Federal Court of Australia

J & N Nominees Pty Ltd (as trustee of the J & N Unit Trust) v Deva Darwin Pty Ltd [2026] FCA 693

ORDERS

THE COURT ORDERS THAT:

1.    The applicant recover possession of the land at Lot 625, Town of Darwin, also known as 89 Mitchell Street, Darwin, Northern Territory.

2.    The applicant have liberty to apply for the enforcement of order 1, including under r 41.10 of the Federal Court Rules 2011 (Cth).

3.    There be judgment for the applicant in respect of its claims against the first respondent in paragraphs 1.4 and 1.5 of the originating application filed on 10 September 2025, in the amount of $1,535,058.08.

4.    There be judgment for the applicant in respect of its claims against the second respondent in paragraphs 2.1 and 2.2 of the originating application filed on 10 September 2025, in the amount of $1,535,058.08.

5.    There be judgment for the applicant for sums which have fallen due under the existing lease and loan agreements, since 11 November 2025.

6.    The first respondent’s cross-claim against the applicant in its amended notice of cross-claim dated 21 November 2025 be dismissed.

7.    The respondents pay the applicant’s costs of and incidental to the proceeding, including the cross-claim, as agreed or assessed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

MCDONALD J:

Introduction

1    The applicant and cross-respondent, J & N Nominees Pty Ltd as trustee of the J & N Unit Trust (J&N), is the owner of the land at 89 Mitchell Street, Darwin (Land). The first respondent and cross-claimant, Deva Darwin Pty Ltd (Deva), is the lessee of the Land, on which it conducts a business operating the Discovery nightclub, the Lost Arc bar and (through a contract with a third-party operator) the Fantasy Lounge adult entertainment venue. The second respondent, Mario Madaffari, is the sole director of Deva, and the guarantor of various obligations owed by Deva to J&N.

2    On 7 March 2012, J&N and Deva entered into Lease No 847516 (Lease). The term of the Lease was three years, from 6 March 2012 to 5 March 2015. The Lease contained seven options for its renewal, each option entitling Deva to renew the Lease for a fixed term of either one year or three years, providing that certain specified conditions were met. The Lease was renewed on several occasions. The effect of the last renewal was that the Lease would (if not further renewed) expire on 5 March 2025.

3    From time to time since 2016, J&N has provided financial assistance to Deva to support the operation of its business. Relevantly, J&N and Deva entered into a loan agreement and a general security agreement on 22 March 2016, a mortgage of a lease on 23 March 2016, a loan agreement and a general security agreement on 17 July 2017, and a loan agreement and a general security agreement on 7 May 2021 (Loan Agreements). Mr Madaffari was a guarantor of Deva’s indebtedness to J&N under each of the Loan Agreements. This was also acknowledged in the terms of the Lease, as varied.

4    Deva failed to pay rent that was due under the Lease, and failed to make payments as required under the Loan Agreements. In early 2025, J&N notified Deva that J&N required Deva to provide vacant possession of the Land from 6 March 2025. In February 2025, following without-prejudice negotiations between the solicitors for J&N and Deva, the parties entered into a contract entitled “Heads of Terms”, which contemplated that Deva would pay agreed sums owing under the Lease and the Loan Agreements and that the parties would enter into a new lease and a new loan agreement by 5 March 2025. J&N contends that Deva breached the Heads of Terms, and Deva contends that J&N did.

5    J&N seeks the following orders (according to its revised minute provided to the Court on the last day of the trial):

1.    The applicant recover possession of the land at Lot 625, Town of Darwin, also known as 89 Mitchell Street, Darwin, Northern Territory.

2.    There be liberty to apply with respect to the enforcement of the order in paragraph 1 including under rule 41.10 of the Federal Court Rules 2011 (Cth).

3.    There be judgment for the applicant in respect of its claims against the first respondent in paragraphs 1.4 and 1.5 of the originating application for $1,535,058.08.

4.    There be judgment for the applicant in respect of its claims against the second respondent in paragraphs 2.1 and 2.2 of the originating application for $1,535,058.08.

5.    The first respondent’s cross-claims against the applicant in its amended notice of cross claim are dismissed.

6.    The first respondent and second respondent are to pay the applicant’s costs of and incidental to the proceedings including of the cross-claims.

6    The respondents seek the following orders (as set out in Deva’s amended notice of cross-claim):

1.    An order for specific performance compelling the Cross-Respondent to grant and execute the New Lease on the terms set out in the Heads of Terms (as incorporated into the Draft New Lease), including the Cross-Respondent’s option to purchase the Cross-Claimant’s assets, plant and equipment at the Premises at a price to be agreed, or if not agreed, as determined by an independent valuer, with any set-off for moneys owing as provided in the Heads of Terms.

2.    Alternatively, damages in lieu of specific performance of the New Lease.

3.    An order for specific performance compelling the Cross-Respondent to grant and execute the New Loan on the terms set out in the Heads of Terms (as incorporated into the Draft New Loan).

4.    Alternatively, damages in lieu of specific performance of the New Loan.

5.    Liberty to apply for the parties to seek the Court’s assistance in settling the terms of the New Lease and/or New Loan if agreement cannot be reached as to the final wording of those documents.

6.    Alternatively, a declaration that the Cross-Respondent is estopped from denying that the Cross-Claimant is entitled to the relief set out in Orders 1 and 3 above.

7.    An order that, by reason of the estoppel, the Cross-Respondent grant and execute the New Lease and New Loan on the same terms as Orders 1, 3 and 5 above, or alternatively, such terms as the Court considers appropriate.

7    For the reasons that follow, J&N’s claims against Deva and Mr Madaffari should be upheld. Deva’s cross-claim should be dismissed. J&N is entitled to recover possession of the Land. Deva and Mr Madaffari are liable to pay the debts outstanding to J&N under the Lease and the Loan Agreements. Deva and Mr Madaffari should pay J&N’s costs of the proceedings. Accordingly, it is appropriate to make orders to the effect of those sought by J&N.

Background facts

The history of dealings between the parties leading up to the Heads of Terms

8    Following the expiration of the original term on 5 March 2015, the Lease was renewed on several occasions. The term of the Lease was due to expire on 5 March 2025. In accordance with cl 4.9(a) of the Lease, if Deva wished to renew the Lease beyond that date, it was required to give notice to J&N by 5 December 2024. It did not do so. Deva’s right of renewal was not enlivened in any event, because that right was expressly conditioned on Deva, at the time of the request to renew, not being “in breach of any of the Terms of this lease”. Deva was, in fact, in breach of the terms of the Lease, because it had failed to pay any of the rent that was due under the Lease since July 2024. As Deva would formally acknowledge in the Heads of Terms executed in February 2025, it was by then in default in the amount of $316,516.29 under the Lease and in the amount of $151,506 under the Loan Agreements.

9    On 15 January 2025, J&N’s solicitor, John Tsoukalis, sent a letter by email to Mr Madaffari. The letter asserted that J&N was entitled to possession of the Land on 6 March 2025 and to payment of $411,170.77, with additional capital amounts of $968,381.66 due to be repaid from January 2025 under the Loan Agreements. Mr Tsoukalis’s letter invited discussions regarding the consensual finalisation of matters under the Lease and the Loan Agreements.

10    Following communications between Mr Tsoukalis and the solicitor for Deva, Lachlan Rigg, on 13 February 2025, the parties entered into the Heads of Terms.

The Heads of Terms

Express terms

11    The Heads of Terms is dated 13 February 2025. The evidence establishes that Mr Madaffari executed the Heads of Terms on behalf of Deva on that date, and John Halkitis executed it on behalf of J&N on or shortly after that date. There is no dispute that the Heads of Terms constituted a binding contract between J&N (referred to as “JN” in the Heads of Terms) and Deva. It is a critical document having regard to the issues in the proceedings.

12    By cl 1 of the Heads of Terms, Deva expressly acknowledged and confirmed that, as at the date of the Heads of Terms:

(a)    $151,506 was due and owing under the Loan Agreements (Loan Amount); and

(b)    $316,516.29 was due and owing under the Lease (Lease Amount).

13    Clause 2 of the Heads of Terms stated:

2.    On or before 14 February 2025, Deva shall make payment of the Loan Amount to JN.

14    Clause 16, the last clause of the Heads of Terms, recorded an acknowledgment by J&N that payment of the Loan Amount was made by Deva on 12 February 2025. That is, Deva had already complied with the obligation imposed by cl 2 by the time the Heads of Terms were finalised and executed. By cl 3 of the Heads of Terms, J&N acknowledged and agreed that Deva’s payment of the Loan Amount would remedy all current outstanding loan payment breaches or defaults under the terms of the Loan Agreements.

15    Clauses 4 and 6 of the Heads of Terms required the parties to use “all reasonable endeavours” to achieve certain outcomes (Reasonable Endeavours Obligations).

16    Clauses 4 and 5 of the Heads of Terms related to the preparation and execution of a new lease agreement (New Lease), and stated as follows:

4.    Subject to Deva making payment of the Loan Amount by 14 February 2025, the parties shall use all reasonable endeavours to enter into a new lease for the Premises (New Lease) on or before 5 March 2025. The New Lease shall commence on 6 March 2025 and replace the current Lease which ends on 5 March 2025, subject to the Lease Amount being paid.

5.    The New Lease shall be on the same terms as the current Lease (including the various applicable Lease Amendments) and shall also:

(a)    incorporate the terms of the applicable Lease Amendments;

(b)    include a new initial term of then [sic] Lease commencing on 6 March 2025 and expiring 5 March 2028 with the options to renew for the remaining further terms as specified in the applicable Lease Amendments;

(c)    allow the tenant to assign the New Lease to a related entity subject to:

i.    obtaining the landlord’s consent (which may not be unreasonably withheld subject to the Landlord being satisfied at its absolute discretion as to the financial standing, financial viability and capacity of any assignee); and

ii.    Deva paying out all moneys owing to JN pursuant to the Loan Agreements or the New Loan Agreement (as relevant) or the assignee, Deva and Mario Madaffari providing security to JN that is acceptable to JN to secure all moneys owing by Deva to JN pursuant to the Loan Agreements or the New Loan Agreement.

(d)    confirm that the tenant may enter into a sublease subject to obtaining the landlord’s consent (which may not be unreasonably withheld);

(e)    provide the landlord with the option, at the expiry or termination of the New Lease, to purchase any of the tenant’s assets, plant and equipment at the Premises for an amount agreed by the parties or if not agreed, for an amount determined by independent valuer. The landlord shall be entitled to set off and deduct from the purchase amount payable for the assets, plant and equipment, any moneys that are owing by Deva to JN;

(f)    provide the Landlord with the option, at the expiry or termination of the New Lease, to purchase the gaming machine licences applicable to the Premises for an amount agreed by the parties or if not agreed, for an amount determined by independent valuer. The landlord shall be entitled to set off and deduct from the purchase amount payable for the gaming machine licences, all moneys that are owing by Deva to JN;

(g)    confirm that the liquor licence applicable to the premises shall be transferred to the landlord at the expiry or termination of the New Lease for no cost; and

(h)    include any additional terms required by JN, acting reasonably and in good faith, for the purpose of consolidating the current Lease and the Lease Amendments into the New Lease.

17    Clauses 6, 7 and 8 of the Heads of Terms related to the preparation and execution of a new loan agreement (New Loan Agreement), and were in the following terms:

6.    Subject to Deva making payment of the Loan Amount by 14 February 2025, the parties shall use all reasonable endeavours to enter into a new loan agreement (New Loan Agreement) on or before 5 March 2025.

7.    The parties acknowledge that the existing Loan Agreements and the existing Securities continue to be valid and binding on the parties and enforceable by the Landlord until the commencement of the fully executed New Loan Agreement at which time the existing Loan Agreements will be superseded only[.]

8.    The New Loan Agreement shall consolidate and be on the same terms as the current Loan Agreements and shall also:

(a)    include cross-collateral terms with the New Lease, whereby if Deva defaults under the Lease or New Lease (as relevant) and has failed to remedy the breach within 14 days of receipt of notice, Deva would be deemed to also be in default under the New Loan Agreement entitling JN to recourse against the collateral under the New Loan Agreement and the Securities;

(b)    acknowledge the validity of the Securities granted by Deva and its director Mario Madaffari;

(c)    confirm that Deva must provide signed Liquor Licence and Gaming Machine licence transfer forms in blank to be held by JN in escrow as part of its security;

(d)    include any additional terms required by JN, acting reasonably and in good faith, for the purpose of consolidating the Loan Agreements and existing Securities into the New Loan Agreement.

18    Clause 9 of the Heads of Terms is a critical clause, as it contains the contractual obligation which J&N alleges was breached by Deva, and on which J&N relies for both its primary contention that the Heads of Terms came to an end by effluxion of time at the end of 5 March 2025 and its alternative contention that J&N lawfully terminated the Heads of Terms on 6 March 2025. Clause 9, and cl 10, which was closely connected with it, stated:

9.    On or before 28 February 2025, Deva shall make payment of the Lease Amount to JN.

10.    With effect on and from payment of the Lease Amount, JN acknowledges and agrees that Deva’s payment of the Lease Amount remedies all current outstanding payment breaches or defaults under the terms of the Lease. For the avoidance of doubt, this does not include any Further Amounts that may become payable after the date of this Heads of Terms.

19    As will be seen, the time fixed by cl 9 was later extended to 5 March 2025 by an email sent on 28 February 2025 from J&N’s solicitor, Mr Tsoukalis, to Deva’s solicitor, Mr Rigg. The exchange of correspondence between Mr Tsoukalis and Mr Rigg, including this email, is discussed at [31]-[52] below.

20    I pause at this point to make some brief observations about cll 4 to 9 of the Heads of Terms.

21    First, the Reasonable Endeavours Obligations in cll 4 and 6, were obligations imposed on both parties. It was clear enough from the correspondence between the solicitors for the parties, and their usual practice, that J&N’s solicitor, Mr Tsoukalis, would undertake the task of preparing the first proposed draft of the New Lease and the New Loan Agreement.

22    Secondly, cl 5 (in relation to the New Lease) and cl 8 (in relation to the New Loan Agreement) identified, in a relatively precise and prescriptive way, the content to be included in the New Lease and the New Loan Agreement. Most of the terms were to reflect the previous terms contained in earlier versions of the Lease and its amendments and the earlier loan agreements, and the nature of the additional terms was reasonably clearly spelt out. The preparation of the New Lease and the New Loan Agreement was not purely mechanical, and would require some work, including careful checking by the parties’ solicitors, but could not be expected to be an especially onerous or time-consuming task.

23    Thirdly, the Reasonable Endeavours Obligations were expressed to be subject to Deva making payment of the Loan Amount by 14 February 2025, but were not expressed to be subject to Deva making payment of the Lease Amount.

24    Fourthly, it is nevertheless important to note that the Heads of Terms, as originally drafted and agreed to, contemplated that Deva was to make payment of the Lease Amount by 28 February 2025, while cl 4 contemplated that the New Lease need not be entered into until 5 March 2025 (at the latest) and the requirement to use all reasonable endeavours was directed to achieving the execution of the New Lease and New Loan Agreement by 5 March 2025. Clause 4 stated that the New Lease was to take effect on the following day, 6 March 2025, but that was expressed to be subject to the Lease Amount having been paid. In short, the Heads of Terms contemplated that the payment of the Lease Amount and the preparation and entry into the New Loan Agreement would occur in parallel, but did not make one dependent on the other. The Heads of Terms contemplated that the Lease Amount would be paid some days before the New Lease and the New Loan Agreement were required or expected to be finalised.

25    Clause 11 of the Heads of Terms also has some potential importance, in circumstances where Deva contends that, because of J&N’s delay in providing (through Mr Tsoukalis) drafts of the New Loan Agreement and the New Lease (which Deva claims constituted a breach of the Heads of Terms), the Heads of Terms did not come to an end on 5 or 6 March 2025, but rather continued to operate after that date (and, indeed, still continues to operate). Clause 11 provided:

11.    Deva agrees that any amounts that become payable under the current Loan Agreements and the Lease between the date of this Heads of Terms and the commencement of the New Lease and the New Loan Agreement (Further Amounts) shall be paid as and when due and payable under the current Lease and the current Loan Agreements. For the avoidance of doubt, the Further Amounts shall consist of the monthly principal and interest loan instalment of $16,834.00 under the current Loan Agreements and the monthly rent payment of $30,398.02 and any outgoings under the Lease[.]

26    Clause 12 of the Heads of Terms provided that, subject to cl 14, J&N agreed not to commence legal proceedings or take any action against Deva or its related entities, but made clear that it did not prevent J&N commencing legal proceedings or taking other action after 6 March 2025. Clause 13 defined various expressions for the purposes of the Heads of Terms.

27    Clauses 14 and 15 of the Heads of Terms are two further critical clauses. They provided:

14.    Time shall be of the essence in respect of the performance of the above terms. Deva acknowledges that, if it breaches any of the terms above, JN has the right to terminate these Heads of Terms forthwith on written notice and then to proceed forthwith to enforce its rights under the existing Lease and Loan Agreements and otherwise as if these Heads of Terms had not been entered into but giving credit to Deva for any amounts paid hereunder.

15.    Deva and JN agree that:

(a)    these Heads of Terms shall expire and cease to apply as from 6 March 2025; and

(b)    nothing in these Heads of Terms shall affect the validity of the existing Lease and the Loan Agreements which continue to be valid and binding on the parties unless superseded by an executed New Lease and New Loan Agreement (as relevant).

28    Clause 16 of the Heads of Terms has already been mentioned at [14] above.

Implied terms for which the respondents contend

29    In addition to the express terms of the Heads of Terms, the respondents contend that the Heads of Terms contained several implied terms, namely that:

(a)    the party responsible for preparing and providing the first drafts (ie, J&N) would do so within a reasonable time and in a manner that allowed Deva, and its legal advisers, a reasonable opportunity to review, seek instructions, obtain legal advice, redraft, and negotiate the terms of the New Lease and New Loan Agreement before the expiry of the Heads of Terms and the Lease (Reasonable Time for Review Implied Term);

(b)    the first drafts would comply with the substance of the previously agreed clauses in the Heads of Terms (Agreed Content Implied Term); and

(c)    neither party would do anything to hinder or prevent the other from performing its obligations under the Heads of Terms, including (but not limited to) providing draft documents in a manner or at a time that would deprive the other party of a reasonable opportunity for review, advice, and negotiation (Not to Hinder or Prevent Performance Implied Term).

30    The first two implied terms are said to arise “as a matter of proper construction and/or by necessary implication”. The third is said to be “an implied term of the Heads of Terms or a necessary incident of the Reasonable Endeavours Obligations”. The implication of each of these terms is said by Deva to be necessary to give business efficacy to the Heads of Terms and to be so obvious that it goes without saying.

Correspondence between Mr Tsoukalis and Mr Rigg following the execution of the Heads of Terms

31    On 26 February 2025, Mr Rigg sent an email to Mr Tsoukalis, noting that only a week remained until the expiry of the Lease and requesting that J&N “provide copies of the draft documents as soon as possible”. The email also stated:

We note that our review of the documents will by necessity consume as least two or three days and we are obviously very minded to have these documents signed by early next week at the latest.

32    On 27 February 2025 at 12.15pm, Mr Tsoukalis sent an email to Mr Rigg attaching a draft of the New Lease, marked up with Mr Tsoukalis’s changes and noting that, given J&N had not yet reviewed and approved those changes, Mr Tsoukalis reserved the right to make amendments to the draft. Mr Tsoukalis further stated that he was “working on the new Loan Agreement”.

33    On the same day, Mr Rigg replied to Mr Tsoukalis’s email with the following:

I acknowledge receipt of the draft new lease and confirm that we [sic] currently taking instructions and reviewing the draft new lease.

Despite it being two weeks since the heads of terms signed by our client were provided to you, we note that we are still yet to receive the draft new loan agreement from you.

I refer to my email from earlier this week and reiterate that our review of the draft new lease and draft new loan agreement will require several days. Further, please note that Monday 3 March 2025 is a public holiday in Western Australia.

Therefore, as a matter of urgency, we require the draft new loan agreement be provided to us for our review as soon as possible.

In the circumstances, our client requires that we receive, review and settle the new lease and new loan agreement before our client makes payment of the rent debt in full.

However, notwithstanding your client’s failure to provide drafts of the new lease and new loan agreement within a reasonable time, our client shall still tomorrow make a part payment towards the rent debt in good faith.

We trust that you will provide us with the draft new loan agreement shortly so that the parties may mutually and expeditiously advance the matter.

34    Also on 27 February 2025, Deva paid the sum of $16,834 to J&N. That was not, however, a part payment of the Lease Amount (as the terms of Mr Rigg’s email suggested would be made); it was, rather, merely the additional amount that had become owing by Deva to J&N under the last of the Loan Agreements.

35    On 28 February 2025 at 3.59pm, Mr Tsoukalis sent an email to Mr Rigg, attaching the draft of the New Loan Agreement which Mr Tsoukalis had prepared. The respondents contend that the first paragraph of Mr Tsoukalis’s email amounts to a representation that J&N was providing the draft of the New Loan Agreement in a form that reflected the terms stipulated in the Heads of Terms (Compliance with Heads of Terms Representation). The first part of the email provided as follows:

I attach a draft of the proposed new Loan Agreement. The draft is provided subject to contract. I note that a draft of the proposed new Lease was provided to you, subject to contract, on 27 February 2025. These are drafts of the agreements our respective clients have agreed to settle and enter into in accordance with the Heads of Terms dated 13 February 2025 … .

36    The email also stated:

I also note that your client made payment last night to our client of the sum of $16,834. Our client understands that this payment is the February instalment of the Loan Amount. The Lease Amount of $316,516.29 is due to be paid by your client today under clause 9 of the Heads of Terms.

In the circumstances, and without making any concession and with a full reservation of its rights, I am instructed to advise that our client will accept payment of the Lease Amount of $316,516.29 at any time prior to midnight on 5 March 2025 as being satisfaction of your client’s obligations under clause 9 of the Heads of Terms. If your client does not pay the Lease Amount of $316,516.29 prior to midnight on 5 March 2025, our client reserves the right to terminate the Heads of Terms forthwith.

This is the only indulgence our client is prepared to give your client in terms of its compliance with the Heads of Terms. For the avoidance of any doubt, all other terms and conditions are unaffected by this offer. Time also remains of the essence.

37    The respondents further contend that, by Mr Tsoukalis’s email of 28 February 2025, J&N impliedly represented to Mr Rigg (and thus to Deva) that Deva and its advisers would have sufficient time to review, seek instructions, obtain legal advice, redraft and negotiate the terms of the New Lease and New Loan Agreement before the expiry of the Heads of Terms and the Lease (Sufficient Time Representation).

38    Mr Tsoukalis’s email of 28 February 2025 effectively extended the time fixed by cl 9 of the Heads of Terms for the payment of the Lease Amount from 28 February 2025 to 5 March 2025.

39    On 5 March 2025, Mr Rigg sent an email to Mr Tsoukalis, attaching a draft of the New Lease with Deva’s proposed amendments. The email read:

Please note that we are currently taking instructions and are reviewing the draft new loan agreement.

However, as I advised last week, Monday was a public holiday in Western Australia, so we have lost some time on our end since you provided the draft new loan agreement.

I refer to my emails from last week and reiterate that our client has been unable to complete its review of the draft documents ahead of 5 March 2025 as a result of your client’s delay in providing the draft new lease and draft new loan agreement.

Notwithstanding this delay from your client, I am instructed that our client is intends [sic] to enter into the new lease and new loan agreement in accordance with the terms agreed in the Heads of Terms and pay the outstanding rent debt once those documents are in a settled form.

To advance the matter in the meantime, please see attached draft lease with our proposed amendments. This draft is subject to our client’s further review. Please note that the changes proposed are in accordance with the various extensions and variations to the current lease and the agreed heads of terms.

For the avoidance of doubt, until the new lease is signed, from 6 March 2025 the lease will be in a Holding Over period in accordance with clause 4.8 of the current lease. To this purpose, I am instructed that my client paid the rent for March 2025 last Friday.

(Emphasis in original.)

40    On 6 March 2025, Mr Tsoukalis sent an email to Mr Rigg, stating:

I refer to our prior communications and to the Heads of Terms dated 13 February 2025 which I also attach to this email.

I note the following:

1.    Pursuant to clause 15(a), the Head of Terms have “expired” and cease to apply.

2.    The Landlord notes that, in any event, the Tenant failed to pay the Lease Amount in full by 5 March 2025. If, contrary to the Landlord’s primary position, the Heads of Terms are still on foot, the Landlord hereby terminates the Heads of Terms in reliance on the Tenant’s failure to satisfy that requirement under the Heads of Terms.

3.    The Term of Lease Reg No. 847516 expired midnight last night 5 March 2025.

4.    The Tenant has no agreement from the Landlord, express or implied, to remain on the Premises and is obliged to vacate forthwith.

Kindly advise by close of business on Tuesday 11 March 2025 the Tenant’s proposal for the orderly handover of the Premises and the discharge by the Tenant of all of its outstanding obligations to the Landlord which I note are secured over the Tenant’s assets and undertaking as well as being supported by a personal guarantee.

Unless the Landlord receives a realistic and workable proposal from the Tenant which properly recognises the Landlord’s rights, the Landlord will proceed to fully enforce its rights to the premises and in respect of all other property over which it has a security as well as against the Tenant and its guarantor.

41    On 6 March 2025, at some point after the receipt of this email, there was a telephone conversation between Mr Rigg and Mr Tsoukalis.

42    Later on 6 March 2025, Mr Rigg sent Mr Tsoukalis an email in the following terms:

The delays in our client receiving the draft new lease and new loan agreement resulted in our client incurring further delays in respect to the payment of the rent debt for the reasons discussed in our call.

The capitalised terms in the below proposal take the meaning given to them in the heads of terms dated 13 February 2025 (Heads of Terms) unless the context requires otherwise.

In an effort to resolve the matter in an amicable fashion, our client makes the following proposal:

1.    On or before 31 March 2025, Deva shall make payment of $316,516.29 (Lease Amount) to JN.

2.    With effect on and from payment of the Lease Amount, JN acknowledges and agrees that Deva’s payment of the Lease Amount remedies any outstanding payment breaches or defaults under the terms of the Lease relating to or arising from payments that became due and payable under the Lease prior to 1 February 2025.

3.    JN and Deva shall use all reasonable endeavours to negotiate in good faith and finalise the draft documents for:

(a)    the New Lease for the Premises in accordance with the terms set out under clause 5 of the Heads of Terms; and

(b)    the New Loan Agreement in accordance with the terms set out under clause 8 of the Heads of Terms.

4.    Following payment of the Lease Amount, the parties shall immediately enter into, execute and exchange counterparts of the New Lease and New Loan Agreement.

Our client believes that the above proposal represents the most efficient, commercial and equitable method of resolving matters.

The above proposal shall remain open for acceptance until 2:00pm AWST on Friday 14 March 2025 at which time it will lapse and be incapable of acceptance.

(Emphasis in original.)

43    On 11 March 2025, Mr Rigg emailed Mr Tsoukalis, stating:

Our client acknowledges that the term of the lease expired on 6 March 2025. However, at 12:00am on 6 March 2025, our client was holding over the lease and occupying the premises with the consent of the landlord which is necessarily implied by the conduct of the parties in the preceding month.

Accordingly, the lease entered into a holding over period on 6 March 2025 and our client became a monthly tenant pursuant to clause 4.8 of the lease. Your email of 6 March 2025 which attempts to withdraw your client’s consent was received after the lease had entered into the holding over period and otherwise has no effect on the holding over.

As a result:

(a)    the lease remains ongoing;

(b)    our client has no obligation to vacate the premises;

(c)    our client is entitled to continue to occupy the premises as a monthly tenant on the same terms as the terms of the lease; and

(d)    your client is not entitled and otherwise prevented from retaking possession of the premises under the lease, common law, the Business Tenancies (Fair Dealings) Act 2003 (NT) and the Law of Property Act 2000 (NT)

In the circumstances, my client has no intention to vacate the premises that it is entitled to occupy under the terms of the lease.

In respect to the Heads of Terms, we note that:

(a)    despite the Loan Amount being paid prior to the execution of the Heads of Terms, your client in breach of its obligations under clauses 4 and 6 of the Heads of Terms, failed to use all reasonable endeavours to enter into a New Lease and New Loan Agreement on or before 5 March 2025;

(b)    pursuant to clause 14 of the Heads of Terms, time was of the essence in respect to your client’s obligation to use all reasonable endeavours to enter into a New Lease and New Loan Agreement; and

(c)    pursuant to clause 15(b) of the Heads of Terms, the existing Lease continues to be valid and binding on the parties unless superseded by an executed New Lease.

For the reasons above, the lease continues to apply unless superseded by an executed New Lease.

To that end, I am instructed that my client wishes to proceed with entering into the New Lease and New Loan Agreement on the same terms as the those agreed in the Heads of Terms.

Please confirm that your client agrees to rectify its default of the Heads of Terms and use all reasonable endeavours to enter into a New Lease and New Loan Agreement as soon as reasonably practicable.

44    In his email of 11 March 2025, Mr Rigg, claimed that Deva was holding over pursuant to cl 4.8(a) of the Lease. J&N now accepts that that was correct. In the same email, Mr Rigg also asserted that Deva had an ongoing entitlement to require J&N to use all reasonable endeavours to enter into a new lease and new loan agreement under the Heads of Terms. J&N disputes this.

45    On 11 March 2025, J&N executed a notice to quit. This was served on Deva by email from Mr Tsoukalis to Mr Rigg on 12 March 2025, but was later withdrawn.

46    On 20 March 2025, Mr Rigg sent an email to Mr Tsoukalis, providing a copy of the draft New Loan Agreement with Deva’s proposed changes marked up.

47    On 21 March 2025, Mr Tsoukalis sent an email to Mr Rigg, attaching a further marked up version of the draft New Lease containing J&N’s final terms (subject to any serious issue or necessary correction), and advancing a without-prejudice proposal to resolve the dispute between the parties on terms which included that Deva would pay the Lease Amount in full by 31 March 2025, and that the parties would execute the New Lease and the New Loan Agreement.

48    On 26 March 2025, Mr Tsoukalis sent an email to Mr Rigg attaching a further marked up version of the draft New Loan Agreement containing J&N’s final terms (subject to any serious issue or necessary correction).

49    On 28 March 2025, Mr Rigg sent a lengthy email to Mr Tsoukalis which, among other things, confirmed that Deva would not be in a position to pay the Lease Amount by 31 March 2025. Relevant aspects of the content of this email are referred to at [79] below. Mr Rigg’s email attached Deva’s final versions of the New Lease and New Loan Agreement, which contained only relatively minor further amendments to the versions previously provided by Mr Tsoukalis.

50    On or about 30 April 2025, J&N served notices of default and demand pursuant to cl 3.2 of the last of the Loan Agreements. The consequence of this was that all outstanding capital payments due under the Loan Agreements also fell due.

51    A mediation was held between J&N and Deva on 28 May 2025. The mediation was unsuccessful.

52    On 28 May 2025, J&N gave Deva one month’s notice pursuant cl 4.8(a) of the Lease and served a notice to quit in compliance with Pt 13 Div 2 of the Business Tenancies (Fair Dealings) Act 2003 (NT). The notice purported to require Deva to give up possession of the Land on or before 31 July 2025.

Issues in dispute

53    J&N claims to be entitled, as at 11 November 2025, to an order for possession of the Land and for judgment against each of the respondents in the sum of $1,535,058.08, which it maintains it is owed under the Lease and the Loan Agreements, as well as further amounts falling due under the Lease and the Loan Agreements since 11 November 2025.

54    By their amended defence, the respondents admit that “but for the matters pleaded below, the sums claimed by [J&N] would be owing under the Lease and Loan Agreements”. That is, the respondents accept that J&N is entitled to the orders it seeks, and does not dispute the amounts claimed, subject only to several claims, based on the Heads of Terms, which Deva raises by way of its amended notice of cross-claim. The respondents contend that those claims entitle Deva to an order requiring J&N to grant Deva the New Lease over the Land, and execute the New Loan Agreement, as contemplated by the Heads of Terms. The respondents further contend that they are entitled to an award of damages and/or compensation for breach of contract or as a remedy for misleading or deceptive conduct contrary to s 18 of the Australian Consumer Law (ACL), which is Schedule 2 to the Competition and Consumer Act 2010 (Cth).

55    The issues for determination arise from Deva’s cross-claim. They may be summarised, at a fairly high level, as follows:

(1)    Did J&N breach the Reasonable Endeavours Obligations in cll 4 and 6 of the Heads of Terms?

(2)    Was any of the Reasonable Time for Review Implied Term, the Agreed Content Implied Term and/or the Not to Hinder or the Prevent Performance Implied Term an implied term of the Heads of Terms?

(3)    If so, did J&N breach any of those implied terms?

(4)    If J&N breached any of the terms of the Heads of Terms:

(a)    did its breach cause the parties not to enter into a new lease and new loan agreement as contemplated by the Heads of Terms;

(b)    is J&N precluded by the prevention principle from relying on the fact that Deva did not pay the Lease Amount by 5 March 2025 as a basis on which to assert that the Heads of Terms:

(i)    expired and ceased to apply as from 6 March 2025 by operation of cl 15(a) of the Heads of Terms; and/or

(ii)    was terminated by written notice given by J&N to Deva on 6 March 2025 in accordance with cl 14 of the Heads of Terms; and

(c)    is Deva entitled to an order for specific performance requiring J&N to enter into the New Lease and New Loan Agreement as contemplated by the Heads of Terms?

(5)    If Deva has proved that J&N breached the Heads of Terms, has Deva proved that it suffered any loss?

(6)    Is J&N estopped from denying the existence of the New Lease and the New Loan Agreement?

(7)    Did J&N make the Compliance with Heads of Terms Representation and/or the Sufficient Time Representation?

(8)    If so, did that conduct contravene s 18 of the ACL?

(9)    What is the appropriate remedy for that contravention and, in particular, should the Court exercise the power under ss 237 and 243 of the ACL to require J&N to enter into the New Lease and the New Loan Agreement with Deva, or to award Deva compensation under s 237 of the ACL?

56    In relation to each of these issues, Deva has the burden of proving the facts necessary to establish the causes of action on which it relies.

57    Given the conclusions I have reached in relation to some of these issues, it will not be necessary to deal with all of them. I have attempted to deal with enough of the issues to dispose of the case, even if my conclusions about some of the issues were wrong. I have not gone on to address some issues which appear to me to be hypothetical and remote in light of the conclusions which I have reached.

Principles relevant to the construction of contracts

58    The principles relevant to the construction of commercial contracts are well known and are not in dispute. The following summary of the applicable principles appears in the judgment of Kiefel, Bell and Gordon JJ in Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 at 551 [16], in a passage that was quoted with approval by the High Court in Laundy Hotels (Quarry) Pty Ltd v Dyco Hotels Pty Ltd (2023) 276 CLR 500; [2023] HCA 6 at 509 [27]:

It is well established that the terms of a commercial contract are to be understood objectively, by what a reasonable businessperson would have understood them to mean, rather than by reference to the subjectively stated intentions of the parties to the contract. In a practical sense, this requires that the reasonable businessperson be placed in the position of the parties. It is from that perspective that the court considers the circumstances surrounding the contract and the commercial purpose and objects to be achieved by it.

59    In the present case, relevant background considerations that inform the construction of the Heads of Terms include that Deva had failed to pay amounts due under the Lease and the Loan Agreements, and that the Heads of Terms was proposed by J&N as a means of requiring Deva to make the outstanding payments, in exchange for J&N’s willingness to enter into a new lease extending beyond 5 March 2025 when the existing Lease was due to expire.

Evidence

Witnesses called by J&N

60    J&N relies on the following affidavits:

(a)    affidavits of Mr Halkitis dated 10 October 2025 and 28 November 2025;

(b)    affidavits of Mr Tsoukalis dated 14 November 2025 and 15 November 2025; and

(c)    affidavit of George Bandes dated 26 November 2025.

61    Mr Halkitis is a director of J&N. In his affidavits, he deposes to the history of dealings between J&N, Deva and Mr Madaffari in connection with the Land between 2012 and September 2025, key aspects of which have been summarised above. In evidence that was not challenged by the respondents, Mr Halkitis explains the basis on which the Lease Amount (agreed in the Heads of Terms) was calculated, and deposes to the fact that Deva’s arrears in rental payments due under the Lease date back to an invoice issued by J&N, payment of which was due on 24 May 2024. Mr Halkitis explains the basis on which he calculates that, as at 10 October 2025, Deva, and Mr Madaffari as Deva’s guarantor, owed J&N $583,625.54 under the Lease and $858,965.51 under the Loan Agreements.

62    The affidavit evidence of Mr Tsoukalis sets out relevant correspondence between himself and Mr Rigg in the period between 15 January 2025 and 22 April 2025. He deposes to the fact that it was never his intention to delay in respect of the preparation and finalisation of the New Lease and the New Loan Agreement, and identifies, in general terms, reasons why he had been unable to prepare drafts of those documents sooner. Further, he deposes to the fact that it was not his intention to prepare drafts of the New Lease and the New Loan Agreement in a form that did not comply with cll 5 and 8 of the Heads of Terms.

63    Each of Mr Halkitis and Mr Tsoukalis was cross-examined. I see no reason to doubt their evidence and I generally accept it.

64    Mr Bandes is the group accountant employed by J&N. His affidavit evidence, which was not challenged, establishes that J&N issued certain invoices to Deva, and that no payments of amounts owing under the Lease or the last of the Loan Agreements had been made by Deva to J&N between 10 October 2025 and 26 November 2025.

Witnesses called by the respondents

65    The respondents rely on the following affidavits:

(a)    affidavit of Mr Rigg dated 26 November 2025;

(b)    affidavits of Mr Madaffari dated 25 November 2025, 29 November 2025 and 30 November 2025; and

(c)    affidavits of Deva’s shareholders, Carlo Celisano, Domenico Caccamo, Mario Di Vincenzo, Michael Angi and Salvatore Vallelonga dated 28 November 2025, and David Raco and Domenico Raco dated 30 November 2025.

66    Mr Madaffari’s affidavit evidence explains aspects of Deva’s business, the history of its occupation, development, renovation and refurbishment of the Land. Mr Madaffari’s evidence includes reference to an occasion in 2017 when he informed the directors of J&N that he wanted to build a bar called the Honey Pot, and that he had proposed to (and ultimately did) fund it by obtaining funds from the shareholders of Deva.

67    Mr Madaffari deposes to the negotiations between the parties that led up to the execution of the Heads of Terms. Mr Madaffari’s evidence is that he arranged for a meeting of shareholders to be held on 24 February 2025 in the expectation of raising funds to pay the Lease Amount but says that, because he did not have the draft terms of the New Lease and the New Loan Agreement, he “had to advise the shareholders as to the non-delivery of the draft [New Lease] and draft [New Loan Agreement] and [that] they would have to wait for the lease and loan agreements with agreed terms before they could make capital contributions to pay the Lease Amount”. Mr Madaffari does not suggest that he informed J&N of these matters, but does state that he believed that the directors of J&N would have known that Deva had to go to a meeting of shareholders to raise funds.

68    Mr Madaffari’s evidence is that a further meeting of Deva’s shareholders was held on 4 March 2025, at which Mr Madaffari told the meeting “that the documents we received [ie, the first drafts of the New Lease and the New Loan Agreement provided by Mr Tsoukalis] were incorrect and did not include all the terms required by the Heads of Terms” and that Mr Madaffari “would work on getting proper documents agreed and come back to them”. Mr Madaffari states that “the reason” that Deva did not pay the Lease Amount on 28 February 2025 was that J&N had only provided the drafts of the New Lease and the New Loan Agreement on 27 and 28 February 2025 respectively, and “[s]ince Deva could not present the shareholders with settled agreements the shareholders could not make the capital payments required so that Deva had the funds necessary to make payment of the Lease Amount”. Mr Madaffari does not explain why the shareholders “could not” make capital payments to Deva without knowing the final form of the New Lease and the New Loan Agreement, given that the funds were to be used to pay a substantial amount which Deva had acknowledged was owing under the existing Lease. Mr Madaffari acknowledges that Deva is in breach of the Lease and “has not paid any rent since 6 March 2025”.

69    Mr Madaffari states that, in March and April 2025, he sought and obtained a loan based on the security of the house he owns with his wife “that would have met the liability”. In cross-examination, Mr Madaffari accepted that that was something that he “could have done at any stage”. Mr Madaffari does not explain why, if those funds are available to him, Deva has not paid the Lease Amount. Mr Madaffari also deposes to the fact that, on 19 November 2025, a further meeting of Deva’s shareholders was held, at which the shareholders “agreed to make the payment when the Court made an order to the effect that [J&N] and [Deva] had to enter into the [New Lease] and the [New Loan Agreement]”.

70    Mr Rigg’s affidavit evidence sets out the history of correspondence between the parties from his perspective. He claims that the time allowed for him to review the New Lease and the New Loan Agreement was too short. Mr Rigg says that the reason he did not provide a draft of the New Loan Agreement to Mr Tsoukalis until 20 March 2025, because he was waiting for a response to the proposal contained in his email of 6 March 2025. He draws attention to the differences between the terms of the various drafts of the New Lease and the New Loan Agreement exchanged between Mr Rigg and Mr Tsoukalis. Notably, Mr Rigg’s affidavit makes no mention of any communication with J&N regarding the need for finalised versions of the New Lease and the New Loan Agreement as a practical prerequisite to Deva’s paying the Lease Amount, apart from his assertion to that effect in his email to Mr Tsoukalis dated 28 March 2025.

71    Both Mr Rigg and Mr Madaffari were cross-examined. There are certain aspects of the evidence of Mr Rigg and Mr Madaffari which appeared to me to be self-serving and which did not sit comfortably with the contemporaneous documentary record. To be fair to Mr Rigg, he acknowledged that he did not have a clear recollection of some of the matters about which he gave evidence, and repeatedly appeared to be attempting to work out what had happened by reference to the documents. I consider that aspects of Mr Rigg’s evidence and Mr Madaffari’s evidence are likely to be affected by a substantial degree of reconstruction (perhaps sometimes inadvertent) in light of their understanding of the respondents’ case at trial.

72    There are some aspects of Mr Rigg’s and Mr Madaffari’s evidence on which I am not prepared to act where it is unsupported by contemporaneous documents. These are identified below to the extent that is necessary to explain my reasons. The evidence in respect of the issues which I have found it necessary to decide largely relates to communications between the solicitors for the parties in the period between February and March 2025, in respect of which there is a documentary record (see, eg, [31]-[49] above). The disputed factual issues that need to be resolved are relatively confined.

73    The shareholders were not cross-examined. The affidavit evidence of each of the shareholders was to the effect that:

(a)    they had attended meetings of the shareholders of Deva on 24 February 2025 and 4 March 2025;

(b)    they were not presented with the terms of any proposed New Lease or New Loan Agreement at those meetings;

(c)    they were not prepared to agree to advance funds that would enable Deva to pay the Lease Amount unless Deva presented to the shareholders a new lease and new loan agreement with terms that were acceptable to Deva and its shareholders, and that this represented the position of all the shareholders present at the meetings, from which no dissent was expressed;

(d)    they attended a further shareholders meeting held on 18 November 2025, at which the shareholders unanimously agreed to a motion to the effect that, if the Court were to order J&N to enter into the New Lease and New Loan Agreement, the shareholders would provide funding of up to $600,000 to pay rental and loan arrears due to J&N; and

(e)    they were personally prepared to contribute funds which they identified, as part of the $600,000 referred to above.

Resolution of issues presented by Deva’s cross-claim

J&N was not informed that Deva’s capacity to pay the Lease Amount was contingent on obtaining shareholder funding

74    Mr Rigg’s evidence was that his recollection of events from February and March 2025 was unclear. At one point in his evidence, he said that he thought that he had told Mr Tsoukalis that Deva could not pay the Lease Amount until funding had been obtained from Deva’s shareholders, and that he thought that he had first said that in the course of a telephone conversation between them. I do not accept that his evidence in this regard is reliable, and, for the reasons that follow, I find that Deva did not communicate to J&N that its capacity to pay the Lease Amount was dependent on raising funds from shareholders, or that it might have required final drafts of the New Lease and/or the New Loan Agreement to secure such funding, until 28 March 2025.

75    In Mr Rigg’s email to Mr Tsoukalis on 5 March 2025, he stated:

Notwithstanding this delay from your client. I am instructed that our client is intends [sic] to enter into the new lease and new loan agreement in accordance with the terms agreed in the Heads of Terms and pay the outstanding rent debt once those documents are in a settled form.

76    This statement of intention linked the payment of the outstanding rent (ie the Lease Amount) to the New Lease and the New Loan Agreement being “in a settled form”. The statement did not communicate to Mr Tsoukalis and J&N that Deva’s capacity to make the payments was practically dependent on the receipt of the documents in a settled form, and did not link the receipt of those documents to the need to obtain funding from Deva’s shareholders to pay the Lease Amount.

77    In the course of cross-examination, it was put to Mr Rigg that, as at 6 March 2025, he had not communicated to Mr Tsoukalis the fact that Deva was dependent on shareholders to pay the Lease Amount. Mr Rigg found it difficult to answer this question, and the line of questions that followed, in a straightforward manner:

Q:    So on 6 March, what I want to suggest to you is this, Mr Rigg. At no stage had you communicated on behalf of Deva to Mr Tsoukalis the fact, that be correct, that Deva was dependent on funding from its shareholders to pay the lease amount?

A:    I do not recall when that was conveyed to John Tsoukalis, whether that was before or after this email. If I – it’s a long time ago. The first communication in that respect was, if I call – recall correctly, via telephone discussion, and that is around that time, so I can’t confirm whether it was that day, before or after.

Q:    I suggest to you, and I invite you to contradict me by reference to a particular event, that by this stage, you had not communicated to Mr Tsoukalis on behalf of Deva that Deva was dependent on funding from shareholders to pay the lease amount?

A:    Is – sorry. I just want to confirm, the question is Deva was dependent on – I had not conveyed that Deva was dependent on the loan – on the funding from shareholders? I – once again, I do not know whether I conveyed that or not. I also – I – the source of the – I – I can’t recall when that was a discussion I had with John.

Q:    That’s a bit surprising, isn’t it, Mr Rigg? That’s – wouldn’t it be something fundamental to communicate to Mr Tsoukalis if you had been instructed in those terms? And you would have done it in writing, wouldn’t you, like you communicated everything else that you were instructed in writing to Mr Tsoukalis?

A:    I communicated many things by telephone conversation as well. Not everything was provided by email.

…

Now, I know we had either discussion with Mr Tsoukalis on 20 March to that extent, and I believe I discussed it with him earlier than that, but I do not recall when. I can’t … provide any more details than that. But that’s - - -

Q:    So just so that we understand what your evidence just was – you said you believe you may have told him about it in a conversation on 20 March 2025?

A:    Yes – about then. That was the second time we discussed it.

Q:    The second time. And you can’t recall what the earlier occasion was?

A:    No. There was a lot happening around then. Obviously, you can see there was a fair bit of action between a few days – the correspondence and reviewing. It was a busy time for me separately, as well.

Q:    So you were busier with other matters at the same time?

A:    Yes. But - - -

Q:    To go back to my question, just to be clear about your evidence, are you in a position to say with any confidence that you had communicated with Mr Tsoukalis by telephone or in writing on any occasion prior to 6 March 2025 that Deva was dependent on funding from its shareholders to pay the lease amount?

A:    I cannot recall the exact date that was communicated to John Tsoukalis – first communicated.

Q:    That wasn’t my question, Mr Rigg, was it?

A:    It’s certainty – so I cannot certainly say when that was first communicated. Is – if that’s the answer you’re looking for.

Q:    No. I’m trying to assist his Honour to make findings in relation to this case – and, particularly, to make findings as to when it was first communicated to Mr Tsoukalis on behalf of J & N that there was a dependency on shareholder funding to pay the lease amount. His Honour will need to make a decision about that. I’m trying to work out your evidence. Is your evidence that you are unable to say that you communicated that prior to 6 March?

A:    I am unable to say with certainty I communicated that prior to 6 March. That’s as best as I can do.

Q:    I suggest to you that you are also not able to say on oath that you also communicated to Mr Tsoukalis or anybody else on behalf of J & N prior to 6 March 2025 that the shareholders required the new lease and loan agreement to be finalised before they would advance funds to Deva to pay the lease amount?

A:    My response is, likewise, the same – because, obviously [unclear] would be hand-in-hand. I was unaware of their shareholder process or involvement – or the approval process, I would say – at 5 March.

78    Mr Rigg thus ultimately accepted that he himself was “unaware of the shareholder process or involvement or the approval process” as at 5 March 2025. Shortly afterwards, he accepted that he could not confirm whether he had conveyed that “the lack of finalised documents prevented Deva from getting funding from its shareholders” prior to 6 March 2025. He claimed that he had communicated that Deva’s payment of the Lease Amount depended on its obtaining shareholder funding in a telephone conversation with Mr Tsoukalis on 20 March 2025, and that he had previously communicated the same in an earlier telephone conversation.

79    The email which Mr Rigg sent to Mr Tsoukalis on 28 March 2025 consisted mainly of some 31 numbered paragraphs. Relevantly, they included the following:

…

20.    On 20 March 2025, I called and spoke with you to request your client’s response to the Proposal. I explained to you that my client had not provided its reviewed version of the new loan agreement as it was waiting on your client to respond to my client’s Proposal of 6 March 2025. Following the call, I provided you with a copy of my client’s version of the new loan agreement with the proposed changes in mark up. My client did not seek to introduce any new terms and my client’s proposed changes were consistent with the terms agreed in the Heads of Terms.

…

26.    However, whilst my client was waiting for your client to respond to my client’s Proposal of 6 March 2025, the director of my client, Mario Madaffari, proactively sought alternative funding to pay the Rent Amount [sic: Lease Amount]. As my client could not get funding from its shareholders without also providing finalised versions of the new loan agreement and new lease agreement to the shareholders, Mr Madaffari engaged a broker and has obtained pre-approval for a loan in the amount of $780,000 secured by a mortgage against his home at 1 Moresby Close, Bibra Lake WA.

…

80    Mr Rigg’s email of 28 March 2025 did not suggest that he had previously communicated to Mr Tsoukalis that shareholder funding for Deva was dependent on receipt of the final terms of the New Lease and the New Loan Agreement. In particular, Mr Rigg’s email did not state that Mr Rigg had told Mr Tsoukalis about the need for shareholder funding in the telephone conversation on 20 March 2025, despite the fact that the email had provided, at [20], a fairly detailed description of that telephone conversation. Neither Mr Rigg nor Mr Tsoukalis has produced a file note of the telephone conversation of 20 March 2025. As noted at [70] above, in his affidavit evidence, Mr Rigg did not depose to having told Mr Tsoukalis in a telephone conversation that Deva’s payment of the Lease Amount was dependent on raising funds from shareholders or that such funding was dependent on the shareholders being given the final terms of the New Lease and the New Loan Agreement.

81    In my view, notwithstanding Mr Rigg’s belief that he mentioned it in a telephone conversation on 20 March 2025 and possibly in an earlier conversation, it is probable that [26] of Mr Rigg’s email was the communication by which Mr Rigg first informed Mr Tsoukalis that the agreement of Deva’s shareholders to provide funding for the payment of the Lease Amount had been sought but was not forthcoming because the terms of the New Loan Agreement and the New Lease had not been finalised. I find that J&N (or its agent, Mr Tsoukalis) was first on notice of Deva’s claim that that was the position on 28 March 2025. It is not obvious that Deva would have perceived any advantage in informing J&N that it did not have a present capacity to pay the Lease Amount at any earlier point in time.

82    On 24 February 2025, Mr Rigg had informed Mr Tsoukalis that his instructions were that a payment towards the Lease Amount would be made on or before 28 February 2025. He said this at a time when he knew that he had not yet received drafts of the New Lease or the New Loan Agreement from Mr Tsoukalis. The assurance given by Mr Rigg, that a part payment of the Lease Amount would be made on or before 28 February 2025, was apt to imply that Deva was willing and able to make payment of the Lease Amount, and certainly did not convey that its ability to do so was dependent on approval from Deva’s shareholders, for which the final drafts of the New Lease and the New Loan Agreement were required.

83    Further, Mr Madaffari accepted in cross-examination that Mr Rigg’s email of 28 March 2025 was “the first time” he (Mr Madaffari) had “tried to blame that on J&N”. He specifically accepted that the proposition that Deva “could not get funding from its shareholders without also providing finalised versions of the new loan agreement and the new lease agreement” had not been suggested to J&N before 28 March 2025. I accept this evidence, which was a concession against Mr Madaffari’s interests.

84    For all these reasons, I find that there was no basis on which J&N could have been aware that agreement on the final terms of the New Lease was required for shareholder funding. In fact, assessed objectively and from the point of view of J&N, the communications up until 28 March 2025 would have suggested otherwise.

The alleged implied terms

85    It is convenient to first address the three terms which Deva alleges are implied in the Heads of Terms. In my view, it should not be accepted that any of the three alleged implied terms exists in a form that would be of assistance to Deva in this case, for the following reasons.

86    In light of the fact that cll 4 and 6 of the Heads of Terms expressly imposed obligations on the parties to use all reasonable endeavours to execute the New Lease and the New Loan Agreement by 5 March 2025, the Reasonable Time for Review Implied Term cannot be said to be necessary. In essence, the proposed implied term merely amounts to an elaboration of the content of the express Reasonable Endeavours Obligations. To the extent that the proposed implied term would impose an obligation to ensure that reasonable time was provided for review of the draft New Lease and draft New Loan Agreement, that would extend beyond, and be inconsistent with, the parties’ deliberate choice to impose mutual obligations described in terms of “all reasonable endeavours”. That said, I accept that, in circumstances where the parties, through their solicitors, were to exchange drafts of the New Lease and the New Loan Agreement, the practical content of the Reasonable Endeavours Obligations extended to requiring the parties to use their reasonable endeavours to provide each other with such drafts in such form and at such points in time as to realistically enable agreement to be reached about the terms of the New Lease and the New Loan Agreement in time for each of them to be executed on 5 March 2025.

87    As to the Not to Hinder or Prevent Performance Implied Term, it may be accepted, in principle, that some kind of contractual term to the effect that the parties would not hinder performance of the Heads of Terms could and should be implied. However, the content of any such term could not sensibly extend to imposing an obligation on J&N to avoid conduct that might create a hindrance due to arrangements between Deva and its own shareholders, which were unknown to J&N, particularly where any such obligation would be inconsistent with the express contemplation that the Lease Amount was to be paid by Deva several days before the last day fixed for entry into the New Lease, which carried the obvious implication that the final form of the New Lease and the New Loan Agreement may well not be available by the point in time when Deva was contractually obligated to pay the Lease Amount.

88    As to the Agreed Content Implied Term, I do not accept that it is in any sense necessary to imply such a term. The essential substantive content of the New Lease and the New Loan Agreement was largely dictated by cll 5 and 8, respectively, of the Heads of Terms. The Reasonable Endeavours Obligations contemplated a process (which, of its nature, was always likely to be iterative) by which the parties would seek to agree on final terms of the New Lease and the New Loan Agreement. The conduct of each party is capable of being assessed against the Reasonable Endeavours Obligations, and the fact that one party, at a particular point in time, provided a draft which failed fully to reflect the substance of the agreed terms is a matter to be taken into account in assessing whether that party should be held to have breached the Reasonable Endeavours Obligations. I do not accept that it was necessary to imply, as a distinct term of the Heads of Terms, that each draft (or any particular draft) provided by one party to the other should reflect the substance of the agreed terms.

Deva’s obligation to pay the Lease Amount was not contingent on J&N’s compliance with the Reasonable Endeavours Obligations

89    Under the Heads of Terms as initially entered into, payment of the Lease Amount was an obligation that fell on Deva in accordance with the terms of cl 9. Deva was required to pay the Lease Amount on or before 28 February 2025. I find that the obligation was independent of the Reasonable Endeavours Obligations imposed by cll 4 and 6. This conclusion is strongly supported by the following considerations:

(1)    The Heads of Terms contemplated that the outcomes to which the Reasonable Endeavours Obligations were directed would be achieved at a point in time after the payment of the Lease Amount was required to be made.

(2)    The Reasonable Endeavours Obligations were expressed to be mutual obligations of both Deva and J&N, whereas the requirement to pay the Lease Amount was an obligation imposed only on Deva.

(3)    Clause 4 of the Heads of Terms expressly provided that the commencement of the New Lease on 6 March 2025 and the replacement of the existing Lease with the New Lease were “subject to the Lease Amount being paid”.

(4)    Both of the Reasonable Endeavours Obligations were expressly linked to the obligation of Deva to pay the Loan Amount, in that the Reasonable Endeavours Obligations did not come into existence at all unless the Loan Amount was paid on or before 14 February 2025.

(5)    Having regard to the latter two points, the drafting of cll 4 and 6 indicates that the parties turned their minds to the relationship between the Reasonable Endeavours Obligations and other obligations imposed by the Heads of Terms and, where those obligations were intended to be interrelated to each other in some way, stated this directly.

90    “Covenants are to be construed as dependent or independent according to the intention of the parties and the good sense of the case … and on the order in which the several things are to be done”: Bannister v Heyman (1924) 34 CLR 243 at 260 (Isaacs J), quoting Measures Brothers Ltd v Measures [1910] 2 Ch 248 at 262; Morton v Lamb (1797) 7 TR 125 at 130. An evident and important purpose of the Heads of Terms, from the perspective of J&N, was to obtain from Deva payment of the amounts that Deva acknowledged were already due to J&N under the existing Lease and the existing Loan Agreements. The parties did not make Deva’s obligation to pay one of those amounts, the Lease Amount, contingent on J&N’s compliance with another obligation, mutually imposed on both parties, to use reasonable endeavours to achieve an outcome that the Heads of Terms contemplated would only be realised on a date after the date fixed for payment of the Lease Amount. There is nothing in the language of the Heads of Terms to suggest that is what they did.

91    Although the date for the payment of the Lease Amount was subsequently extended by Mr Tsoukalis’s email of 28 February 2025, the basic nature of Deva’s obligation to pay the Lease Amount was not varied. Deva’s payment of the Lease Amount was not expressed to be, and did not become, dependent on J&N’s compliance with either of the Reasonable Endeavours Obligations, or on the provision of a draft of the New Lease and the New Loan Agreement in substantially final form. I find that it was, and remained, an obligation that operated independently of the Reasonable Endeavours Obligations and any other obligations imposed by the Heads of Terms.

92    Deva’s obligation to make payment of the Lease Amount by 28 February 2025, imposed by cl 9 of the Heads of Terms (and as subsequently extended to 5 March 2025) was not expressed to be subject to finance. The Heads of Terms contained no provision that recognised a need for finance on Deva’s part or any obligation on J&N to assist Deva to obtain finance from shareholders or otherwise. Objectively construed, the Reasonable Endeavours Obligations imposed by cll 4 and 6 of the Heads of Terms were not directed to assisting Deva to obtain finance from shareholders. They were, instead, directed to ensuring that, once Deva had paid the Loan Amount and the Lease Amount, final drafts of the New Lease and the New Loan Agreement would be available to be executed on or before 6 March 2025.

93    Given my conclusion that Deva’s obligation to pay the Lease Amount was not dependent on J&N’s compliance with the Reasonable Endeavours Obligations, the failure of Deva to pay the Lease Amount by the extended deadline of 5 March 2025 at least enlivened J&N’s contractual right, under cl 14 of the Heads of Terms, to terminate the Heads of Terms forthwith by giving written notice to Deva. Subject to my consideration of the prevention principle (at [117]-[124] below), it follows that the notice given by Mr Tsoukalis on 6 March 2025 on behalf of J&N had the effect of terminating the Heads of Terms, and J&N was thereafter entitled to enforce its rights under the existing Lease and Loan Agreements.

94    In light of this conclusion, it is probably not strictly necessary to decide whether cl 15(a) of the Heads of Terms itself operated to cause the Heads of Terms to “expire” with effect from 6 March 2025. However, I consider that it did. It may be accepted that, had Deva complied with its obligation to pay the Lease Amount and J&N failed to comply with the Reasonable Endeavours Obligations, J&N could not take advantage of its own breach of the Reasonable Endeavours Obligations to rely on cl 15(a) of the Heads of Terms. However, the fact that Deva had not complied with its own, independent, obligation to pay the Lease Amount by 5 March 2025 meant that, irrespective of any breach of the Reasonable Endeavours Obligation by J&N, the New Lease could not come into effect as contemplated by cl 4 of the Heads of Terms, because its coming into effect was expressed to be “subject to the Lease Amount being paid”. Accordingly, I conclude on this separate basis that – again, subject to my consideration of the prevention principle – the Heads of Terms came to an end on 6 March 2025.

Did J&N breach the Reasonable Endeavours Obligations?

95    In light of the conclusions already reached, it is not necessary to decide whether J&N breached the Reasonable Endeavours Obligations in cll 4 and 6 of the Heads of Terms. However, in case I am wrong I shall consider that question. For the reasons that follow, I conclude that J&N was not in material breach of the Reasonable Endeavours Obligations.

96    While I accept that Mr Tsoukalis could have, and ideally would have, provided drafts of the New Lease and New Loan Agreement to Mr Rigg for his consideration earlier, the provision of drafts of those documents to Mr Rigg on 27 and 28 February 2025 was, in my view, consistent with the obligations to use all reasonable endeavours to enter into a new lease and a new loan agreement on or before 5 March 2025. As I have mentioned, the task of preparing the New Lease and the New Loan Agreement was not one that was especially onerous; it essentially required the careful checking and importation of terms from previous instruments. As Mr Rigg acknowledged in cross-examination:

Q:    So this was – of all the tasks in terms of reaching an agreement about a commercial transaction – straightforward, particularly given how precise the heads of terms were?

A:    Yes. Very straightforward, yes.

97    I accept that Mr Rigg had real work to do to check the documents and satisfy himself that they reflected the terms stipulated in the Heads of Terms (exerting “brain power”, to adopt the expression used by counsel for the respondents). I further accept that there were several respects in which the draft New Lease and the draft New Loan Agreement that were provided by Mr Tsoukalis on 27 and 28 February 2025 respectively at least arguably did not fully reflect those stipulated terms. However, on balance, I accept that, had Deva been in a position to pay the Lease Amount, there would have been a drive to finalise the terms of both the New Lease and the New Loan Agreement, and that could still realistically have been achieved by midnight on 5 March 2025. The reality is that it suited Deva for entry into the New Lease to be delayed (and to blame J&N for the delay) because it provided a (barely) plausible excuse which Deva could point to in an attempt to maintain that the Heads of Terms remained on foot (and would later point to in order to justify its continuing failure to pay the Lease Amount). If there was any breach of the Reasonable Endeavours Obligations by J&N, it was not material.

What follows if J&N did breach the Reasonable Endeavours Obligations?

98    Even if it be assumed that the delay in Mr Tsoukalis’s provision of the draft of the New Lease and the New Loan Agreement constituted a breach by J&N of the Reasonable Endeavours Obligations, I do not consider that that conclusion would entitle Deva to the relief it seeks, for the following reasons.

99    On 6 March 2025, Deva, through the email sent by Mr Rigg, had purported to extend the time for finalising the terms of the New Lease and the New Loan Agreement and for the payment of the Lease Amount to 31 March 2025. Despite maintaining that the Heads of Terms had come to an end, J&N was evidently still prepared to allow further time to finalise the New Lease and the New Loan Agreement, and continued to engage with Deva about the terms of the New Lease and the New Loan Agreement. Mr Rigg provided Mr Tsoukalis with a further draft of the New Lease on 5 March 2025, but did not provide a further draft of the New Loan Agreement until 20 March 2025.

100    Given that the Heads of Terms, dated 13 February 2025, had contemplated that the New Lease and the New Loan Agreement would be finalised by 5 March 2025, it is not apparent why so much extra time would have been required, after 6 March 2025, for Mr Rigg to review the New Loan Agreement and return it to Mr Tsoukalis, even on the assumption that J&N had failed to comply with the Reasonable Endeavours Obligations by reason of Mr Tsoukalis’s failure to provide the drafts of the New Loan Agreement and the New Lease for Mr Rigg’s consideration a little sooner.

101    Mr Tsoukalis provided a further amended draft of the New Lease on 21 March 2025, and a further amended draft of the New Loan Agreement on 26 March 2025. Mr Rigg communicated Deva’s acceptance of almost all of the proposed amendments to both the draft New Lease and the draft New Loan Agreement on 28 March 2025. The final form of both agreements was thus effectively settled by 28 March 2025.

102    By 31 March 2025, Deva had had an additional period of more than three weeks to attempt to obtain funding to make payment of the Lease Amount. Deva had had access to Mr Tsoukalis’s near-final drafts of the New Lease since 21 March 2025 and the New Loan Agreement since 26 March 2025 (the terms of which, in any event, were largely dictated by cll 5 and 8, respectively, of the Heads of Terms). Even if an understanding of the precise terms of the New Lease and the New Loan Agreement were necessary for Deva to obtain shareholder funding, it was in a position to have done so shortly after 26 March 2025.

103    Even taking Deva’s case at its highest, the effect of J&N’s alleged failure to comply with the Reasonable Endeavours Obligations was that Deva’s obligation to pay the Lease Amount in accordance with the Heads of Terms should be regarded as effectively suspended. Deva submits that the obligation was suspended for “a reasonable time”: see, eg, Bensons Property Group Pty Ltd v Key Infrastructure Australia Pty Ltd (2021) 37 BCL 248; [2021] VSCA 69 at 264 [102]. This can only mean (most generously to Deva) a reasonable time after J&N and Deva had exchanged drafts of the New Lease and New Loan Agreement in a form that substantially reflected what was contemplated by the Heads of Terms. That had occurred by 26 March 2025 at the latest.

104    What constitutes a reasonable time in this context would fall to be assessed objectively by reference to the circumstances. The circumstances include:

(a)    the original timeframe fixed by the Heads of Terms for the completion of the New Lease and the New Loan Agreement;

(b)    the terms of the Heads of Terms (including, importantly, the fact that Deva’s obligation to pay the Lease Amount was neither tied to, nor conditional on, receipt of a final version of the New Lease and the New Loan Agreement, and was initially required to be complied with before the finalisation of the New Lease and the New Loan Agreement);

(c)    the extent of any delay occasioned by J&N’s non-compliance with the Reasonable Endeavours Obligations; and

(d)    the fact that the Lease Amount represented a payment of rent that had been accumulating since July 2024 and remained unpaid, and which Deva had acknowledged was payable under the existing Lease.

105    I do not accept that Deva was prevented from making payment of the Lease Amount by virtue of the fact that J&N had taken the position that the Heads of Terms had come to an end. Despite taking that position, J&N (through Mr Tsoukalis) continued to engage with Deva in relation to the terms of the draft New Lease and draft New Loan Agreement until the end of March 2025, and was apparently still willing to negotiate the extension of the Lease if Deva paid the Lease Amount. Deva had not accepted any repudiation of the Heads of Terms by J&N, and had, rather maintained the position that the Heads of Terms remained on foot.

106    It is to be recalled that the Lease Amount was an amount which Deva was legally required to pay on any view. If Deva’s position were correct, it was payable, at the latest, very shortly after acceptable drafts of both the New Lease and the New Loan Agreement had been exchanged. On the other hand, if J&N’s position was correct, the Heads of Terms had come to an end and, in accordance with cl 15(b) of the Heads of Terms, the Lease Amount was payable under the Lease (as had been acknowledged by Deva) because it represented rent that Deva had failed to pay since July 2024.

107    By the end of March 2025, the terms of the New Lease and the New Loan Agreement had been exchanged several times and were essentially settled as between the J&N and Deva. Despite this, Deva did not make payment of the Lease Amount to J&N by 31 March 2025, the date on which Mr Rigg (in his email of 6 March 2025) had said that it would do so.

108    The failure of Deva to pay the Lease Amount – which was due under the terms of the Heads of Terms (if it was still on foot) or under the Lease (if the Heads of Terms was no longer on foot), and to take the necessary steps to attempt to finalise the terms of the New Loan Agreement and the New Lease (to which Deva had attempted to link the payment of the Lease Amount) was consistent with a pattern of conduct on the part of Deva in which it repeatedly sought to invoke any plausible basis to defer payment of the Lease Amount – an amount of in excess of $300,000 which had been accruing for many months – while Deva failed to take the steps necessary to raise the funds to pay that amount.

109    The only reasons for Deva to withhold payment of the Lease Amount after the end of March 2025 were because it was unable to raise the funds to make the payment or because it sought to obtain a practical advantage in its continuing negotiations with J&N by withholding an amount which it clearly owed to J&N. By the end of March 2025, neither of those reasons could be attributed to any failure of J&N to comply with the Reasonable Endeavours Obligations, so as to excuse continuing non-compliance by Deva with its obligation to pay the Lease Amount.

110    Further and in any event, Mr Rigg’s email of 28 March 2025 communicated to J&N that Mr Madaffari had, by that time, arranged for an alternative form of finance to allow Deva to make payment of the Lease Amount. (It is not to the point that the correctness of that representation may itself have been doubtful.) The effect was that Deva itself was representing that it was in a position to pay the Lease Amount at that time.

111    For these reasons, even if Deva were correct to contend that J&N had breached the Reasonable Endeavours Obligations, and that the effect of the breach was to extend the operation of the Heads of Terms for a reasonable time, Deva did not act within a reasonable time to satisfy its own obligation to pay the Lease Amount. In those circumstances, J&N was entitled to rely on its rights to enforce the Lease and the Loan Agreements and to terminate the Lease.

Alleged misleading or deceptive conduct by J&N

112    As explained at [35]-[37] above, the respondents allege that Mr Tsoukalis’s email of 28 February 2025 contained two implied representations, made to Mr Rigg by Mr Tsoukalis on behalf of J&N.

113    The first representation which the respondents say was conveyed by Mr Tsoukalis’s email, the Sufficient Time Representation, is that Deva and its advisers would have sufficient time to review, seek instructions, obtain legal advice, redraft and negotiate the terms of the New Lease and New Loan Agreement before the expiry of the Heads of Terms and the Lease.

114    Mr Tsoukalis’s email did not convey the Sufficient Time Representation. Nothing in the email amounted to any representation as to whether the period remaining between 28 February 2025 and 5 March 2025 was sufficient to finalise the terms of the New Lease and the New Loan Agreement. Nor did it represent that J&N was allowing any additional time to finalise the terms of the New Lease and the New Loan Agreement (and it expressly stated that J&N would allow Deva until 5 March 2025 to pay the Lease Amount, but no longer). The relevant passage in the email simply stated that Mr Tsoukalis’s draft of the New Loan Agreement was attached. There is no reason to construe Mr Tsoukalis’s email of 28 February 2025 as making any implied representation about whether the time then remaining before 5 March 2025 was sufficient to enable the terms of the New Loan Agreement to be finalised and agreed.

115    In any event, it is clear enough that Mr Rigg and Deva could not have been misled by, and did not act in reliance on, the Sufficient Time Representation, because the content of the draft of the New Loan Agreement that was provided by Mr Tsoukalis was readily apparent, and capable of being assessed by Mr Rigg, since it was attached to Mr Tsoukalis’s email.

116    The second representation which the respondents say was conveyed by Mr Tsoukalis’s email of 28 February 2025 is the Compliance with Heads of Terms Representation. I do not accept that the email contained any representation that the draft of the New Loan Agreement complied with the stipulations in the Heads of Terms. It was clear that the draft that was attached to Mr Tsoukalis’s email was Mr Tsoukalis’s first draft, and that it was being provided to Mr Rigg for the purpose of his consideration – including for him to check whether he was satisfied that it complied with the requirements stipulated by cl 8 of the Heads of Terms, and to suggest any changes that were necessary. Mr Tsoukalis’s draft of the New Loan Agreement was attached to the email and the terms which it contained were plain to see. There is no basis to construe Mr Tsoukalis’s email as making any representation about the contents of the draft New Loan Agreement. Moreover, for the same reason – because the draft New Loan Agreement itself accompanied the email – Mr Rigg and Deva could not possibly have been misled by, and did not in fact rely, on the alleged Compliance with Heads of Terms Representation.

The prevention principle does not preclude J&N from relying on the Heads of Terms

117    The respondents rely on the “prevention principle”, contending that J&N is not entitled to bring the Heads of Terms to an end (or to contend that the Heads of Terms expired in accordance with cl 15(a)), on the ground that J&N’s conduct which the respondents allege was in breach of the Heads of Terms prevented Deva from being in a position to enter into the New Lease and the New Loan Agreement on 5 March 2025.

118    As Dixon CJ explained in Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1954) 90 CLR 235 at 246, “it was always the law that, if a contracting party prevented the fulfilment by the opposite party to the contract of a condition precedent therein expressed or implied, it was equal to performance thereof”. In Drinkwater v Caddyrack Pty Ltd (unreported, Sup Ct, NSW, Young J, 25 September 1997), the defendants had purported to terminate a contract and it was argued by the plaintiff that the prevention principle precluded them from taking advantage of a situation that had been brought about by their own wrong to justify the termination. Justice Young said of the prevention principle:

There is no doubt that there is some such principle … I do not consider that there is any general principle that a person cannot take advantage of his or her own wrong, though there are a series of instances where this is the result. In most situations, the reason is that there is an interdependence between the failed act and the wrong of the other party. Where there is no such interdependence, the principle does not apply.

119    On appeal, in Kyrwood v Drinkwater [2000] NSWCA 126, Powell JA (with whom Meagher JA agreed) agreed with the conclusion of Young J, but (at [154]) expressed the reasons for that conclusion differently. Referring to Nina’s Bar Bistro Pty Ltd v MBE Corporation (Sydney) Pty Ltd [1984] 3 NSWLR 613 and Roadshow Entertainment Pty Ltd v (ACN 053 006 269) Pty Ltd (1997) 42 NSWLR 462, his Honour stated that:

… if non-compliance with a contractual obligation is to take away the defaulting party’s right to terminate, there must be a direct causal relationship between the non-compliance and the failure to complete, the onus of proving which lies on the non-defaulting party, and there must be an absence of repudiation by the defaulting party prior to that time.

120    In light of my conclusions above, the prevention principle did not preclude J&N from terminating the Heads of Terms in accordance with cl 14, or from relying on its expiration in accordance with cl 15(a), for the following reasons.

121    First, I have not found that J&N breached the Reasonable Endeavours Obligations or any of the implied terms for which the respondents contend.

122    In any event, Deva’s obligation to pay the Lease Amount (initially by 28 February 2025, later extended to 5 March 2025) was independent of the Reasonable Endeavours Obligations. The obligation to pay the Lease Amount was not subject to finance. In any case, Deva did not make J&N aware of any causal connection between the finalisation of the terms of the New Lease and the New Loan Agreement and the capacity of Deva to pay the Lease Amount until 28 March 2025, at which time it represented to J&N that Mr Madaffari was in a position to raise funds to enable Deva to pay the Lease Amount by other means, in any event. On the contrary, on 24 February 2025, Mr Rigg, on behalf of Deva, had assured Mr Tsoukalis that his “standing instructions” were that Deva intended to make the payment of the Lease Amount on or before 28 February 2025, plainly representing that Deva was in a position to do so, notwithstanding that the Heads of Terms did not contemplate that the New Lease and New Loan Agreement were to be in final form by then.

123    In enforcing its right to bring the Heads of Terms to an end by virtue of Deva’s failure to pay the Lease Amount, and in relying on the expiration of the Heads of Terms in accordance with cl 15(a) thereof, J&N is not taking advantage of its own breach of the Heads of Terms (if there was any such breach) in any relevant sense. The operative cause of the loss of Deva’s rights under the Heads of Terms was its own failure to comply with its obligation to pay the Lease Amount.

124    J&N could not, of course, have relied on its own breach of the Reasonable Endeavours Obligations (assuming it had breached them) as a basis to contend that, because the New Lease and the New Loan Agreement had not been executed by midnight on 5 March 2025, the Heads of Terms had expired or had been terminated by J&N, but it was entitled to rely on Deva’s failure to pay the Lease Amount, an obligation which I have found was contractually independent of (and, if it matters, also was not known by J&N to be factually dependent on) the Reasonable Endeavours Obligations. The Reasonable Endeavours Obligations were designed to result in the creation of a new lease and a new loan agreement that could be executed and could commence following the happening of a separate event, the payment of the Lease Amount. The failure to pay the Lease Amount by the extended date of 5 March 2025 was a breach by Deva of the distinct obligation imposed by cl 9, and J&N was not prevented from relying on that breach in exercising its right to terminate the Heads of Terms under cl 14 or, alternatively, from relying on the expiration of the Heads of Terms by operation of cl 15(a).

Equitable estoppel

125    The respondents claim that J&N is estopped from denying the existence of the New Lease and the New Loan Agreement. The claim, as pleaded, is based on the allegation that J&N represented that it would “negotiate and enter into the New Lease and New Loan before 5 March 2025” and that “the New Lease and the New Loan would be entered into on the agreed terms, subject only to reasonable negotiation and finalisation of documents”. In their submissions, the respondents frame their equitable estoppel claim slightly differently, contending that it would be unconscionable for J&N to deny that “the parties had on or around 13 February 2025, agreed on all the essential terms for a lease and loan and decided to enter into the New Lease and [New Loan Agreement] based on that agreement, subject only to the parties’ reasonable endeavours to incorporate all the agreed terms into the New Lease and [New Loan Agreement] before 5 March 2025” (emphasis added).

126    In either form, this contention must be rejected. It is clear from the Heads of Terms that J&N required the payment of the Lease Amount before it would be required to enter into the New Lease and the New Loan Agreement with Deva. It would not be unconscionable for J&N to deny the existence of a promise to enter into the New Lease and the New Loan Agreement in circumstances where Deva did not pay the Lease Amount by 5 March 2025, or at all.

Deva is not entitled to specific performance of the Heads of Terms

127    Given my conclusions above, J&N was entitled to enforce payment of the amounts due under the existing Lease and Loan Agreements on and from 6 March 2025 or, alternatively, at least from the end of March 2025. The Heads of Terms expired, or alternatively was lawfully terminated by J&N. It follows that Deva is not entitled to specific performance of the Heads of Terms.

128    Deva’s entitlement to enter into the New Lease and the New Loan Agreement was always subject to payment of the Lease Amount in accordance with the Heads of Terms. It did not make such payment, and still has not done so.

129    Further, Deva has the burden of proving that it is ready, willing and able to comply with the Heads of Terms and the New Lease. I accept that the respondents have had to act relatively quickly to prepare for the trial in this action, since acknowledging the proceedings, and I assess the evidence produced by them with that in mind. The respondents have not put into evidence audited financial statements of Deva. Deva’s current financial position has been demonstrated to be unhealthy. It is possible that it could raise money from external sources to pay its debts. However, Deva has a history of promising to make payments due under the Lease and the Loan Agreements, and failing to fulfil those promises. Notably, even by the time of trial in December 2025, Deva had not paid the Lease Amount, despite having acknowledged unequivocally, on 13 February 2025, that it was payable.

130    I do not find it necessary to decide whether Deva is insolvent or whether it has in fact been trading while insolvent. It is sufficient that I am not satisfied that Deva has positively established that it is able to comply with its existing legal obligations, or with the terms of the New Lease and the New Loan Agreement, or that Deva has positively established that it will be able to trade lawfully under the New Lease. In these circumstances, it would not be appropriate to order specific performance of the Heads of Terms by requiring J&N to enter into the New Lease and the New Loan Agreement, even if the respondents had established one of the causes of action on which they rely.

Conclusions

131    For the reasons given above, Deva’s cross-claim must be dismissed. On the basis of the admissions made in the amended defence, judgment should be given for J&N. It is appropriate to make orders in the terms of those set out at the beginning of these reasons. The respondents should pay J&N’s costs of the proceedings, including the cross-claim.

Associate:

Dated:    4 June 2026