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Metro Waterloo Pty Ltd v HWL Ebsworth Lawyers[2021] QDC 295

Metro Waterloo Pty Ltd v HWL Ebsworth Lawyers[2021] QDC 295

DISTRICT COURT OF QUEENSLAND

CITATION:

Metro Waterloo Pty Ltd v HWL Ebsworth Lawyers [2021] QDC 295

PARTIES:

METRO WATERLOO PTY LTD

ACN 168 276 828

(Plaintiff)

v

HWL EBSWORTH LAWYERS

(Defendant)

FILE NO/S:

BD1235/20

DIVISION:

Civil

DELIVERED ON:

26 November 2021

DELIVERED AT:

Brisbane

HEARING DATE:

8, 9, 10 September 2021
(Final written submissions 22 October 2021)

JUDGE:

Barlow QC DCJ

ORDERS:

The plaintiff’s claim be dismissed.

CATCHWORDS:

TORTS – NEGLIGENCE – PURE ECONOMIC LOSS: NEGLIGENT ACTS, OMISSIONS OR REPRESENTATIONS – DAMAGE AND CAUSATION – CAUSATION – plaintiff retained defendant to negotiate and draw contract for sale of lots in an apartment complex – plaintiff intended to include clause requiring the appointment of a particular letting agent -  clause not included in final contract due to defendant’s negligence – plaintiff aware that clause was not in final contract of sale – whether failure to include clause caused valuable loss to plaintiff – whether decision of plaintiff to proceed with contract broke chain of causation.

DAMAGES – ASSESSMENT OF DAMAGES IN TORT – PROPERTY LOSS – HEADS OF LOSS – POTENTIAL EVENTS AND LOSS OF CHANCE OR OPPORTUNITY – GENERALLY – plaintiff retained defendant to negotiate and draw contract for sale of lots in an apartment complex – plaintiff intended to include clause requiring the appointment of a particular letting agent - clause not included in final contract due to defendant’s negligence – whether clause constituted a valuable commercial opportunity and what that value would be.

Evidence Act 1977, s 101(1)(b)

Property Occupations Act 2014

Adamson v Williams [2001] QCA 38, cited

Badenach v Calvert (2016) 257 CLR 440, applied

Chand v Commonwealth Bank of Australia [2014] NSWSC 708, considered

Dew v Richardson [1999] QSC 192, cited

Griffiths v Evans [1953] 1 WLR 1424, considered

Jones v Dunkel (1959) 101 CLR 298, applied

Howarth v Miotti [2009] QSC 96, cited

Malec v JC Hutton Pty Ltd (1990) 169 CLR 638, cited

Markel Syndicate Management Ltd v Taylor [2021] FCAFC 198, cited

Medlin v State Government Insurance Commission (1992) 182 CLR 1, cited

Sellars v Adelaide Petroleum NL (1994) 179 CLR 332, cited

Principal Properties Pty Ltd v Brisbane Broncos Leagues Club Ltd [2018] 2 Qd R 583, cited

COUNSEL:

D P O'Brien QC and B W Wacker for the plaintiff

R L Perry QC and S M Derrington for the defendant

SOLICITORS:

McInnes Wilson Lawyers for the plaintiff

Gilchrist Connell for the defendant

Contents

Introduction1

Events up to the Final EOI2

Dealings between Metro and Forum3

The arrangements between Metro and Tessa5

The sale of Tessa’s business10

Events after Final EOI, 30 April to 7 June 201912

The contested telephone call15

Forum appoints McGrath as its letting and sales agent19

Post-sale correspondence concerning Tessa21

Preliminary evidentiary issue – Jones v Dunkel24

Was the defendant negligent or in breach of its retainer?27

Did the plaintiff know that there was no enforceable Tessa provision?27

Was the defendant aware of the plaintiff’s mistake (if any)?28

Who decided not to include a Tessa provision?28

Did Metro suffer any loss?29

What must the plaintiff prove to demonstrate a loss?29

What prospect was there of Forum agreeing to a Tessa provision?32

What form would any contractual Tessa provision have?33

Did Metro lose any valuable commercial opportunity?33

Assessment of loss34

What prospect was there of Forum appointing Tessa under a Tessa provision?34

What prospect is there that Tessa would have agreed to manage any units?35

The Apax contract38

Other lenders to Tessa?40

Conclusions40

Amount of loss40

Did HWLE’s negligence cause any loss suffered by Metro?42

Conclusions45

Introduction

  1. [1]
    The plaintiff (Metro) is the developer of a residential apartment building in Newstead known as “Capri”.  Its directors are Luke Hartman, David Devine and Kenneth Woodley.  The defendant (HWLE) is a firm of solicitors. 
  2. [2]
    Metro is a subsidiary of Metro Property Development Pty Ltd (MPD), which is the parent of a group of companies, each of which was incorporated as a special purpose vehicle to be the developer of a particular apartment building.  MPD’s usual practice is to select a development site and incorporate a special purpose vehicle (SPV) for the development of that site.  The SPV will then, either alone or with a joint venture partner, obtain finance, enter into contracts for the construction of the building and market the units “off the plan” to investment buyers and owner occupiers.  It will also locate and negotiate a contract with a building manager and letting agent.  Where, at completion of the building, some units have not been pre-sold, the SPV may seek to sell a number of the units “in one line”: that is, all to one purchaser under one contract.
  3. [3]
    Since 2014, MPD SPVs have engaged, as manager and letting agent for the relevant apartment building, a company associated with a former employee of MPD, Brendan Tutt.  Those companies were referred to by MPD as “Tessa”.  On each occasion, the SPV and a special purpose company incorporated by Mr Tutt entered into a management rights and business procurement agreement under which the MPD SPV agreed to arrange for the body corporate to appoint the Tessa SPV as the building manager and letting agent for the building and (in essence) to recommend (or to require in the contracts of sale of units) that investor owners appoint the Tessa SPV as their letting agent.  The Tessa SPV would agree to use its best endeavours and cooperate with the MPD SPV to procure the maximum number of appointments as letting agent for units in the relevant development.  It would agree that, whenever it was appointed letting agent for a unit (whether on the MPD SPV’s recommendation or otherwise) within a certain period, it would pay the MPD SPV a specified sum referred to as an “appointment amount” for each unit. 
  4. [4]
    HWLE had been retained by MPD SPVs to act for the SPVs in the development and sale of apartment buildings over a number of years.  HWLE would assist by drawing and negotiating development contracts, sale contracts and a management rights and business procurement agreement on behalf of the relevant SPV.  The principal individuals of HWLE responsible for each retainer were Jason Warat and Melinda Leacy, each a partner of the firm.  The SPV would usually grant a power of attorney to Mr Warat to enable him to sign sale contracts on behalf of the SPV.
  5. [5]
    In January 2018, Metro and a Tessa company known as “Tessa at Capri” (to which I shall refer as “Tessa”) entered into a management rights and business procurement agreement (MRBPA) concerning Capri and a planned tower adjacent to it, in similar terms to the previous agreements between MPD SPVs and Tessa SPVs.[1]  I shall refer to relevant terms of that agreement later.
  6. [6]
    Construction of Capri was concluded in April 2018.  Metro had sold most of the units in Capri by October 2018, but 62 remained unsold.  Metro looked to sell most of those remaining units in one line.
  7. [7]
    Metro engaged HWLE to act for it in respect of the Capri project and appointed Mr Warat as its attorney to sign sale contracts on its behalf.  Ms Leacy undertook most of the work under that retainer but, at the time most relevant to this proceeding, she was away and Mr Warat stepped in to advise and to act for Metro.
  8. [8]
    Metro found a buyer of 54 units, Forum Australia Residential Partnership Pty Ltd (Forum).  The terms of sale were negotiated over a period of some months.  Metro instructed HWLE to draw a contract of sale reflecting the terms of a written expression of interest (the Final EOI) from Forum.  That EOI included a provision (referred to by the parties as a Tessa provision) that, if an appropriately drawn term were included in the final contract of sale, may have obliged Forum, if it chose to rent any of the units it bought, to engage (or to offer to engage) Tessa as its letting manager of those units.[2]
  9. [9]
    HWLE drew the contract of sale of the units to Forum, but did not include a Tessa provision.  Forum appointed a different company to be the letting manager of the units that it made available for rent. 
  10. [10]
    Metro contends that, in failing to include a Tessa provision in the contract, HWLE was negligent and in breach of its retainer and that negligence and breach have lost Metro the opportunity to have such a provision in the contract with Forum and consequently to receive an appointment fee from Tessa for each of Forum’s units that was made available to let.  If Tessa had been retained by Forum for all of those units, those fees would have amounted to $848,588.40 (including GST).  Metro accepts that Tessa may not have been appointed to all the units, but says that the value of Metro’s lost opportunity is between 50% and 75% of that sum, for which it claims damages.
  11. [11]
    HWLE appears to accept, at least in general terms, that it should have included a Tessa provision in the contract sent to Forum for execution and that it wrongly advised Metro, when asked why such a clause was not in the contract, to the effect that that was because Forum had a complete discretion as to the appointment of a letting agent under the Tessa provision in the Final EOI.  However, it asserts that those errors did not cause Metro any loss because Metro decided to instruct Mr Warat to execute the contract of sale knowing that the Final EOI did include such a provision (although it was non-binding) and that the contract did not and deciding for itself that it would proceed without any such clause.  Furthermore, HWLE contends, Metro has not proved what the terms of a contractual Tessa provision may have been, nor that Forum would have agreed to any such provision, nor that, if it had, Tessa would have accepted appointment as Forum’s letting agent and paid any appointment amounts to Metro.  Therefore, Metro has not demonstrated that it has suffered any loss.  Alternatively, it has not demonstrated the value of any loss.  Consequently, Metro has not proved its loss, nor that any loss was caused by HWLE.

Events up to the Final EOI

  1. [12]
    The events from October 2018 to April 2019 are relevant to the issues that arise.  Most of the facts concerning those events are not contentious.  I have described some of them briefly in the introduction, but it is necessary to add some details in order to understand and to determine the issues.

Dealings between Metro and Forum

  1. [13]
    Negotiations between Metro and Forum for the sale of the balance of the unsold units in Capri appear to have started in January 2019.[3]  On 12 February 2019, in the course of those negotiations, Mr Hartman informed Mr Faulk, the managing director of Forum, that:[4]
  1. –any sale would need the stock to sign Form 6[5]– rental with on site manager.
  2. –Note metro have no vacancy in … Capri.
  3. –These on site managers are the best people to manage rental of property.
  1. [14]
    Later the same day, Mr Hartman sent to Mr Faulk and others at Forum a list of the “latest available stock”.  In his email attaching the list,[6] Mr Hartman said:
  1. –please provide offer based on available stock
  2. –also confirm that this stock will be managed by on site manager …
  3. –Tess (capri)

For min 12 months.

  1. [15]
    On 14 February 2019, Metro and Forum executed a document headed “Expression of Interest” (the Joint EOI).[7]  The document recorded the proposed conditions of a sale by Metro to Forum of 58 residential units within Capri (subject to adjustment for sales to other persons prior to exchange of the contract) and 11 residential units within another development.
  2. [16]
    The Joint EOI commenced with the following words (the non-binding statement):[8]

The terms set out in this offer document are for reference only and do not in any way constitute a legally binding offer, agreement or a commitment to enter into any transaction.  …  The actual terms and conditions upon which Forum … might undertake the transaction are subject, in the sole discretion of Forum, … to satisfactory completion of due diligence, credit approval and satisfactory review of documentation.

  1. [17]
    The following provision, to which the parties referred as the Tessa provision, was included in the document under the heading “Property Management (‘Leasing’)”:

The Purchaser will have full discretion as to whether Forum Units will be offered for rent.  If Forum Units are rented (“Rented Forum Units”), management is to be conducted by the current on-site manager being Tess at Capri …, for the period of [12] months following exchange of contracts.  Management fees will be capped at 5.0% p.a. of gross rental receipts.

The Purchaser will retain full discretion as to whether Rented Forum Units will be offered for sale by a sales agent appointed by the Purchaser at any time following settlement.

It is clear that Forum drew this clause in response to Metro’s request that it appoint the on site manager to manage any units that it decided to let out, for a minimum of 12 months.

  1. [18]
    Under the heading “Conditions Precedent to Purchase”, the Joint EOI set out a list of 10 items.  It also included the following words (the legals statement):

Legals.  Metro will provide legal documents by the 25th Feb.  They must be agreed & executed subject to DD within four weeks of initial receipt of contracts.

  1. [19]
    Mr Hartman forwarded a copy of the Joint EOI to Ms Leacy, saying that HWLE would act for Metro.[9]  Thereafter, Mr Hartman provided further instructions to Ms Leacy as required from time to time.
  2. [20]
    A few days later, Metro asked Forum to separate the Joint EOI into two EOIs:  one for Capri and one for the other development.  On 18 February 2019 Forum provided and the parties signed an EOI relating solely to Capri (the Capri EOI).[10]  Notably, that EOI included the non‑binding statement and the same conditions precedent, but it did not include the Tessa provision or the legals statement.
  3. [21]
    Metro provided the Capri EOI to HWLE and requested Ms Leacy to prepare contractual documents.[11]  Ms Leacy prepared some documents and provided them to Metro on 19 February 2019.[12]  The parties agree that, consistently with the Capri EOI, the documents did not include any clause comprising an attempt to provide for a form of Tessa provision.
  4. [22]
    On 1 April 2019 or thereabouts, Forum informed Metro that it would no longer proceed with the purchase.  However, in the evening of 18 April 2019 Forum provided another expression of interest to Metro, stating in the covering email, “we are in a position to offer unconditional terms on Capri.”[13]  That document (the Revised EOI) included a non-binding statement and a Tessa provision.  It did not provide for any conditions precedent to completion.  In the covering email, Forum proposed to exchange the contract on 29 April and to settle on 30 May 2019.
  5. [23]
    Mr Hartman forwarded a copy of that document to Ms Leacy and Mr Warat (among others) later that evening, but did not instruct them to do anything at that stage.[14]  There is no direct evidence of any negotiations taking place between the parties, but emails exchanged between Metro officers and agents show that the Revised EOI led to further negotiations.[15] 
  6. [24]
    On 24 April 2019, Mr Warat sent an email to Mr Hartman, in response to Mr Hartman’s email of 18 April.  Mr Warat asked, “Any update on this?  Do I need to start preparing a Sale Contract?”  Mr Hartman replied, relevantly saying, “This deal is moving again. Can you refresh file on Forum as Melinda away.  We had an agreed legal contract with them.  Is now 49 units involved.”[16]
  7. [25]
    On 29 April 2019 Forum provided another expression of interest to Metro’s agent, Colliers, describing it (in a covering email) as “the revised final offer/EOI”.  That document (the Final EOI)[17] was to purchase 49 units (subject to adjustment for sales before exchange).  It included the non-binding statement and a Tessa provision.  It had only one condition precedent, which is irrelevant for present purposes.  It seems to have been the result of negotiations as, in an email from Samuel Biggins of Colliers to Mr Hartman forwarding the email attaching the Final EOI, Mr Biggins said, “We have pushed them hard and they are unable to go any further.”[18]
  8. [26]
    The Final EOI appears to have been signed by a director of Metro on 30 April 2019.  Presumably (although there is no direct evidence of the fact) a signed copy was returned to Forum. 

The arrangements between Metro and Tessa

  1. [27]
    Metro and Tessa entered into the MRBPA on 23 January 2018.  Under the agreement, Metro agreed to procure, and Tessa agreed to accept, the engagement of Tessa by the body corporate as the manager and letting agent for Capri, under a Management Engagement and Letting Authorisation Agreement (MELA Agreement).  The body corporate for Capri later appointed Tessa as the manager and letting agent for the building.  The executed agreement for that appointment is not in evidence, but a draft MELA Agreement was annexed to the MRBPA and I infer, in the absence of evidence to the contrary, that the final document was in those terms. 
  2. [28]
    Under the MRBPA, Tessa agreed to pay Metro $14,286 plus GST (referred to as the “Appointment Amount”) for each appointment it received from a unit owner to act as the owner’s letting agent in relation to a lot.[19]  The terms of a letting appointment, including the letting fee to be charged by Tessa, were not specified in the MRBPA except that, by clause 9.10, Tessa was prohibited from seeking appointments that charged owners a combined commission and management fee of more than 8% plus GST of the rental payable (or certain other charges).  Otherwise, it seems that the terms of a letting appointment were within Tessa’s discretion.  Tessa was obliged to use its best endeavours and to cooperate with Metro to procure the maximum number of appointments.  On each “Review Date” it would pay Metro the Appointment Amount for all new appointments[20] it had received since the last Review Date.  Review Dates were, relevantly, every three months after the settlement date of the agreement (which, after some amendments, was 13 July 2018[21]) for two years.
  3. [29]
    It appears that Tessa’s normal rental management fee was 8% of the gross rent received.[22]  On three occasions, where it was appointed, by one owner at a time, as letting agent for eight units, five units and five units respectively, it agreed to reduce that rate to 5%.[23]
  4. [30]
    These facts and the exchanges between Metro and Tessa are important because one of HWLE’s defences is that any negligence on their part did not lead to the alleged loss of the appointment amounts from Tessa because Tessa would not have accepted, or could not have paid Appointment Amounts for, a large number of appointments from Forum at a commission rate of 5%.  It is therefore necessary to consider Tessa’s and Forum’s positions in this respect in some detail.
  5. [31]
    On 17 October 2018, Mr Hartman sent an email to the owner of Tessa, Brendan Tutt.[24]  He asked Mr Tutt to review the proposed rents on the balance of 62 units then available (for sale) in Capri.  Among other things, he said:

If we can look @ short and long term rent as well.  Also your management fee for short term and management fee for long term – assuming bulk buyer @ 5%.

  1. [32]
    Mr Tutt responded a few minutes later, saying:

Not a problem.  Will call later today to discuss short term.

  1. [33]
    Mr Hartman gave evidence that,[25]

At this time, I do not recall Tutt raising an issue with [Tessa] accepting appointments at a rate of 5% commission.

  1. [34]
    The next written communication between Metro and Tessa relevant to the proposed Forum sale appears to have occurred on 4 March 2019.  Early that afternoon, Mr Hartman sent an email to Mr Tutt and Mr  Woodley, the marketing director of Metro, copied to Mr Hogan and Mr Biggins of Colliers and to Caroline Lamshed, the Chief Financial Officer of Metro.  The email was headed “Tessa – Brendan Tutt CC.”[26]  In the email, Mr Hartman said:

Brendan is available to meet tomorrow @ capri and talk about rental quality of this product and speed in which he can lease up the 58 available units.

…

Brendan is briefed on deal and is on side.  he will assist with this transaction by managing these units for 5% for 12 months.

  1. [35]
    Mr Hartman deposed that his reference to Brendan being “briefed on deal and on side” was a reference to his email exchange with Mr Tutt on 17 October 2018.  He said,[27]

I do not recall discussing the issue with Tutt in the intervening period and do not recall Tutt indicating he was no longer agreeable to that arrangement.

  1. [36]
    On 14 March 2019, Mr Tutt emailed Mr Hartman in these terms:[28]

Just called mate.

Call me on this, CBA cannot fund purchase of management rights to one buyer and need rate to be a minimum of 7% plus GST.  Attributing zero value.

I mentioned this to them in relation to your potential buyer, they are also saying that we advised them that there were circa 180 lots sold to individuals at the time we funded it.

  1. [37]
    Mr Hartman and Mr Tutt then apparently had a discussion (although Mr Hartman did not mention it in his evidence), because Mr Tutt sent another email to Mr Hartman about 35 minutes after his first email.  In that email he said:[29]

Thanks mate.  The key issue we have is CBA and the fact they won’t fund multiple lots of this volume to one owner.  What the value is now verse what the value was when we agreed to buy these lots is very different.  I appreciate your position and the further position you have said David and Ken will take.

As per below we are not able to take agreements below 8%, I believe I can get them to agree to 7 plus GST% but we will need to submit.  For smaller deals eg 3 or 4 lots we can do special deals like we have done before.  If they buy in smaller entities or spread out vehicles of ownership this could be a solution.

The other option would be if we can potentially get the buyers to appoint us for a long term on a commercial agreement.  Would need some advice as this may be contracting outside the act.

Let’s resolve smartly and move forward.

  1. [38]
    It does not appear that Mr Hartman responded to that email.  On 19 March 2019, Mr Tutt emailed him, attaching his 14 March emails and asking if they could make a time “to discuss this and get a position on this.”  Mr Hartman responded to that email in the following terms:[30]

No problems.

In summary.

At this stage – we don’t have bulk deal finalised.

we are close on two.

You are unable to pay for balance appointments if a bulk sale

You also can’t offer 5% management fees.

at this stage we are continuing to sell as per normal and this has no impact on your ability to pay Metro.

I don’t want to do to a wider group till understand issue and Tessa proposed solution.

  1. [39]
    Mr Tutt responded by asking to meet the next day at 2.00pm, to which Mr Hartman responded:[31]

No problems mate.

Really keen for you to tell me the best solution your end to pay for balance managements.

Can then work out how best to structure.

  1. [40]
    Shortly after that exchange, Mr Hartman wrote an email to his fellow directors and Ms Lamshed, copied to Ms Leacy, in which he said:[32]

Brendan has been down on site meeting some of potential bulk buyers to assist with management/rental.  he has rung and advised that CBA his bank won’t fund him to pay for appointments of a bulk buyer in one line for balance stock.

No problems if individual buyers.

  1. –I have advised him agreement is clear that if appointments are as per contract that he has to pay Metro.
  2. –He disagrees and saying is a substantial risk as one buyer would walk out door and he loses 55 managements.

Wanted to let you know asap

Melinda can review management rights contract.

We need to understand legal position as step 1 so as can discuss.

Brendan is meeting me @ 2pm in Sydney tomorrow.

Lack of funding/finance is no doubt causing this issue.

  1. [41]
    Later that day, Ms Leacy relevantly responded:[33]

The Management Rights Procurement Agreement does not make a distinction between different types of owners/buyers, provided they are not related to Metro.

Provided an owner of Lot signs a PO Form 6 appointing Tessa as their letting agent in relation to a Lot, Tessa must pay for that appointment.

  1. [42]
    On 20 March 2019, Mr Tutt sent Mr Hartman this email:[34]

Mate

See you at 2pm.

There is zero value to any management sold to a bulk buyer.  I think you would struggle at anything over 10 to one owner to create value.

We have always tried to assist in any way and performed for Metro and vice versa.

We just need to acknowledge Metro is changing strategy for sale of balance stock and fall overs which diminishes value of management rights.

  1. [43]
    Mr Hartman forwarded that email to Mr Devine, Mr Woodley, Ms Lamshed and Ms Leacy, saying:[35]

See below from Brendan T.

Melinda has given clear advice on legal position on these managements.

Keen to discuss thoughts on next steps on handling this issue.

Pushing Forum to close out bulk deal.

  1. [44]
    In his evidence, Mr Hartman referred to and commented on this series of emails.  He said:[36]

I do not recall that Tutt ever proposed a structure.  … 

However, I did not consider this an impediment to [Tessa] taking appointments from Forum at 5% because Tutt had previously agreed to do so and I had received advice from Leacy on 19 March … which I understood to mean that [Tessa] were bound by the terms of the MRBPA.   Therefore, I considered that the issue Tutt outlined with CBA was a matter for him to sort out.  …

… I do not recall any discussion with the Directors following this [ie, 20 March] email about this issue outlined in the email.

  1. [45]
    Mr Hartman was not cross-examined about these emails and his evidence set out at [35] and [44] above.  However, I do not find it credible, and I do not accept, that in March 2019 Mr Hartman believed that, by his email of 17 October 2018, Mr Tutt had in some way committed Tessa to accept appointments as letting manager of over 50 units held by one owner at a 5% commission.  Mr Tutt had been asked simply to “look at” rental rates and Tessa’s management fee and to discuss them.  There was no commitment, nor even any preliminary indication, that Tessa would accept a 5% commission to manage a large number of units “in one line”.  If indeed Mr Hartman believed the exchange of emails in October 2018 was some form of commitment or clear indication by Mr Tutt, it was an unrealistic and entirely uncommercial belief.  It is not a belief that a man of Mr Hartman’s commercial experience could have honestly and reasonably held. 
  2. [46]
    It is clear, from the facts that he could not recall any relevant discussions with Mr Tutt between October 2018 and March 2019, he did not mention (presumably because he did not recall) any discussion between them on 14 March or on 19 March 2019 and he could not recall any discussions with his fellow directors about this issue, that Mr Hartman had no recollection of any discussions and, in preparing his affidavit and in his oral evidence, he relied solely on the emails to which his attention was drawn.  I consider that his statements that, in March 2019, he was referring to (and thereby impliedly was relying on) an email received nearly five months earlier, with no intervening discussions having occurred, by which he believed that Mr Tutt had irrevocably agreed to Tessa taking appointments from Forum at 5% commission, were reconstruction by him, rather than facts.  They are beyond belief.
  3. [47]
    I do accept, however, that, as a result of Ms Leacy’s advice, Mr Hartman believed that Tessa was obliged to accept appointments from Forum, even at a commission rate of 5%.  The correctness or otherwise of that advice is not directly a subject of this proceeding, although it will be necessary for me to consider it when assessing what, if any, loss Metro has suffered as a consequence of Forum not being obliged to appoint Tessa, in the absence of a Tessa provision in the contract of sale to Forum.[37]
  4. [48]
    On 24 April 2019, Mr Woodley sent an email to Mr Hartman, Mr Devine and Ms Lamshed headed “Capri Sales Strategy”.[38]  Relevantly, Mr Woodley said the following:

Kenny and I have perused the benefits of a bulk sale at Capri against an individual sales basis.  The attached feaso prepared by Caroline shows a deficit to Metro of $582,484 …  The feaso produced by Caroline on the 2nd of April last re: the individual sales shows a profit of 131,172.  The combined difference between the two strategies shows that Metro would be $713,616 worse off going down the Bulk Deal route.  This difference could be enlarged if we had a problem with Tessa of them settling the Management Rights.

Tessa has spoken to Luke about the problem he could have with his bank arranging finance on the balance of the units because of the bulk buyer being involved in the purchase.  I am aware that Luke has spoken to Brendan Tutt regarding this and was adamant that Tessa must settle.  However, a question mark hovers over this issue whether Tessa can’t settle or alternatively Forum might elect to place the Management rights elsewhere. 

The balance due on the Management Rights is $735,000.  …  The loss to Metro would blow out to $949,934 if we did not receive our share of the Management Rights payment due.

Management Rights:

Attached please find a copy of the Management Rights business procurement agreement which show that we have until 24 months after settlement in July 2018 to provide the documentation to Tessa to secure payment to us of the Management Rights.

[Mr Woodley then discussed benefits of a bulk offer, the amount of the Forum offer recently received and the potential to sell the remaining units individually.]

We need to discuss the Forum offer asap …  My preference subject to an increased offer from Forum is to accept the deal.  The possibility remains that the market could get worse before it gets better with the Bulk Deal we have a quick definite outcome.

  1. [49]
    Later that day, Mr Hartman sent an email to the other directors and Ms Lamshed,[39] referring to then current “stock” numbers, saying that “Forum will resubmit offer based on this amount of product.”  He went on to say, “Tessa is another issue to resolve. We maybe able to sell management rights for circa 50 apartments to someone else if they won’t pay.”
  2. [50]
    There is no evidence of any other contact between Metro and Tessa, before the agreement between Metro and Forum, about the possibility of Forum appointing Tessa as its letting agent for a large number of apartments.

The sale of Tessa’s business

  1. [51]
    On 20 May 2019, Tessa made an agreement with Apax Realty Pty Ltd,[40] under which Tessa sold to Apax its business under the MELA Agreement for Capri.  The agreement (the Apax contract) was subject to the body corporate’s consent to the sale.
  2. [52]
    The Apax contract relevantly provided:

12.3 The Buyer acknowledges that the Seller procured the grant of the management rights to the scheme from the developer, Metro Waterloo Pty Ltd ACN 168 276 828 (Developer) by way of procurement agreement dated 13 April 2018 (Procurement Agreement).

12.4 The obligations of the Seller, as manager under the Procurement Agreement, continue to apply, which includes a requirement of the Seller to pay to the Developer an amount for each additional letting appointments that the Developer secures from purchasers of lots, at various times, with the last review occurring on 13 July 2020 (Review Dates).

12.6 Adjustments following completion:

  1. (a)
    At each review date, the Seller and Buyer must agree on the number of additional appointments to which the Seller is required to pay the Developer in accordance with the Procurement Agreement.
  2. (b)
    If the Buyer holds a Current Appointments for a lot for which the Seller has not previously paid the Developer, the Buyer is required to pay to the Seller or as the Seller directs an amount calculated as follows:

Appointment Amount x the number of new appointments for lots not previously paid which are held at the relevant Review Date compared to the number of appointments held at the previous Review Date.

  1. (c)
    In calculating the number of new appointments held at the relevant Review Date under this special condition 12.6, where an owner has entered into appointments for:
  1. (i)
    4 or less lots in the Complex, the Buyer is required to pay the relevant amount calculated under clause 12.6(b) for each of those appointments; or
  1. (ii)
    5 or more lots in the Complex, the Buyer and Seller must work together in good faith to come to an agreement as to the amount the Buyer is required to pay for those appointments to the Seller or as the Seller directs.

If an agreement cannot be reached by the Buyer and Seller within 1 month of the relevant Review Date, unless that date is extended by agreement, the parties agree as follows:

  1. (A)
    The Seller will be entitled to continue to be the letting agent to manage those lots;
  2. (B)
    Those lots are specifically excluded from any restraint of trade warranty previously given by the Seller; and
  3. (C)
    The Buyer must not actively campaign for the owners of those lots to appoint the Buyer as the letting agent and the restraint in standard condition 13 applies…
  1. [53]
    It is not clear how the sale of Tessa’s business was intended to fit with Tessa’s obligations to Metro under the MRBPA.  It will be recalled that the MRBPA required Tessa to use its best endeavours to secure appointments of itself as letting agent for units in Capri.  On the face of the agreement, Tessa was not entitled to secure appointments of a different company as letting agent. 
  2. [54]
    Notwithstanding that arrangement in the MRBPA, the Apax agreement (particularly clause 12.6) appears to be intended to operate by acknowledging that Tessa continued to be obliged to pay Metro an Appointment Amount for any new appointments, even though they were not appointments of Tessa.  In those cases, Apax would pay Tessa a higher Appointment Amount than Tessa had to pay Metro.  However, that applied only if one owner appointed Apax as agent for up to four units.  If one owner sought to appoint Apax for more than four units, then Apax and Tessa would negotiate an amount that Apax would pay Tessa.  If they could not agree, then Tessa could be appointed as letting agent for those units and Apax must not seek to be appointed to those units. 
  3. [55]
    The clause is puzzling, as it purports to apply only if Apax has been appointed, in which case Tessa could not “continue to be” the letting agent.  Taking a practical approach, it seems to mean that, if an owner offers to appoint Apax to more than four units, if Apax and Tessa cannot agree on a fee payable by Apax for those appointments, then Tessa may seek to be appointed instead of Apax, notwithstanding that otherwise Tessa was not entitled to seek its own appointment for units in Capri for a period of three years.[41]
  4. [56]
    As will become clear in my discussion of damages, Metro asserts that this agreement and the amounts payable by Apax to Tessa under it are relevant to the calculation of damages and, in particular, to Tessa’s ability to pay Metro for appointments by Forum and therefore the commercial value to Metro of a Tessa provision in the Forum sale contract.

Events after Final EOI, 30 April to 7 June 2019

  1. [57]
    In the afternoon of Tuesday 30 April 2020, Mr Hartman sent an email to Mr Warat and Ms Leacy (among others), attaching a copy of the executed Final EOI.[42]  In the email, he said, “Please see attached – Jason Warrat will provide contract ASAP for execution on terms as agreed.”
  2. [58]
    Late that evening, Mr Hartman sent a text message to Mr Warat in the following terms:[43]

Contract for bulk deal – Did u get a chance to review status and update required.  Signed term sheet provided.  Keen to get signed Thursday at latest.  Deposit due Friday.  I fly to USA Friday morning  …

There is no evidence of any response from Mr Warat.

  1. [59]
    Mr Hartman travelled to the United States of America on 3 May 2019, returning on 10 May.[44]
  2. [60]
    No contract was ready by 3 May 2019, as there were negotiations between the solicitors about a number of issues, including whether the contract would be a straight sale of the units, a call option to Forum or a put and call option and the terms of special conditions to the ultimate sale contract.  Mr Warat emailed some of the emails and draft documents to Mr Hartman, although Mr Hartman said that he did not review any of the drafts as he was undertaking a course in the USA.[45]  There is no evidence of any mention of a Tessa provision (or the terms of such a provision) in the course of those negotiations.  Eventually the contracts agreed were a call option entitling Forum to require Metro to enter into a sale contract on terms annexed to the call option agreement.
  3. [61]
    There is a dispute between the parties about the effect of Mr Hartman’s instructions to Mr Warat to draft contracts “on terms as agreed”.  I do not consider it necessary to detail that dispute, which is really a red herring.  It suffices to conclude that it is clear that Mr Warat started with the draft documents that Ms Leacy had prepared and negotiated with Forum’s solicitors in February and March 2019, based on the Capri EOI.[46]  This conclusion derives principally from the facts that Ms Leacy had negotiated contracts based on the Capri EOI, Mr Hartman had instructed Mr Warat to “refresh” the file on Forum at a time when the only draft documents (to which Mr Hartman referred as “an agreed legal contract”) were those based on the Capri EOI and Forum’s solicitor referred Mr Warat to the exchange of emails that had occurred during the March negotiations with Ms Leacy as a starting point for the final contracts.[47]
  4. [62]
    None of the draft contractual documents, nor the final documents, appears to have included any form of Tessa provision.  Relevantly, the final sale contract, as executed, contained this provision:[48]

The Buyer acknowledges that, as at the Contract Date, … there is no obligation on a buyer of an apartment to make their apartment available to the Seller or Letting Agent for letting to prospective tenants.

  1. [63]
    It is not clear from the evidence whether this clause was already in the draft sale contract that Ms Leacy had negotiated, based on the Capri EOI,[49] or Mr Warat inserted it into the sale contract that he drew.  In any event, Metro submitted that this provision was to the opposite effect of a Tessa provision.[50]  It is unnecessary to determine if that is the case.
  2. [64]
    On 8 May 2019, the following email exchange occurred between Mr Warat and Mr Hartman.[51]
    1. (a)
      At 5:54pm (3:54am United States Eastern time), Mr Hartman received an email from Mr Warat that:
      1. attached a copy of the execution page (only) of the call option deed;
      2. identified the “main conditions” of the call option deed, which were limited to the call option period, settlement date, deposit, buyer, nominee, price, GST and guarantees and did not refer to a Tessa Provision; and
      3. sought instructions to sign the call option deed under the Power of Attorney.
    2. (b)
      At 5:58pm (3:58am United States Eastern time), Mr Hartman responded to Mr Warat’s email seeking confirmation that the call option deed included a provision consistent with the Tessa Provision. Mr Hartman deposed[52] that he asked this because:
      1. the issue of the management rights, and specifically receiving the Appointment Amounts under the MRBPA, was important to the plaintiff for the reasons he outlined at paragraphs [45] to [48] of his affidavit; and
      2. it was, for that reason, the most crucial part of the Forum deal (aside from the purchase price itself).
    3. (c)
      At 6:01pm (4:01am United States Eastern time), Mr Warat replied to Mr Hartman stating that the call option deed did not include a provision consistent with the Tessa Provision because the Final EOI provided that the appointment by Forum of Tessa was in Forum’s entire discretion.
    4. (d)
      At 6:02pm (4:02am United States Eastern time), Mr Hartman responded “OK. Please sign under PoA”.
    5. (e)
      At 6:06pm (4:06am United States Eastern time), Mr Warat sent an email to Mr Hartman attaching the Final EOI and asked, “Please approve signing under POA.”
    6. (f)
      At 6:11pm (4:11am), Mr Hartman responded “Please proceed to sign under PoA”.
  3. [65]
    Mr Warat gave the following evidence in his affidavit:[53]

[35] Sometime during, or around the time of, the exchange of emails discussed in paragraph 32 above, I received a telephone call from Mr Hartman during which:

  1. (a)
    we discussed the fact that the Tessa Provision had not been included in the Sale Documents; and
  2. (b)
    he stated words, the substance of which were:
  1. (i)
    he was prepared to continue on and execute the Sale Documents without the Tessa Provision, because Metro’s priority was getting the Forum Lots sold;
  2. (ii)
    receiving any payments from [Tessa] under the MRBPA concerning the lots being sold to Forum would be a “bonus”.

[36] As part of the process of preparing this affidavit, and in an effort to identify the precise time of the telephone call discussed in paragraph 35 above, I have reviewed the call records for both my work telephone and my mobile phone for the relevant day, but have been unable to identify a record of the call. I expect this is because I received the call from Mr Hartman on my mobile, and my Optus mobile phone records do not show incoming calls.

[37] Having reviewed the contemporaneous emails for the purposes of preparing this affidavit, I believe the telephone call took place sometime between or around my email of 6.01pm and Mr Hartman’s email of 6.11pm.

[38] I recall that I was in my office when I received the telephone call from Mr Hartman. I did not make a file note of it because the conversation did not seem significant at the time, and I was attempting to get the Sale Documents finalised as soon as possible believing that this was a priority for Metro. Mr Hartman often called or texted me on my mobile in relation to the legal work HWLE was performing for the Metro Group.

  1. [66]
    In answer to that evidence, Mr Hartman gave evidence that:[54]
    1. (a)
      while he was in the United States, he stayed in a room that did not have a telephone;
    2. (b)
      he only used his mobile telephone to make and receive telephone calls while he was there;
    3. (c)
      he did not use any computer programs to communicate with others while he was there;
    4. (d)
      an extract from his mobile telephone records (which he exhibited to his affidavit) for 6 to 9 May 2019 shows that he made no telephone call to Mr Warat’s office or mobile telephone number on 8 May 2019 (indeed, it shows no calls early in the morning USA time or in the early evening Australian time); and
    5. (e)
      he denied that the telephone call occurred.
  2. [67]
    Late in the evening of 8 May 2019, Mr Warat received from Forum’s solicitors a copy of the call option deed executed by Forum.  He executed the deed, under his power of attorney from Metro, early the next morning and returned it to Forum’s solicitors.[55]
  3. [68]
    Forum exercised its call option and signed the sale contract on 30 May 2019.  Settlement occurred on 7 June 2019, when Forum acquired 54 units in the building.

The contested telephone call

  1. [69]
    It is now necessary to determine whether the telephone conversation between Mr Warat and Mr Hartman on 8 May 2019, about which Mr Warat gave evidence, occurred.  There is no documentary evidence of the telephone call having taken place, at least during the period in which Mr Warat contends it occurred.  It is necessary that I determine whether to accept some or all of Mr Warat’s evidence or that of Mr Hartman about it.
  2. [70]
    In cross-examination about that alleged call, Mr Warat said that:[56]
    1. (a)
      he rarely makes file notes of his conversations with clients;
    2. (b)
      he agreed with the proposition that, if a solicitor gives advice to a client about an important matter or if a client gives a solicitor oral instructions to proceed to sign a contract without a particular clause, the best practice is to make a file note of that conversation;
    3. (c)
      when he thinks that something said might be contentious or important or something that he needs to record, he makes a detailed file note; 
    4. (d)
      in this instance, obviously, at the time he did not think that was the case because he did not make a file note of the conversation;
    5. (e)
      he disagreed that he was mistaken about the conversation;
    6. (f)
      there was no reason for him to lie about it and he was certain that the conversation took place.
  3. [71]
    A solicitor in commercial practice is generally expected to record in file notes at least important matters arising in conversations with the client and other persons.  Where the solicitor has not recorded, either in a file note or elsewhere, the fact or the substance of a conversation in which, for example, the solicitor says that the client gave the solicitor certain instructions, a court in later proceedings in which that conversation is of crucial importance may well have cause to doubt the accuracy of the solicitor’s evidence and to prefer that of the client, including where the client denies that the conversation occurred at all.  This is not because a court considers, or there is a principle of law, that, in the absence of a written record by the solicitor, it is always the case that “the word of the client is to be preferred to the word of the solicitor, or, at any rate, more weight is to be given to it,”[57] but because it is generally expected that a competent and diligent solicitor will, in the course his or her usual practice, keep a written record of instructions and other relevant matters relayed to the solicitor by the client.  This is not only good practice to protect the client’s interests, but it also protects the solicitor’s interests in case of future litigation (such as this) as, without such a record, the solicitor’s evidence may well be disbelieved.[58] 
  4. [72]
    Notwithstanding some courts’ leanings toward believing the client’s oral evidence over that of the solicitor where the solicitor has no written record of an important conversation, it is certainly not the case that a client should be believed simply because the solicitor has no written record of relevant instructions, nor that a solicitor should be believed simply because of his or her professional status.[59]  Both parties have an equal right to be believed.  Which of their respective versions is to be accepted normally depends on the persuasiveness of their evidence, as judged by surrounding objective circumstances.  Findings of fact, especially those based upon an opinion as to creditworthiness of witnesses, are to be made from a careful and objective examination of the evidence adduced with respect to those facts.[60]
  5. [73]
    HWLE pleaded the conversation in its first defence, filed in June 2020, and it has maintained that pleading ever since.  That indicates that, about 13 months after Mr Warat says it occurred, he recalled it with sufficient detail to instruct the firm’s counsel to plead it.  This is not a case in which a solicitor is seeking to recall a conversation that allegedly occurred many years earlier. 
  6. [74]
    Mr Warat said that the statement that he recalls Mr Hartman making about Mr Hartman’s reason for being prepared to instruct Mr Warat to execute the contract without a Tessa clause in it – that Metro’s priority was getting the Forum lots sold and any payments from Tessa would be a bonus – did not seem important to him at the time.  That was one reason for not making a file note about it, nor recording it in an email.  The gist of Mr Warat’s evidence was that Forum appeared to him to be keen to lock Forum into the deal and wanted the contract signed promptly – that is, immediately.  The reason was not important to Mr Warat.  But Mr Warat was adamant that the conversation occurred. 
  7. [75]
    The fact that that statement was not important to Mr Warat is, logically, a reason why it is less likely that Mr Warat would remember at least that part of the conversation than if it had appeared to him to be important.  His evidence that it was not important to him may indicate an unusual attitude to a change in instructions which, one might objectively think, was important.  However, his advice about the clause and the instructions he received to proceed in its absence were, of course, recorded in the exchange of emails.  The reason for the instructions may be seen as unnecessary to record in writing.
  8. [76]
    On the other hand, Mr Hartman, in his second affidavit,[61] was adamant that the conversation did not occur.  He was not cross-examined about his denial that he made the call.  His telephone records support a finding that he did not ring Mr Warat during the 10 minutes or so in which Mr Warat said it occurred.  Similarly, Mr Warat said that the telephone records he has located do not show any call made by him to Mr Hartman.[62] 
  9. [77]
    Also relevant to the question whether Mr Warat’s recollection of the conversation is wrong is that, on 15 July 2019, Ms Leacy wrote an email to a litigation partner of HWLE, David Jenkins, sending him a copy of the Final EOI and expressing concern that (as she understood it) Forum had appointed another company (McGrath) as letting agent, as a consequence of which Metro would not receive any Appointment Amounts from Tessa.  A solicitor for Forum had apparently spoken to her and said it was not bound to appoint Tessa as there was no requirement under the sale contract.  Ms Leacy said,

I need to rebut this somehow as I can’t see why we didn’t include it in the Contract, unless Jason thought it would be third line forcing.

  1. [78]
    Apparently Mr Warat was away at that time.  Mr Jenkins responded to Ms Leacy, noting that the first step was to speak to Mr Warat and work out why the Tessa clause was not in the contract.  Ms Leacy then sent an email to Mr Warat and asked for “any background about why it was not included in the contract.”[63]
  2. [79]
    There is no evidence of any written or oral response from Mr Warat to that email.  There is no evidence that Ms Leacy or Mr Jenkins spoke with him.  In particular, there is no record at all that Mr Warat told either of them about the alleged conversation at that time, which was, of course, only some 10 weeks after it allegedly occurred.  Counsel for HWLE did not, in re-examination, ask Mr Warat whether he had ever told anyone else about the conversation.  Nor did HWLE call either Ms Leacy or Mr Jenkins to give evidence about whether he had told them about it in July 2019.[64]  The first “record” of the conversation is in the defence filed in June 2020, indicating that Mr Warat gave instructions about it shortly before the defence was filed. 
  3. [80]
    These matters, particularly the absence of telephone records of a phone call between Mr Warat and Mr Hartman on 8 May 2019 and the absence of any record or other evidence that Mr Warat told anyone else about the conversation when Metro first complained to HWLE, support a conclusion that Mr Warat’s recollection and evidence of the conversation occurring that day were incorrect.
  4. [81]
    In his evidence, Mr Warat accepted that he had made a mistake in advising Mr Hartman that, under the Tessa provision in the Final EOI, it was in Forum’s entire discretion who to appoint as letting manager.  There was no attempt to cover up or excuse that error.  Mr Warat was forthright in accepting the error.  He was also forthright in denying any motive to lie and expressing the reasons why he would not do so, when it was put to him that the conversation did not occur.
  5. [82]
    I found Mr Warat to be a forthright and apparently honest witness.  Of course, I would expect that of a solicitor of many years’ experience, but his standing in the profession is not a factor in the view I take of his credit.  However, I consider that it is particularly unlikely that he would lie or exaggerate in giving his evidence, given the effect that a finding to that effect would have on his professional reputation and perhaps even his ability to continue in practice.  I do not see any reason for him to have made up evidence about the telephone call occurring or what Mr Hartman said to him during the call.  Nor do I consider that he has inadvertently reconstructed his evidence of the call, now mistakenly believing that it occurred when it did not.
  6. [83]
    On the other hand, Mr Hartman’s evidence generally demonstrated to me that he had no recollection of conversations with anybody about matters the subject of this proceeding.  He appeared to accept that a conversation occurred only if it was clearly referred to in a note or email.[65]  Additionally, Metro (in particular Mr Hartman) seemed very keen to secure the sale to Forum, in order to rid itself of the balance on the unsold units in the development.[66]  That attitude is consistent with Mr Warat’s evidence to the effect that he understood that Metro was keen to lock Forum into the deal and wanted the contract signed promptly.  It is also consistent with Mr Hartman’s conduct in promptly instructing Mr Warat to execute the contract even though he knew it did not contain a Tessa provision, rather than simply instructing Mr Warat to add the provision into the draft contract and return it to Forum for its agreement, especially after Mr Warat had emailed to him a copy of the Final EOI which clearly did include such a provision.
  7. [84]
    I accept Mr Warat’s evidence that he and Mr Hartman had a conversation to the effect that he described.  However, the absence of any documentary evidence of the conversation – particularly the absence of any file note by Mr Warat, the absence of any reference to the call in the emails exchanged that evening, the absence of any record of such a call in either party’s telephone records and the absence of any contemporaneous record or other evidence that Mr Warat told anyone else about the conversation when asked by his colleagues why there was no Tessa provision in the sale contract - demonstrates to me that any such call did not occur that day.  It is clear, from paragraph 37 of his affidavit, that Mr Warat has reconstructed, from the emails he exchanged with Mr Hartman that evening, what he considers likely to be the time at which and the day on which the conversation occurred:  he clearly does not specifically recall it occurring between 6.01pm and 6.11pm on 8 May 2019.  However, I do not consider that he has invented or reconstructed the fact that such a telephone call occurred and the substance of the conversation.
  8. [85]
    My conclusion is that, at some time, Mr Hartman and Mr Warat had a conversation in which Mr Hartman said words to the effect that Mr Warat recalls being said (except that Mr Hartman told him why he had been prepared to have the sale documents executed on 8 May).  However, that conversation did not take place that evening.  The absence of any telephone records of the conversation, in particular, demonstrates, on the balance of probabilities, that it did not occur in that time frame.  To that extent, Mr Warat was mistaken.  Rather, it is likely that a conversation to that effect occurred after Mr Hartman had returned from the United States of America, probably in the context of Forum having told Metro that it had appointed McGrath as its national portfolio manager (see below), leading to Metro seeking HWLE’s assistance in attempting to persuade Forum to appoint Tessa as well as, or instead of, McGrath. 
  9. [86]
    I find that such a conversation did occur, but at a later date than 8 May 2019.

Forum appoints McGrath as its letting and sales agent

  1. [87]
    On 6 June 2019, Mr Biggins of Colliers informed Mr Hartman that Forum had appointed “McGrath” as its national portfolio manager and McGrath would reach out to Tessa post settlement to discuss the units going into the pool.[67]
  2. [88]
    At some time, apparently on or before 6 June 2019, Forum made a “services agreement” with McGrath Sales Pty Ltd, a real estate agent.[68]  Counsel for HWLE submitted that, by that agreement, Forum appointed McGrath as its agent to lease all Forum’s units in Capri and therefore there was no longer any possibility or likelihood that Forum would thereafter appoint Tessa as its letting agent for any of the units.  That is not the case, for the following reasons.
  3. [89]
    The agreement dealt not only with units in Capri, but also with units in two other buildings.  It anticipated that Forum and McGrath would enter into a separate rental management agreement for any lot that Forum decided to lease after acquiring it.  They would also enter into a sales agency agreement for any lot that Forum decided to sell.  For leased lots, McGrath would charge a letting fee of one week’s rent for securing each tenancy and a management fee of 5% of the weekly rent collected by it. 
  4. [90]
    The agreement did not expressly require that Forum actually appoint McGrath as its letting agent for lots to be acquired by Forum, although it anticipated that it would.  Nor did it prevent Forum appointing another agent instead of McGrath.  Rather, the parties agreed that, subject to any relevant sales agency agreement or managing agency agreement between them, McGrath would provide the services under each sales agency agreement or managing agency agreement in consideration for Forum paying it the fees set out in the services agreement.  The agreement could be terminated by either party on three months’ notice to the other. 
  5. [91]
    The document appears to me to be an agreement to agree, perhaps thereby not being enforceable at all.  But that is beside the point.
  6. [92]
    Of particular relevance is that, in a schedule to the services agreement,[69] it indicated that Forum would, between (variously) July 2019 and December 2021, let out 31 of the units in Capri for periods of 12 to 24 months, followed by their sale, and it would sell the remaining 22 (without first letting them out) between July 2019 and June 2020.  The schedule is described as a budget “for the current anticipated Properties.”  “Budget” is defined as meaning “the sales and marketing budget, including forecasting of any Agreed Sales Price, expected sales timing/velocity and all future costs and expenses associated with the Services to be provided by McGrath quarterly and agreed by Forum.”[70]  The particular relevance of the schedule to this case is that it shows Forum’s apparent intention, in June 2019, of letting out only 32 of the 54 units it was about to acquire from Metro.
  7. [93]
    On 23 September 2019, Forum and McGrath executed a document (in form 6 under the Property Occupations Act 2014), by which Forum appointed McGrath as its letting agent for all 54 units, on terms broadly consistent with the service agreement.[71]  The appointment was said to be for a period starting on 20 September 2019, with no end date specified.  Thus, it was only on 23 September 2019 that Forum actually appointed McGrath as its letting agent for units in Capri.  Until then, it had been open to Forum to appoint a different letting agent or agents, including Tessa.
  8. [94]
    There is no evidence of how many units Forum did in fact let in the following 12 months,[72] although Metro pleaded that Forum let out 44 of those units by July 2020[73] and based its claim of loss in that pleading on that number.[74]  Inconsistently, in amended particulars of loss in the trial bundle,[75] it claimed a loss based on Appointment Amounts for all 54 units, in reliance on the 23 September 2019 appointment of McGrath. 
  9. [95]
    In the absence of any direct evidence of how many units Forum let out, I am left with the budget prepared in June 2019 and the fact that, in September 2019, Forum appointed McGrath as its letting agent for all 54 units that it had bought.  I suspect, however, that that was simply a matter of convenience to avoid the need to make multiple appointments, while Metro continued to keep some aside for sale.  The budget indicates that it was in fact only intended to secure tenants for 32 units.  Nothing (apart from its appointment over 54 units) indicates otherwise.  As the budget is annexed to a material contract, I consider it the better indicator of how many units Forum in fact intended to let out.

Post-sale correspondence concerning Tessa

  1. [96]
    On 6 June 2019 at 5.59pm, Mr Hartman sent an email to Mr Biggins, with the subject “Forum – Tessa appointment for management”, in which Mr Hartman asked, “Please advise the status of this?”  Mr Biggins responded, at 6.13pm, relevantly saying:[76]

Forum have appointed a national portfolio manager (McGrath) for Capri and 2 other projects they’re buying into.  The manager will reach out to Tessa post settlement to discuss the units going into the pool.

  1. [97]
    Mr Hartman responded to Mr Biggins at 6.15pm, saying “This was not the agreement.  Please call to discuss.”
  2. [98]
    On the same day, at 5.02pm, Mr Hartman wrote to Ms Leacy, copied to Ms Lamshed, saying “please advise how management rights dealt with??”  Ms Lamshed responded at 5.02pm saying, “Has the sale gone through?  Otherwise, we need Forum to sign the Form 6 to appoint Tessa and they are obligated to pay.”  Mr Hartman then responded to Ms Lamshed, copied to Ms Leacy, saying, “Is outside of contract/was in heads of agreement.”[77]
  3. [99]
    On 7 June 2019, Mr Biggins sent an email to Mr Faulk of Forum, with the subject “Capri Management – Tessa”.  Mr Biggins said:[78]

Further to our discussion last night Metro have asked for confirmation that post settlement and your internal review of which apartments are being held for letting vs near term sale, that any apartments to be let and managed will be done so through Tessa for the initial 12 month period as per the HOA.

  1. [100]
    Mr Faulk responded:

Correct per the sale agreement – following McGrath review of flighting sale schedules we will put a parcel of units to rental management.

  1. [101]
    On 10 June 2019, Ken Woodley[79] sent an email to Mr Hartman, in the context of preparing, with Colliers for Forum, for the practical handover of the units following settlement of the sale, saying:

Before responding to Colliers, would you like us to notify Tessa of the settlements?

  1. [102]
    Mr Hartman responded, “Yes – also unsure of amount of managements they will get @ this stage.” 
  2. [103]
    On 25 June 2019, Ms Lamshed sent an email to Mr Hartman, headed “Forum”, saying, “Just a reminder to chase them up for appointing tessa as rental manager.”  Mr Hartman responded, “Yes-chasing them on this.  Minimal Movement.”[80]
  3. [104]
    There is no direct evidence of any discussions between Forum and Tessa about the possibility of Forum appointing Tessa to manage some or all of the units in Capri.  However, it appears that they had some discussions as, on 27 June 2019, one Natalie Grenfell, apparently a manger of a company known as Newpoint Advisory, sent an email to Mr Tutt, headed “Forum Rental Units” and saying, “Just following up on your submission for the rental management.”[81]  That indicates that there had been some discussions or correspondence in which Tessa had been asked to submit a proposal to Forum for managing the letting of some or all of Forum’s units, but it had not submitted any such proposal.
  4. [105]
    Mr Tutt appears to have responded to that email only on 8 July 2019, when he sent an email in reply saying, “We have reviewed this again and will issue today.”  Ms Grenfell responded to him, saying “We needed to get started on the leasing for our client and as such the rental management has been given to McGrath.”  That appears to have led Mr Tutt to send an email to Mr Hartman,[82] in which he said,

We have been advised today that McGrath are managing the apartments at Capri.  This comes as no surprise as believe they sold them.

  1. [106]
    The next day, Mr Hartman forwarded Mr Tutt’s email to Ms Leacy, with whom he exchanged the following emails:[83]

Mr Hartman to Ms Leacy: 

See below – Capri management/forum.

Believe Forum are selling down Capri apartments and holding some.

Please advise legal position with Forum on managements.

Ms Leacy to Mr Hartman:

Luke,

The Heads of Agreement contains no restriction on the selling of lots by Forum.

Forum has full discretion of whether the lots are offered for rent.

If they are renting lots, the must use Tessa for a period of 12 months after exchange of contracts, which expires on 30 May 2020.  Tessa’s fees will be capped at 5% of gross rent.

Mr Hartman to Ms Leacy:

Melinda

Can we send a letter to Forum advising this + cc Colliers.

If they wish to use someone else to rent this stock they need to pay Metro compensation of $14k or what ever Tessa pay us per apartment.

  1. [107]
    One might think that Ms Leacy’s advice was wrong, as she was, in effect, asked to advise on Metro’s legal right to insist that Forum engage Tessa.  Instead of advising on the position under the contract, she referred to the “heads of agreement” – presumably the Final EOI which, on its face, was not binding and, at that stage, was irrelevant.  However, while explaining why the following steps occurred, no issue arises in this proceeding from this incorrect advice.
  2. [108]
    On 10 July 2019, Ms Leacy wrote a letter to Forum’s solicitors,[84] relevantly saying:

The Seller wishes to remind the Buyer of their obligations under the Expression of Interest in respect of property management.

If the Buyer rents any of the Lots, management is to be conducted by the current on-site manager until 30 May 2020.

Please remind the Buyer of their obligations under the Expression of Interest.

If the Buyer does not wish to appoint the on-site manager, the Seller will require payment of $14,286 plus GST for each Lot that is to be rented by another letting agent.

  1. [109]
    While it is not entirely clear what happened as a direct consequence of that letter, on 25 July 2019 Mr Biggins of Colliers sent an email to Mr Tutt asking him to have a telephone discussion with “Newpoint”.[85]  In answer to a question from Mr Tutt about what they would discuss, Mr Biggins said he was facilitating discussions to try to reach an outcome “regarding Forum’s obligations to have Tessa manage the units they’ve purchased.”  Mr Tutt responded that Forum had listed the units with and appointed McGrath and it was clear that Forum had no intention of using or wanting Tessa to do it.  Mr Biggins replied that Metro had asked him to arrange a discussion between Tessa and Forum as Forum had not ruled out working with Tessa.  Mr Tutt then forwarded that exchange of emails to Mr Hartman, saying:

What is the below about?

McGrath have been appointed to lease?  What needs to be discussed?

  1. [110]
    That evening, Mr Hartman sent the following email to Mr Faulk:[86]

Keen to resolve this issue.

-metro sold apartments @ Capri to Forum on the basis that they were to be paid for management rights. 

This was basis of deal and the discount agreed was on this basis.  This was agreed and as per HOA.

-our nominated provider was Tessa – whom you claim have been unwilling to assist Forum.

You have now chosen to use McGrath to undertake the management of these bulk apartments.

No payment has been made to Metro.

Based on 52 apartments @ $14k per apartment.

Note you are looking to rent 30 apartments.

Wanted to understand your position on this matter and how to resolve.

  1. [111]
    The next morning, Mr Faulk responded to Mr Hartman:[87]

I’ve requested my asset manager, NewPoint, reengage with Tessa who I understand were not positive in their approach to the business and arrangement with Metro.  Note I am agnostic regarding your arrangement with Tessa, who leases subject units and collects rent - only that it gets done.

For clarity:  Forum is not legally bound to contract with Tessa nor has any financial obligation relating to such.

I’ll update you following above discussions.

  1. [112]
    Mr Hartman forwarded that email exchange to Mr Tutt, asking him to call to discuss.  Mr Tutt responded:[88]

Not sure what you want from us mate.  There intention is not to use us.

Why were we not notified at the point of sale as normal?

  1. [113]
    Mr Hartman sent the chain of emails with Mr Faulk and Mr Tutt to Mr Warat and Ms Leacy.
  2. [114]
    On 29 July 2019, Ms Leacy told Mr Hartman that Forum had provided a timeline of contact with Tessa which indicated that Tessa was “not very interested” in the rental arrangements and had not provided a management proposal after three weeks. Ms Leacy recommended that HWLE write to Tessa’s solicitors to remind Tessa of its obligations under the MRBPA to use its best endeavours and to cooperate with Metro to procure the maximum number of appointments when Forum re-engaged with it.  On 2 August 2019, Ms Leacy sent such a letter to Tessa’s solicitors.[89]
  3. [115]
    There is no evidence of what, if any, response HWLE or Metro received to that letter.  Nor is there any evidence of any further communications between Metro or Forum and Tessa.  Mr Warat said that he did not recall receiving any correspondence from or on behalf of Tessa and there is no such correspondence on HWLE’s files.  Nor did he or HWLE receive any instructions from Metro to take any further steps to enforce the terms of the MRBPA against Tessa.[90]

Preliminary evidentiary issue – Jones v Dunkel

  1. [116]
    Most of the evidence in this matter comprised documents: the contracts between the various companies and a substantial body of emails.  Only two witnesses gave evidence:  Mr Hartman for Metro and Mr Warat for HWLE.  Their evidence in chief was given by affidavit, on which they were cross-examined.  Most of their evidence was not significantly challenged but, as is apparent from the chronology above, the substantial evidentiary issues are, first, whether the conversation about which Mr Warat gave evidence occurred as and when he said it did and, secondly, whether Tessa would and could have accepted appointment as Forum’s letting agent for the apartments it decided to rent out and therefore would and could have paid Metro an Appointment Amount for each letting appointment.
  2. [117]
    I have already dealt with the contested conversation.  I have stated that I prefer Mr Warat’s evidence that it occurred to Mr Hartman’s evidence that he does not recall any such conversation, although I have found that it did not occur on 8 May 2019.  That leaves the questions about Tessa’s willingness and ability to accept appointments and to pay Metro for them.
  3. [118]
    One person who did not give evidence was Mr Tutt.  HWLE submits that one would have expected Metro to call him in order to seek to prove that Tessa could and would have accepted appointments by Forum and paid Metro the Appointment Amounts.  As Metro did not call him, but simply seeks to draw inferences from other evidence about what Tessa could and would have done, HWLE submits that the Court should infer that his evidence would not have assisted Metro and consequently the Court should less readily draw the inferences that Metro asks it to draw about the subject.[91]
  4. [119]
    In support of this proposition, HWLE’s counsel pointed to the following matters:
    1. (a)
      Metro has the onus of proving its case, in particular that, had the Tessa provision been in the sale contract, Tessa would have accepted appointments by Forum and paid Metro the relevant Appointment Amounts;  in this respect, Mr Tutt could have given evidence about Tessa’s arrangements with its bank and its financial position;  he could, of course, also have given evidence about the commercial risks or otherwise to Tessa in accepting so many appointments from one owner, but all these matters were directly within his knowledge and were relevant to Metro’s case – indeed, Metro unsuccessfully attempted to adduce hearsay evidence concerning these issues in Mr Hartman’s first affidavit and to ask the court to make inferences about them;  that evidence was ruled, or admitted to be, inadmissible;  it would have been natural for Metro to call Mr Tutt to give that evidence directly;
    2. (b)
      Metro and Mr Tutt had a long commercial association, to the extent that, according to Mr Hartman, he and Mr Tutt had become quite good friends;[92]
    3. (c)
      there was no explanation for not calling him; and
    4. (d)
      given the risk that Metro’s evidence in the trial was not sufficient to prove the issue, it is appropriate for this Court to draw a Jones v Dunkel inference from Metro’s failure to call Mr Tutt, notwithstanding that one might think that he was equally available to both parties.  This was because it would have been more natural for the plaintiff to call him than the defendant, as the plaintiff had the onus of proof on the issue, the proof it had presented was thin, Mr Tutt could have given evidence directly on the issue at hand and the friendly relations between him and Mr Hartman meant that there was no obstacle to Metro calling him.[93]
  5. [120]
    HWLE submitted that the Court should infer that Mr Tutt’s evidence would or may not have assisted Metro to prove its case and that Metro feared to call him.  Therefore, the Court would more readily draw inferences contrary to Metro, or decline to draw inferences that Metro contends arise from the direct evidence, where Mr Tutt could have given such evidence himself.
  6. [121]
    Metro’s counsel submitted that it was not necessary, nor more natural, for Metro to have called Mr Tutt, because:
    1. (a)
      the Court could not find that Mr Tutt is “in the plaintiff’s camp;”
    2. (b)
      in their correspondence of 2 August 2019 to Tessa’s solicitors, HWLE asserted that Tessa may have been in breach of the MRBPA, making it reasonable to infer that Mr Tutt would have been hostile to the plaintiff; and
    3. (c)
      Mr Warat gave evidence that he acts for Tessa in a number of matters and is in regular contact with Mr Tutt, so he is more in HWLE’s camp than that of Metro, or either party could have called him.
  7. [122]
    I consider that it would have been natural to expect that Metro would have called Mr Tutt.  His evidence as to Tessa’s financial position would have been particularly relevant to its ability to pay Appointment Amounts to Metro.  Also, any evidence he gave about whether Tessa would have accepted appointments, if offered by Metro, would have been very relevant (even if, being ex post facto, the court would have treated it with some caution), especially to the issue of the extent of any loss to Metro – that is, in particular, how many such appointments Tessa could and would have accepted.  He could also have given evidence of any conversations he had had with Mr Hartman between October 2018 and March 2019.
  8. [123]
    I do not accept that the fact that HWLE, on behalf of Metro, wrote one letter to Tessa’s solicitors asserting a possible breach of the MRBPA means that Mr Tutt would have been hostile to Metro.  To the contrary, to have given evidence would have given Mr Tutt the opportunity to explain how Tessa would have used its best endeavours to accept appointments offered to it, which would have been in Tessa’s own interests in overcoming any risk that Metro would sue it for not acting accordingly.
  9. [124]
    I do not consider that the fact that HWLE continues to act for Tessa results in Mr Tutt being more in HWLE’s camp or reduces the “natural” position that Metro would call him to assist in proving its case.  First, Mr Tutt’s evidence would have been directly relevant to an issue that Metro must prove to succeed in its claim against HWLE and HWLE would no doubt wish to cross-examine him to the extent desirable.  Secondly, it is not surprising that the firm would be reluctant to involve its current client in a dispute with its former client.  Thirdly, the other matters referred to in [119](d) above clearly apply to Mr Tutt and Metro.
  10. [125]
    In the circumstances, in the absence of any explanation by Metro for not calling Mr Tutt, it is more easily open to me not to draw inferences in support of Metro’s case, or to draw inferences from the direct evidence that are contrary to that case.  However, as will become apparent, not much if anything in my conclusions will depend on this factor.  My findings are drawn mostly, and most powerfully, from the direct evidence, particularly the contemporaneous documents.

Was the defendant negligent or in breach of its retainer?

  1. [126]
    The defendant appears to accept that it was negligent, but for the plaintiff to succeed I must be satisfied that it was.  I find that it was negligent in two relevant ways. 
  2. [127]
    First, Mr Warat was negligent in failing to include a Tessa provision in the agreement with Forum.  The effect of Metro’s instructions was that HWLE was to prepare contracts to reflect the Final EOI, using as a base the draft contracts previously negotiated between HWLE and Forum’s solicitors and arising from the Capri EOI.  The Final EOI included a Tessa provision, but Mr Warat did not include any clause reflecting that provision, nor seek to negotiate the terms of such a clause.  That was in breach of Metro’s instructions.  Mr Warat did not include it, either because he overlooked it when reviewing the draft contracts or, having read the Final EOI, he wrongly considered that its effect was to provide that Forum had a complete discretion whether or not to appoint Tessa as its letting agent.  Clearly, his exclusion of a form of Tessa provision from the sale contract was negligent.  That failure was also in breach of Metro’s instructions and therefore of HWLE’s retainer.
  3. [128]
    Secondly, when asked by Mr Hartman, “Can you confirm clause for management rights/ can we put Tessa or equivalent manager,” he was negligent in advising Metro that he did not include a “clause for management rights” because “the letter of offer [apparently referring to the Final EOI] said it was in their entire discretion.”[94]  That advice was clearly wrong.  In his affidavit, Mr Warat acknowledged that that advice was incorrect.  He said it resulted from his misreading the Tessa provision in the Final EOI in the manner he described.[95]
  4. [129]
    Therefore, I find that HWLE was negligent and in breach of its duties under its retainer.

Did the plaintiff know that there was no enforceable Tessa provision?

  1. [130]
    Having been sent an email by Mr Warat that described “the main conditions” of the option deed, Mr Hartman expressly asked whether there was a management rights clause (by which he was clearly referring to a Tessa provision) and he was expressly told by Mr Warat that there was no such clause in the contract.
  2. [131]
    Mr Hartman – and therefore Metro – therefore knew that there was no such provision in the contractual documents.  Mr Hartman said as much in his affidavit.[96]
  3. [132]
    I do not accept that Mr Hartman believed that the Tessa provision in the Final EOI was binding, even though no such provision was included in the sale contract.  Mr Hartman is a very experienced developer.  He has no doubt had considerable experience with expressions of interest and contracts for the sale of real estate.  He must have appreciated the difference between a non-binding expression of interest, on the basis of which parties negotiate the terms of a contract while not being bound to any contractual obligations, on the one hand, and a binding contract on the other.  But even if his experience of expressions of interest were limited or non-existent, he is clearly an intelligent man, he is experienced in the business of property development and contracts and he speaks, reads and understands English.  He could not have misunderstood the words and effect of the very first paragraph of the Final EOI (and those that preceded it):  nothing in the EOI was binding and Forum and Metro would only be bound by the terms of any contract that succeeded it.  Indeed, Mr Warat sent him a copy of the Final EOI containing those words (presumably expecting that Mr Hartman would not have a copy with him in the USA) before seeking his final instructions to execute the Option Deed.  Mr Hartman said he did not look at it on that occasion, which is doubtful, given that he purportedly relied on it.  But nevertheless he was clearly familiar with its terms, including its expressly non-binding nature.
  4. [133]
    Furthermore, the sale contract itself, by clause 78 of the standard conditions, expressly provided that:

This Contract contains the entire terms agreed between the Seller and the Buyer in relation to the sale and purchase of the Property and supersedes all prior negotiations.

  1. [134]
    Being so experienced in property development and sales, I have little doubt that Mr Hartman was aware of those standard conditions, including that term.  But even disregarding that term, Mr Hartman must have known that the only binding obligations were those in the final contractual documents and not those in the Final EOI (or any earlier EOI or draft contractual documents).  Indeed, one day before settlement of the sale contract, Mr Hartman told Ms Lamshed that Forum’s obligation to appoint Tessa was “outside of contract/was in HOA.”  In other words, although it was provided for in the Final EOI, it did not make it into the contract and therefore was not a binding obligation.
  2. [135]
    I find that Mr Hartman knew that the effect of there being no Tessa provision in the contract was that Forum would not be obliged to appoint Tessa. 
  3. [136]
    Mr Hartman – and therefore Metro – knew that, in the absence of a Tessa provision in the proposed sale contract, there would be no binding obligation on Forum to appoint Tessa as its letting agent.

Was the defendant aware of the plaintiff’s mistake (if any)?

  1. [137]
    This question does not arise, given my finding about Mr Hartman’s knowledge.  But even if it were the case that Mr Hartman believed that the Final EOI was binding on Forum, that belief would not have been induced by HWLE and there is no suggestion at all, let alone any evidence, that anyone in HWLE was aware of that view.  Clearly it was not.

Who decided not to include a Tessa provision?

  1. [138]
    I have found that, at some date after Mr Warat had executed the option deed on behalf of Metro, Mr Warat and Mr Hartman did have a conversation about why Mr Hartman had instructed Mr Warat to execute the option deed even though the sale contract did not include a Tessa provision.  The explanation given by Mr Hartman on that occasion was consistent with Metro’s other conduct that indicated a sense of urgency on its part to form a contract that was binding on Forum as soon as possible.  That sense of urgency, which probably stemmed from the fact that Forum had previously suddenly stopped negotiations, was indicated in several earlier emails from him to Mr Warat,[97] as well as Mr Woodley’s email of 24 April 2019.[98]
  2. [139]
    Mr Hartman, having been told that there was no Tessa provision in the sale contract, took only about one minute to instruct Mr Warat to execute the option deed.[99]  Then, having been sent a copy of the Final EOI by Mr Warat and Mr Warat having asked him again to approve execution under the power of attorney, Mr Hartman responded five minutes later, instructing Mr Warat to sign.  His alacrity in giving those instructions in the knowledge that there was no Tessa provision in the contract and without raising any concerns about it with Mr Warat is a strong indication that he did not consider the existence of a Tessa provision to be of great importance, certainly not in comparison with promptly securing an agreement with Forum.
  3. [140]
    Mr Hartman decided to instruct Mr Warat to execute the option deed on behalf of Metro, knowing that it did not contain such a provision and that there was no obligation under any document that Forum appoint Tessa as its letting agent.  That was his decision, on behalf of Metro.  Perhaps he thought he could persuade Forum to appoint Tessa to manage at least some units.  Perhaps he thought that Tessa was highly unlikely to accept any, or any substantial number, of appointments at 5% commission and therefore the absence of such a clause was inconsequential for Metro.  In the end, his motive is irrelevant.  It was his conscious decision.  It was made despite, not in reliance on, Mr Warat’s advice.

Did Metro suffer any loss?

What must the plaintiff prove to demonstrate a loss?

  1. [141]
    A number of issues require determination in order to decide whether Metro suffered any loss as a result of entering into the sale contract with Forum that did not have a Tessa provision.  If it suffered no material loss, then HWLE cannot be liable to it in tort and would only be liable, at most, to pay nominal damages for breach of contract.
  2. [142]
    Metro’s case is that, but for HWLE’s negligence:
    1. (a)
      a Tessa provision would have been included in the contract of sale;
    2. (b)
      Forum would have been obliged to appoint, and would have appointed, Tessa as manager and letting agent for each unit that Forum elected to rent; and
    3. (c)
      Tessa would have paid Metro the Appointment Amount for each of those appointments;
    4. (d)
      alternatively, Forum would have provided to Tessa a signed Form 6 Appointment for each unit, Tessa would have been obliged to accept those appointments and to pay Metro the Appointment Amount for each of them and, if it did not, Metro would have had a cause of action against Tessa for its loss.[100]
  3. [143]
    It contends that, because of HWLE’s negligence:
    1. (a)
      in the absence of a Tessa provision, Forum was not obliged to appoint Tessa, nor did it offer any appointments to Tessa which Tessa would have been obliged to accept;
    2. (b)
      Forum let out 44 of its lots during the one year after the sale contract was executed;
    3. (c)
      therefore Metro has suffered a loss of the opportunity to receive $691,442.40, comprising 44 x $14,286 plus GST;[101]
    4. (d)
      alternatively, Metro has lost a valuable commercial opportunity, namely to be paid the Appointment Amount for each Forum unit rented out during the relevant period, or to sue Tessa for breach of its obligation to accept any appointments offered to it by Forum in that period.[102]
  4. [144]
    During the trial, Metro also approached its claim on the basis that its lost opportunity was to have a Tessa provision in the sale contract, which was itself a valuable opportunity.  HWLE submitted that this issue does not arise on the pleadings and therefore it is not a real issue.  Metro pleaded that the valuable commercial opportunity it lost was to be paid the Appointment Amount for each Forum unit rented out during the relevant period, or to sue Tessa for breach of its obligation to accept any appointments offered to it by Forum in that period.  It did not plead that the lost opportunity was to have the Tessa provision included in the contract. 
  5. [145]
    It would certainly have been clearer if Metro had pleaded that a Tessa provision itself would have been a valuable commercial opportunity, leading to the further opportunity that Tessa would have paid Appointment Amounts to Metro.  However, the absence of a Tessa provision was clearly the nub of its case, which is that, if the Tessa provision had been included in the sale contract, it provided the real prospect of a commercial return to Metro comprising the receipt of Appointment Amounts.  The lost opportunity in that sense involves both the potential existence of a Tessa provision and the potential receipt of income as a result.  The two are complementary parts of the one commercial opportunity. 
  6. [146]
    It is not controversial that, where a plaintiff claims damages for a loss of a valuable opportunity, two questions arise for determination by the court:
    1. (a)
      first, the plaintiff must establish on the balance of probabilities, that the breach of contract or negligence caused the plaintiff a loss of a commercial opportunity that had more than a theoretical or negligible value:  that is, the opportunity had a substantial, not merely speculative, prospect of a benefit to the plaintiff that it sought to acquire;
    2. (b)
      secondly, if the plaintiff can prove the first element, the court must assess the extent of the loss and therefore the appropriate damages, by reference to the degree of probabilities or possibilities of relevant factual hypotheses.[103]
  7. [147]
    What is controversial in this case is what the plaintiff has to prove, on the balance of probabilities, to demonstrate the first of these requirements. 
  8. [148]
    Metro contends[104] that it need prove only that the inclusion of the Tessa provision in the sale contract would have given rise, of itself, to a real commercial opportunity for Metro: namely, the opportunity arising from the possibility that Forum would have decided to let out some of its units, that Forum would then, in accordance with he Tessa provision, have offered Tessa a letting management agreement for those units and that Tessa, in accordance with its obligations under the MRBPA, would have accepted letting management of some or all of Forum’s units and would have paid Metro an Appointment Amount for each of the units to which it was appointed.
  9. [149]
    Metro contends that issues of how many units Forum would have let out, whether it would have offered the management of those units to Tessa and whether Tessa would have accepted any such offer and paid any Appointment Amounts to Metro fall to be determined in the assessment of the value of the commercial opportunity that it has lost because there was no Tessa provision in the sale contract (that is, as part of the second enquiry to which I have referred above).
  10. [150]
    HWLE, on the other hand, submits[105] that, in order to prove that the Tessa provision was of a real commercial value in itself, it is necessary for Metro to prove, on the balance of probabilities, that Forum would have agreed to the inclusion of the Tessa provision or a provision in materially the same terms and effect, that Forum would then have offered appointments to Tessa and that Tessa would have accepted appointments by Forum.  As to the first, the relevant question is the likelihood that Forum would have agreed to a Tessa provision and the form that such a provision in the sale contract would have taken (that is, its content).  As to the others, it submitted that a Tessa provision would only give rise to a benefit to Metro if Tessa was offered and accepted appointments, which Metro must also prove on the balance of probabilities in order to prove that a Tessa provision had a commercial value that was not negligible.  The second limb, of valuing any loss, should involve only an assessment of the probability that Tessa would have actually paid any Appointment Amounts.
  11. [151]
    The plurality in Badenach v Calvert said this about when a loss of opportunity may be compensable in tort:[106]

It may be accepted that an opportunity which is lost may be compensable in tort.  But that is because the opportunity is itself of some value.  An opportunity will be of value where there is a substantial, and not a merely speculative, prospect that a benefit will be acquired or a detriment avoided.

It remains necessary to prove, to the usual standard, that there was a substantial prospect of a beneficial outcome.  This requires evidence of what would have been done if the opportunity had been afforded.  …

The onus of proving causation of loss is not discharged by a finding that there was more than a negligible chance that the outcome would be favourable, or even by a finding that there was a substantial chance of such an outcome.  The onus is only discharged where a plaintiff can prove that it was more probable than not that they would have received a valuable opportunity.

  1. [152]
    Thus, in order to prove that it has suffered loss, Metro must prove, on the balance of probabilities, that there is a substantial, and not a merely speculative, prospect that, had the opportunity to include a Tessa provision in the sale contract not been lost (that is, had a Tessa provision been included), it would have acquired a benefit.
  2. [153]
    What Metro must prove to demonstrate the value of a Tessa provision is informed, to a substantial degree, by the MRBPA because that contract preceded (and continued in existence during) Metro’s negotiations with Forum and their entering into the option deed and then the sale contract.  The MRBPA imposed the obligation on Tessa to cooperate with Metro and to use its best endeavours to secure the maximum number of appointments.  In proposing a Tessa provision to Forum, Metro was taking steps to attempt to secure the maximum number of appointments for Tessa.  In those circumstances, if Forum would agree to such a provision, then that was of immediate benefit to Metro, in that it gave rise to a series of complementary contractual obligations that may, if complied with by both Forum and Tessa, secure appointments of Tessa and consequent payment to Metro of further Appointment Amounts.  That prospect had a more than negligible commercial value to Metro even though it may have been uncertain whether Tessa would have been appointed as letting manager for all, some or none of the Forum units.  Whether the appointments and Appointment Amounts were for only one unit or many is irrelevant to this question, although it is very relevant to the assessment of the extent of Metro’s damages in compensation for its loss.
  3. [154]
    In this sense, the Tessa provision and the MRBPA would have been commercially complementary and, in a sense, interdependent contracts intended to achieve, and having a substantial prospect of, a beneficial commercial outcome for Metro.[107] 
  4. [155]
    Therefore, to demonstrate that it has suffered a loss, Metro need only prove, on the balance of probabilities, that Forum would have agreed to a Tessa provision and the form of such a contractual provision. 

What prospect was there of Forum agreeing to a Tessa provision?

  1. [156]
    HWLE’s counsel submitted that Metro has not demonstrated that there was any real prospect that Forum would have agreed to any particular form of Tessa provision if one had been included in the contract.  Without knowing what such a clause might have contained and without any evidence from Forum that a particular clause would have been acceptable to it, there is no evidence sufficient to demonstrate that there was any prospect of Forum agreeing to a Tessa provision.
  2. [157]
    It is important to note that there is no evidence of the precise terms of any Tessa provision that had previously been included in a contract for sale of units by any MPD SPV.  The closest there is to such a clause is the Tessa provision in the Final EOI.
  3. [158]
    Nor is there any evidence that Forum had ever previously purchased units from an MPD SPV, whether or not under a contract containing a Tessa provision.  HWLE relies on the absence of that evidence as leading to considerable uncertainty as to whether Forum would have agreed to the inclusion of such a provision in the contract of sale and, if so, what would have been the precise terms of the clause.
  4. [159]
    However, Forum had, on three occasions, provided an EOI in which it had included the Tessa provision.  While on one occasion it had not included that provision, it withdrew from negotiations over that EOI and, when it resumed negotiations, it had again included that provision.
  5. [160]
    I find that, if a clause that had the practical effect of the Tessa provision had been included in the draft sale contract prepared by Mr Warat, Forum would have agreed to its inclusion.  That leads to the issue of what form such a clause would have taken. 

What form would any contractual Tessa provision have?

  1. [161]
    This question must be answered in a practical commercial manner.  HWLE’s counsel submitted that the clause as stated in the Final EOI was too vague and would not have been enforceable.  For example, it required Forum to appoint Tessa, but did not provide what would happen if Tessa did not accept an appointment.  As Metro has not proved the terms of any contractually binding and workable clause, it has not demonstrated that it lost any viable contractual benefit and therefore any loss of income or lost opportunity to earn income.
  2. [162]
    In my view, the Tessa provision in the Final EOI was clear in its intent.  It is not necessary that Metro prove the exact wording of a contractual clause that would have reflected that intent.  Of course, it could not have imposed an obligation on Tessa to accept an offer of appointment:  it is clear that, for such an obligation, Metro relied on the provisions of the MRBPA.   Whether Tessa was obliged to accept such an offer would depend on the extent of its obligations under the MRBPA:  an issue that I discuss below.  However, an effective clause would have required that Forum offer to appoint Tessa as letting agent for any units that Forum decided to let out within 12 months of the contract execution date, that any such offer be on standard terms as indicated in Form 6 and that the commission rate for management of a unit be no more than 5%. 
  3. [163]
    The Tessa provision in the Final EOI was sufficiently clear to enable a simple but enforceable clause giving effect to it to be included in the sale contract between Forum and Metro.  I find that, if such a clause had been drawn by HWLE, it would have been accepted by Forum and would have been included in the sale contract.

Did Metro lose any valuable commercial opportunity?

  1. [164]
    These conclusions lead to the result that Metro lost a valuable commercial opportunity in not having the Tessa provision included in the sale contract.  The inclusion of a Tessa provision would have led to the real prospect that Tessa would have paid Metro further Appointment Amounts.  That prospect had a commercial value to Metro.  There was therefore a real commercial value in a Tessa provision, had it been included in the sale contract from Metro to Forum.  The absence of such a provision means that Metro has suffered a loss of the chance to be paid those sums.  The value of that commercial opportunity was more than negligible.
  2. [165]
    I do not consider that there was any real prospect of Metro successfully suing Tessa for breach of the MRBPA if it declined to accept appointments and to pay Metro for any appointments offered to it because, for the reasons explained below,[108] it was not obliged to accept appointments at a 5% commission rate.  That prospect was not, therefore, a valuable commercial opportunity for Metro that was lost because of the absence of a Tessa provision in the sale contract.

Assessment of loss

  1. [166]
    Having reached that conclusion, it is necessary to determine the value of the lost opportunity and therefore what loss Metro has suffered, having regard to the probabilities and possibilities that relevant events would have occurred. 
  2. [167]
    HWLE submitted that, even if there were a Tessa provision in the contract between Metro and Forum, there is no real prospect that Forum would have appointed Tessa as its letting agent or that, even if Forum did offer to appoint Tessa, Tessa would have accepted any appointments and paid Appointment Amounts to Metro.  Therefore, Metro has not proved that it has actually suffered any loss even if HWLE were negligent and that negligence caused Metro a loss of the opportunity to include a Tessa provision in the contract of sale to Forum and to be paid Appointment Amounts by Tessa. 
  3. [168]
    To determine that issue, it is principally necessary to consider:
    1. (a)
      first, the likelihood that Forum would have appointed (or offered to appoint) Tessa as letting manager for some or all of Forum’s units;
    2. (b)
      secondly, whether Tessa had an obligation, under the MRBPA, to accept appointments by Forum at a 5% commission rate; and
    3. (c)
      thirdly, whether or not Tessa had such an obligation, the likelihood that Tessa could have afforded to and would have accepted appointments from Forum and paid some or all of the Appointment Amounts for those appointments.

What prospect was there of Forum appointing Tessa under a Tessa provision?

  1. [169]
    The history of the appointment of McGrath by Forum as its national portfolio manager, Forum’s agent’s correspondence with Tessa thereafter and Mr Tutt’s responses to that correspondence and to Mr Hartman about it and the ultimate appointment of McGrath by Forum as its letting agent for the Capri units on 23 September 2019 indicates that, even though it was not obliged to appoint Tessa (or to offer to do so) under its agreement with Metro, Forum was prepared to consider doing so.  Its attempts to seek a proposal from Tessa were not, in my view, merely for show.  Forum appears to me to have been genuinely prepared to appoint Tessa to manage at least some of its units. 
  2. [170]
    It is a simple matter to conclude, as I do, that, if Forum had been obliged by a Tessa provision to appoint (or to offer to appoint) Tessa as its letting agent at a commission rate of 5%, it would have done so.

What prospect is there that Tessa would have agreed to manage any units?

  1. [171]
    By 20 March 2019, it must have been clear to Mr Hartman that, if Forum were to buy the remaining units in Capri, it was unlikely that Tessa would agree to take on management of any substantial number of those units at a 5% commission.  Therefore, it was unlikely – indeed, at most only a remote possibility – that Tessa would be able to accept appointments and to pay an Appointment Amount for so many appointments by one owner.
  2. [172]
    On 5 June 2019, solicitors for Tessa sent a letter to HWLE (on behalf of Metro) about other lots in Capri that, apparently, had been sold by Metro to separate buyers who had appointed Tessa as their managing agents.  The letter asserted that 10 owners had recently terminated Tessa’s appointment as agent and they had all appointed the same alternative letting agent.  All of those units had been sold by Metro with the assistance of one real estate agent, who appeared to have directed them all to the other letting agent.  Tessa’s solicitors requested that Metro deal with the agent, as its “Associate” as defined in the MRBPA, requiring it not to direct owners to another letting agent.  The next day, Mr Tutt emailed a copy of the letter to Mr Hartman, asking him to “action it” that day.[109]  
  3. [173]
    While not directly relevant, Metro’s counsel relied on this demand as evidence that Tessa would enforce its rights under the procurement agreement and, implicitly, would have insisted on - and been prepared to pay Metro for - the procurement of its appointments to Forum’s units; thus demonstrating that there was a substantial likelihood that Tessa would have accepted appointment to manage Forum’s units and paid Appointment Amounts to Metro. 
  4. [174]
    I do not accept that submission.  Tessa had already secured the appointments the subjects of the letter, which were from several owners.  Of course it did not want to have Metro’s agents directing owners to another agent.  However, that did not indicate a change to the negative attitude of Tessa to the proposition that it be appointed as letting agent for a large number of Forum units at a 5% commission.
  5. [175]
    By June 2019, Tessa was clearly not interested in being appointed to manage a large number of units for one owner, especially at a commission rate of 5%.  It did not respond genuinely to Forum’s attempts to obtain a proposal from it.  That is not surprising, as it seems clear that the commercial benefit to it of paying Metro the Appointment Amount for each unit was that in most cases it was likely that, once it was appointed for an initial period, it would remain the letting agent for a unit as long as it continued to do a reasonable job.  It was only when it remained the letting agent for a number of years that it could recoup the capital sum it outlaid in the Appointment Amount and begin to profit from its appointment for a unit.  Although some owners may decide to appoint someone else as their letting agent, the loss of only a few owners (and consequently a few units) was not a substantial commercial risk to Tessa.  However, where one owner owned a substantial number of units, if Tessa was appointed to manage all those units there was a risk that Tessa would lose a substantial income (and the benefit of the substantial capital outlay that it had made) if the owner decided to appoint someone else after an initial 12 month period.
  6. [176]
    That this was so was clear from Mr Tutt’s emails to Mr Hartman in March 2019 about Tessa’s bank’s refusal to fund appointment amounts for a large number of units owned by one person.  The bank’s position was a sensible commercial position that recognised the substantial risk to Tessa if one owner of a large number of units withdrew its appointment of Tessa after only one year.
  7. [177]
    This proposition apparently became clear to Tessa no later than in March 2019, when Tessa had obviously discussed with its bank whether the bank would lend it sufficient funds to enable it to pay Appointment Amounts for a large number of units owned by one entity.  That discussion was in the very context of Metro negotiating to sell to one owner all of its unsold units.  As Mr Tutt said in his emails of 14 March 2019,[110] the value of appointments for multiple units at 5% was much less than that of one or a few appointments at Tessa’s normal fee of 8%.  While not evidence of the bank’s actual view, it appears that Mr Tutt had been told that the bank attributed no value to such an arrangement.  That is not surprising, given the risk involved in having one owner for multiple appointments and the lower commission that Metro was proposing that a new owner would pay. 
  8. [178]
    Metro submitted that regard must be had to Tessa’s obligation under the MRBPA to use its best endeavours and to cooperate with Metro to procure the maximum number of appointments as letting agent by unit owners.  Counsel submitted that, to fulfil that obligation, Tessa would have been obliged to accept any appointments offered to it by Forum and thus to pay Appointment Amounts to Forum for all such appointments.  They submitted that this was important to Metro and had been confirmed by HWLE in March 2019, when Ms Leacy advised that the MRBPA “does not make a distinction between different types of owners/buyers [and] provided an owner of a Lot signs a PO Form 6 appointing Tessa as their letting agent in relation to a Lot, Tessa must pay for that appointment.”[111]
  9. [179]
    I agree that I must have regard to Tessa’s obligations under the MRBPA.  However, with respect, I disagree that those obligations would have required it to accept an appointment offered by Forum to manage all (or a substantial number) of the Forum units that Forum wished to let out, particularly at a commission rate of 5%.  A “best endeavours” clause does not oblige a party to do “whatever it takes” to satisfy the condition.[112]  It does not oblige the person to go beyond the bounds of reason.  The person is obliged to do all that the party reasonably can in the circumstances to achieve the contractual object, but no more.[113]
  10. [180]
    Tessa’s obligations under the MRBPA did not oblige it to accept appointments in numbers and at commission rates that would be inadequate for its commercial purposes.  In particular, they did not require Tessa to offer or to accept appointments at a commission rate of 5%, nor to offer or to accept appointments for multiple units owned by one person. 
  11. [181]
    Metro relied in part on clause 9.4 of the MRBPA, which provided that:

The Manager must accept Appointments and perform, so far as it reasonably possible, its obligations under the Appointments (including sourcing tenants), notwithstanding that:

  1. (a)
    Settlement has not been effected;
  1. (b)
    the Body Corporate has not yet authorised the carrying out of the Management Rights Business; and
  1. (c)
    anything else required for the operation of the Management Rights Business may not be in place.
  1. [182]
    However, in my view it does not assist.  It only applied to the situation before settlement of the MRBPA. Even if that were not so, it cannot have meant that Tessa must accept appointments on whatever terms are offered to it.  Such a construction would be unrealistic and uncommercial, contrary to the general approach to the construction of commercial contracts:  a clause in such a contract must be considered in the context of the contract as a whole, set in its surrounding circumstances.  Meaning is determined objectively, by reference to text, context and purpose and, unless a contrary intention is indicated, the contract (and a provision within it) will be interpreted on the assumption that the parties intended to produce a commercial result.[114]  Its effect was not that Tessa must accept all appointments offered to it on whatever terms they were offered. 
  2. [183]
    Except in one respect, the MRBPA did not provide for the terms on which appointments must be offered by Tessa to owners of lots (or which it must accept), including the letting fee to be charged by Tessa.  Tessa was responsible for the preparation, issuing and procuring signing of appointments.[115]  The only obligation on Tessa concerning the terms of an appointment was that it could not, without Metro’s consent, seek appointments that provided for owners to pay, among other things, a combined commission and management fee of more than 8% plus GST of the rental payable.[116]  Otherwise, the terms of appointments were within Tessa’s discretion.  Clearly, in exercising that discretion, it was entitled to have regard to its legitimate and reasonable commercial interests.  It was not obliged to offer, nor to accept, an appointment on terms that, in its reasonable opinion, were not commercially reasonable or acceptable.  In determining whether to offer or to accept an appointment, Tessa was obliged to act reasonably, but it was certainly entitled to take into account the capital cost of securing the appointment (that is, the obligation to pay Metro an Appointment Amount), the period of the proposed appointment, the income that the appointment may generate, whether such an appointment was likely to be profitable and any risks involved in accepting the appointment, particularly if it was among a number of appointments by one owner.  It was also entitled to take into account the attitude of its financier to funding Appointment Amounts that Tessa would be obliged to pay if appointed as letting agent.
  3. [184]
    When Tessa became aware of its bank’s view of the proposal to accept appointment by one owner as letting manager of up to 54 units, it proposed a number of potential solutions to Metro.[117]  As counsel for HWLE point out, Metro did nothing to advance any of those proposed solutions, but instead negotiated with Forum on the basis of Forum paying the letting agent a maximum commission rate of 5% (well below the cap of 8% contemplated in the MRBPA).[118]  Metro was not itself in breach of the MRBPA by those actions,[119] but nor would Tessa have been in breach by not accepting appointments on those terms, provided that it acted reasonably in doing so.
  4. [185]
    In all the circumstances, I consider that Tessa would not have been in breach of its obligations under the MRBPA by not accepting any appointment offered to it by Forum for multiple units, especially at a commission rate of 5%.  It is clear that Forum was looking to appoint a letting agent at a 5% commission, as had been proposed in the Tessa provision in the Final EOI.  Ultimately it appointed McGrath at that rate. 
  5. [186]
    Metro submitted that it is relevant to Tessa’s ability to pay Appointment Amounts for all the Forum units that, in the Services Agreement between Forum and McGrath, the schedule provided for the letting of units to be staggered over 12 months.[120]  Therefore, counsel for Metro submitted, appointments of Tessa to manage the letting of those units would be similarly staggered and it would only pay for the appointments made as at each review date.
  6. [187]
    With respect, even if the actual rental of units was planned to be staggered, that does not mean that the appointment of a letting agent was to be similarly staggered.  It is more likely that Forum would appoint an agent at one time to let all its units (or all those the subject of the appointment of that agent) by one appointment agreement (as it ultimately did with McGrath).  Tessa’s liability to pay Appointment Amounts for all the units to which it had been appointed would then arise, in one lump sum, at the review date following its appointment.
  7. [188]
    This submission also overlooks that the issue raised by Tessa and its bank about the value of multiple appointments was not simply concerned with situations where one owner offered a large number of appointments at one time, but more particularly the risk arising from there being one owner of many units for which Tessa was appointed.  Even if the actual appointments were staggered over, say, twelve months (in accordance with McGrath’s letting schedule), for Tessa to be appointed as agent for all those units over that period would result in Tessa being the letting agent of many units held by one owner and therefore at risk of losing the agency of all those units over the following twelve months (as the appointments were only required to be for twelve months).  That risk, which appears to have been the predominant factor in the reluctance of Tessa and its bank to accept a large number of appointments from one owner, would therefore still arise.

The Apax contract

  1. [189]
    Metro also submitted that the Apax contract changed Tessa’s financial position and its ability (and the prospect that it would have decided) to accept, and to pay Metro Appointment Amounts for, multiple appointments by Forum.
  2. [190]
    As I have discussed earlier,[121] it is not clear how the Apax contract and the MRBPA were intended to interact. The contract referred to the MRBPA and appeared to acknowledge that Tessa would continue to be bound to pay to Metro an Appointment Amount for any new appointment of Apax as letting agent for a unit in Capri.  It provided that Apax would pay Tessa the amount of $16,302.45 (also referred to as an Appointment Amount) for each new appointment of Apax as letting agent. However, as I have recorded above, it limited that obligation to its appointment to a maximum of four units by one owner.[122]  Above that number, the appointment amount was to be negotiated and, if not agreed, Tessa would “be entitled to continue to be the letting agent to manage those lots.”  In such a case, Tessa was not prevented by a non-compete clause in the contract[123] from acting as letting agent for those units, but Apax was prevented instead from seeking appointment to any of those units.  How that would work in fact is not clear, given that it only applies to appointments of Apax already made at each review date, so Apax would already be the appointed letting agent and the owner would not be obliged to appoint Tessa in lieu of Apax. 
  3. [191]
    Metro submitted that this sale agreement changed Tessa’s financial and funding landscape from its position in March 2019, so that it would have been “incentivised” to secure the appointment of Apax to Forum units and it could have paid Metro for those appointments from the proceeds it received from Apax.  Therefore, not only was a Tessa provision a valuable commercial opportunity, but there is a strong likelihood that Tessa would have paid Metro an Appointment Amount for all, or a substantial number of, the Forum units.
  4. [192]
    With respect, the lack of clarity in the way the Apax agreement (requiring the appointment of Apax as letting agent and preventing Tessa from accepting appointments) and the MRBPA (requiring the appointment of Tessa), together with the limit on the number of appointments for which Apax was obliged, if it accepted them from one owner, to pay Tessa an Appointment Amount does not make this at all clear.  There is no evidence that Apax did in fact receive any new appointments and paid Tessa for any appointments.  I infer, from the fact that McGrath was appointed as letting agent for all Forum’s units, that Apax was not appointed by Forum to manage any of its units.  A Tessa provision would not have obliged Forum to appoint Apax as its letting agent and Apax is unlikely to have accepted appointments for any more than a small number of units, if they had been offered to it.  That would have meant that it would not have had to pay Tessa for any large number of units.  It would not, therefore, have been a source of substantial funds that would have enabled Tessa to pay Metro for appointments to manage Forum units.
  5. [193]
    The Apax contract does not, therefore, add to the prospect that Tessa would have paid any Appointment Amounts to Metro for Forum units.  Indeed, if anything the “non-compete” clause tends to reduce the likelihood that Tessa would have accepted any Forum appointments (or at least fewer than five), as to do so would have been in breach of that obligation to Apax.

Other lenders to Tessa?

  1. [194]
    Metro submitted that it is possible that lenders other than the Commonwealth Bank would have been prepared to fund Appointment Amounts for a substantial number of appointments by Forum.[124]  That is purely speculative and there is no evidence from which it might be inferred.  I reject that submission.

Conclusions

  1. [195]
    I consider it inevitable that, if Forum had offered a letting agency to Tessa for all its units, Tessa would have declined.  On the other hand, there is a reasonable possibility that Tessa would have offered to accept appointment for a few of the units, as I discuss below.  Tessa had been willing to accept appointments for up to eight units at 5% commission in the past.  Tessa appeared to accept that such an arrangement had sufficient value, whereas above ten units was too risky a proposition.  Given the content of the Tessa provision, I doubt that Forum would have agreed to appoint Tessa at a higher commission rate than 5%, but it may well have agreed to appoint Tessa to let only some of its units.  This is especially so given that, under the McGrath letting plan, Forum proposed to stagger the letting of its units over some months.

Amount of loss

  1. [196]
    Having regard to those matters, it becomes necessary to assess the value of Metro’s lost opportunity.  This is done by reference to the possibilities and probabilities that, in the light of a contractual Tessa provision, Forum would have appointed Tessa as its letting agent for at least some of its units and Tessa would have accepted, and paid Appointment Amounts to Metro for, those appointments. 
  2. [197]
    Metro ultimately submitted that its loss should be calculated in the following manner.
    1. (a)
      Early in its closing submissions,[125] in an overview of its case Metro submitted that, as Forum appointed McGrath as letting agent for all the units it had bought, if instead Tessa had been appointed as agent for the units it would have paid Metro $848,588.40.  Accepting that a substantial discount should be applied to reflect the contingencies involved in that occurring, Metro submitted that the Court should assess the prospect of the plaintiff earning that sum at 50% and award damages of $424,294.20.
    2. (b)
      Later in its submissions, Metro promoted another reasoning process to reach a different result.[126]  It submitted that there was a reasonable prospect that, had a Tessa provision been included in the sale contract, Forum would have appointed Tessa and Tessa would have accepted that appointment for at least some of the units to be rented by Forum.  Tessa had, in the past, accepted bulk appointments for up to eight units having the same owner.  Up to that level (indeed, up to 10 units) at least, there was sufficient value in such appointments, even at 5% commission.[127]  Therefore, there is a high degree of certainty that Tessa would have been offered and accepted at least 10 appointments in the September 2019 quarter.  Additionally, if Apax had been offered and accepted appointments, it would have paid Tessa appointment amounts for those appointments, which Tessa may have applied to itself securing further appointments.  Finally, Metro submitted, there is a prospect that Tessa would have taken up appointments for some of the remaining Forum units.  All up, it is probable that Tessa would have taken 26 appointments which, at $14,286 plus GST each, would total payments to Metro of $424,294.20.[128]
    3. (c)
      Then, Metro submits, to determine the amount of the compensable loss, the Court should refer to the degree of probabilities or possibilities of these hypotheses and discount the maximum loss that it has demonstrated by 50%.  That would result in damages of $212,147.10.[129]
  3. [198]
    Although ultimately Forum appointed McGrath as letting and sales agent for all 54 units, I consider it unlikely that, if it had appointed Tessa as its letting agent instead of McGrath, it would have appointed it to let out all the units.  McGrath was already Forum’s national portfolio manager and had proposed a letting and sales schedule that had been agreed to, at least tentatively as a budget.  The best evidence[130] is that Forum may have looked to let out 32 units at most.  For the purpose of calculating Metro’s loss, that is a practical limit, based on the best evidence, of the number of possible appointments of Tessa by Forum.
  4. [199]
    However, I consider it unlikely that Tessa would have accepted appointment to more than 10 units, given its view and that of its financier of the uncommercial risk and value of taking more than that number of appointments from one owner.  Furthermore, there is no evidence that would suggest, let alone demonstrate, that Apax would have had any different view.  Indeed, the limit in the Apax agreement of four units per owner demonstrates that it would have had a similar (indeed, more conservative) view.
  5. [200]
    Metro’s submission that Apax would have accepted more appointments and paid Tessa money that Tessa would then have used to take on further appointments is pure speculation that does not come near the realm of “probabilities and possibilities that arise on the evidence”.  The proposition that Tessa would have then sought to become the letting manager for still more units, if Apax declined to take them up, is even more speculative, especially as Apax was not obliged to accept any appointments and Tessa was prohibited from taking any appointments to manage Capri units except in the unlikely circumstances provided for in clause 12.6(c)(ii).
  6. [201]
    I consider that there is some possibility that Forum would have agreed to appoint Tessa, which would have accepted its appointment, as agent for up to ten of the units (on the basis that Apax would have declined that number of appointments).  Had that occurred, Tessa would have paid Metro up to ten appointment amounts.  Despite its bank’s concerns about value, those concerns appear to have arisen where more than eight or ten units were owned by one person, as that gave rise to the risk that Tessa would lose a substantial income stream.  I consider it likely that either the bank would have lent Tessa sufficient money to pay up to ten Appointment Amounts, or Tessa would likely have had the resources to pay them in any event.
  7. [202]
    At most, therefore, Tessa may have paid Metro an Appointment Amount for 10 units, totalling $142,860 plus GST.  However, given its clear reluctance to accept Forum appointments at 5% after its bank rejected that commission rate as “bankable”, the uncertain effects of the Apax contract and Tessa’s reaction to being invited by Forum to put in a letting proposal in June 2019, I consider the likelihood of that occurring is low.  There is a higher likelihood that it would have accepted appointment for five units, but there is some doubt whether Forum would have been prepared to offer such a limited number of appointments to Tessa.  The effect of the Apax agreement makes either likelihood even more uncertain.  To put it another way, it is unlikely that Tessa would have accepted appointments for more than five units, in which case it would have paid Metro $71,430 plus GST, but the probability that Forum would have offered that number of appointments is itself low.  The latter, though, is to be balanced against the possibility that Forum would have offered and Tessa would have accepted appointment to ten units.
  8. [203]
    Taking into account all these possibilities and probabilities, therefore, I assess Metro’s loss as a result of a Tessa provision not being included in the sale contract as amounting to $71,430.  I do not include GST in, nor add it to, this sum, as any GST would have been payable by Metro to the Commonwealth.  Unless Metro were obliged to pay GST on any award of damages to it by this Court, then it has not suffered a loss of the amount of GST that Tessa would have paid it.

Did HWLE’s negligence cause any loss suffered by Metro?

  1. [204]
    HWLE will only be liable to Metro for damages in tort, and for more than nominal damages in contract, if its negligence caused that loss.
  2. [205]
    HWLE contends that Metro (by Mr Hartman) decided to instruct Mr Warat to execute the sale contract on behalf of Metro notwithstanding that Mr Hartman knew that the contract did not include the clause and despite Mr Warat’s advice that Forum had a complete discretion as to the appointment of a letting agent.  Therefore, the absence of the Tessa provision was caused, not by HWLE’s negligence in not including it in the draft contract, but by Mr Hartman’s decision to give that instruction to Mr Warat in the knowledge that there was no such provision and that Forum would not be obliged to appoint Tessa as its letting agent.
  3. [206]
    Mr Hartman said in his evidence that, despite Mr Warat’s advice, he believed that the Tessa provision in the Final EOI was binding on the parties.  I have rejected that evidence.[131]  In any event, Mr Hartman did not tell Mr Warat that that was his belief, nor did he seek advice as to whether it was correct. 
  4. [207]
    HWLE submitted that, even if Mr Hartman had that totally unreasonable belief, if Metro entered into the agreement on the basis of that belief, despite knowing that there was no Tessa provision in the final contract and that it was Mr Warat’s advice that Forum had a complete discretion as to whom it might appoint as its letting agent, then Metro (by Mr Hartman) made a conscious decision to enter the contract on that assumption and (as Mr Hartman said in his affidavit) despite Mr Warat’s advice.  In other words, he did not rely on Mr Warat’s advice at all – and therefore that advice did not cause the loss.  Mr Hartman knew that the Tessa provision was not in the contract, but he decided to instruct Mr Warat to execute the option deed anyway.
  5. [208]
    In those circumstances, HWLE submitted, this case is relevantly indistinguishable from a recent case in New South Wales,[132] where the plaintiff knew that the bank had not followed his instructions to redeem certain investments and decided not to reiterate his instructions but to hold onto the investments, which subsequently lost considerable value.  Here, HWLE submitted, its negligence gave rise to a prospective loss to Metro (that is, the loss of the opportunity to include a Tessa provision in the sale contract).  But Metro knew of that negligent act and its potential consequences.  Mr Hartman had a ready means to overcome those consequences (by instructing Mr Warat to reopen negotiations to include a Tessa provision in the contract).  He decided not to do so for reasons of his own, despite that knowledge and “despite” Mr Warat’s advice.  Therefore, his decision was an independent and informed decision that resulted in the Tessa provision not appearing in the contract.  In the circumstances, the loss cannot be attributed to HWLE.
  6. [209]
    Metro submitted that Mr Hartman’s decision to instruct Mr Warat to execute the option deed was not a free, deliberate and informed decision that broke the chain of causation from Mr Warat’s negligence in misreading the Tessa provision, leading to him not including it in the sale contract and advising Mr Hartman as he did.  If Mr Warat had followed Metro’s instruction to draw contracts consistent with the Final EOI, he would have included a Tessa provision in the sale contract, there would have been no occasion for any discussion about its inclusion or effect, nor for Mr Hartman to have to consider whether to proceed without a Tessa provision.  Therefore, Mr Warat’s initial negligence in not including the provision, supplemented by his later negligent advice that there was no call for such a provision, were the direct causes of its absence from the contract and therefore of Metro’s loss.
  7. [210]
    Metro also submitted that an intervening decision of a client will not break the chain of causation from a solicitor’s negligent act if the solicitor’s contractual or tortious duty of which the solicitor is in breach was to guard against the very act that occurred, or where the solicitor’s wrongful conduct generated the very risk of injury resulting from its negligence and that injury occurs in the ordinary course of things.[133]  Here, HWLE’s duty of care involved protecting Metro’s interests in drafting and advising on the terms of the contracts with Forum and its negligence involved a clear failure to protect those interests.  That failure exposed Metro to the act (Mr Hartman’s decision) that HWLE now contends broke the chain of causation. 
  8. [211]
    If the latter submission were correct, then the plaintiff should have succeeded in Chand, because the plaintiff only had the opportunity to make his decision to hold onto the investments because of the defendant’s negligent failure to follow his earlier instruction to redeem them.
  9. [212]
    In this case, Mr Warat’s failure to include a Tessa provision in the contract was not a cause of Mr Hartman’s decision to instruct him to proceed without it.  Mr Hartman made that decision in any event, for his own reasons.  The assumption that Mr Hartman said he made – that the Tessa provision in the Final EOI was binding on Forum - was not one that any solicitor in Mr Warat’s position would have expected Metro or Mr Hartman to have made in the circumstances, particularly in light of Mr Warat’s incorrect advice about its effect.  Nor did Mr Hartman seek Mr Warat’s advice whether his assumption was correct.  I have no doubt that, if Mr Hartman had said to Mr Warat that he believed that the Final EOI created a binding obligation on Forum notwithstanding that there was no Tessa provision in the sale contract, Mr Warat would have advised him that that was incorrect and that, if he wanted Forum to be bound by such a clause, it would be necessary to include a clause in the contract. 
  10. [213]
    In any event, I find that Mr Hartman was prepared to, and knowingly did, cause Metro to enter into the option deed without a Tessa provision in the sale contract.  He and his fellow directors were keen to get Forum committed to purchase the remaining units in Capri.  Forum had already withdrawn from negotiations on one occasion.  Mr Woodley had identified a risk that property prices may fall and thereby increase the loss that Metro then anticipated it would suffer on the development overall.  Mr Hartman and his fellow directors wanted to offload the balance of the units and the risks that went with them as soon as reasonably possible.  Mr Hartman’s later explanation to Mr Warat in the disputed telephone conversation reflected his true position:  Metro was keen to sell the units to Forum.  Any Appointment Amounts it might thereafter receive from Tessa were simply icing on the cake.  Indeed, Mr Hartman knew that the prospects of receiving any such amounts from Tessa, except perhaps for a few units, were negligible given what he had been told by Mr Tutt about both Mr Tutt’s and Tessa’s bank’s views on being appointed as agent for a large number of units owned by one party.  Therefore, at most Metro was giving up the prospect of receiving relatively few further Appointment Amounts from Tessa for the more certain and valuable prospect that Forum would exercise its option and Metro would quickly rid itself of a large number of unsold units and the risks of continuing to hold them.
  11. [214]
    Mr Hartman was prepared to take the risk that Tessa would not be appointed and therefore would not be liable to pay Appointment Amounts to Metro for any or all of the Forum units.  His priority was to commit Forum to a short period within which to decide whether to exercise its option, in the expectation that it would do so and Metro would have successfully sold the balance of units and thus completed that development.  He knew that Forum had no obligation, under the sale contract, to appoint Tessa.  I consider that he also knew that the Final EOI was not binding.  He decided nevertheless to instruct Mr Warat to execute the Option Deed. 
  12. [215]
    This conclusion is fortified by the fact that, despite Metro originally telling Forum that “any sale would need the stock to sign Form 6 – rental with on site manager,”[134] when Forum provided the Capri EOI, which did not include a Tessa provision, Metro accepted it and instructed Ms Leacy to prepare contracts based on it.  That is what she did and those documents were the basis of the contracts drawn by Mr Warat.  Metro’s willingness to accept an EOI and to instruct HWLE to draw contracts without a Tessa provision[135] are further indications that a Tessa provision was considered desirable but not essential to a contract of sale with Forum. 
  13. [216]
    Metro therefore entered into the option deed (and consequently the sale contract) as a result of Mr Hartman’s conscious decision to do so knowing that it contained no Tessa provision and that Forum had no obligation to appoint Tessa. 
  14. [217]
    Consequently, although Metro did lose a valuable commercial opportunity by the exclusion of a Tessa provision in the sale contract, it did so as a result of its own considered decision despite, not as result of, Mr Warat’s incorrect advice and knowing that the sale contract did not include a Tessa provision.  That decision broke any “chain of causation” between HWLE’s negligence and Metro’s loss.
  15. [218]
    Therefore, the loss of that commercial opportunity was not caused by HWLE’s negligence and breach of contract.

Conclusions

  1. [219]
    HWLE was negligent in not including a Tessa provision in the sale contract and in advising Metro that, under the Final EOI, Forum was to have a complete discretion as to who it may appoint as its letting agent.
  2. [220]
    Metro knew that the provision was not in the contract and decided to proceed in any event, knowing that the Final EOI imposed no binding obligation on Forum. 
  3. [221]
    If (contrary to my finding) Metro (by Mr Hartman) believed that the Final EOI was binding, that was not a belief instilled or supported (nor indeed known) by Mr Warat and Metro (by Mr Hartman) held that belief and acted on it despite Mr Warat’s advice and knowing that there was no Tessa provision in the contract.
  4. [222]
    Metro therefore consciously entered into the Option Deed, without a Tessa provision, despite HWLE’s negligence and because of its own free and informed decision.  Any loss it suffered as a consequence was not caused by HWLE’s negligence, nor its breach of its retainer.
  5. [223]
    If I were wrong in those conclusions, Metro’s loss would be no greater than $71,430. 
  6. [224]
    Metro has not claimed nominal damages for breach of contract, so I shall not award any such damages.
  7. [225]
    Therefore, Metro has failed to prove its claim, which should be dismissed.  Subject to any submissions to the contrary, the plaintiff should pay the defendant’s costs of the proceeding.

Footnotes

[1]  The MRBPA is in exhibit 1 (the trial bundle of agreed documents), TB153-270.

[2]  Whether such a clause would or may have been included in the contract of sale of the units to Forum and what it would have provided are contentious issues.

[3]  TB295-297.

[4]  TB294.  In this and other quoted emails and other documents, I have included the typographical and grammatical errors in the originals.

[5]  “Form 6” is a prescribed form for the appointment of a resident letting agent under the Property Occupations Act 2014.

[6]  TB302-304.

[7]  TB305-307.

[8]  The words were all in upper case in the document.  I have not included all the opening words, but only those directly relevant to the issues in this proceeding.

[9]  TB309-313.

[10]  TB321E-321G.

[11]  TB316.

[12]  This is admitted on the pleadings, although there is no evidence to that effect and the documents are not in evidence.  The defendant refers to the draft documents as the Transaction Documents, a term that I shall adopt.

[13]  TB361-364, referred to by the plaintiff in its statement of claim as the “Revised EOI”.

[14]  TB365.

[15]  TB365-368.

[16]  TB369.

[17]  TB377-379.  The covering email is at TB376.

[18]  TB376.

[19]  This amount was payable “per Appointment” and “Appointment” was defined as a PO Form 6 appointing Tessa as the owner’s letting agent “in relation to a Lot.”  There is no dispute in this proceeding that, if one appointment were made by an owner in respect of more than one unit, Tessa would be obliged to pay an Appointment Amount for each unit to which the appointment related.

[20]  That is, an appointment by an owner who had not previously appointed it as the owner’s letting agent: presumably, for the particular unit.

[21]  TB279-280.

[22]  Mr Hartman referred to that as Tessa’s standard 8% management fee in an email of 28 September 2018 to the proposed purchaser of 8 units: TB284.

[23]  In September 2018, 8 units to Solido Investment Nominees Pty Ltd – TB791-910; in December 2018, 5 units to Blue Gum Investments (Australia) Pty Ltd – TB911-978; in January 2019, 5 units to Dr Simmons Family Pty Ltd – TB979-1063.

[24]  TB286.

[25]  Affidavit of Mr Hartman affirmed on 8 June 2021 (first Hartman affidavit, commencing at TB76), [38].

[26]  TB327.  “CC” in the heading clearly means “Como & Capri”:  that is, both proposed towers.

[27]  First Hartman affidavit, [57].

[28]  TB342.

[29]  TB341-342.

[30]  These emails are at TB340-341.  The times showing on the emails at first glance do not follow chronologically, but they appear to be a mix of Brisbane and Sydney times.

[31]  TB339.

[32]  TB323.

[33]  TB322-323.  As will become clear, I consider that her advice to the effect that Tessa must accept and pay for all appointments (however many units with one owner are the subject of an appointment) was wrong, which is relevant on the issue of damages.

[34]  TB344-345.

[35]  TB344.

[36]  First Hartman affidavit, [59]-[61].

[37]  See [178]ff below.

[38]  TB366-367.

[39]  TB368.

[40]  TB625-664.

[41]  Standard clause 13.1.

[42]  TB380.

[43]  TB381-382.

[44]  First Hartman affidavit, [75], TB91.

[45]  TB391-530; first Hartman affidavit, [78], TB92.

[46]  That is the “Transaction Documents” referred to by HWLE in its defence.

[47]  TB392.

[48]  Special condition 47.2(d):  TB613 (in draft), TB701 (executed).

[49]  Those drafts are not in evidence.

[50]  That may or may not be the case.  Given the distinction between “the Buyer” and “a buyer”, it may actually mean that, if Forum on-sold a unit to a buyer, that buyer would be under no obligation to use Tessa as its own letting agent.  If so, then it is not inconsistent with a Tessa provision.

[51]  The emails appear in the trial bundle in various places, not in one discrete chain, between TB551 and 566 inclusive.  Deposed to in the first Hartman affidavit, [79], TB92-94.

[52]  First Hartman affidavit, [79](b).

[53]  Affidavit of Mr Warat affirmed on 7 July 2021, [35]-[38], TB106.

[54]  Affidavit of Mr Hartman affirmed on 26 July 2021 (second Hartman affidavit), [4]-[10], TB111.

[55]  Warat affidavit, [39], [40], TB106.  The agreement is at TB571-624.

[56]  T3-52; T3-53; T3-54; T3-55; T3-58; T3-59 to 3-60.

[57] Griffiths v Evans [1953] 1 WLR 1424, 1428 (Denning LJ, in dissent).  His Lordship went on to say that “If the solicitor does not take the precaution of getting a written retainer, he has only himself to thank for being at variance with his client over it and must take the consequences.”  Other cases have applied that policy to the absence of notes of instructions, not just the creation and terms of a retainer.  It has also been said that, where there is a conflict between the evidence of solicitor and client, “it is not surprising that there should be some leaning towards the interests of the supposedly more ignorant party:” Meerkin & Apel v Rossett Pty Ltd [1998] 4 VR 54, 66.

[58]  As occurred, for example, in Legal Services Commissioner v Rowell [2013] QCAT 397, [18].

[59] Adamson v Williams [2001] QCA 38, [20]-[21].

[60] Dew v Richardson [1999] QSC 192, [10]; Howarth v Miotti [2009] QSC 96, [68].

[61]  Filed in response to Mr Warat’s affidavit in which, among other things, Mr Warat gave evidence about the alleged telephone call:  TB110 at [4]-[10].

[62]  Warat affidavit, [36], TB106.

[63]  This series of emails is at TB734-736.

[64]  Any evidence that Mr Warat told them about the conversation in July 2019 may have been admissible in rebuttal of the assertion to Mr Warat that he was mistaken about the conversation, which implied an assertion that he had consciously or subconsciously invented it: Evidence Act 1977, s 101(1)(b); Nominal Defendant v Clements (1960) 104 CLR 476, 479-480, 490, 494-495.  HWLE’s failure to call them without explanation could lead the court to infer that their evidence would not have assisted HWLE in this respect, but no submission to that effect was made by counsel for Metro.

[65]  See, for example, the discussion at [35] to [46] above about his email exchanges with Mr Tutt about Tessa allegedly agreeing to undertake management of Forum lots at 5% commission and then about its bank being unwilling to fund Appointment Amounts after a bulk sale.

[66]  As recorded in [48] and [49] above (and the defendant’s submissions [113]-[119], [126], [131]).

[67]  First Hartman affidavit, [88]; TB716.

[68]  The agreement is at TB776-787.  I say “apparently” because the agreement is not dated, but Mr Biggins told Mr Hartman on 6 June that Forum had appointed McGrath as its national portfolio manager.

[69]  TB785.

[70]  This description and definition are in clause 1.1 at TB777.

[71]  TB759-770.

[72]  I refer to 12 months because the Tessa provision only proposed that Forum appoint Tessa for 12 months, although of course such an appointment could have continued beyond that period.

[73]  Further amended statement of claim, particulars of [45].  As it was pleaded as particulars, not a material fact, HWLE did not respond to it in its defence.  In any event, as will become clear, Metro ultimately did not rely on the possibility that Tessa would have been appointed to 44 or even 54 lots.

[74]  As I discuss later, in its closing submissions it substantially changed the manner in which it calculated its loss.

[75]  TB1064.

[76]  TB716. 

[77]  TB714.  Ms Leacy does not appear to have responded to Mr  Hartman’s emails.

[78]  This email and the response are at TB723.

[79]  That is, the son of Mr Woodley who is a director of Metro.  Ken Woodley was the Senior Development Manager of Metro.  This email and Mr Hartman’s response are at TB719.

[80]  TB726.

[81]  These and the following email are at TB728-729.  Mr O'Brien QC informed me, without objection, that Newpoint Advisory were “a company advising and acting for Forum”: T1-73:22-23. It was referred to by Mr Faulk as Forum’s “asset manager:”  TB751 email from Mr Faulk of Forum to Mr Hartman, set out at [111] below.

[82]  TB727.

[83]  TB730-731.

[84]  TB732-733.

[85]  This exchange of emails is at TB742-746. 

[86]  TB752.

[87]  TB751-752.

[88]  TB750.

[89]  The advice is at TB754 and the letter at TB757-758.

[90]  Warat affidavit [51]-[52], TB108-109.

[91]  Relying on the principles in Jones v Dunkel (1959) 101 CLR 298, 308, 312, 320-321:  defendant’s closing submissions, [17]-[63].

[92]  First Hartman affidavit, [21].

[93]  HWLE relied in this respect on obiter dicta in Manly Council v Byrne [2004] NSWCA 123, [72].

[94]  TB551.

[95]  Warat affidavit, [32](b); TB105.

[96]  First Hartman affidavit, [79](c), (d).

[97]  For example, his keenness to have contracts ready for execution promptly:  TB380; TB381-382; TB385; TB389; TB402.

[98]  TB366; see [48] above.

[99]  Email at 6.02pm, TB551.

[100]  Further amended statement of claim, [41], [42A].

[101]  Further amended statement of claim, [42], [42B], [44], [45].

[102]  Further amended statement of claim, [46], [46A].

[103] Sellars v Adelaide Petroleum NL (1994) 179 CLR 332, 355, 364; Malec v JC Hutton Pty Ltd (1990) 169 CLR 638, 643; recently summarised by McMurdo JA (Philippides JA and Boddice J agreeing) in Principal Properties Pty Ltd v Brisbane Broncos Leagues Club Ltd [2018] 2 Qd R 583, [13].

[104]  Plaintiff’s closing submissions, [94]-[117].

[105]  Defendant’s closing submissions, [372]-[390]; defendant’s submissions in reply, [1]-[28].

[106] Badenach v Calvert (2016) 257 CLR 440, [39]-[41] (citations omitted).

[107]  cf Heenan v Di Sisto [2008] NSWCA 25, [27].

[108]  At [179]-[183].

[109]  TB712-713.

[110]  See [36] and [37] above.

[111]  See [41] above.  Defendant’s closing submissions, [27], [32].

[112] Williamson v JJA Holdings Pty Ltd [2011] QSC 84, [49].

[113] Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, 64.

[114]  As most recently expressed in Markel Syndicate Management Ltd v Taylor [2021] FCAFC 198, [6].

[115]  Clause 9.3, TB162.

[116]  Clause 9.10, TB163.  That clause was clearly intended to ensure that Tessa sought appointments on commercially realistic terms.

[117]  TB341-342, 14 March 2019.  See [37] above.  By those proposals, Tessa appears to have been attempting to look at ways to maximise the number of Appointments it was reasonably able to accept.

[118]  Defendant’s closing submissions, [279]-[281].

[119]  Metro did not have any similar obligation to use its best endeavours to procure Tessa’s appointment as letting agent.  Its only material obligations (other than to have Tessa appointed as manager of the scheme) were to use its reasonable endeavours to instruct and control its sales agents and employees to introduce Tessa as the letting agent for the scheme and to ensure that Tessa was introduced to purchasers of lots as the letting agent:  clauses 12.2(b) and (j).

[120]  Plaintiff’s closing submissions, [163]-[169] and [174]-[176].

[121]  At [53]ff above.

[122]  According to exhibit 3, the Apax contract included that cap on how many appointments Apax must accept from one owner as Apax’s bank would not lend on bulk-sale apartments.  I do not take that into account as there was no direct evidence of that.

[123]  Clause 13 of the Apax contract.

[124]  Plaintiff’s closing submissions, [179].

[125]  Plaintiff’s closing submissions, [10].

[126]  Plaintiff’s closing submissions, [188]-[195].

[127]  Metro relies for this proposition on Mr Tutt’s email of 20 March 2019, TB344-345.  See [42] above.

[128]  That figure is incorrect, as it accounts for 27 units, not 26.  The figure for 26 units is $408,579.60 (inclusive of GST).

[129]  Using the correct figure for 26 units, that sum would be $204,289.80.

[130]  See [92] to [94] above.

[131]  [132]-[135] above.

[132] Chand v Commonwealth Bank of Australia [2014] NSWSC 708, particularly at [298] and [302]; affirmed in Chand v Commonwealth Bank of Australia [2015] NSWCA 181.

[133]  Relying on Medlin v State Government Insurance Commission (1992) 182 CLR 1, 6-7; Allianz Australia Insurance Ltd v Waterbrook at Yowie Bay Pty Ltd [2009] NSWCA 224, [106]-[107]; Mallesons Stephen Jaques v Trenorth Ltd [1999] 1 VR 227, 737.

[134]  TB294, 12 February 2019: [13] above.

[135]  Despite Ms Lamshed later instructing Ms Leacy, on 4 March 2019, that “We are looking at bulk sale at Capri.  All units to be assigned to Tessa” – TB325. 

Close

Editorial Notes

  • Published Case Name:

    Metro Waterloo Pty Ltd v HWL Ebsworth Lawyers

  • Shortened Case Name:

    Metro Waterloo Pty Ltd v HWL Ebsworth Lawyers

  • MNC:

    [2021] QDC 295

  • Court:

    QDC

  • Judge(s):

    Barlow QC DCJ

  • Date:

    26 Nov 2021

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2021] QDC 29526 Nov 2021-
Notice of Appeal FiledFile Number: CA69/2204 Jan 2022-
Appeal Determined (QCA)[2022] QCA 19507 Oct 2022-

Appeal Status

Appeal Determined (QCA)

Cases Cited

Case NameFull CitationFrequency
Adamson v Williams [2001] QCA 38
2 citations
Jump To
Cite 1 - [2001] QCA 38
Cite 2 - [2001] QCA 38
Allianz Australia Insurance Ltd v Waterbrook at Yowie Bay Pty Ltd [2009] NSWCA 224
1 citation
Jump To
Cite 1 - [2009] NSWCA 224
Badenach v Calvert (2016) 257 CLR 440
2 citations
Jump To
Cite 1 - (2016) 257 CLR 440
Cite 2 - (2016) 257 CLR 440
Chand v Commonwealth Bank of Australia [2014] NSW SC 708
2 citations
Jump To
Cite 1 - [2014] NSW SC 708
Cite 2 - [2014] NSW SC 708
Chand v Commonwealth Bank of Australia [2015] NSWCA 181
1 citation
Jump To
Cite 1 - [2015] NSWCA 181
Dew v Richardson [1999] QSC 192
2 citations
Jump To
Cite 1 - [1999] QSC 192
Cite 2 - [1999] QSC 192
Griffiths v Evans (1953) 1 WLR 1424
2 citations
Jump To
Cite 1 - (1953) 1 WLR 1424
Cite 2 - (1953) 1 WLR 1424
Heenan v Di Sisto [2008] NSWCA 25
1 citation
Jump To
Cite 1 - [2008] NSWCA 25
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41
1 citation
Jump To
Cite 1 - (1984) 156 CLR 41
Howarth v Miotti [2009] QSC 96
2 citations
Jump To
Cite 1 - [2009] QSC 96
Cite 2 - [2009] QSC 96
Jones v Dunkel (1959) 101 CLR 298
2 citations
Jump To
Cite 1 - (1959) 101 CLR 298
Cite 2 - (1959) 101 CLR 298
Legal Services Commission v Rowell [2013] QCAT 397
1 citation
Jump To
Cite 1 - [2013] QCAT 397
Malec v J C Hutton Pty Ltd (1990) 169 CLR 638
2 citations
Jump To
Cite 1 - (1990) 169 CLR 638
Cite 2 - (1990) 169 CLR 638
Mallesons Stephen Jaques v Trenorth Ltd [1999] 1 VR 227
1 citation
Jump To
Cite 1 - [1999] 1 VR 227
Manly Council v Byrne [2004] NSWCA 123
1 citation
Jump To
Cite 1 - [2004] NSWCA 123
Markel Syndicate Management Ltd v Taylor [2021] FCAFC 198
2 citations
Jump To
Cite 1 - [2021] FCAFC 198
Cite 2 - [2021] FCAFC 198
Medlin v State Government Insurance Commission (1992) 182 CLR 1
2 citations
Jump To
Cite 1 - (1992) 182 CLR 1
Cite 2 - (1992) 182 CLR 1
Meerkin & Apel v Rossett [1998] 4 VR 54
1 citation
Jump To
Cite 1 - [1998] 4 VR 54
Nominal Defendant v Clements (1960) 104 CLR 476
1 citation
Jump To
Cite 1 - (1960) 104 CLR 476
Principal Properties Pty Ltd v Brisbane Broncos Leagues Club Ltd [2018] 2 Qd R 583
2 citations
Jump To
Cite 1 - [2018] 2 Qd R 583
Cite 2 - [2018] 2 Qd R 583
Sellars v Adelaide Petroleum NL (1994) 179 CLR 332
2 citations
Jump To
Cite 1 - (1994) 179 CLR 332
Cite 2 - (1994) 179 CLR 332
Williamson v JIA Holdings Pty Ltd [2011] QSC 84
1 citation
Jump To
Cite 1 - [2011] QSC 84

Cases Citing

Case NameFull CitationFrequency
Legal Services Commissioner v Hallam [2024] QCAT 3862 citations
Metro Waterloo Pty Ltd v HWL Ebsworth Lawyers [2022] QCA 195 1 citation
1

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