ABF Smith Pty Ltd v Klodinsky[2022] QDC 12

DISTRICT COURT OF QUEENSLAND

Contents

Summary

1. [1]
   The plaintiff (ABF) claims damages for breach of a written put and call option (the Agreement) entered into between ABF, the first defendant (Ms Klodinsky) and the second defendant (Mr O'Shea) on 5 August 2016. The subject matter of the Agreement is 800,000 $1 units (the units) in the Lionsgate Income Fund No 1 Unit Trust.  ABF contends that the defendants failed to complete the purchase of the units following exercise of the Put Option by ABF and claims the shortfall suffered on sale of the units. 
2. [2]
   Ms Klodinsky contends she never signed the Put Option, or if she did, she did not sign it before the attesting witness Mr Fairweather, or if she did, Mr Fairweather did not witness the Agreement in a manner which caused it to meet the requirements of a deed.  She alleges further that the Put Option Fee of $1 was not paid.  She contends that, if the Agreement is not a deed, the failure to pay the Put Option Fee had the result that ABF acquired no rights under the Put Option. 
3. [3]
   Mr O'Shea (who did not appear at trial) pleaded that he was not liable on the Put Option because of the failure to pay the Put Option Fee and that he was not liable for damages on termination because ABF had not strictly complied with the termination procedure in the Agreement.
4. [4]
   For the reasons which follow, I find that Ms Klodinsky did sign the Agreement and did so before Mr Fairweather, who attested her signature as required by law.  I find that the failure to pay the $1 Put Option Fee did not prevent the defendants becoming bound by the Agreement and that ABF did comply with the requirements for termination of the Agreement.
5. [5]
   Mr Stephen Smith (the sole director of ABF) gave evidence which was not contested and established the damages claimed.  ABF is therefore entitled to judgment for the damages for failure to complete the purchase of the units under the Put Option in the amount of $240,577.89 plus interest. 

Background

Events prior to 4 August 2016

6. [6]
   Until at least late 2017, Ms Klodinsky and Mr O'Shea were intimate partners.  They lived together in Graham Street, Port Melbourne.  Ms Klodinsky had a car, parked at the building.  They had separate business lives, with Ms Klodinsky working on a swimwear business (Frankie Swimwear) and Mr O'Shea working in businesses of his own.  
7. [7]
   ABF carries on the business of lending money.  Mr Smith is its sole director.  Some time prior to August 2016, he was approached by a finance intermediary to finance the acquisition of the units by the defendants through the mechanism of the Agreement.  He did not know the defendants and did not meet them at the time.  The dealings were conducted, for his party, through his solicitors.  The Agreement was prepared by his solicitors, who are also the solicitors for ABF in these proceedings (Galilee).
8. [8]
   Schedule 2 to the Agreement contained a document headed Guarantee and Indemnity.^[1] Mr Simon Bennett of OMB Solicitors was approached to provide independent advice to Ms Klodinsky and Mr O'Shea as guarantors in relation to the Agreement.  Mr Bennett is an accredited specialist in property law and a solicitor of long experience in that area.  He believed the task was a referral from a property agent.  He had not met the defendants before.  Mr Bennett was located in Southport and the defendants lived in Melbourne.  It was necessary for their identity to be verified and for the advice to be given by video link.  It must have also been obvious, if it had been considered, that execution of the Agreement, being in the form of a Deed, would not be able to be attested by Mr Bennett.
9. [9]
   Mr David Fairweather is the principal of Fairweather Law.  In 2016, he practiced in Bourke Street, Melbourne.  At that time, he had practiced in commercial litigation for over 20 years.  He has witnessed many documents in his career, primarily affidavits but including many other legal documents.
10. [10]
    He recalls being approached to verify the identity of the defendants on behalf of Mr Bennett and to facilitate a Skype teleconference in his office so that Mr Bennett could provide the advice required.  Mr Fairweather did not know Mr Bennett nor the defendants. Mr Fairweather did not recall how the request for his assistance was made, though he did not recall any personal contact with Mr Bennett and thought that the arrangements were made with Mr Bennett and Mr O'Shea through his PA.^[2]  Mr Fairweather said that he did not intend to charge any fee, considering his role to be a courtesy to another practitioner.   

Events on 4 August 2016

11. [11]
    The meeting was scheduled for 2.30 pm on 4 August 2016 at Mr Fairweather’s office.^[3]  By his defence, Mr O'Shea admitted that he signed the Agreement.  Taken with the solicitors’ evidence and the contemporaneous documents, I find that the following events occurred (leaving aside the contested question of whether Ms Klodinsky was present).
12. [12]
    Mr O'Shea at Fairweather Law arrived some time between 2.30 pm and 2.50 pm.  Mr Fairweather was provided with Mr O'Shea’s passport, and Ms Klodinsky’s passport and driver’s licence. It was not suggested Mr Fairweather did not sight the originals, as is stated in his certification of copies of those documents.  Mr Fairweather certified copies of those documents and caused soft copies of the certified copies to be sent Mr Bennett at 3:02 pm.^[4]   By that time the Skype call with Mr Bennett had begun.  That call likely took, at most, 20 minutes. That can be inferred from the fact that by 3:28 pm executed copies of the Agreement were sent by email by Mr Fairweather’s PA to Mr Bennett’s PA and it is reasonable to infer that attending to execution, copying, and sending by email would have taken just a minute or two.
13. [13]
    Both solicitors prepared contemporaneous records relating to the meeting (quite apart from the email traffic). 
14. [14]
    Mr Fairweather prepared a hand-written diary note which was hand dated 4 August 2016 in these terms:

Met with Greg O'Shea and Rebecca Klodinsky to record identification for purpose of Simon Bennett of OMB Solicitors providing advice re agreement/ guarantees. (only there for beginning)

15. [15]
    It was not suggested to Mr Fairweather that this diary note was not prepared at the time it records, and there is no reason to believe otherwise.
16. [16]
    Mr Bennett prepared two independent advice certificates.  He accepted it was a pro forma document, although it would have had to be edited to insert the particulars relevant to the defendants and the Agreement.   He said he had some independent recollection of the Skype call.  He said the certificates were executed on the date they bear, 4 August 2016.  It is sufficient to set out Ms Klodinsky’s certificate

CERTIFICATE OF WITNESS AND INDEPENDENT ADVICE

(GUARANTOR)

Dear Sir

Re:Put and call option Agreement

I, Simon Gordon Bennett

of OMB Solicitors

of 9 seabank lane southport in the State of QLD, Solicitor, hereby certify as follows:

1. Before this Deed of Guarantee and Indemnity (“the Guarantee”) was executed by REBECCA KLODINSKY (“the Guarantor”):
   1. (a)
      I identied REBECCA KLODINSKY;
   2. (b)
      I explained the nature and effect of this Guarantee and the put and call option agreement and the legal consequences to the Guarantor of any breach by any party;
   3. (c)
      In particular, I pointed out the information contained in the Schedule to this Certificate and explained to the Guarantor that any notice, request, demand, consent, approval, agreement or other communication to the Buyer or any other Guarantor in relation to the transaction evidenced in part by this Guarantee may be sent to the Buyer or the Guarantor alone and will only be copied or sent to the Guarantor alone and will only be copied or sent to the Guarantor at the Sellers discretion;
   4. (d)
      I asked the Guarantor if he/she understood the nature and effect of this Guarantee and the other loan documents and the possible consequences to him/her of any failure by anyone to fulfill all obligations under those documents and the answer was “yes”; and
   5. (e)
      I asked the Guarantor whether he/she was signing this Guarantee freely and voluntarily and the answer was “yes”.
2. The Guarantor executed the Guarantee.
3. I am not a solicitor who is:-
   1. (a)
      Acting for the Seller in the transaction evidenced in part by this Guarantee;
   2. (b)
      Employed in a legal practice of a Solicitor referred to in paragraph (a); or
   3. (c)
      A member of a partnership or employed by a partnership, a member of which in acting for any person referred to in paragraph (a).

DATED this 4 day of August 2016

Hand written signature

SCHEDULE

1. Guarantor/s:REBECCA KLODINSKY
2. Buyer/s GREGORY PETER O'SHEA AND REBECCA KLODINSKY
3. SellerABF SMITH PTY LTD ACN 121 966 514 AS TRUSTEE FOR THE ABF SYNDICATE NO 2 TRUST
4. Put and Call Option agreement between
5. Liability of Guarantor: All monies owing from time to time by the Buyer (alone or with any other person) to the Seller under the Put and Call option Agreement

17. [17]
    It is not disputed that the Agreement was executed by Mr O'Shea and attested by Mr Fairweather in his office.  There is independent verification of Mr O'Shea’s attendance in emails sent by Mr Fairweather’s PA, and Mr O'Shea admits execution of the Agreement in his defence. 
18. [18]
    The Agreement also contains three signatures identified in the Agreement as signatures of Ms Klodinsky.  These signatures are remarkably like her signature on the proposed variation agreement (discussed below) which she accepts as authentic.  More on that later. 

The Agreement

19. [19]
    The Agreement relevantly provided:

PUT AND CALL OPTION

Dated:5 August 2016

Parties:REBECCA KLODINSKY OF 501/187 Graham Street Port Melbourne in the State of Victoria and GREGORY PETER O'SHEA of 501/187 Graham Street Port Melbourne in the State of Victoria in the state of Queensland (hereinafter called “Buyer”)

ABF SMITH PTY LTD CAN 121 966 514 AS TRUSTEE FOR ABF SYNDICATE NO 2 TRUST of 16 Stuart St, Longueville in the State of New South Wales (hereinafter called the “Seller”)

REBECCA KLODINSKY OF 501/187 Graham Street Port Melbourne in the State of Victoria and GREGORY PETER O'SHEA of 501/187 Graham Street Port Melbourne in the State of Victoria (hereinafter called the “Guarantors”)

INTRODUCTION

1. The Seller is or will become the registered owner of the Units.
2. The Seller grants an option to the Buyer to purchase the Units from the Seller.
3. The Buyer grants the Seller an option to sell the Units to the Buyer.

IT IS AGREED

1. Definitions and Interpretations

1.1Definitions

Agreement means this document, including any schedule or annexure to it.

Agreement Date means the date of this Agreement.

Business Day means a day that is not a Saturday, Sunday or ay other day which is a public holiday on the Gold Coast.

Buyer’s Solicitors means OMB Solicitors.

Call Option Expiry Date means twelve (12) months from the date of this agreement.

Call Option Fee means one ($1.00) dollar.

Dispute means any disagreement about anything relating to the interpretation or performance of any provision of this Agreement notified in writing by a party to the other.

Guarantor means Rebecca Klodinsky and Gregory Peter O'Shea.

Guarantee means the Guarantee in schedule 2.

Options means the Call Option, the Put Option, or both, as the context requires.

Purchase Price means eight hundred thousand dollars ($800,000.00).

Put Option Fee means one ($1.00) dollar

Put Option Expiry Date means the date seven (7) days after the Call Option Expiry Date (subject to Clause 6).

1.3Parties

1. (a)
   If a party consists of more than 1 person, this Agreement binds each of them separately and any 2 or more of them jointly.

2. Grant of Call Option

2.1On the Agreement Date the Buyer must pay the Call Option Fee and the Security Deposit for the Units to the Seller’s Solicitors.

2.2In consideration of the Call Option Fee and Security Deposit paid by the Buyer to the Seller’s Solicitors, (and subject to the terms of this Agreement) the Seller grants to the Buyer an option to purchase the Units on the terms set out in the Unit Transfer Form (“Call Option”).

…

5. Grant of Put Option

5.1The Buyer acknowledges receipt of the Put Option Fee from the Seller.

5.2In consideration of the Put Option Fee, the Buyer grants to the Seller an option to sell the Units to the Buyer on th terms set out in the Unit Transfer Form for the Purchase Price, and subject to the other provisions of this Clause 5 (“Put Option”).

5.3Subject to Clause 5.5, the Put Option is irrevocable until 6.00 pm (Brisbane time) on the Put Option Expiry Date. To ensure clarity, if the Call Option Expiry Date is extended for any reason, the Put Option Expiry Date is automatically extended in accordance with the definitions clause.

5.4The Put Option may only be exercised between 12 midnight on the Call Option Expiry Date and 6.00 pm on the Put Option Expiry Date in relation to the Units

5.5The Put Option must be exercised by delivery to the Buyer’s Solicitors of:-

1. (a)
   One (1) copy of the Unit Transfer Form, duly signed by the Seller; and
2. (b)
   Any other document or letter required by law.

5.6Delivery may only be effected by delivery to the Buyer’s Solicitors.

6. Unit Transfer Form Effective upon Exercise of Put Option

6.1If the Put Option is validly exercised, the Unit Transfer Form comes into effect on valid exercise of the Put Option and is to be dated that date.

6.2The Buyer must give to the Seller when executing this Agreement one (1) copy of the Unit Transfer form signed by the Buyer.

6.3The Seller must hold the Unit Transfer Form received under this clause in escrow and must not sign it until either the Call Option is exercised by the Buyer or the Put Option is exercised by the Seller.

7. Default

7.1When default occurs

Default under this Agreement occurs:-

1. (a)
   if a party fails to perform an obligation under this Agreement and that default is incapable of being remedied, or if capable of being remedied, continues unremedied for fourteen (14) days after written notice of the default has been given by the other;
2. (b)
   if a party becomes an externally administered body corporate under the Corporations Act 2001;
3. (c)
   if a party is in liquidation or subject to any action which could lead to it being wound up;
4. (d)
   a party is the subject of a proposed compromise or arrangement with its creditors; and
5. (e)
   if a judgment is entered against the Buyer and remains unsatisfied for fourteen (14) days or if any execution or other process of Court or authority is not paid or satisfied within fourteen (14) days.

7.2Effect of Default

A non-defaulting party may terminate this Agreement by written notice to the defaulting party if any of the events in Clause 7.1 occurs (without prejudice to any other rights including the right to liquidated damages).

…

15. Notices

15.1A notice or other communication connected with this Agreement (“Notice”) has no legal effect unless it is in writing.

15.2In addition to any other method of service provided by law, the Notice may be:-

1. (a)
   sent by prepaid post to the address of the addressee set out in this Agreement or subsequently notified;
2. (b)
   sent by facsimile to the facsimile number of the addressee; or
3. (c)
   delivered at the address of the addressee set out in this Agreement or subsequently notified.

15.3A Notice must be treated as given and received:-

1. (a)
   if sent by post, on the second Business Day (At the address to which it is posted) after posting;
2. (b)
   if sent by facsimile before 5.00 pm on a Business Day at the place of receipt, on the day it is sent and otherwise on the next Business Day at the place of receipt;

or

3. (c)
   if otherwise delivered before 5.00 pm on a Business Day at the place of delivery, upon delivery, and otherwise on the next Business Day at the place of delivery.

15.4Despite Clause 15.3(b) a facsimile is not treated as given or received unless at the end of the transmission the sender’s facsimile machine issues a report confirming the transmission of the number of pages in the Notice.

15.5A notice sent or delivered in a manner provided by Clause 15.2 must be treated as validly given to and received by the party to which it is addressed even if:-

1. (a)
   the addressee has been liquidated or deregistered or is absent from the place at which the notice is delivered or to which it is sent; or
2. (b)
   the Notice is returned or unclaimed.

15.6Any Notice by a party may be given and may be signed by its Solicitor.

15.7Any Notice to a party may be given to its Solicitor by any of the means listed in Clause 15.2 to the Solicitor’s business address or facsimile number.

…

17. Security Deposit

17.1The Buyer must pay the Seller’s Solicitors the total Security Deposit on the date of this Agreement.

17.2The Security Deposit is to be held in the Seller’s Solicitors Trust Account until such time as either the Put or Call Option is exercised at which time it will be taken to be part payment of the Purchase Price and shall be considered payment of the deposit under the Unit Transfer Form.

17.3In the event that either the Call Option or the Put Option is validly exercised and the Buyer fails to pay any sum required to be paid by the Buyer to the Seller under this Agreement, the Security Deposit is immediately on such default forfeited to the Seller.

17.4In the event that the Security Deposit is forfeited to the Seller under clause 17.3, the Security Deposit is to be applied in induction, of, but does not otherwise extinguish nor in any way limited the Buyer’s liability to the Seller arising from any breach by the Buyer of their obligation under this Agreement.

Buyer’s Obligations are Unconditional

18.1The Buyer agrees that the Buyer’s obligations under this Agreement shall be unconditional and are and shall remain in full force and effect irrespective of:

1. (a)
   The validity, regularity and enforceability of any provision of this Put and Call Option;

…

Schedule 2

GUARANTEE AND INDEMNITY

BY:__Hand written names______________________________

TO:The Seller

1.1In consideration of the Seller agreeing at the request of the Guarantor (which request is confirmed by the Guarantor signing this Put and Call Option) to accept the offer of the Buyer to purchase the Units on the basis that a guarantee and indemnity be given in accordance with the terms of this Clause, the Guarantor covenants with the Seller tht the Guarantor, as a principal obligor and not merely as surety, irrevocably and unconditionally guarantees to the Seller (and indemnifies the Seller in respect of) the due and punctual performance of all  the obligations of the Buyer under or arising out of this Put and Call Option including (without limitation):

1. (a)
   The prompt payment of all amounts payable by the Buyer under his Put and Call Option;
2. (b)
   The prompt performance of all other obligations of the Buyer under this Put and Call Option and
3. (c)
   The prompt payment of all amounts for which the Buyer may become liable in respect of any breach of this Put and Call Option.

…

20. [20]
    An issue arises which turns in part on the presentation of the execution page of the Agreement.  It is convenient to show it as it appears in the Agreement:

21. [21]
    Also relevant is the execution of the Guarantee in Schedule 2:

22. [22]
    Mr Smith gave evidence that the overall purpose of the Agreement was to operate as a form of financing of investment in the relevant trust (which held a commercial property) by the defendants.  It did so by the device of call and put options.  The Agreement provided for that purpose by the following key steps:

    1. (a)
       ABF would acquire the units;
    2. (b)
       ABF granted the defendants a call option, by which the defendants could require ABF to sell the units to the defendants for $800,000 (the purchase price) to be exercised within a year of execution of the Agreement (being between 5 August 2016 and 5 August 2017); and
    3. (c)
       The defendants granted ABF a put option by which ABF could require the defendants to purchase the units for the purchase price, to be exercised by the plaintiff between 6 August 2017 and 12 August 2017.

Events up to termination of the Agreement

23. [23]
    The defendants did not exercise the call option. 
24. [24]
    Around 20 February 2017, a draft Deed of Variation was prepared in relation to the Agreement by OMB solicitors.  It varied the Agreement by adding a Mr Delmege as a guarantor and providing that the security deposit could be appropriated by ABF at its discretion and that such sum would be in addition to the purchase price.  The signatures on the draft (including Ms Klodinksy’s) was witnessed by Mr Hill, a solicitor in Port Melbourne.   The Introduction to the draft variation clearly identified Ms Klodinsky’s obligations under the Agreement, though Ms Klodinsky gave no evidence about discussing the obligation recited there with Mr O'Shea or the solicitor Mr Hill.  
25. [25]
    The execution block for the draft variation was as follows:

26. [26]
    Ms Klodinsky said in evidence in chief that the only document she signed in relation to this matter was signed at Port Melbourne in February 2017.  There was no other evidence about the genesis or fate of the draft variation.  There is no evidence it was ever executed by ABF.
27. [27]
    On 18 July 2017, ABF’s solicitors, Galilee, gave notice to the Buyer’s Solicitor as defined in the Agreement (still OMB at that stage) of intention to exercise the Put Option on 7 August 2017.   How OMB came to be the Buyer’s Solicitor, given that Mr Bennett was seemingly only retained to give Guarantee advice, was not examined at trial.  In any event, OMB did not retain instructions as of 18 July 2017 and instead referred Galilee to Ms Miller of Bell Legal Group, a firm located on the Gold Coast. 
28. [28]
    Ms Miller was retained by the defendants in relation to the exercise of the Put Option.  I make that finding because it is evident from the correspondence between Ms Miller and the defendants that Ms Miller considered that she was retained by them both in relation to the steps by ABF to exercise the Put Option, and that Ms Klodinsky did not challenge this position either in response to email correspondence sent to her or in her evidence.^[5] 
29. [29]
    On 3 August 2017, by letter and email to Bell Legal Group, Galilee confirmed that ABF would exercise the Put Option on 7 August 2017 and included instructions for settlement on that date at 10.00 am at the offices of OMB.  That correspondence was forwarded to the defendants by Ms Miller.  
30. [30]
    The defendants did not settle on 7 August 2017.  That same day, Galilee sent a  Default Notice to Bell by email in the following terms, relevantly (after referring to the settlement arrangements):

Default

There was no attendance by the Buyer, despite our client’s agent waiting until 10.20am.

We hereby notify the Buyer, pursuant to clause 7.1(a) of the Agreement, that:

1. the Buyer is in default of the Agreement, in that the Buyer has failed to provide a bank cheque for the amount of $700,000.00 in favour of the Seller;
2. to remedy the default, the Buyer is required to provide to the Seller a bank cheque for the amount of $700,000.00 in favour of the Seller within 14 days (that is, by 4.00pm on Monday, 21 August 2017). The Seller will hand over a copy of the Unit Transfer Form duly signed by the Seller on receipt of the required bank cheque, provided this occurs by 4.00pm on 21 August 2017; and
3. if the default is not remedied by that time, the Seller intends to terminate the Agreement by issuing a notice to the Buyer in accordance with clause 7.2 of the Agreement, and to thereafter pursue the Buyer for damages.

31. [31]
    That document was immediately forwarded by Ms Bell to both defendants.  Ms Klodinsky saw it at the latest at about 12.00 pm on 8 August 2017 because she asked Mr O'Shea for an explanation.  He immediately responded telling Ms Klodinsky, inter alia, that it had all been paid and that she had nothing to worry about.  Wrong on both counts.
32. [32]
    On the same day, the Default Notice was posted to the defendants at the Graham Street unit. 
33. [33]
    By letter dated 23 August 2017, posted to the defendants at the Graham Street address, ABF gave notice that it terminated the Agreement under clause 7.2.^[6] 

ABF’s steps after termination

34. [34]
    The evidence of Mr Smith as to the steps he took in dealing with the units was not challenged at trial.   Mr Smith gave evidence that:

    1. (a)
       In the period from 10 August 2017 to 11 November 2019, ABF remained the owner the units;
    2. (b)
       On 12 September 2019, Mr Smith received an email from Henry Williams, the representative of the manager of the Trust, that communicated to Mr Smith that:^[7]

       1. The trust’s sole asset had been valued at $10.4 million, which was a significant decrease from its previous valuation of $12 million;
       2. The trust had a debt to Commonwealth Bank of Australia (CBA) of $7.2 million and was in default under its first registered mortgage to CBA;
       3. The trust’s net equity in the trust’s sole asset was therefore $3.2 million;
       4. When the net equity of the trust was divided by the 5.9 million issued $1 units in the trust, this indicated a current value per unit of 54.24 cents per unit; and
       5. One of the unit holders, Garth of Fort Knox Storage was willing to invest further money to re-capitalise the Trust, however, was only willing to do so on the basis that he acquire 100% of the units in the trust;
    3. (c)
       On that basis, Mr Smith decided to sell ABF’s units to allow the re-capitalisation of the trust to proceed; and
    4. (d)
       On 11 November 2019 the plaintiff completed the sale of the units and received the sum of $433,920.00, representing a sale price of $0.5424 per unit multiplied by 800,000 units.
35. [35]
    Mr Smith identified that in the period from 7 August 2017 to 11 November 2019 the plaintiff received income from the trust in the aggregate amount of approximately $25,000 on account of its ownership of the units (less than the pleaded amount of $25,500.11).
36. [36]
    ABF’s pleaded case was consistent with the above evidence on the amount of the capital loss but also claimed Hungerfords v Walker interest of $165,307.75 arising out of seven alternative transactions.   ABF did not press those heads of damages but rather confined its claims to interest available under the statute, calculated uncontentiously by reference to the Court website calculator at $52,487.51 as at the last day of trial.  Issues on the pleadings relating to the claim for interest as damages are now irrelevant.
37. [37]
    The defendants by their defences challenged the pleaded capital loss on the grounds, relevantly, that the price obtained for the units was less than market value or that ABF failed to mitigate its loss because a higher value could have been obtained at an earlier time. Neither proposition was particularised.  Indeed, proper pleading of either matter arguably required the pleading of additional material facts, such as the amount which was the market value at various times.  Further, no evidence was led to support either proposition, nor was there a challenge to Mr Smith’s evidence at trial.  That evidence was inherently credible.  There was no basis at all to reject his evidence. 
38. [38]
    Based on the above, Mr de Jersey QC set out the calculation of the plaintiff’s actual position as of 11 November 2019, versus its position as of 11 November 2019 if it had received $800,000 from the defendants on 7 August 2017.  The capital loss is said to be $240,577.89, calculated as follows:^[8]

39. [39]
    If ABF makes out the liability of the the defendants, it is entitled to judgment for the Net Capital Loss sum identified plus interest of $52,487.51, totalling $293,065.40.  Ms Klodinsky did not challenge this calculation.

Relevant procedural history

40. [40]
    ABF commenced the proceedings on 3 April 2020.  Solicitors filed Ms Klodinsky’s Defence and Counterclaim (against Mr O'Shea) on 13 November 2020.    Relevantly, that Defence admitted that Ms Klodinsky executed the Agreement on 5 August 2016^[9] and was otherwise largely in the form of Mr O'Shea’s defence at trial (though Mr O'Shea seems later largely to have drafted his defence based on Ms Klodinsky’s original defence). 
41. [41]
    The Counterclaim alleged that in or about early August 2016, Mr O'Shea had presented an unexecuted copy of the Agreement on a desk and said that he needed her to sign it for his business and that he would take full responsibility for any liability under the Agreement. She says she agreed then to sign the Agreement in reliance on those representations and that she actually signed the Agreement later, on 5 August 2016.
42. [42]
    Mr O'Shea filed a defence on 1 September 2021 which largely adopted Ms Klodinsky’s defence.  He was represented by Lennon Lawyers.
43. [43]
    The matter was placed on the Commercial List in June 2021 and set down for trial on 15 October 2021.  On 2 December 2021, Ms Klodinsky filed an Amended Defence.  By that pleading she withdrew the admission (without leave at that stage) that she had executed the Agreement and abandoned the Counterclaim entirely.  In the place of the admission, she pleaded:

4. As the allegations pleased in paragraph 4 of the statement of claim, the first defendant:

(a)repeats and relies upon the matters pleaded below in the counterclaim;

2. (b)
   denies that the plaintiff entered into the Opotion Deed and believes the same to be untrue because te plaintiff entered into the Option Deed and believes the same to be untrue because the platinfiff entered into the Option Deed in its capacity as trustee for the ABF Syndicate No 2 Trust;

3. (c)
   save for the aforesaid says further that she admits that on or about 5 August 2016 17, alternatively, 20, February 2017 the first defendant she executed the Option Deed a document entitled “DEED OF VARIATION OF PUT AND CALL OPTION” (Deed of Variation); and

Particulars

The first defendant executed the Deed of Variation at the officers of McCluskys Lawyers, 101 Bay Street, Port Melbourne, Victoria.

An unexecuted copy of the Deed of Variation was emailed to the second defendant by OMB Solicitors on 17 Febuary 2017 at 11.53pm.

OMB Solicitors emailed a copy of the Deed of Variation executed by the first defendant, second defendant, and Max Delmege to the plaintiff’s solicitors on 20 Febuary 2017 at 3.17pm.

(d)    denies the allegation that she executed the Option Deed (as defeind in the statement of claim) on 5 August 2016 (or on 4 August 2016, or at all) and believs the allegation to be untrue because her purported signature on the Option Deed was purportedly witnessed by David Ashley Fairweather, an Australian legal practioner, of Level 11, 575 Bourke Street, Melbourne, Victoria:

(i)    she did not attend Mr Fairweather’s office on 5 August 2016 because was in Sydney on that date;

Particulars

On 5 August 2016, the first defendant trvalled from Melbourne to Sydney on flight VA827 departed Melbourne at or about 9.00am and returned on flight VA862 arriving in Mebourne on or about 6.05pm.

(ii)    she did not attend Mr Fairweathers’s office on 4 August 2016; and

(iii)    she has never attended Mr Fairweather’s office, nor ever met Mr Fairweather

4A. On or About 17, alternatively 20 Febuary 2017:

(a)    The second defendant asked the first defendant to sign a document;

(b)    the second defendant represented oraly to the first defendant words to the effect that:

1. he needed the first defendant to urgently execute the documents to assist in his business;
2. if any loss was suffered or moneys were required to be paid as a result of the document, the second defendant would be liable for those payments and the first defendant would not be liable to any extend;

(together, the Idemnity Representations);

(c)    relying on the Indemnity Representations, the first defendant signed the document             

Particulars

The document the first defendant signed was the document referred to in paragraph 4(c) above and the particulars thereto.

44. [44]
    Subsequently, Ms Klodinsky was granted leave to withdraw the admission of execution of the Agreement.  Her affidavit in support, tendered without objection at trial, said that she discovered the error in making the admission when she saw subpoena material in early November 2020 indicating she had signed the Agreement at Fairweather Legal.^[10]   She said she had never been to Fairweather Legal, but had signed a document at Port Melbourne, and that once she saw the draft variation, she realised that must be the document she signed, not the Agreement.  She said that misunderstanding affected her instructions on the original defence.  Presumably the detailed instructions on the counterclaim were affected by the same mistake. 
45. [45]
    Thereafter Ms Klodinsky’s solicitors obtained the original Agreement from Galilee to provide it to a handwriting expert.  The handwriting expert signed an undertaking to keep the original version of the option deed intact. ABF heard nothing further from the handwriting expert.^[11] No mention was made in the first defendant’s material of any intention to call expert evidence from a handwriting expert and no such evidence was foreshadowed, right up until the leave application in less than two weeks before commencment of the trial.  Ms Klodinksy offered no explanation why the handwriting expert was not called.^[12] 
46. [46]
    The matter came on for trial as listed on Monday 31 January 2022.  That morning, Mr O'Shea appeared by telephone seeking an adjournment.  The adjournment was granted until 11.00 am on 1 February 2022.  That morning, he sent an email stating that the matter had been settled.  That email was sent without the consent of the other parties.  My associate responded explaining that the trial was proceeding at 11.00 am.  Mr O'Shea did not appear.  Mr de Jersey proceeded against Mr O'Shea under Rule 476 Uniform Civil Procedure Rules to prove the case against Mr O'Shea.  Mr O'Shea’s defences were substantially technical in character, as will be seen.   

The Issues at Trial

47. [47]
    Ms Klodinsky raised four contentions by way of defence:

    1. (a)
       First, that she never signed the Agreement and is not bound by it; 
    2. (b)
       Second, in the event the Court found that Ms Klodinsky did sign the Agreement, it should find that it was not signed in the presence of the attesting witness (Mr Fairweather) and was therefore not a deed; 
    3. (c)
       Third, in the event the Court found that Ms Klodinsky did sign the Agreement before Mr Fairweather, it was not attested as required by the Property Law Act 1974 because Mr Fairweather did not attest her signature specifically; and
    4. (d)
       Fourth, if the Agreement was not a deed (based on either the second or third contention), then no rights arose against Ms Klodinsky on the Put Option because the $1 Put Option Fee was not paid, and that fee was a condition precedent to any obligations arising under the Put Option. 
48. [48]
    As I have explained, Mr O'Shea did not appear at the trial.  However, the plaintiff proceeded against him and dealt with the issues arising from his defence.   Mr O'Shea raised three contentions by way of defence:

    1. (a)
       First, (consistent with Ms Klodinsky’s alternative argument) the Put Option obligations were not binding because the Put Option Fee of $1 was not paid;
    2. (b)
       Second, the Default Notice under the Agreement was not served as required by the Agreement by service on the defendants’ solicitor and therefore it supported no right to terminate the Agreement and sue for damages; and
    3. (c)
       Third, the separate service of the Default Notice by post on the defendants directly, while valid, was given less than 14 days before ABF terminated the Agreement and therefore that termination was invalid (because the Agreement required the Notice to give 14 days to remedy). 
49. [49]
    For the reasons which follow, I reject Ms Klodinsky’s contentions:

    1. (a)
       First, I find that Ms Klodinsky did sign the Agreement in the presence of Mr Fairweather;
    2. (b)
       Second, the the mode of attestation of the Agreement was effective to constitute the Agreement a deed; and
    3. (c)
       Third, even if the Agreement was not a deed, and even if the Put Option Fee was not paid, it was a binding contract, and the Put Option Fee was not a condition precedent to the Put Option obligations.
50. [50]
    I also reject Mr O'Shea’s contentions:

    1. (a)
       First, the Agreement took effect as a deed on any view of the evidence in respect of Mr O'Shea’s obligations;
    2. (b)
       Second, service of the Default Notice on the defendants’ solicitors by email was valid service under the Agreement, inter alia, because those solicitors had authority to receive the document; and
    3. (c)
       Third, even if email service on the solicitors was not valid service, the termination of the Agreement occurred more than 14 days after deemed delivery of the Default Notice sent by post and was therefore invalid.

The execution issue

Ms Klodinsky’s version of events

51. [51]
    Ms Klodinsky’s central allegation was that she had never been to Fairweather Legal, much less on 4 August 2016.  Her version of events that day was given against the background of contemporaneous texts and emails, which she contends supports that allegation. 
52. [52]
    In evidence in chief, she said that 4 August 2016 was a work day for her in her swimwear business.  That work was done from the Graham Street apartment.  She referred to an email exchange between her and a property agent in Honolulu which occurred between 7:55 am and 8:21 am. Ms Koldinsky said that she was investigating opening a store and dealing with the agent (Jess) for that purpose.  As the correspondence shows, she was told by Jess that the landlord of a shop she was interested in leasing was reluctant to lease it to her because it might impact on the business of an existing swimwear shop in the same premises called San Lorenzo.  Ms Klodinsky offered to send some information to persuade the landlord that her business was not direct competition for San Lorenzo.  At 8:21 am she said she would “have some visual documents over to you for [the landlord] today. Price points, imagery and clientele etc”.
53. [53]
    Ms Klodinsky said that the shop was important for her business and that preparing the submission was her main task that day. 
54. [54]
    Ms Klodinsky next relied on text messages with Mr O'Shea:

    1. (a)
       Between 8.00 am and 12.00 pm they were in regular contact by text, including requests that Mr O'Shea bring her lunch (there is no reference to a meeting);
    2. (b)
       At 2:24pm Ms Klodinsky sent a text message to Mr O'Shea’s mobile number stating:

You bring me food and vanish

Where are you?

Why are your phones off??

When u coming home?!

3. (c)
   At 4:24 pm, she sent another text saying, “Why are your phones off?” but this time sent to the mobile number and also sent to a different mobile.

55. [55]
    Ms Klodinsky said, in that context, that Mr O'Shea came home with her lunch at about 12.30 pm but left immediately.^[13]  She said he ultimately came home after 5:30 pm. She explained the reference to phones because she said he had at least two that he used, both of which were messaged at 4:24 pm by her.
56. [56]
    A submission was sent to the agent for the landlord from Ms Klodinsky’s desktop computer at 3:48 pm.   The attachment contained:

    1. (a)
       One page with two sets of brief dot points about the business of Frankie Swimwear and San Lorenzo;
    2. (b)
       Five pages which comparison photograpsh of Frankie swimwear and San Lorenzo swimear; and
    3. (c)
       Two pages with a brief description and photographs of Frankie Swimwear branded clothes which were not beach wear.
57. [57]
    She was asked how long it took to prepare the document, but did not give a time, rather emphasising that it was not an easy job.^[14]
58. [58]
    She said that her passport and drivers’ licence was usually left at home on a chest of drawers.
59. [59]
    In response to my questions, she estimated travel time from Port Melbourne to the City as 30 to 40 minutes around 2:30 pm and much longer in peak hour. However, she could not estimate the distance.
60. [60]
    Strangely, she gave no evidence in chief that she did not sign the Agreement and gave no evidence in chief that she had never been to Fairweather Legal.  If a deliberate strategy, it was a risky one. 
61. [61]
    The following principal points emerged in cross examination.
62. [62]
    Ms Klodinsky accepted she received the emails from Ms Miller in mid-2017, though said she did not recall reading any of them and did not recall if she was aware of the Agreement at that time, nor being aware of the draft variation at the time.^[15]  She added that she still did not know what the Agreement was, and did not know what a variation was.^[16]  (I thought this particular flourish in her evidence was a self-serving attempt to present herself as more ignorant of the issues in the trial than she was.)
63. [63]
    She was cross examined about how and when she became aware in 2021 that she had (on her account) mistakenly admitted that she had signed the Agreement when she actually signed the draft variation. She could not recall, even though her evidence in exhibit four linked the discovery to November 2021, just three months ago.^[17]
64. [64]
    She gave evidence that the only document she signed was signed in Port Melbourne at Mr Mckluskey’s office.  She rejected the suggestion that she regularly signed documents that Mr O'Shea put in front of her.^[18]  She eventually gave evidence that she had never been to Fairweather Legal.^[19]  However, in cross examination she conceded that the signatures on the Agreement could be hers:

    1. (a)
       In the context of being shown both signature blocks for the Agreement and the draft variation (in a manner I am satisfied was quite clear to the witness) Ms Klodinsky said:

All right.  Well, if we go back to the option deed which starts at page 5 of the same bundle?   What page, sorry?

It starts at page 5.  And then if you turn through from five to 13?   Yes, I’m there.

You’re there?  And you see – I mean, I – it’s suggested that they’re your signatures.  Do you disagree with that proposition?   It looks like my signature.

Did you apply that signature yourself in those two places on page 13?   It looks like my signature, but I haven’t been to David Fairweather’s office.

No, but do you think you might have applied your signature on that document on some other occasion than at David Fairweather’s office?  Is that your evidence?   Sorry?  Pardon?

Do you think you might have put that – your signature on page 13 in those two places at some other location than 575 Bourke Street, Melbourne, Victoria?   The – the page that I signed was blank, so unless – yes, maybe.

Okay.  Have you seen – you see there’s another solicitor’s stamp here. Bourke Street, Melbourne?   Isn’t that David Fairweather’s?

David Fairweather’s stamp, yes?   Yeah.

Have you – before now, have you ever read that address in that stamp?   No.

No.  And no one’s ever pointed that out to you?   No.  Sorry, no.

Thank you.  Can I suggest to you that      ?    [indistinct] hear me.

Can I suggest to you that what’s happened here is that you don’t know one way or the other where – whether you actually signed page 13, correct?   All?

Page 13.  The signatures on page 13.  You don’t know whether they’re your signatures or not?   It looks like my signature.

And you can’t say positively that it’s not you who placed those signatures on that page – signatures on that page.  Correct?   I don’t know.

2. (b)
   Later she said:

MR DE JERSEY:   Now, Ms Klodinsky, you don’t know one way or the other whether you did or did not sign the two documents I’ve taken you to?   They have my signature.

Yes.  So you accept, don’t you?   Yes…

      it’s possible that you did sign both documents yourself, correct?   Yes.

65. [65]
    Later, when Mr de Jersey formally put the plaintiff’s case, Ms Klodinsky reverted to a denial of signing the Agreement.   Having watched the whole of her evidence, however, I find that her earlier concessions were not the result of misunderstanding or mistake.
66. [66]
    She was cross examined about her work activities on 4 August 2021. She gave evidence that the submission sent 3:48 pm took four to five hours to complete.  It was put to her that the work involved could not have taken that long. She rejected that proposition.^[20] In re-examination, she said nothing ‘big’ happened on 4 August 2016 except doing the proposal between 8:21 am and 3:48 pm.
67. [67]
    She gave evidence that her staff never sent emails from her computer and that they did not have the password.  

Ms Klodinsky signed the Agreement at Fairweather Legal

68. [68]
    I do not accept Ms Klodinsky’s evidence that she did not attend at the offices of Mr Fairweather and sign the Option Agreement on 4 August 2016.  I have reached that view for the following reasons. 

Signature on the Agreement

69. [69]
    I am satisfied that the signature on the Agreement is Ms Klodinsky’s signature, even without relying on the evidence of the solicitors.  I reach that view because:

    1. (a)
       Comparing the signatures on the Agreement to the signature Ms Klodinsky accepts is genuine, they are remarkably similar.  Given the extravagant nature of the signature, it would also be one which would likely be difficult to forge.  Looking carefully at all signatures, my conclusion would be that the signatures on the Agreement are genuine, absent some good reason to ignore their similarity;^[21]
    2. (b)
       Ms Klodinsky accepted that the signatures on the Agreement could be hers  and accepted it was possible she signed the Agreement.  Having observed the whole of the cross examination, I reject the submission from Mr Stanistreet that Ms Klodinsky was confused during the cross examation when she made those concessions.  I do not think her formal rejection of the proposition at the end of the cross examination provides any reason to doubt the reliability of those concessions; and
    3. (c)
       Ms Klodinsky took steps to obtain handwriting expert opinion, but no expert opinion was ever foreshadowed, and no explanation for not obtaining such evidence was advanced.

Circumstances of the change in instructions

70. [70]
    The way Ms Klodinsky came to allege that she did not sign the Agreement also calls into question the reliability of her recollection generally and her recollection that she had never been to Mr Fairweather’s office in particular.
71. [71]
    She admitted signing the Agreement from the filing of her defence in November 2020 until the amendments filed on 2 December 2021.  It must be recognised that the statement of claim did not expressly allege signing before Mr Fairweather, but it is extremely unlikely that the defence was filed without showing Ms Klodinsky a copy of the Agreement.  Ms Klodinsky was very vague in her recollection about how the defence was prepared.  It is difficult to accept she did not see the Agreement at the time. 
72. [72]
    She was then extremely vague in oral evidence about how and when she came to realise that the admission in the defence was incorrect, despite her sworn statement in Exhibit 4.  The discovery of the mistake would have been a significant event and, even accepting that Ms Klodinsky had had few dealings with lawyers, she surely would have realised that the error was an important issue.  And this occurred, on the evidence, in November 2021.  Yet she said in evidence that she could not recall when she discovered the mistake.  At the least this suggests that she has a very poor recollection of key events relevant to this matter. 
73. [73]
    Further, the gravmen of her evidence is that having admitted in November 2020 that she signed a document imposing significant obligations on her, a document received seemingly in November 2021 refreshed a memory she did not have in November 2020, which excused her from obligations under the Agreement.  While such a series of events is possible, it does not seem probable.  Particularly given her evidence in cross examination when tested on the signatures on the Agreement to which I have referred.   

Opportunity for signing

74. [74]
    Mr Stanistreet urged me to give weight to Ms Klodinsky’s contemporaneous documents which he submitted supported Ms Klodinsky’s version of events.  However, in my view those documents are not decisively supportive of that version. 
75. [75]
    First, I am not persuaded that the extent of the work required to produce the submission sent at 3:48 pm is so extensive as to support an inference that Ms Klodinsky did not have the opportunity to have been present at Fairweather Legal at around 3.00 pm.  Her evidence that producing the document took the whole of her time from 8:21 am, or even 4 to 5 hours, was not credible.  There was minimal text, and most of the text related to her own business.  It would not have taken long for her to produce that text.  All the photographs for Frankie Swimwear products were on her own computer.  And the photographs for San Lorenzo have their source identified at the top of the page.  I do do not accept that Ms Klodinsky had any independent recollection of how long this job took, much less that it took all day.  Her evidence on this point was a self-serving reconstruction, which she stuck to in cross examination despite being tested on the reliability of that recollection.
76. [76]
    Second, even if one assumes that she sent the 2:24 pm text and the 3:48 pm email from her apartment, I am not persuaded that that did not leave sufficient time to travel to the City and back and attend on the video call.  That call could have been finished as early as 3:15 pm and execution of the Agreement would have taken barely a minute or two.  Port Melbourne is adjacent to the CBD.  Her evidence was that it took 30 to 40 minutes by car at around 3.00 pm to get from the City to Port Melbourne.  I do not accept the accuracy of Ms Klodinsky’s estimate.
77. [77]
    Third, I do not accept that the necessary inference from the two texts asking why Mr O'Shea’s phones were turned off is that the two partners did not see each other in the meantime.  Indeed, these messages require assumptions to be made about their context for them to assist Ms Klodinsky.  They might just as easily reflect annoyance that having just seen Mr O'Shea, and then discovering that his phone had been turned off again for no good reason.  There might be other explanations. 
78. [78]
    Fourth, there is no evidence of text messages or emails during the exact period when Ms Klodinsky would have been at Fairweather Legal.
79. [79]
    Fifth, it is not surprising that the correspondence between solicitors about the arrangements referred to Mr O'Shea, rather than both defendants.  He was plainly the key party in the transaction.  I do not think that matter supports an inference that Ms Klodinsky did not attend.

No actual recollection

80. [80]
    I am not persuaded that Ms Klodinsky had any actual recollection of what occurred on 4 August 2016:

    1. (a)
       For the reason already given, she appears to have a poor recollection of events and to be an unreliable historian generally; and
    2. (b)
       The impression I derived from her evidence about 4 August 2016 was that she was reconstructing events, drawing inspiration from the content of the text messages and emails which were shown to her during her evidence.  At no time did she give a statement of what she actually recalled of that day without the assistance of references to the text messages and emails.  A good example is her evidence that Mr O'Shea came home at about 5.30 pm on 4 August 2016.  I do not accept she had any recollection of that, given that she was trying to recall an unremarkable event occurring more than 5 years ago.  

The solicitors’ evidence

81. [81]
    I have set out in paragraphs [13] to [16] above, the contemporaneous documents which support the solicitors’ accounts.   They strongly support the conclusion that Ms Klodinsky was present on 4 August 2016.  Both men were cross examined.  I find that both were credible and reliable witnesses.   The following matters objectively support their versions:

    1. (a)
       The content of the file note and the guarantor advice certificate both contain an unequivocal assertion that Ms Koldinsky was present for the Skype meeting.  It is difficult to see how either document could have been produced inadvertently.  The diary note is hand-written.  It is very unlikely that Mr Fairweather could have mistakenly included a specific reference to Ms Klodinsky.  The guarantor advice certificate, though a pro forma document, nonetheless had to be specifically prepared and separately signed in respect of Ms Klodinsky.  Again, it is hard to see how Mr Bennett could have signed the certificate referring specifically to her by mistake.  If Ms Klodinsky truly was not present, then it seems likely that both documents would have had to be deliberately and falsely prepared.  That seems extremely improbable in the absence of some positive evidence supporting the finding;    
    2. (b)
       The improbability is magnified when it is kept in mind that neither solicitor had any significant interest in their role in the transaction.  Mr Fairwather did it without charge and as a favour for another practitioner.   Mr Bennett’s task was a limited one and would have been entirely insignificant in the day to day practice of a solicitor with property law accreditation and an established practice.   No credible reason for inaccurately recording Ms Klodinsky’s presence was identified;
    3. (c)
       Further, neither solicitor knew the other before the day of in question and might not even have spoken with each other.  But if Ms Klodinsky is correct, it is likely that there must have been some collusion between the two men to be sure that both would produce documents that wrongly recorded that Ms Klodinsky was present when she was not; and  
    4. (d)
       It was suggested in cross examination that the note taking and record keeping of both solicitors was deficient.  Given the nature of their respective roles on the day, I reject that suggestion.   I find nothing odd about a solicitor not producing a retainer letter for giving advice on a guarantee nor in a solicitor not preparing a file note about witnessing a deed signed by persons he has just identified.  Both tasks were small uncontentious tasks which in my view would not justify any more contemporaneous records than those that were produced.    But even if more records should have been produced, it is a weak basis for infering misconduct of the kind which would probably have been required if I am to accept Ms Klodinksy’s version.    
82. [82]
    There was nothing which gave me cause to question the credibility and reliability of Mr Fairweather’s and Mr Bennett’s contemporaneous notes nor to question their oral evidence.  

Conclusion

83. [83]
    Ms Klodinsky’s evidence showed her to be someone who paid little attention to Mr O'Shea’s business affairs and was content to go along with what he said about them and what he asked her to do about them.  Her attitude to the objectively alarming emails from Ms Miller in mid-2017 strongly supports that inference.  It is also supported by own evidence of how little she was interested in Mr O'Shea’s affairs.  She plainly recalled at some point being asked to sign a document and agreeing to sign it first, then signing it later.  So much is clear from the Counterclaim at paragraph 4.  She conceded that the signatures on the Agreement looked like hers.  No suggestion was made as to how else a signature which appeared the same as her genuine signature got on the Agreement.   She is also a person with an unreliable memory for the specific reasons I have given.  There are contemporaneous documents supporting the evidence of both solicitors, which evidence was not shown to be unreliable.
84. [84]
    I find that she did sign the Agreement and did so at Fairweather Legal.  Given those findings, there is no reason to question that the signatures were attested as Mr Fairweather recorded.
85. [85]
    ABF submitted that, given the similarity of the signature on the Agreement to Ms Klodinsky’s own signature, she bore an onus of establishing that the signature had been applied fraudulently.^[22]  It was unnecessary to consider questions of onus to resolve this case.  The evidence as a whole comfortably established on the balance of the probabilities that Ms Klodinsky signed the Agreement in the manner alleged by ABF.  The consequence is that Ms Klodinsky is bound by the Agreement.

Was Ms Klodinsky’s signature properly attested?

86. [86]
    Even if Ms Klodinsky’s signature was applied to the Agreement in Mr Fairweather’s presence, Mr Stanistreet contended that it was not attested as required by s. 45 Property Law Act 1974 for the purpose of constituting the Agreement a deed in respect of Ms Klodinsky’s obligations. 
87. [87]
    That section relevantly provides:

45 Formalities of deeds executed by individuals

(1) Where an individual executes a deed, the individual shall either sign or place the individual’s mark upon the same and sealing alone shall not be sufficient.

(2) An instrument expressed—

(a) to be an indenture or a deed; or

(b) to be sealed;

shall, if it is signed and attested by at least 1 witness not being a party to the instrument, be deemed to be sealed and, subject to section 47 , to have been duly executed.

(3) No particular form of words shall be requisite for the attestation.

88. [88]
    Mr Stanistreet’s contention arises out of the form of the attestation.  I refer to paragraph [20] above.  It can be seen that Mr Fairweather’s attestation is not repeated under both Ms Klodinsky’s signature and Mr O'Shea’s signature, but rather appears after both.  Ms Klodinsky contends that the effect of this is that Mr Fairweather has not “attested” as required by s. 45(2) Property Law Act 1974, the signature of Ms Klodinsky.
89. [89]
    It can be accepted that if Ms Klodinsky signed the Agreement at some time prior to Mr Fairweather attesting the signatures (and therefore not in his presence), then he will not have attested the signature as required by the section.^[23] 
90. [90]
    However, I have found that she was in his presence when the Agreement was executed.  In that circumstance, I reject the proposition that the signature is not attested as required by the section for two reasons. 
91. [91]
    First, the statute poses a factual inquiry, was Ms Klodinsky’s signature witnessed by Mr Fairweather.  No particular form of words is required.  I have found as a fact that Ms Klodinsky was signed before Mr Fairweather and therefore his attestion in fact relates to both signatures. 
92. [92]
    Alternatively, if it were thought that the scope of the attestation clause has to be construed objectively as part of the document, than in my view, looked at objectively, the attestation clause is intended to attest both signatures.  However, if it is not, it is, at worst, ambiguous as to whether it relates to one or both signatures.  Regard may be had to relevant extrinsic facts to resolve ambiguity.^[24]  I have found that Ms Klodinsky was present and signed before Mr Fairweather. That is a relevant extrinsic fact to construction of the attestation clause which establishes that it related to both signatures in each case.
93. [93]
    The Agreement took effect as a deed against all parties.

The Option Fee issue

94. [94]
    Ms Klodinsky contends that she is not bound by the Agreement as a deed because either:

    1. (a)
       If she signed it, she did not do so before Mr Fairweather and therefore it is not properly attested; or
    2. (b)
       Even if she did sign it before Mr Fairweather, it was not validly attested.
95. [95]
    I have rejected both contentions.  However, if I am wrong, I turn to considering her further argument (Mr O'Shea made a similar argument but advanced no basis to consider he was not bound by the Agreement as a deed).
96. [96]
    The contention turns on the allegation that the $1 Put Option Fee was never paid.  There is no evidence that it was paid, beyond the acknowledgement in clause 5.1.  Such an acknowledgement is not conclusive proof of payment, but rather evidence that payment has occurred.^[25]  Direct evidence was given by Ms Klodinsky that the dollar was not paid and nor was Mr Smith to give any evidence that it was.  I am not persuaded the dollar was paid.
97. [97]
    The contention of Ms Klodinsky then seems to be this: on the proper construction of clause 5.2, the payment of the Put Option Fee was a condition precedent to any obligations arising in respect of the Put Option.  As it was not paid, the defendants are not bound by their promises in respect of the Put Option. 
98. [98]
    In a lighter moment, Mr de Jersey submitted that there was no evidence that the Call Option fee was paid, and that the two breaches “cancelled each other out”.  I did not require Mr Stanistreet to respond to that submission.  Notwithstanding that, I consider that the defendants were bound by the Agreement even if it did not take effect as a deed and even if the $1 was not paid.
99. [99]
    First, clause 5.2 is cast in the language of an exchange of promises.  The promise to pay $1 is good consideration and is expressly bargained for as consideration for the promise to grant the Put Option.  It is not possible reasonably to construe this form of language as making the first promise a condition precedent for the existence of the counter promise, at least in the context of this contract.   
100. [100]
     Second, it is plain from reading the Agreement as a whole, that it creates an inter-related structure of promises which facilitate the overall purpose of the transaction.  ABF buys the units, it grants a Call Option should the defendants wish to acquire the units and, obtains a Put Option to secure its position should the defendants not complete the Call Option and it turn out to be contrary to ABF’s wishes to hold the units long term.  The proposition that just one part of this commercial suite of promises and counterpromises should be conditional on the payment of the nominal option fee is an entirely uncommercial construction of the Agreement.  On the proper construction of the Agreement the each of the obligations undertaken by each party were in consideration of the obligations undertaken by the other.
101. [101]
     Third, clause 18.1 stands against a construction making the Buyer’s obligations conditional in the manner contended for.
102. [102]
     It seemed at one point that it might also have been contended that the failure to pay the Put Option Fee somehow made the contract ineffective for failure of consideration.  The second point above answers that proposition.  However, I was unable ever to identify how such a contention availed the defendants.  Failure of consideration is a concept known to the law of restitution.  It was explained recently by the High Court as follows^[26]:

31 Failure of consideration is one of the factors that makes retention of a benefit prima facie unjust. It was recognised by Lord Mansfield (69) as a ground for a claim for money had and received. It was a criterion of recoverability which survived the rejection in the United Kingdom and Australia of the implied contract theory. This Court has, on more than one occasion, described failure of consideration in terms set out by the late Professor Birks (70):

“Failure of the consideration for a payment … means that the state of affairs contemplated as the basis or reason for the payment has failed to materialise or, if it did exist, has failed to sustain itself.”

31As Gummow J pointed out in Roxborough v Rothmans of Pall Mall Australia Ltd (71), failure of consideration for the purpose of a claim for money had and received is not confined by contractual principles (72). In that case there had been no failure of performance by Rothmans of any promise it had made. There was no question of repudiation by it of its contractual obligations. The question was whether it was “unconscionable” for Rothmans as the recipient of payments to retain them in circumstances in which it was not specifically intended or especially provided that it should so enjoy them (73). The question of unconscionability, as his Honour explained, derived from the general equitable notions which found expression in the common law count for money had and received (74). This Court acknowledged in Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation (75) that “contemporary legal principles of restitution or unjust enrichment can be equated with seminal equitable notions of good conscience” albeit the action itself is not for the enforcement of a trust. The reference to conscionability in this context, however, does not mean that whether enrichment is unjust is to be determined by reference to a subjective evaluation of what is fair or unconscionable. As the Court reiterated in Farah Constructions Pty Ltd v Say-Dee Pty Ltd (76): “recovery rather depends on the existence of a qualifying or vitiating factor falling into some particular category.” (Footnote omitted.)

103. [103]
     The defendants neither pleaded nor identified what matter, beyond failure to perform the promise to pay the Put Option Fee, gave rise to any restitutionary claim, nor how such a claim would assist the defendants.  Nor did they develop any argument as to the basis upon which the Agreement would be ineffective in absence of performance of the promise to pay $1.
104. [104]
     The failure to pay the Put Option Fee is, at most, a breach of contract.  Termination for any such breach is not permitted because it is unlikely, on proper construction of this contract with its suite of interlocking promises, to be a condition of the contract. And even if it was, clause 7 regulating termination has not been complied with in respect of any such breach by the defendants and they have never purported to terminate for breach. 
105. [105]
     The failure to pay the Put Option Fee does not affect the entitlement of ABF to damages for breach of the obligations arising under the Put Option in the circumstances of this case.

Mr O'Shea’s other contentions

106. [106]
     Mr O'Shea additoinally contends that ABF’s termination of the Agreement was invalid because it failed to provide 14 days to comply with the Default Notice as required by clause 7.1(a) in that:^[27]

     1. (a)
        The termination notice was dated 23 August 2017;
     2. (b)
        Service of the Default Notice by email on Bell Legal on 7 August 2017 was more than 14 days before the termination notice but was invalid as service under the Agreement; and
     3. (c)
        Service of the Default Notice by post was valid but was deemed to have occurred less than 14 days prior to termination on 23 August 2017.
107. [107]
     These points were included by Ms Klodinsky in her pleading but were not pursued at trial.  However, they need to be dealt with as part of the consideration of the plaintiff’s case against Mr O'Shea.
108. [108]
     Mr O'Shea’s contentions are wrong.
109. [109]
     First, the premise of the argument is that ABF terminated the Agreement on 23 August 2017.  However, that is the date of the letter which terminated the Agreement.  Termination of a contract must be communicated.  In the absence of evidence to the contrary, the termination notice will be deemed to be received two business days after posting: clause 15.3(a).  That will be, at the earliest (assuming the letter was sent on 23 August 2017) 25 August 2017.  The notice sent by post to the defendants was sent on 7 August 2017.  Assuming deemed service on 9 August 2017, the termination will have been communicated on the 15^th day after service of the Default Notice.   This point was pleaded in ABF’s reply.  It provides a complete answer to the validity of the termination contention by Mr O'Shea.
110. [110]
     Second, in my view, the service by email on Ms Miller was valid service of the Default Notice in any event.  The process whereby the defendants retained different solicitors from the Buyer’s Solicitor identified under the Agreement comprised an implied variation of the Agreement, whereby in consideration of ABF agreeing to permit a change to solicitors by the defendants, the defendants impliedly agreed to accept service on those defendants.  There is no other objective interpretation of the conduct of the defendants in response to the 18 July 2017 letter which ABF sent, consistent with the contract, to OMB in the first instance.  Service on Bell Legal was service on the Buyer’s Solicitor for the purposes of the Agreement.  
111. [111]
     I also reject the argument that service by email on the defendants’ solicitor is not service for the purpose of the clause 15.2.   Service on Bell Legal was service on the defendants’ agent of a document which it was within the scope of the agent’s authority to receive.  Clause 15.2 does not purport to restrict or confine the ways in which service may be effected.  The only essential requirement for a notice under the Agreement is that stated in clause 15.1: that is be in writing.  The rest of the provisions of clause 15 are facilitative provisions.  Clause 15.2 plainly contemplates that service may occur by any method of service provided by law.  Those words are apt to include methods of service provided by statute as well as general law.  There is no good reason to read them down.  Service on a solicitor of a party within the scope of that person’s retainer is valid service of a document.

Conclusion

112. [112]
     ABF has made out its claim against the defendants and is entitled to judgment in the amount claimed in its trial submissions.  I will hear the parties as to costs.