate the contract on any basis, unless it proved that it would have been ready, willing and able to complete both contracts on 11 May 2018. 
  2. [104]
    In my view, this issue is really only relevant to consideration of the termination of the Rent Roll Contract.  For now, it suffices to say that I am satisfied that, if the parties had settled the Rent Roll Contract on 11 May and the landlord had agreed to grant a lease in the relevant terms to Laurel Star, then Laurel Star would have been ready, willing and able to settle the Business Contract that day.  Its obligation was only to pay $5,000 plus GST, less the deposit that it had already paid.  At the least, it had access to the Westpac loan facility for a sum far in excess of that sum.  I have no doubt that it could have paid the balance of the price under this contract.  For those reasons, as well as for the reason that it was not obliged to be ready, willing and able to complete the contract at the time it terminated it before the due settlement date,[71] this defence is not open in respect of the Business Contract.

Termination for breach of the Rent Roll Contract

  1. [105]
    For completeness I add that if, as the plaintiffs contend, Laurel Star validly terminated the Rent Roll Contract for breach by Babstock, then, under clause 6.2 of the Business Contract, it was also entitled to terminate the Business Contract because settlement of the Rent Roll Contract was not effected.

Did Laurel Star validly terminate the Business Contract?

  1. [106]
    I therefore conclude that Laurel Star was not entitled to terminate the Business Contract for breach by Babstock.  However, it was entitled to terminate the contract under clause 25.3 and it did so.  Therefore, I find that Laurel Star validly terminated that contract on 10 May 2018. 

Construction of the Rent Roll Contract

  1. [107]
    The plaintiffs allege that Babstock breached (or, more accurately, would have breached at settlement) the Rent Roll Contract, by failing to be in a position to provide all the necessary documentation for each of the properties to be taken over by Laurel Star on the first settlement date of 11 May 2018.  The plaintiffs contend that, in anticipation of that breach, they validly terminated that contract on 10 May 2018.  They also contend that they were entitled to, and did, terminate that contract because Babstock was deemed to be in breach of it by breaching the Business Contract.
  2. [108]
    It is necessary first to consider the terms of the Rent Roll Contract, as the defendants contend that it was varied, or Laurel Star waived some of Babstock’s obligations under it, by post-contractual conduct of the parties.  The relevant alleged variation was, in substance, that Babstock need not obtain new appointments of Laurel Star as agent, but may simply give the owners notices of assignment of the appointments to Laurel Star.

Requirements for an assignment

  1. [109]
    Before considering whether or not there was such a variation agreement, it is necessary to consider the contractual and statutory requirements for the effective assignment of an appointment of an agent. 
  2. [110]
    There is no evidence that, within one business day of the due diligence date (or indeed, at any time), Laurel Star gave Babstock a notice under clause 3.5.  In the absence of such a notice, Babstock was entitled to choose how it fulfilled its obligation under clause 5.2.  It chose to do so by giving the owners notices of assignment of the owners’ respective appointments of Babstock as agent, thus assigning those appointments to Laurel Star.  It was not obliged to secure new appointments from existing owners, because Laurel Star had not required it to do so by a notice under clause 3.5, although it could choose to do so for any one or more of the properties. 
  3. [111]
    Therefore, Babstock was entitled, under the original terms of the contract, to effect its obligations under clause 5.2 by “obtaining in writing from each property owner an Assignment in favour of Laurel Star.”  “Assignment” is defined as “an assignment of an Appointment from the Seller to the Buyer notified in writing in such manner prescribed by the Act.”  “Act” is defined as meaning the Property Agents and Motor Dealers Act 2000, the Property Occupations Act 2014 “or any subsequent Act and includes any amendment and regulations thereto.”  The Property Occupations Act applied at the date of the contract and is the Act to turn to for the manner of notification.[72]  It relevantly provided that the assignee of an appointment must give each client written notice of the assignment within 14 days after the assignment.[73]  Subsection 113(4) provided that an assigned appointment is taken, for section 102, to be an appointment by the client of the proposed assignee and to continue to have effect according to its terms.[74] 
  4. [112]
    Somewhat perplexingly, the Act ignores the distinction between an assignment and novation of a contract.  Generally, one can only assign the benefits of a contract, not the burdens.  The parties to a contract can only change by novation of the contract between the remaining and new parties.[75]  However, the Act appears to treat an “assignment” of an appointment as operating as if it were the novation of an appointment.[76]  I shall proceed on that basis.
  5. [113]
    That being the case, an assignment would simply constitute an agreement between the assignor and the assignee, which could be perfected by the assignee (or presumably someone on the assignee’s behalf) giving the owner written notice of that assignment. 
  6. [114]
    I must construe the contract in the context of the governing legislation.  The Act provides that an assignment is effective upon notice of it being given to the owner.  An acknowledgment from the owner could not take away the owner’s statutory right to revoke the assignment within 30 days of receiving notice.  In any event, an owner can at any time revoke an appointment by giving 30 days’ notice in writing, so an appointment would be no more secure than an effective assignment.
  7. [115]
    Therefore, as Laurel Star did not elect which of the alternatives (assignment or appointment) it required, Babstock was entitled to choose its method.  In order effectively to assign an appointment to an owner in accordance with the Act, all that Babstock needed to do was to give the owner notice in writing, on behalf of Laurel Star, that the appointment had been assigned to Laurel Star. 
  8. [116]
    However, while that is all that was required under the Act to effect an assignment, clause 10.1.4 of the Rent Roll Contract required that, on the relevant settlement date of each particular transferred property, the Seller must deliver to the Buyer,

a new Appointment or Assignment in respect of each relevant transferred Property, duly executed by the relevant transferred Property Owner and, if applicable, in a form approved by the Buyer pursuant to Clause 6, appointing the Buyer as its managing agent for that Property on terms no less favourable than the existing form.[77]

  1. [117]
    The clause does not provide that the document to be provided at settlement was “a new Appointment, duly executed by the relevant transferred Property Owner, or an Assignment, in respect of each relevant transferred Property.”  If the parties had agreed that only an appointment need be executed by the owner, that would have been the logical manner of expressing the clause.  Instead the words “duly executed by the relevant transferred Property Owner” are, in my view, clearly intended to apply to both methods of securing the appointment of Laurel Star as agent.
  2. [118]
    This construction is supported by other provisions that refer to an assignment being “obtained” or “received”[78] – a term that clearly imports the notion of something comprising an assignment being received by the parties from each owner. 
  3. [119]
    Thus, at settlement for a particular property, if an appointment of Babstock had been assigned to Laurel Star rather than a new appointment having been obtained, Babstock was obliged to have taken the extra step of having the property owner sign the notice of assignment, in essence by way of acknowledgment of the assignment.  This was notwithstanding that the assignment would be effective, under the Act, without such an acknowledgment.  This extra step, while unnecessary under the Act, was one that the parties had agreed as necessary for settlement.  It is unnecessary to speculate about the reasons for that requirement.

Variation or waiver of the Rent Roll Contract?

Documentation agreement

The allegations

  1. [120]
    The defendants plead[79] that the Rent Roll Contract was varied by a subsequent agreement between the parties, which they labelled the ‘Documentation Agreement’.  They allege that it was made “in or about the period from 2 to 21 February 2018” and that the parties agreed that:
    1. (a)
      Babstock would fulfil its obligations under clauses 5.2 and 10.1.4 of the contract by effecting assignments of the seller’s appointments for the properties by providing to the owners a notice of assignment including the name and address of the buyer as contemplated by the first part of clause 3.5.1;
    2. (b)
      the notice would be sent to each owner together with the letter of introduction contemplated by clause 6.1;
    3. (c)
      by implication, Babstock was not required to provide, at settlement, a new appointment or assignment in respect of each property executed by the owner, appointing Laurel Star as managing agent for the property.
  2. [121]
    The defendants contend that the agreement was partly oral, in a conversation between Mr Marburg and Mr Kenman in which they agreed to the terms set out in (a) and (b) above.  It was partly in writing, “constituted or evidenced by” a number of emails between Mr Kenman and Mr Marburg and a letter from Laurel Star’s then solicitor to the defendants’ solicitor.  It was also “constituted or evidenced by” Babstock’s actions, on 14 and 15 March 2018, in sending to each owner a letter attaching a notice of assignment of its appointment to act as managing agent and a letter of introduction from Mr Marburg.[80]
  3. [122]
    The Documentation Agreement, as pleaded in paragraphs 16C and 16F of the defence, included no express term that the extra step required by the contract, of obtaining assignments executed by the owners, was no longer necessary.  Rather, the defendants plead, in paragraph 16H, that there was an implied term that they were not required to provide a new appointment or an assignment executed by the property owner.  It is not clear why such a term should be implied into the agreement alleged, other than because it was not mentioned in the conversation as alleged in the statement of claim. 
  4. [123]
    In their reply, the plaintiffs admit that a conversation took place between Mr Kenman and Mr Marburg, in which Mr Kenman proposed that the assignment of the seller’s appointments be effected by providing notices of assignment to the owners.[81]  But the plaintiffs go on to plead that Mr Marburg replied to Mr Kenman that “he would still require signed acknowledgments from each Property Owner.”[82]  That appears to me to be an allegation that Mr Marburg expressly required the opposite of what the defendants plead, in the defence, was an implied term of the agreement.  That is, the plaintiffs allege that Mr Marburg effectively reiterated the contractual requirement that Babstock obtain assignments executed by the owners.  The plaintiffs also admit the emails and letter relied on by the defendants but deny that the alleged Documentation Agreement was made.[83] 

The evidence

  1. [124]
    Mr Marburg’s evidence in chief was short, during which he gave no evidence about this conversation.  In cross-examination the following exchanges took place between him and Mr Kidston:[84]

MR KIDSTON:   Now, would you accept, also, that in the letter from Mr Sarinas, your solicitor, of 10 May 2018, that’s the first time that you requested that a certain form of assignment, or document in relation to assignment, be provided at settlement or was required?‑‑‑No.

When did you say that earlier?‑‑‑Would have been in April.  I can’t nominate a date.

…

You see, it’s the case, isn’t it, that you’d agree [scil – agreed] with Mr Kenman that how settlement – how transfer of his letting appointments was to occur was in accordance with the then legislation that you’d give notice, and if there wasn’t a complaint after 14 days, the letting appointments would be transferred to you.  You had those conversations with Mr Kenman, didn’t you?‑‑‑I can recall asking for confirmation from all the owners. 

Yes.  I’m talking about Mr Kenman.  What I’m suggesting to you is you agreed with him in or about February that what you’re doing [scil – going] to do in respect of transferring the letting appointments was have him give the notice to all the people on the list to say it’s been assigned and this is the new property manager, and he would give that notice and if no one complained after 14 days, the letting appointments would be transferred to you?‑‑‑Can’t recall.

…

You had a telephone conversation with Mr Kenman, didn’t you, Mr Marburg, on or about 9 February where you’ve discussed the mechanism by which the letting appointments would be transferred?‑‑‑I can’t recall.

And I suggest to you that you had a discussion to the effect that some sort of formal document effecting a transfer wasn’t required, and all that was required was to give a notice and [scil – under] the Act, and by doing that if no one complained after a period of time, the letting appointment would be transferred to you?‑‑‑No.

Well, I suggest to you, you had such a conversation and you agreed that that was one of the ways in which the letting appointments could be assigned to you?‑‑‑I can’t recall that. 

Well, you can’t – by saying you can’t recall, do you accept that this conversation may have occurred?‑‑‑No. 

All right, and then, in fact, you agreed that that was how you would proceed, that he would give those notices on behalf of the relevant defendant prior to settlement?‑‑‑No. 

…

You had a conversation with Mr Kenman by telephone on or about 9 February 2018 about the transfer of the letting appointments?‑‑‑No.

And you both said words to the effect that it wasn’t necessary for the first defendant to secure new agents’ appointments from the property owners in the name or Laurel Star.  Do you accept that?‑‑‑Sorry, can you just repeat that again.

That you were discussing with Mr Kenman ‑ ‑ ‑?‑‑‑Yes.

‑ ‑ ‑ in a telephone conversation the mechanism by which the letting appointments would be transferred to Laurel Star?‑‑‑Yes.

And I’m suggesting to you that both you and he in the course of this discussion said words to the effect that it wasn’t necessary for the first defendant to have – to secure new letting appointments signed by the property owners in the name of Laurel Star, but rather that the assignment would be affected [sic] [-] of the letting appointments which are to be sold [-] by my client giving a notice of assignment, including the name and business address of Laurel Star, as was contemplated by clause 3.51 of the contact.  Do you recall having that conversation and stating words to that effect?‑‑‑I can’t recall the date, but I can remember having a conversation about not getting new form 6s made in the name of Laurel Star.

Yes.  And that was because you decided that it wasn’t necessary.  There was this other mechanism of effectively transferring the letting appointments to you?‑‑‑Yes.

All right?‑‑‑That was ‑ ‑ ‑

And you agree that that’s how you would do it, that other effective way?‑‑‑Yes, but I still required confirmation of assignment from all the property owners.

I suggest you didn’t have that conversation.  That wasn’t said at all.  And I suggest to you that what was agreed was that the notice under the Act would be given by my client, in effect nominating Laurel Star in the appropriate way as the new letting agent, and that that is how the assignment obligation would be performed under the contract.  That’s the conversation you had and you agreed to that course?‑‑‑I cannot recall.  I ‑ ‑ ‑

And it’s the case, isn’t it, that never after that conversation, did you say to my client, “I require you to provide letting appointments signed by the property owners at settlement?  You never later said that, did you?‑‑‑Sorry, I – can you just repeat that again?  I’m ‑ ‑ ‑

I’m sorry.  I’ll take it slowly.  You had this conversation on or about 9 February with Mr Kenman where you discussed these matters as we just discussed?‑‑‑I can’t recall the date.

About early February then?‑‑‑Perhaps.  I can’t recall.

All right.  But you can recall having that – a conversation to that effect?‑‑‑I can recall discussing the assignment side of things at some stage.

All right.  And that was discussing it when Mr Kenman, wasn’t it?‑‑‑Yes.

Okay.  Now, that occurred some time before you purported to terminate on the 10th of May 2018, didn’t it?‑‑‑Yes.

And what I’m suggesting to you is in the period between that conversation occurring and 10 May 2018, you never raised with Mr Kenman or anyone on behalf of my client that you required some formal document or assignment at settlement?‑‑‑Yes.

You agree you didn’t raise it?‑‑‑No, I – I requested confirmation from the individual owners – property owners.

How did you do that?  Did you write to my client?‑‑‑I – I’m recalling it was one day when I was at the office.

…

I’m recalling that it was one day at the office when he discussed the assignments – confirmation of assignments from all property owners.  I can’t remember what day it was.

  1. [125]
    Further cross-examination followed later:[85]

Now, can I take you to another conversation that you had with Mr Kenman.  This was the conversation during cross-examination that I suggested to you occurred on about 9 February 2019, where you discussed the mechanism by which the letting appointments would be transferred to Laurel Star at settlement;  do you recall that?‑‑‑I can’t recall the conversation.

All right.  And it’s the case, isn’t it, then, that you can’t – do you say you can’t recall – I think you conceded, however, that Mr Kenman raised the issue of effecting a transfer of those letting appointments by way of giving a notice.  Do you recall having a conversation to that effect?‑‑‑To that effect, yes.

Yes.  But you can’t recall what you said in response?‑‑‑No.

See, I suggest to you that during that conversation, you didn’t say words to the effect that you still required a written transfer or written assignment, or a new form 6 of that settlement?‑‑‑I can – excuse me.  I can recall saying that I required confirmation from the owners, otherwise we wouldn’t know whether they received the documentation or not.

All right.  But you didn’t have a – that seems to be something different.  What I’m suggesting to you is that you didn’t ever say, in that conversation, that you would still require signed acknowledgements from each property owner?‑‑‑I can’t recall.

And you can’t recall because – you can’t recall whether you said that or not because you don’t remember?‑‑‑Yeah, I can’t remember the – what was ‑ ‑ ‑

It’s entirely possible?‑‑‑I can’t remember what was actually said.

All right.  But it was the case, wasn’t it, that since that conversation, you were proceeding on the basis that there wouldn’t be a signed acknowledgement from each property owner delivered at settlement;  that was the case, wasn’t it?‑‑‑No.

All right.  And I suggest to you that it was the case that the way that you were proceeding thereafter was that notice of the assignment would be given and there would be – under the Act, and provided there was some sort of confirmation received, you’d be happy with that?‑‑‑Yes.

  1. [126]
    In his evidence in chief, Mr Kenman gave the following evidence about the conversation:[86]

Now, you had a further discussion with Mr Marburg about how you would go about transferring the letting appointments at settlement?‑‑‑Yes.

You recall that conversation?‑‑‑Yes, I do, sir.

Can you recall, roughly, when that was?‑‑‑Yes.  It was on or before the 9th of February.

Okay.  Now, you said that you proposed that the assignment of the sellers appointments for the properties be effected by providing each property owner a notice of assignment, including the name and business address of the then buyer.  What did Mr Marburg say in response to that?‑‑‑He advised that that was a good idea, to go through that process.

All right.  And did he say anything else at that time?‑‑‑He said he was still getting his head around what the procedures were.  I asked him if he had a chance to have a look at the buyers’ handbook.  He said that no, he hasn’t had a chance to open it yet.  I advised him that it’s an excellent document.  The buyer and the seller both receive a handbook from Real Estate Dynamics, giving them the stepping stones that they require to complete a contract, and I advised him to have a look at that, so that he knew what he was going to be doing.

All right.  And after proposing to him that this mechanism for transferring the letting appointments, did he make any comments, specifically, in relation to that?‑‑‑I asked him specifically if he needed any more documents, other than the assignment and walked him through that.  He said “no, I’m happy with what you’re doing, Andrew”.

Right.  And did he later say anything to you that changed that position?‑‑‑No.

  1. [127]
    In cross-examination, he was asked more questions about the conversation:[87]

MR MORRIS:   Mr Kenman, when you were given [sic] evidence this morning, you spoke of a discussion which you had with Mr Marburg concerning, to use what I have as a mutual [scil – neutral] term, the transfer of the agency appointments as letting agent?‑‑‑Yes, sir.

All right.  And when you were asked about that meeting, you said that it occurred on or before the 9th of February?‑‑‑Yes, sir.

…

… so it was a phone call first and then an email sent out.

Okay.  So it was a phone call.  It wasn’t a person-to-person meeting?‑‑‑No, sir.  It was not.

Okay.  And what’s your recollection of the phone call?  As best you can, what words you used and what words he used?  …  ‑‑‑It’s difficult for me to ascertain all the discussion.  I remember some key points that we discussed.  The key points were we were talking about the assignments, the paperwork that was required for the assignments.  We talked about the letter of introduction.  We referenced the two handbooks, the sellers handbook and the buyers handbook.  I asked Mr Marburg if he was happy with the way that we would do through the assignments and he said, yes, indeed he was.  Or – that effect.

Can you do your best to recall the words that you used?‑‑‑I can’t, sir.  I can give you an understanding of what was said, but word-for-word, unfortunately, I don’t have a good enough memory for that.

Do you recall yourself saying words along these lines, “I agree that Babstock Proprietary Limited is not required by Laurel Star, or perhaps by its predecessor, Marburg Investments Proprietary Limited, to secure new agents appointments from the property owners in its name, and I agree to the assignment of the sellers appointments for the properties being affected [sic] by Babstock providing to the property owners a notice of assignment, including the name and business address of the then buyer, as contemplated by a particular clause in the rent roll contract and that the notice would be sent together with a letter of introduction contemplated by a provision in the rent roll contract from Babstock”?‑‑‑Mr Marburg and I agreed to that.

All right.  Well, what is the effect of the words that you instructed your lawyers were used?‑‑‑I said words to the effect of, “Alan, we need to go through the buyers and sellers handbook and ensure that we’re taking the relevant steps accordingly.  In that, I need to get from you an introduction letter.”  He said, “Yes, I understand that.”  I said, “Have you had the chance to go through it all?” He said, “No, it’s – I haven’t had the opportunity at all.”  I said, “Well, here are the steps that we need to take.  We need to get an introduction letter from yourself.  I’m going to do a letter as well, and then there is an assignment letter, as we discussed before.  Are you happy with that process?”  He said, “Yes, I am.”  …

  1. [128]
    Later he gave the following evidence:[88]

Look, is this an accurate statement:  you came away from that meeting with a belief in your mind that you’d reached an agreement?‑‑‑Absolutely, sir.

Yep.  And ever since then, you’ve persisted in a belief that you came away from that meeting with an agreement?‑‑‑I haven’t had to do that, sir, because I’ve put that in writing, and that in writing, and that was agreed to in writing.

Where was that agreed to in writing?‑‑‑I followed up the next day with an email saying that this is what we agreed to.

  1. [129]
    The email to which he was referring is exhibit 79.[89]  Mr Kenman was cross-examined about that email[90] and insisted that it was prepared and sent as “in my mind it was … an agreement … as reached per the conversation the night before.”[91]
  2. [130]
    The email relevantly said, “Please find attached our proposed letter to the client advising them of our sale.”  The attached letter did that and provided that the author (Mr Kenman) “enclose the following for each Owner’s records.”  The first document was referred to as “Notice of Assignment of Appointment of Agent”, though no draft notice was attached to the email.  The draft letter did not ask the owners to sign and return the attached notice.
  3. [131]
    An example notice of assignment appears as part of exhibit 81.  It did not include provision for the owner to sign the document, whether as an acknowledgment of receipt or as consent to the assignment.  Notably, it stated that Babstock had provided 14 days’ notice before the assignment as required by the Property Agents and Motor Dealers Act 2000.  It went on to say, “Section 135A(5) of the Act states ‘If a Client agrees to the assignment and the real estate agent assigns the appointment under this section, the appointment is taken, for section 133, to be an appointment by the client of the proposed assignee and to continue to have effect according to its terms.’”
  4. [132]
    The reference to the Property Agents and Motor Dealers Act 2000 was, of course, wrong, as the applicable Act at the time was the Property Occupations Act 2014.  Section 113 of that Act states what was required in a notice of assignment for it to be valid.  Notably, the notice sent by Babstock to owners did not contain all the necessary requirements, as it did not include the address of Laurel Star’s registered office, nor did it state that the appointment may be revoked by the client by giving at least 30 days’ notice of the revocation to the assignee, unless the client and the assignee agreed, in writing, to an earlier day for the appointment to end. 
  5. [133]
    The latter omission, in particular, is important, as it may have meant that the notices of assignment did not operate effectively to transfer the management of the properties to Laurel Star.  The Rent Roll Contract provided, in effect, that if any owner terminated Laurel Star’s appointment within 90 days of the date on which Laurel Star had paid that portion of the purchase price calculated by reference to that property, then Babstock would (through the Retention Stakeholder) refund to Laurel Star that proportion of the price.[92]  That clause was clearly drawn in anticipation that some owners may choose not to accept the assignment of the appointment to Laurel Star or may decide to terminate the appointment for other reasons.  The absence of the notice to the owners that they were entitled to terminate the appointment may have led to delays in that occurring that may have meant that Laurel Star would no longer be entitled to a refund.  Clearly clause 14 was drawn in the context of the statutory requirement that the owner be given notice of the right to terminate.
  6. [134]
    This defect in the notice of assignment was not relied on by Laurel Star.  However, it serves to underline the apparent importance to the Buyer of the contractual requirement that the notices of assignment be executed by the owners, as reflected in clause 10.1.4 of the contract.
  7. [135]
    It is also notable that, on 28 March 2018, at a time when the first settlement date was 4 April 2018, Mr Marburg sent an email to Mr Kenman[93] in which he said, among other things,

Could you please advise on client responses regarding “assignment” of the Agreements.

  1. [136]
    Mr Kenman did not respond to that part of the email in his responsive email. 
  2. [137]
    On the same topic, on 29 March 2018, Mr Marburg emailed his solicitor.[94]  Relevantly, he said,

As discussed, I have spoken to the seller regarding advice on “assignment” of the client Agreements.

I was informed that as the seller had advised all clients of the pending change in ownership, all they asked for was a response if any client did not want to continue with the Agreement under our management.

No client has indicated that they would not assign the agreement.

Is this an accepted method at change-over?

  1. [138]
    There is no evidence of any response to that question, but it seems that, following the emails that Mr Marburg and Mr Kenman exchanged on 28 March 2018, they had a discussion along the lines of that described in Mr Marburg’s email of 29 March 2018.  These emails and discussion tend to support Mr Marburg’s evidence that he had not, by that time, agreed to dispense with owners’ confirmation of the assignments and they do not support Mr Kenman’s evidence about the alleged Documentation Agreement.

Was there a Documentation Agreement?

  1. [139]
    The email of 9 February 2018 does suggest that the parties had discussed transferring the appointments by notices of assignment.  But that could be done under the agreement in any event.  In the absence of clear words confirming that Mr Marburg and Mr Kenman had agreed that it would not be necessary for the owners to acknowledge receipt of the notices of assignment, this email and the following conduct relied on by the defendants could not amount to an agreement to vary the terms of the Rent Roll Contract to remove the requirement for such an acknowledgment.  This situation was not altered by the emails exchanged, or the conversation that apparently occurred, on 28 and 29 March 2018.
  2. [140]
    I consider it unlikely that an experienced commercial person such as Mr Kenman would consider it acceptable to vary parties’ obligations under a detailed written contract without setting out the terms in a written agreement signed by all the parties.  Although that requirement was not an express term of the Rent Roll Contract, Mr Kenman struck me as a generally careful man in matters concerning business.  I consider that he would not have taken the risk of relying on the terms of an oral variation of the written agreement for the sale of his valuable business.
  3. [141]
    I am satisfied that, at some stage, Mr Kenman and Mr Marburg had a conversation in which Mr Kenman proposed obtaining assignments of existing appointments and Mr Marburg agreed that that would be satisfactory.  Of course, Mr Kenman did not need to obtain Mr Marburg’s agreement to that occurring, as Laurel Star had not expressed its wishes under clause 3.5.  But it is not surprising that Mr Kenman decided that it was appropriate to confirm with Mr Marburg what Mr Kenman intended to, as was his choice.
  4. [142]
    I am not satisfied that Mr Marburg told Mr Kenman that he would still require signed acknowledgments from property owners.  Mr Marburg’s evidence in that respect was vague.  His recollection of the conversation was clearly very poor.  He may have expected to receive signed acknowledgments of assignments from the owners, but I cannot accept, on his evidence, that he said anything about it in that conversation.  Nor did he say anything about it in the emails he exchanged with Mr Kenman after the conversation.
  5. [143]
    The upshot is that, while the parties agreed that it would be sufficient for Babstock to give notices of assignment to owners rather than obtaining new appointments of Laurel Star, each of the parties had a different understanding of what was required to put that into effect.  They never agreed on a particular method.  In particular, they did not reach any agreement that the contractual requirement that assignments be executed by the owners would not apply. There was therefore no relevant variation of the Rent Roll Contract.

Appointment waiver/dispensation

  1. [144]
    I turn now to consider whether Laurel Star waived any right it may have had to insist on the owners granting it an appointment or providing a written acknowledgment of an assignment.
  2. [145]
    Mr Kenman did not say, in his evidence, that he relied on the conversation in deciding not to ask owners to execute the notices of assignment.  He obviously had his own view, just as Mr Marburg had his view, of what was required to comply with the Rent Roll Contract and, under the Act, to effect assignments of the appointments.  However, Mr Marburg said and did nothing that could constitute a waiver or a dispensation of the contractual requirement that Babstock provide written acknowledgments of the assignments.
  3. [146]
    Therefore, the defendants’ alternative defence to this effect fails.

Termination of the Rent Roll Contract

Was Babstock in anticipatory breach of the Rent Roll Contract?

  1. [147]
    The plaintiffs contend that they were entitled to terminate the Rent Roll Contract in anticipation that Babstock would be unable, at settlement on 11 May 2018, to provide the necessary documentation for each of the properties that were to be transferred to Laurel Star that day.  Particularly, the plaintiffs contend that Babstock was unable to provide:
    1. (a)
      completed agent appointments or assignments for four properties;
    2. (b)
      properly completed ECRs for 32 properties; and
    3. (c)
      a new appointment or assignment of an existing appointment for each relevant property, in each case executed by the owner, appointing Laurel Star as managing agent for that property.
  2. [148]
    This makes it necessary to consider whether Babstock would so clearly have been in default on 11 May 2018 that Laurel Star was entitled to terminate the Rent Roll Contract on 10 May for anticipatory breach of that contract by Babstock.  As Mr Kidston put it in his final submission,

To the extent that Laurel Star relies on anticipatory breach to justify its termination, it must prove that Babstock was as at 10 May 2018 unwilling or unable to perform the obligations the subject of the Anticipatory Breach Matters when the time for performance would have arisen.[95]

  1. [149]
    Because of my conclusion about the contractual requirement for Babstock to provide assignments of appointments executed or acknowledged in writing by the owners, Babstock would be in breach of the Rent Roll Contract by not providing an original or copy of a notice of assignment for each relevant property, executed by the owner, at or before settlement.  It is clear that, by 10 May 2018, Babstock had not obtained such executed assignments from the owners of the properties that it intended to settle the following day, because it did not believe that it was obliged to do so.  In that instance, it would clearly not have been in a position to provide such executed notices of assignment on 11 May 2018.
  2. [150]
    That raises the question whether Laurel Star was entitled to rely on the situation as at 10 May 2018 as an anticipatory breach that entitled it to terminate the Rent Roll Contract before that settlement date.  Before determining the answer to that question, it is necessary to consider whether Babstock was obliged, under the contract, to settle those properties and to provide those documents at settlement on 11 May 2018.  If it was not obliged to do so on that particular date, then it is irrelevant whether or not it could do so on that occasion.
  3. [151]
    The answer to this question in turn depends on how many and which properties Babstock was obliged to “transfer” to Laurel Star on the first settlement date.
  4. [152]
    The Rent Roll Contract does not make it abundantly clear how the parties were to determine which of the properties were to be the subject of settlement on the first settlement date and which on the second settlement date or later.  However, a careful reading shows that the only properties to be settled on the first of these dates were those “in respect of which an Assignment is obtained” before that date.
  5. [153]
    In particular:
    1. (a)
      clause 2.4 (chapeau) and clause 2.4.2 require that the purchase price be paid, relevantly, on the first settlement date, by the buyer paying “an amount calculated by multiplying the Adjusted Income by the Supply Right Factor applicable to each of the Properties included in the First Settlement.”
    2. (b)
      “Adjusted Income” is relevantly defined as “the Income in respect of all Properties … in respect of which an Assignment is obtained before the relevant settlement date”.
  6. [154]
    Therefore, the amount to be paid at either settlement date could only be determined by ascertaining which properties were to be the subject of settlement on that day.  That was determined by whether Babstock had “obtained” an assignment before the relevant settlement date.
  7. [155]
    Thus, Babstock was not required to “obtain” assignments for any particular properties, nor for any particular number of properties, by either of the particular settlement dates although, as with all contracts, the parties were obliged to take reasonable steps to secure performance of the contract so as to give all parties the benefit of it.[96]
  8. [156]
    On 9 May 2018, Babstock’s solicitors provided to Laurel Star’s new solicitors a final list of the properties that Babstock intended to settle on 11 May 2018.[97]  In the covering letter, Babstock’s solicitors wrote,

Instructions are to compel settlement of both transactions on the due date.  …

In relation to the Rent Roll sale, we enclose herewith:

  1. Sellers response to Buyers concerns notified on 04/05/18.  Notwithstanding that by far the majority of your client’s concerns are misplaced, of all purported “deficiencies” – most of which require the mere completion of an admin task or otherwise conform with model property management practice – all but 3 will have been attended to by Friday.  For any Properties in respect of which required RTAA documentation has not been returned by then, but is subsequently received, will be included in the second settlement.
  2. Updated property schedule for those managements to be included in the First Settlement.
  1. [157]
    The “updated property schedule” was therefore clearly intended to identify the properties in respect of which Babstock intended that Laurel Star pay to it, on 11 May 2018, that part of the purchase price calculated by reference to the adjusted income of those properties.  In order to be entitled to that payment, Babstock was required to have available, on 11 May 2018, all the documents about those properties that it was obliged to provide at settlement.  Those documents included an appointment of Laurel Star as agent or an assignment of Babstock’s agency agreement to Laurel Star, in either case duly executed by the owner, for each of those properties.
  2. [158]
    Although it was not addressed in the correspondence around that time, Babstock clearly had no intention of providing to Laurel Star, at settlement on 11 May 2018, any assignments executed by the owners.  It did not consider that it had any obligation to do so.  Nor, on 10 May 2018, was it in a position to obtain such executed assignments by 11 May for each of those properties.  Although, under the contract, settlement was due on 11 May 2018 only for properties in respect of which an assignment had been “obtained” (which, in my view, means an assignment executed by the owner), it is clear that Babstock was intending to insist on settlement of the properties in the list even though it had not obtained such assignments.  Furthermore, it had no intention of obtaining executed assignments from owners in anticipation of the second settlement date 14 days later:  the reference to including some properties in the second settlement concerned only the issues then being raised by Laurel Star, not the question of executed assignments.
  3. [159]
    The evidence – including the terms of Mr Kenman’s letter to the owners and of the notices of assignment, together with the conversation between Mr Kenman and Mr Marburg on 28 or 29 March 2018 referred to in Mr Marburg’s email to his solicitor on 29 March – demonstrates that Mr Kenman did not consider that it was necessary for Babstock to obtain signed acknowledgments from owners in order to comply with its obligations under the contract.  He had no intention to do so.  The defendants maintained that position up to and throughout the trial of this proceeding.  Babstock clearly had no intention to settle on the terms provided by the contract. 
  4. [160]
    Subject to the further questions raised by Babstock (whether Laurel Star was – and was obliged to be – ready, willing and able to settle on 10 or 11 May 2018 and whether Laurel Star had to give Babstock notice of default and the opportunity to remedy the default before terminating), Laurel Star was entitled to terminate the contract on 10 May for Babstock’s anticipatory breach of that essential requirement.

Other grounds for termination of the Rent Roll Contract

  1. [161]
    The plaintiffs contend that they were also entitled to terminate the Rent Roll Contract, either because they had validly terminated the Business Contract for breach by Babstock, or because Babstock was clearly going to breach the Rent Roll Contract by not being able to provide valid appointments for 4 properties, or properly completed ECRs for a significant number of the properties.  Given my conclusion above, it is strictly unnecessary for me to consider these grounds, but I shall do so in case I am later found to be wrong in that conclusion.
  2. [162]
    As I have already concluded, Laurel Star was entitled to terminate the Business Contract because the landlord would not agree to grant it a lease of the premises occupied by Babstock.  However, as I have also concluded, Babstock had not breached the Business Contract.  Special condition 6.4 of that contract did not apply in that circumstance.  Therefore, Laurel Star could not invoke that clause to deem a default under that contract to be a default under the Rent Roll Contract entitling it to terminate it.
  3. [163]
    Any inability of Babstock to obtain an appointment for only four of the properties to be settled on 11 May 2018 would not, in my view, have entitled Laurel Star to refuse to settle in respect of the other properties to be settled on that day.  Those four properties could be deferred to the second settlement date.  Alternatively, if Laurel Star settled those properties and could not secure itself an appointment, it would be entitled to reject them later and to receive a refund of that portion of the purchase price calculated by reference to those properties.[98]  Laurel Star was not, therefore, entitled to terminate the contract completely because of any absence of an appointment or an assignment for those four properties alone.
  4. [164]
    So far as the ECRs are concerned, on several occasions the plaintiffs gave the defendants a list of the properties that they asserted were not suitable for settlement.  Among those properties were 34 about which the plaintiffs asserted that no valid ECRs existed, for a number of reasons.[99]
  5. [165]
    I shall assume that the ECRs were deficient in the respects alleged by the plaintiffs.  Some of the alleged defects could perhaps have been cured by the second settlement date.  Some may have been incapable of rectification, such as where a tenant had not signed the ECR form within the time required under the relevant statutory period:  that is, within three days of the tenant occupying the premises.[100]  In such a case, it would have been open to Laurel Star to reject those properties or to accept them notwithstanding the defective ECRs.[101]  In those respects, there was no clear breach of the contract by Babstock.
  6. [166]
    However, Laurel Star also contended that the proportion of properties with defective ECRs was so great that Babstock was not able to transfer to Laurel Star a business of the nature and volume for which the parties had contracted.  The volume was important to Laurel Star as it may not have been a viable business without the approximate number of properties that had been represented.
  7. [167]
    The problem with this contention is that the Rent Roll Contract did not state that a minimum number of properties must be available for transfer, otherwise the buyer could terminate the contract.  Notwithstanding any shortfall in the number of properties with properly completed ECRs, the contractual obligations to sell and buy the management rights continued.   The only contracted effect of a variation in the number of properties to be transferred was a reduction in the purchase price under clause 14.
  8. [168]
    Therefore, I do not consider that any defects in the ECRs gave Laurel Star a right to terminate the contract, for breach or otherwise.

Notice and other requirements of the Rent Roll Contract

  1. [169]
    One other issue raised by the defendants was whether Laurel Star could terminate the Rent Roll Contract without first giving Babstock notice under clause 19.5 of that agreement.  They submitted that it had not given such a notice and therefore, even if Babstock had defaulted or would be in default on 11 May 2018, Laurel Star could not terminate unless and until that clause had run its course.
  2. [170]
    The plaintiffs’ response to that submission was simply that, if the contracts were terminated for anticipatory breach (as they submitted was the case), the notice requirements fell away with everything else.[102]
  3. [171]
    If there had been a default under the Business Contract and the non-defaulting party had chosen to terminate it, then that party could choose to terminate the Rent Roll Contract based on that default.  In such a case, where the Business Contract does not have equivalents to clauses 19.5.1 and 19.5.2 of the Rent Roll Contract, clauses 6.3 and 6.4 of the Business Contract would apply to entitle the non-defaulting party to terminate the Rent Roll Contract without having to give notice under those clauses.  This is because clauses 6.3 and 6.4 not only provide that default under the Business Contract is deemed to be a default under the Rent Roll Contract, but also provide an immediate entitlement to terminate the latter, not an entitlement that does not arise unless and until the steps under clauses 19.5.1 and 19.5.2 have been completed.  Of course, that reasoning does not apply in this case, as I have found that Babstock did not default under the Business Contract.
  4. [172]
    In contrast, if Babstock were in actual default under the Rent Roll Contract, ordinarily Laurel Star would have to give notice to Babstock under clause 19.5, setting out the defaults and allowing the contracted time for Babstock to rectify them before Laurel Star had the right to terminate for breach.  That clause applies if “the Seller is in default of one of the Seller’s material obligations under this Agreement.”  Of course, Babstock was not in breach as at 10 May 2018, as it was not obliged to produce the relevant documents until the time came for settlement.  By the time that obligation would have been breached, the contract had come to an end because Laurel Star had terminated it in anticipation that Babstock would breach or repudiate it. 
  5. [173]
    Therefore, I agree with Mr Morris’ submission that clause 19.5 fell away with the balance of the contract and it was not necessary for Laurel Star to give a notice under that clause.[103]  Upon termination of a contract for breach, or upon acceptance by one party of the other’s repudiation of a contract, both parties are discharged from any further obligation to perform their respective contractual duties.[104]  On 10 May 2018, Laurel Star terminated the Rent Roll Contract for anticipatory breach or accepted Babstock’s anticipated repudiation of its obligations under the contract on 10 May 2018.  Upon termination or acceptance, the contract was discharged.  There remained no obligation to await breach on 11 May 2018 and then to comply with the seller’s breach process under clause 10.5.
  6. [174]
    Babstock also contends that it was not obliged to provide assignments under clause 10.4 at settlement on 11 May 2018 because that obligation was conditional on Laurel Star giving it notice, pursuant to clause 7.2, of its financial ability to complete the contract and Laurel Star had not given any such notice. 
  7. [175]
    It is true that Laurel Star did not give such a notice.  But as it is also clear that Babstock would not, in any event, provide assignments signed by the owners, that obligation on Laurel Star fell away upon termination of the contract.  In any event, Babstock’s solicitors’ letter of 11 May 2018 insisted on settlement without any reference to that obligation.  In doing so, Babstock appears to have been prepared to waive it.

Laurel Star’s readiness, willingness and ability to complete the Rent Roll Contract

  1. [176]
    The defendants plead that Laurel Star was not, at 10 May 2018, and would not have been, at 11 May, ready willing and able to settle the Rent Roll Contract, because it had not executed all the documents required by its financier before advancing the funds necessary for Laurel Star to be able to pay the first settlement sum, it had not booked settlement with its financier and it had not ordered the necessary cheques.[105]
  2. [177]
    The plaintiffs, in their reply, allege that they were ready willing and able to settle but for the defendants’ “failures and breaches under the contracts,” they had obtained finance approval for the purchase and it was only because of the defendants’ failures and breaches that the plaintiffs had not executed all the necessary financial documents, booked settlement or had the cheques drawn.[106]
  3. [178]
    Babstock contends that the plaintiffs have not proved that they were, or would have been, able to settle, because they proved only that they had finance approval for $310,000 from Westpac[107] and they did not give any evidence to show that they had other funds available to pay the balance of the purchase price.
  4. [179]
    In cross-examination, the following exchange occurred between Mr Marburg and Mr Kidston:[108]

MR KIDSTON:   Now, you required finance to complete this purchase, didn’t you?‑‑‑Yes.

Can I – because you didn’t have sufficient funds and cash available to pay without finance?‑‑‑No.

So without the cooperation of your bank you were unable to settle?‑‑‑Yes.

  1. [180]
    In re-examination, Mr Marburg gave the following further evidence:[109]

Given that you had not ordered cheques, as you’ve already told us, did you have an understanding of what would be required if you did have to order cheques?‑‑‑No.

All right.  What arrangements did you have in place?‑‑‑I left that with my solicitor to discuss directly with the bank.

……

Had you, yourself, participated in any discussions with the bank?‑‑‑Not – not at that – for that – not for the settlement side of things, or the cheque side of things.  No.

With a view to being in a position to provide money when required, had you engaged in any such discussions?‑‑‑Sorry.  I’m not understanding the ‑ ‑ ‑

……

MR MORRIS:   Did you receive any correspondence from Westpac?‑‑‑Yes.

And what did that correspondence relate to?‑‑‑Approval of finance to purchase the – the subject rent roll and business.

And if you now turn to page 867?‑‑‑Yes.

Is that the approval that you received from Westpac?‑‑‑Yes.

  1. [181]
    There was no other direct evidence concerning Laurel Star’s ability to settle on 10 or 11 May 2018.  In particular, Mr and Mrs Marburg gave no direct evidence about what other assets or sources of funds they may have been intending to use to pay such a price.  They had applied for and obtained funding from Westpac for a sum that was clearly considerably less than the anticipated full purchase price.  Although there was no direct evidence that they had the balance of the funds available, Mr Marburg gave evidence that they had recently sold a management rights business.[110]  I consider that I can infer, from that evidence and from the fact that they only sought finance for a much lower sum than the anticipated purchase price, that, with a combination of their own resources and the finance from the bank, they would have been able to settle on the terms of the contract.  The fact that they had not, by 10 May 2018, sought or drawn cheques in payment of the anticipated settlement sum did not mean they could not have done so had they been satisfied that Babstock was able and willing to settle in accordance with the contract.  Indeed, by 10 May 2018, the amount that would actually be due at settlement had not been determined, given the concerns the plaintiffs had about many of the appointment that Babstock intended to settle that day.
  2. [182]
    In any event, the plaintiffs contend that this is a non-issue.  In his final submissions, Mr Morris QC, for the plaintiffs, said:[111]

When a party terminates a contract due to the other party’s inability or unwillingness to perform at the agreed time for settlement, that party must be in a position to settle; that is, as it is traditionally put, “ready, willing and able” to do so.  But when a party terminates a contract due to the other party’s anticipatory breach – that is, conduct of the other party amounting either to a refusal to perform, or a concession of an inability to perform, when the time to do so arrives – no question arises as to the ‘innocent’ party’s then readiness, willingness or ability to perform.  The repudiation entitles the ‘innocent’ party to rescind; if the ‘innocent’ party elects not to do so, the contract remains on foot, and the ‘innocent’ party must be ready, willing and able to perform when the time for performance arrives; if the ‘innocent’ party elects to rescind, then the time for performance will never arrive.

The Plaintiffs terminated for the Defendants’ anticipatory breach.  It does not matter, for this purpose, whether the anticipatory breach and consequent rescission occurred a day, a week, a month, or even a longer time before the due settlement date.  It is perfectly trite that, in such circumstances, the Plaintiffs need not prove that they were “ready, willing and able” to perform at the time of repudiation and rescission.

  1. [183]
    Mr Morris did not cite any authority for those propositions (perhaps because he considers them to be trite).  But he is correct in saying that the terminating party need not show readiness to settle at the time of rescission.  However, the party must demonstrate that it would have been ready to settle at the date of settlement if it had occurred.  “A party in order to be entitled to rescind for anticipatory breach must at the time of rescission himself be willing to perform the contract on its proper interpretation.  Otherwise he is not an innocent party …”[112]  The party purporting to terminate must show that it was ready and willing to perform the contract according to it terms, but the fact that the other party had intimated that it was unable or unwilling to settle on those terms relieved the terminating party of the need to show more than that it was not incapacitated from raising the necessary funds and had not resolved against doing so.[113]  For the reasons stated in [181] above, I am satisfied that Laurel Star was not incapacitated from settling in accordance with the contract.

Conclusion – did Laurel Star validly terminate the Rent Roll Contract?

  1. [184]
    In my view, Babstock’s obligation to provide the specified documentation at settlement, including assignments duly executed by the owners, was an important and necessary requirement of the contract.  Although it was not an essential step for the effective assignment of the appointments at law, it was a specific requirement of the contract that would have been of considerable utility to Laurel Star, because it could be sure that the owner of each property for which it was paying had received notice of the assignment and had accepted it.  The fact that this particular requirement, although additional to those of an effective assignment, was included in the contract demonstrates its importance to Laurel Star.
  2. [185]
    Babstock would have been entitled to put off, to the second settlement date, settlement of the properties for which it did not have fresh appointments of Laurel Star or executed assignments of its own appointments.  But it is clear that it contended that it was not required to provide assignments executed by the owners.  It had already elected not to obtain fresh appointments and gave no indication that it might do so.  On 10 May 2018, it was clearly not intending to comply with either contracted method of ensuring Laurel Star’s appointment.  As I have found, that was in breach of its obligations on a proper construction of the contract.
  3. [186]
    It is trite law that, when a party to a contract purports to terminate for one or more specified breaches of the contract, but another breach entitling that party to terminate the contract has also occurred, the party is entitled later to rely on that other breach to justify its termination of the contract, even if it did not rely on that breach as a reason for terminating.[114]  There is no reason why that could not also be the case with an anticipatory breach.
  4. [187]
    I therefore consider that Laurel Star was entitled to terminate the Rent Roll Contract for anticipatory breach by Babstock of a requirement of considerable importance to Laurel Star and that was therefore an essential obligation of Babstock.  Laurel Star did terminate the contract by its solicitors’ letter of 10 May 2018.

The plaintiffs’ misrepresentation case

  1. [188]
    The plaintiffs’ misrepresentation case was, broadly, that they relied on representations that had been made to them about the number and locations of the properties managed by the defendants and the quality and completeness of the documentation held by the business about the managed properties.  Thirteen of the properties were not in the locations represented and much of the documentation (particularly ECRs) was incomplete or inaccurate.  Therefore the information was wrong or misleading and they were entitled to rescind the contracts for misrepresentation.  Alternatively, the court should order relief to that effect.
  2. [189]
    Given my conclusions on the termination of both contracts, it is unnecessary for me to consider this part of the plaintiffs’ case. 

The counterclaim

  1. [190]
    The defendants counterclaim for damages that they allege they suffered when, they contend, the plaintiffs repudiated the contracts and the defendants accepted the repudiation and terminated both contracts.
  2. [191]
    Given my conclusion that the plaintiffs validly terminated both contracts, it is unnecessary to consider the counterclaim.

The result

  1. [192]
    In the result, the plaintiffs have succeeded in their claim for breach of contract and the defendants have failed in their counterclaim.
  2. [193]
    The plaintiffs claim the return of the deposit paid under each of the contracts and damages for breach of contract.  In his submissions on behalf of the defendants, Mr Kidston dealt with each of the claims.  Mr Morris, in his submissions, said that the plaintiffs do not take issue with the defendants’ submissions about the relief sought by the plaintiffs.  The parties are therefore agreed that the deposits should be returned to Laurel Star and judgment for damages and costs should be given in its favour.
  3. [194]
    Half of each deposit was paid to Babstock, while the balance is retained by the deposit stakeholder and deposit holder under the respective contracts,[115] so it is not a simple matter of giving judgment against Babstock for the sum of the deposits.  The Rent Roll Contract provided that, on termination by the buyer for default by the seller, “the deposit paid by the Buyer will be refunded in full to the Buyer by the Deposit Stakeholder.”[116]  The Business Contract provided that, if a new lease was not granted to the buyer by the date of completion, all deposit and other monies received by the seller or deposit holder on account of the purchase price must be refunded to the buyer by the seller or the deposit holder as the case may be.[117]  I understand that the deposit stakeholder will do as instructed by the parties.  The simplest manner of enforcing return of the deposit in the circumstances is to give judgment against the defendants for the half Babstock received and to order that they cause the balance to be paid to Laurel Star.  I note that RED has said that it will refund the balance deposit that it holds, without any claim for commission, when instructed to do so by the parties.[118]
  4. [195]
    The parties proceeded in the trial on the basis that Babstock entered into both contracts as agent for WAG.  It is therefore appropriate that judgment be entered and orders be made against both defendants.

 

Footnotes

[1]The exact relationship between Babstock and WAG is not clear.  Their director, Mr Kenman, gave evidence (T3-29:16-29) about how the business was structured between the two that does not seem entirely consistent with the documents, but it does not seem material.

[2]Exhibit 1.45.

[3]The exact consideration for the rent roll would depend on the number of agency agreements ultimately transferred to the buyer, at a cost of $3.10 per $1.00 of annual income under each agency agreement.

[4]The Business Contract is exhibit 1.43.  However, within that exhibit, as schedule 6 to the Business Contract, is the Rent Roll Contract, beginning at page 45 of the exhibit.

[5]Deed of Amendment, Exhibit 1.44.

[6]The plaintiffs say that the lessor of the business premises had made it clear that a new lease would not be granted.

[7]Exhibit 8, dated 14 December 2017, is the request for that extension.  While there is no specific response, the defendants do not appear to have disputed that they were content to extend the date.

[8]Third further amended statement of claim, paragraph 19;  Amended defence to third further amended statement of claim and further amended counterclaim, paragraph 23.

[9]Exhibit 1.44.

[10]Recital A and clause 1 respectively.  These statements are relied on by the plaintiffs at paragraph 17A(c) of the statement of claim, together with paragraphs 17B to 17D.  The plaintiffs seek to construe the Rent Roll Contract as contingent on the Business Contract and vice versa and, to the extent necessary, to rectify the Rent Roll Contract to contain an express clause to that effect.

[11]Exhibit 18.

[12]Exhibit 24.

[13]Exhibit 63.

[14]Exhibit 1.43, clause 4.1;  schedule 2.

[15]As required by clause 4.2.2 of the Rent Roll Contract.  However, the plaintiffs’ solicitors later asserted that Laurel Star had “communicated finance approval to the Seller on 2 February 2018”:  exhibit 62A, p 6.

[16]Exhibit 46.

[17]Exhibit 51.

[18]Exhibits 54 and 55.

[19]Exhibit 57.

[20]Exhibit 62A.

[21]Exhibit 62B.

[22]It is pleaded in the counterclaim, paragraph 31(b).  In the plaintiffs’ reply to that paragraph of the defence, they deny that “the termination was valid”, but they do not respond to the allegation that the defendants’ solicitors sent an email terminating the contracts.  That reply appears to constitute a deemed admission of the allegation that the email was sent.  In any event, I do not apprehend there to be a dispute that such an email was sent and purported to terminate the contracts.

[23]Exhibit 1.43.

[24]Clauses 1.1, 7 & item P in the items schedule.

[25]Clause 22.

[26]Exhibit 1.43, p 4.

[27]Exhibit 1.43, pp 13-27.

[28]Exhibit 1.43, p 4.

[29]Exhibit 1.43, p 4, relied on in the amended defence to third further amended statement of claim, para 14(bb).

[30]Exhibit 1.43, starting at p 89.

[31]I quote only the most relevant definitions.

[32]This appears to be referring to s 113 of the Property Occupations Act 2014, despite the fact that that section does not provide for an agreement in writing to assign an appointment.

[33]Clause 1 definitions of “Adjusted Income”, “Additional Income”, “Income”, “Purchase Price” and “Supply Right Factor” and item 6 of schedule 1.

[34]Clauses 2.4.2 to 2.4.4.

[35]Clauses 2.5 and 2.6.

[36]Clause 4 and schedule 2.

[37]Clauses 10.3 and 10.4.

[38]Clause 10.7 and clause 1.1 definition of “Retention Date”.

[39]Clause 14.

[40]Clause 16.1.

[41]Clause 24 and cchedule 1, item 4.

[42]Cf Business Contract, clause 39.2.

[43]At paragraph [25].

[44]Clause 13.1.1 and item 9 of the item schedule.

[45](2014) 251 CLR 640, 656-657, [35], citing Zhu v Treasurer (NSW) (2004) 218 CLR 530, 559 [82].

[46]See [13] above.

[47]Third further amended statement of claim, paragraphs 17 to 17D.

[48]At paragraphs [28] to [30].

[49]Amended defence to third further amended statement of claim, paragraphs 14(f) to 14(j).

[50]Part of exhibit 25.

[51]Exhibit 26.  I have reproduced only the relevant parts.

[52]Exhibit 70.

[53]I take that date from exhibit 27, an email from Mr Marburg to Mr Cher dated 6 April 2018 that refers to having met him “on Thursday last week,” that is Thursday 29 March 2018.  That is confirmed by exhibit 35.

[54]T2-15.

[55]T2-46:5-14.

[56]Business Contract, clauses 24.4 and 25.2.

[57]At paragraph [63].

[58]Exhibit 25;  see [63] above.

[59]At paragraphs [63], [65] and [66].

[60]T1-73:15-17; T2-15:23-31.

[61]Exhibit 62A, pp 1156 to 1158.  Errors and emphasis in the original.

[62]Exhibit 53, pp 1105-1106.

[63]Exhibit 29, sent at 4.31pm.

[64]No document containing such an offer is in evidence.  However, Mr Marburg agreed that he had been “advised” of it:  T2-17:42-45.  Mr Kenman said he had discussed that possibility with Mr Cher and had offered it to Mr Cher:  T3-73:35-47.

[65]Exhibit 54; exhibit 55, pp 1115-1116, sent at 5.03pm.

[66]Exhibit 53, p 1107.

[67]Exhibit 55, pp 1114-1115.

[68] Relying on Jones v Dunkel (1959) 101 CLR 298.

[69]I say “appears to have been entitled” because this conclusion is subject to my consideration of the defendants’ additional submission that Laurel Star was not entitled to terminate the contract if it was not ready willing and able to settle it as at the date it purported to terminate it.

[70]Third further amended statement of claim, paragraphs 20(d)-(g) and 21.

[71]As to which, see my discussion below of this defence as it concerned the Rent Roll Contract.

[72]This is so whether or not the initial appointment of Babstock as agent was made before the latter Act came into force, as that Act provides that an existing appointment as a resident letting agent continued in force as such an appointment under the latter Act:  s 249.

[73]Property Occupations Act 2014, s 113(2).

[74]Subject to the owner’s right to revoke the appointment by giving 30 days’ notice in writing:  a right impliedly given by paragraph 113(3)(d).

[75]Pacific Brand Sport & Leisure Pty Ltd v Underworks Pty Ltd (2006) 149 FCR 395, [32];  Carter on Contract, LexisNexis Australia, [17,100].

[76]This seems to be a common misconception within the office of the Queensland Parliamentary Counsel that is repeated in many items of Queensland legislation.

[77]Emphasis added.  For an assignment, no form under clause 6 was required.  For an appointment, clause 6 required a “PO form 6 pursuant to the Act”.  That term is not defined in the contract, but clearly means a Property Occupation Form 6 – a form approved under the Act – which was the form of appointment or reappointment of a residential letting agent.

[78]For example, in the definitions of “Additional Income” and “Adjusted Income” and clause 5.2 itself, under which the seller must “take all reasonable steps to obtain in writing from each relevant Property Owner an Appointment or an Assignment in favour of the Buyer.”

[79]Amended defence to third further amended statement of claim, paragraphs 16A to 16I.

[80]An example of the letter, notice of assignment and letter of introduction sent to owners is exhibit 81.

[81]That would, of course, be all that was required in any event, under the Act.

[82]Acknowledgment of what is not stated:  presumably acknowledgment that the appointment of Babstock had been assigned to Laurel Star.

[83]Reply and answer to the third further amended defence and amended counterclaim, paragraph 4A.

[84]T2-38:35-40;  T2-39:22-34;  T2-40:5-24;  T2-41:42 to T2-43:12;  T2-43:28-30.

[85]T3-2:41 to T3-3:30.

[86]T3-38:22 to T3-39:1.

[87]T3-76:15 to T3-79:2.

[88]T3-83:46 to T3-84:6.

[89]I note, though, that the draft letter attached to the email forming part of exhibit 79 is clearly not the letter as it was when the email was sent.  This is obvious from exhibit 31, p 896, in which Mr Marburg asked that Mrs Marburg’s name be removed from the letter and informed Mr Kenman that Laurel Star would be taking over as buyer.  Mrs Marburg is not mentioned in the attached letter in exhibit 79, although clearly she was named in the original draft.

[90]T3-84 to 3-87.

[91]T3-86:28-31.

[92]Clause 14.

[93]Exhibit 36.

[94]Exhibit 38.

[95]Defendants’ closing submissions, paragraph 91, citing Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245, 280.

[96]Butt v M'Donald (1896) 7 QLJ 68, 70-71, approved in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596, 607.

[97]That list is in exhibit 61.  A number of lists had been exchanged earlier, from shortly before the earlier proposed settlement dates, as well as for 11 May 2018.  The Marburgs sent lists of properties that they contended did not have properly completed ECRs or where they had other concerns.  It is unnecessary to identify all the lists that were exchanged.

[98]Under a process provided in clauses 10.7 and 14.

[99]The lists include exhibits 42, 43, 50 and 57.   Babstock’s responses were contained in a schedule forming part of exhibit 61.

[100]Clause 10.1.7:  an ECR “signed by all required parties undertaken at the commencement of the current tenancy, as required by law…”;  Residential Tenancies and Rooming Accommodation Act 2008, s 65.

[101]Clause 14 effectively provided for such an eventuality.

[102]Mr Morris did not cite any authority for that proposition.

[103]Jones v Barkley (1781) 2 Dougl 684, 964, cited by Mason CJ in Foran v Wight (1989) 168 CLR 385, 397, and approved in Park v Brothers (2005) 222 ALR 421, [43].

[104]Rawson v Hobbs (1961) 107 CLR 466, 480-481.

[105]Amended defence to third further amended statement of claim, paragraphs 26(d) and (e).

[106]Reply and answer to the third further amended defence and amended counterclaim, paragraphs 6B(c) and (d).

[107]A short letter of approval was exhibit 63.  See paragraph [16].

[108]T1-48:16-22.

[109]T2-46:41-45; T2-47:8-12; T2-48:22-29.  The document at page 867 referred to is exhibit 63.

[110]T1-20:46-47.

[111]Plaintiff’s closing submissions, paragraphs 45 to 46.

[112]DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423, 433 (Stephen, Mason and Jacobs JJ).

[113]Foran v Wight (1989) 168 CLR 385, 408-409 (Mason CJ, dissenting), 427 (Brennan J), 452-454 (Dawson J).

[114]Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359, 377-378.

[115]The deposit holder under the Business Contract and the deposit stakeholder under the Rent Roll Contract was RED.

[116]Clause 19.5.2(b).

[117]Clause 25.3.

[118]Exhibit 92.

Close

Editorial Notes

  • Published Case Name:

    Laurel Star Pty Ltd v Babstock Pty Ltd

  • Shortened Case Name:

    Laurel Star Pty Ltd v Babstock Pty Ltd

  • MNC:

    [2020] QDC 305

  • Court:

    QDC

  • Judge(s):

    Barlow QC DCJ

  • Date:

    03 Dec 2020

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2020] QDC 30503 Dec 2020Trial of claim and counterclaim relating to sale of letting business and associated rent roll; finding that buyer validly terminated contract selling rent roll for repudiation by seller constituted by way in which seller intended to carry out obligations under the contract: Barlow QC DCJ.
Primary Judgment[2021] QDC 119 Jan 2021Costs judgment: Barlow QC DCJ.
Appeal Determined (QCA)[2022] QCA 63 (2022) 10 QR 52229 Apr 2022Appeal allowed, orders below largely set aside, proceedings remitted for determination of remaining issues (see Laurel Star Pty Ltd v Babstock Pty Ltd [No 3] [2023] QDC 10); held that buyer did not validly terminate contract selling rent roll as seller did not repudiate it as alleged; held further that, upon proper construction of contract, manner in which seller intended to comply with it would not have amounted to breach: Fraser JA (Bond JA and Wilson J agreeing).

Appeal Status

Appeal Determined (QCA)

Cases Cited

Case NameFull CitationFrequency
Butt v McDonald (1896) 7 QLJ 68
2 citations
Jump To
Cite 1 - (1896) 7 QLJ 68
Cite 2 - (1896) 7 QLJ 68
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 C.L.R 423
2 citations
Jump To
Cite 1 - (1978) 138 C.L.R 423
Cite 2 - (1978) 138 C.L.R 423
Electricity Generation Corporation (t/as Verve Energy) v Woodside Energy Ltd and Ors (2014) 251 CLR 640
2 citations
Jump To
Cite 1 - (2014) 251 CLR 640
Cite 2 - (2014) 251 CLR 640
Foran v Wight (1989) 168 CLR 385
3 citations
Jump To
Cite 1 - (1989) 168 CLR 385
Cite 2 - (1989) 168 CLR 385
Cite 3 - (1989) 168 CLR 385
Jones v Barkley (1781) 2 Dougl 684
2 citations
Jump To
Cite 1 - (1781) 2 Dougl 684
Cite 2 - (1781) 2 Dougl 684
Jones v Dunkel (1959) 101 CLR 298
2 citations
Jump To
Cite 1 - (1959) 101 CLR 298
Cite 2 - (1959) 101 CLR 298
Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd (2006) 149 FCR 395
2 citations
Jump To
Cite 1 - (2006) 149 FCR 395
Cite 2 - (2006) 149 FCR 395
Park v Brothers (2005) 222 ALR 421
2 citations
Jump To
Cite 1 - (2005) 222 ALR 421
Cite 2 - (2005) 222 ALR 421
Rawson v Hobbs (1961) 107 CLR 466
2 citations
Jump To
Cite 1 - (1961) 107 CLR 466
Cite 2 - (1961) 107 CLR 466
Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596
2 citations
Jump To
Cite 1 - (1979) 144 CLR 596
Cite 2 - (1979) 144 CLR 596
Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359
2 citations
Jump To
Cite 1 - (1931) 45 CLR 359
Cite 2 - (1931) 45 CLR 359
Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245
2 citations
Jump To
Cite 1 - (1988) 166 CLR 245
Cite 2 - (1988) 166 CLR 245
Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530
1 citation
Jump To
Cite 1 - (2004) 218 CLR 530

Cases Citing

Case NameFull CitationFrequency
Babstock Pty Ltd v Laurel Star Pty Ltd(2022) 10 QR 522; [2022] QCA 6315 citations
Babstock Pty Ltd v Laurel Star Pty Ltd [No 5] [2024] QCA 3 2 citations
Laurel Star Pty Ltd v Babstock Pty Ltd [No 2] [2021] QDC 11 citation
Laurel Star Pty Ltd v Babstock Pty Ltd [No 3] [2023] QDC 101 citation
1

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