Federal Court of Australia

Pheonix A Pty Ltd v Spring UT Pty Ltd ATF Spring Unit Trust [2026] FCA 728

ORDERS

THE COURT ORDERS THAT:

1. The applicants’ originating application be dismissed.

2. The cross-claimants’ cross-claim be dismissed.

3. Subject to paragraph 4 below:

(a) the applicants pay the respondents’ costs of the originating application; and

(b) the cross-respondents pay the cross-applicants’ costs of the cross-claim.

4. If any party seeks a different costs order, it may within seven days file and serve an outline of submissions and any affidavit material.  In that event, the other parties may within a further seven days file and serve a responding outline of submissions and any responding affidavit material, and (subject to further order) the issue of costs will be determined on the papers.

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

TABLE OF CONTENTS

REASONS FOR JUDGMENT

MOSHINSKY J:

Introduction

1 This proceeding relates to two agreements for lease and two related leases in respect of premises in a commercial building located at 85 Spring Street, Melbourne, Victoria (the Building or 85 Spring Street).  The agreements for lease and related leases are:

(a) An agreement for lease between Pheonix A Pty Ltd (Pheonix A) as tenant and Spring UT Pty Ltd as trustee for the Spring Unit Trust (Spring UT) as landlord dated 11 October 2023 in relation to part of the ground floor, part of Level 1 and part of Level 2 of the Building (Agreement for Lease (A)), and a lease between those parties of the same date in respect of the same premises (Lease (A)).

(b) An agreement for lease between Pheonix B Pty Ltd (Pheonix B) as tenant and Spring UT as landlord dated 11 October 2023 in relation to Level 12 of the Building (Agreement for Lease (B)), and a lease between those parties of the same date in respect of the same premises (Lease (B)).

I note that the names of the tenant companies adopt the spelling “Pheonix” (with the “e” before the “o”) rather than the spelling of the word “phoenix”.

2 In these reasons, I will refer to Agreement for Lease (A) and Agreement for Lease (B) together as the Agreements for Lease, and I will refer to Lease (A) and Lease (B) together as the Leases.

3 Pheonix A and Pheonix B are special purpose vehicles which were established by Ms Stephanie Doyle, an experienced businesswoman, for the purposes of conducting hospitality businesses at the premises covered by the Agreements for Lease and Leases. At the time the Agreements for Lease and the Leases were negotiated, Ms Doyle operated (or had operated) a number of hospitality businesses which included mini-golf facilities under the name “Birdies”.

4 Spring UT, which owns the Building, is part of the Pelligra group of companies (the Pelligra Group).  The chairman of the Pelligra Group is Mr Rosario (Ross) Pelligra.  He is also the sole director and secretary of Spring UT.  I will refer to him as Ross Pelligra (rather than Mr Pelligra) to distinguish him from another member of the Pelligra family who gave evidence in the proceeding.

5 The two Agreements for Lease are in substantially the same terms, save for two differences which will be mentioned later in these reasons.  Broadly, the Agreements for Lease deal with works to be carried out by each of the landlord and the tenant at the relevant premises.  Central to the present dispute is clause 2 of each Agreement for Lease (set out later in these reasons).  Clause 2.1 of each Agreement for Lease provides (in summary) that the Agreement for Lease and the related Lease are conditional upon the parties agreeing on the scope and design of the plans and specifications of the relevant works by a certain date.  The clause is in substantially the same terms in each Agreement for Lease, save that Agreement for Lease (A) refers to a period of “90 days” for the relevant agreement to be reached, while Agreement for Lease (B) refers to a period of “60 days”.  Thus, the deadlines under clause 2.1 of each agreement were:

(a) for Agreement for Lease (A) – 9 January 2024; and

(b) for Agreement for Lease (B) – 10 December 2023.

6 Clause 2.3 of each Agreement for Lease provides (in summary) that if the condition is not satisfied on or before the deadline, then at any time after the deadline (but before the condition is satisfied), either party may terminate the Agreement for Lease and the related Lease by notice to the other party.

7 On 21 February 2024, Spring UT (by letters from its lawyers, Moray & Agnew) purported to terminate each Agreement for Lease (and the related Lease) on the basis that the condition in clause 2.1 of the Agreement for Lease had not been satisfied.

8 This proceeding was commenced by originating application on 4 September 2024.  The applicants are Pheonix A and Pheonix B.  The respondents are Spring UT and Ross Pelligra.  In their statement of claim, Pheonix A and Pheonix B contend (in summary) that:

(a) Spring UT breached clause 2.2(b) of the Agreements for Lease (a duty to take reasonable endeavours to satisfy the condition in clause 2.1); clause 5.4 of Agreement for Lease (A) and clause 4.4 of Agreement for Lease (B) (a duty to render all assistance reasonably requested by the tenant); and an implied duty to cooperate;

(b) further or in the alternative, in circumstances where the parties had agreed on the Tenant’s Plans and Specifications by 11 October 2023 (or alternatively, by 15 November 2023) and/or Spring UT was in breach of various clauses of each Agreement for Lease which imposed (broadly) a duty to cooperate and a duty to act in good faith, the purported termination of each Agreement for Lease (and the related Lease) was invalid and amounted to a repudiation of each Agreement for Lease (and the related Lease) (which repudiation was accepted by Pheonix A and Pheonix B); as a result of the repudiation, Pheonix A and Pheonix B have suffered loss or damage;

(c) further or alternatively, at all relevant times from 11 October 2023 (or alternatively, by 15 November 2023), the parties had a common understanding and assumption (or Pheonix A and Pheonix B believed and assumed) that the condition in clause 2.1 of each Agreement for Lease had been satisfied and that the Agreements for Lease and related Leases had become unconditional; Spring UT is acting unconscionably in resiling from the common understanding and assumptions (or alternatively, by resiling from the assumptions which Spring UT induced Pheonix A and Pheonix B to adopt) and Spring UT is estopped from contending that the condition in clause 2.1 was not satisfied;

(d) further or alternatively, the conduct of Spring UT was unconscionable within the meaning of s 20 or 21 of the Australian Consumer Law, being Sch 2 to the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law); Ross Pelligra was a person involved in Spring UT’s contraventions of those provisions; Pheonix A and Pheonix B have suffered loss and damage as a result of that conduct.

9 I note that in opening submissions, senior counsel for Pheonix A and Pheonix B indicated that they do not press the allegations in the statement of claim based on an implied duty of good faith.

10 By their amended defence dated 5 December 2025 (which was amended during the trial), Spring UT and Ross Pelligra contend (in summary) that:

(a) the parties to each Agreement for Lease had not agreed on the scope and design of the Tenant’s Plans and Specifications for the purposes of clause 2.1 of each Agreement for Lease; in particular, neither Pheonix A nor Pheonix B ever prepared or submitted a complete and compliant set of plans and specifications for their respective works (all they submitted were indicative floorplans);

(b) prior to entry into the Agreements for Lease and the Leases, Pheonix A and Pheonix B made a number of representations to Spring UT (set out in para 41 of the amended defence) (the Paragraph 41 Representations) and did not disclose certain material information (set out in para 41A of the amended defence) (the Paragraph 41A Information); the representations were false; Pheonix A and Pheonix B engaged in conduct that was misleading or deceptive contrary to s 18 of the Australian Consumer Law by making the representations and not disclosing the material information;

(c) by reason of the same and some additional matters, Pheonix A and Pheonix B engaged in conduct that was unconscionable contrary to s 20 of the Australian Consumer Law;

(d) each of Pheonix A and Pheonix B breached its obligation of good faith in relation to the obtaining of a satisfactory liquor licence (under a clause in each Agreement for Lease) by not disclosing certain information (set out in para 52 of the amended defence);

(e) further, by failing to disclose those matters, while requesting Spring UT to apply for a liquor licence on their behalf, Pheonix A and Pheonix B allowed Spring UT to proceed on the false assumption that there was no material licensing or “fit and proper person” impediment to the grant or transfer of liquor licences to Pheonix A or Pheonix B; Pheonix A and Pheonix B thereby engaged in misleading or deceptive conduct contrary to s 18 of the Australian Consumer Law or unconscionable conduct contrary to s 20 of the Australian Consumer Law.

11 Spring UT and Ross Pelligra filed a notice of cross-claim and statement of cross-claim dated 10 October 2024.  The statement of cross-claim relies on the same matters as set out in the defence (now, the amended defence).  On the basis of those matters, and relying on ss 237 and 243 of the Australian Consumer Law, Spring UT and Ross Pelligra seek declarations that each Agreement for Lease (and the related Lease) is void ab initio.

12 For the reasons that follow, I have concluded (in summary) that:

(a) At no stage in the period up to 21 February 2024 did the parties agree on the scope and design of the Tenant’s Plans and Specifications in relation to the relevant premises.  In particular:

(i) Insofar as Pheonix A and Pheonix B contend that the parties agreed on the Tenant’s Plans and Specifications by 11 October 2023 (the date of the Agreements for Lease), that contention is rejected.

(ii) Insofar as Pheonix A and Pheonix B contend that the parties agreed on the Tenant’s Plans and Specifications on 15 November 2023 (by way of an email exchange between Ms Doyle and Mr Ryan Taylor of the Pelligra Group), that contention is rejected.  I find that Ms Doyle’s email of that date was intended by Ms Doyle (and understood by Mr Taylor) to operate as confirmation that the Landlord’s Plans and Specifications had been approved (or agreed to) by the Tenant and that that aspect of the condition in clause 2.1 had been satisfied (rather than, for example, confirmation that both the Landlord’s and the Tenant’s Plans and Specifications had been approved or agreed to and that the condition in clause 2.1 had been satisfied in its entirety).

Therefore, prima facie, the condition in clause 2.1 of each Agreement for Lease was not satisfied at the time that Spring UT purported to terminate the Agreements for Lease and the Leases (21 February 2024).

(b) Insofar as Pheonix A and Pheonix B allege that the parties had a common understanding and assumption (or Pheonix A and Pheonix B believed and assumed) that the condition in clause 2.1 of each Agreement for Lease had been satisfied and that the Agreements for Lease and related Leases had become unconditional, that allegation is not made out.  The allegation relies principally on the email exchange of 15 November 2023.  As set out above, I find that Ms Doyle’s email of that date was intended by Ms Doyle (and understood by Mr Taylor) to operate as confirmation that the Landlord’s Plans and Specifications had been approved (or agreed to) by the Tenant and that that aspect of the condition in clause 2.1 had been satisfied (rather than, for example, confirmation that both the Landlord’s and the Tenant’s Plans and Specifications had been approved or agreed to and that the condition in clause 2.1 had been satisfied in its entirety).  Accordingly, I do not accept that the parties had the alleged common understanding (or that Pheonix A and Pheonix B had the alleged belief and assumption).  It follows that I do not accept that Spring UT is estopped from contending that the condition in clause 2.1 was not satisfied.

(c) Insofar as Pheonix A and Pheonix B allege that Spring UT breached clause 2.2(b) of the Agreements for Lease, clause 5.4 of Agreement for Lease (A) (and the comparable clause of Agreement for Lease (B)) and an implied duty to cooperate, those allegations are not made out.

(d) Pheonix A and Pheonix B’s allegations that the conduct of Spring UT was unconscionable within the meaning of s 20 or 21 of the Australian Consumer Law are not made out.

(e) Accordingly, the condition in clause 2.1 of the Agreements for Lease was not satisfied as at 21 February 2024, and Spring UT validly terminated the Agreements for Lease and the Leases on 21 February 2024.

13 It follows that Pheonix A and Pheonix B’s originating application is to be dismissed.

14 Further, I have concluded (in summary) that:

(a) Pheonix A and Pheonix B did make at least some of the Paragraph 41 Representations.  In particular, they represented to Spring UT that Ms Doyle and Mr David Walls (who was a consultant to Ms Doyle during (at least) the second half of 2023 and January 2024) were competent, professional and capable of running licensed venues; and that both Ms Doyle and Mr Walls would be involved in operating the licensed premises which were the subject of the Agreements for Lease and the Leases.

(b) Pheonix A and Pheonix B failed to disclose at least part of the Paragraph 41A Information to Spring UT prior to entry into the Agreements for Lease and the Leases.  In particular, Pheonix A and Pheonix B failed to disclose that it was a condition of the liquor licence held by Birdies Mini Golf Pty Ltd for premises located in Forest Hill, Melbourne (Birdies Forest Hill) that:

(i) Mr Walls was prohibited from holding any financial or beneficial interest, or exercising any power (whether directly or indirectly and in his own name or otherwise) in the business of the licensee involving the supply of liquor at the licensed premises; and

(ii) Mr Walls was prohibited from entering into, or remaining on, the licensed premises.

(c) In the circumstances (including the making of the representations referred to in para (a) above; the fact that it was fundamental to the Agreements for Lease and Leases that the businesses operating at the premises would hold a liquor licence; and the fact that the tenant had a right to terminate the Agreements for Lease if the liquor licence contained conditions which were unacceptable to the tenant), I consider that it was misleading or deceptive (or likely to mislead or deceive) for Pheonix A and Pheonix B not to disclose the existence of the Birdies Forest Hill liquor licence conditions to the Pelligra Group (including Spring UT) before entry into the Agreements for Lease and the Leases.

(d) In light of my conclusion that the Agreements for Lease and the Leases were validly terminated, I am not satisfied that the statutory criteria in ss 237 and 243 of the Australian Consumer Law are satisfied for the making of declarations that each Agreement for Lease (and the related Lease) is void ab initio.

15 It follows that the cross-claim is to be dismissed.

The hearing and witnesses

16 The trial of the proceeding commenced on 3 December 2025 and occupied 10 hearing days (with Day 9 being relatively brief).

17 Pheonix A and Pheonix B relied on evidence from the following lay witnesses:

(a) Ms Stephanie Doyle, the sole director of Pheonix A and Pheonix B; Ms Doyle prepared two witness statements and was cross-examined;

(b) Mr Christopher Stanley, an architect and the director of Splinter Society Architecture (Splinter Society), which is a Melbourne-based architecture and interior design business; Mr Stanley prepared two witness statements and was cross-examined;

(c) Mr David Walls, a consultant to Ms Doyle during at least part of the relevant period; Mr Walls prepared two witness statements and was cross-examined.

18 Ms Doyle was not an impressive witness.  She did not have a precise recollection of the relevant events.  On several occasions, she did not answer the question she was being asked.  I attach little weight to her evidence.

19 Mr Stanley was a good witness.  He gave straightforward answers to questions.  He was consistent in his evidence and made concessions where appropriate.  While he was a little vague on some of the dates and details, this did not detract significantly from my overall positive impression of his evidence.  Where there is a difference between Mr Stanley’s witness statements and his oral evidence, I prefer his oral evidence.

20 Mr Walls was not an impressive witness.  On several occasions, he did not answer the question he was being asked.  He was argumentative on occasion.  Overall, I did not find him to be a credible witness and I attach little weight to his evidence.

21 Spring UT relied on evidence from the following lay witnesses:

(a) Mr Ryan Taylor, who was the Assistant Development Manager of the Pelligra Group at the relevant time (he is now the Development Manager); Mr Taylor prepared a witness statement and was cross-examined;

(b) Mr Rosario (Ross) Pelligra, the sole director of Spring UT and Chairman of the Pelligra Group; Ross Pelligra prepared a witness statement and was cross-examined;

(c) Mr Matthew (Matt) Paris, a Senior Project Manager engaged by the Pelligra Group; Mr Paris prepared a witness statement (which he adopted in the witness box) but was not the subject of any cross-examination;

(d) Mr Genan Sijercic, who was employed as a project manager by the Pelligra Group at the relevant time; Mr Sijercic prepared a witness statement (which he adopted in evidence given by video-conference) but was not the subject of any cross-examination;

(e) Mr Paul Pelligra, the Chief Executive Officer of the Pelligra Group; Paul Pelligra prepared an affidavit (which went into evidence) but was not required for cross-examination;

(f) Mr Sean Dugdale, an architectural designer employed by Point Architects (architects engaged by the Pelligra Group in relation to 85 Spring Street); Mr Dugdale prepared an affidavit (which went into evidence) but was not required for cross-examination;

(g) Mr Edgar Grech, the director of Point Architects; Mr Grech prepared an affidavit (which went into evidence) but was not required for cross-examination.

22 Mr Taylor’s oral evidence was clear and straightforward.  He had a clear recollection of the facts.  He made sensible concessions.  His credibility was damaged, however, by the fact that he sent two emails which were false and misleading.  The emails were sent by Mr Taylor on 30 May 2024 and 4 June 2024 (see below).  Nevertheless, having regard to the other matters to which I have referred, I generally accept his evidence.

23 Ross Pelligra was not an impressive witness.  On several occasions, he did not answer the question he was being asked.  He had a poor recollection of the facts and details.  His oral evidence was often vague.  I attach little weight to most of his evidence.

24 The following expert witnesses were called by the parties (in relation to issues of loss and damage):

(a) Pheonix A and Pheonix B called:

(i) Mr Peter Sheppard, an expert in the hospitality industry; Mr Sheppard prepared an expert report and was cross-examined; and

(ii) Mr Mariano Rossetto, a forensic accountant at Vincents; Mr Rossetto prepared two expert reports and was cross-examined.

(b) Spring UT called Mr Nicola (Nick) Ranieri, a forensic accountant; Mr Ranieri prepared an expert report (which he adopted in the witness box) but was not cross-examined.

25 Mr Sheppard was a good witness.  His evidence was clear and he made sensible concessions.

26 Mr Rossetto was a good witness.  His evidence was very clear and he demonstrated a good command of the detailed material.

The Agreements for Lease

27 Before making detailed factual findings, I provide an overview of the Agreements for Lease and set out the key relevant provisions.  The two Agreements for Lease are in substantially the same terms, save for two differences.  The two differences are:

(a) in clause 2.1, the period of time is “90 days” in Agreement for Lease (A) and “60 days” in Agreement for Lease (B); and

(b) Agreement for Lease (A) has an additional clause (clause 3) which does not appear in Agreement for Lease (B); as a consequence, the numbering of subsequent clauses differs between the agreements.

28 In the paragraphs that follow, I will set out the clauses as they appear in Agreement for Lease (A) (which appears in CB E.0159 commencing at p 4029).  I will also make some references to Agreement for Lease (B) (which appears in CB E.0159 commencing at p 4148).

29 It is not necessary for present purposes to set out the provisions of the Leases.  These appear to be standard form documents and the parties’ submissions did not address the provisions of those documents.  It is clear from the terms of each Agreement for Lease that it is related to the relevant Lease.  The commencement date in each Lease was 28 February 2024.

30 In Agreement for Lease (A), immediately after the table of contents there is an “Information Table” which sets out details of the parties, namely Spring UT as landlord, Pheonix A as tenant and Ms Doyle as guarantor.  On the next page, there are three items set out: the land, the premises and the Sunset Date (which was 27 February 2025).  (The significance of the Sunset Date is discussed below.)

31 The following recitals then appear:

A.    The Landlord is the registered proprietor of the Land.

B.    The Landlord will procure the completion of the Landlord’s Works in accordance with this Agreement.

C.    The Tenant will procure the completion of the Tenant’s Works in accordance with this Agreement.

D.    The Guarantor has agreed to guarantee the performance and observance by the Tenant of the Tenant’s obligations under this Agreement.

32 As the recitals indicate, a central purpose of the Agreements for Lease was to make provision for the Landlord’s Works and the Tenant’s Works.

33 Clause 1.1 contains definitions.  These include:

In this Agreement, unless contrary to or inconsistent with the context:

…

Landlord’s Approvals means all necessary approvals, consents, permissions and licences of all relevant Authorities relating to the performance of the Landlord’s Works and to enable the Premises to be used … for the purpose specified in Item 9 of the Lease (but excluding those relating to or as a consequence of the Tenant’s Works and the Tenant’s Approvals).

…

Landlord’s Works means all work, in accordance with the Plans and Specifications, to be undertaken by or on behalf of the Landlord.

…

Liquor Legislation means the legislation in the State regulating the sale disposal and consumption of liquor on premises like the Premises, which at the date of this lease includes the Liquor Control Reform Act 1998 (Vic).

…

Plans and Specifications means the plans and specifications for the Landlord’s Works agreed between the parties pursuant to clause 2 and annexed to this Agreement as Annexure A pursuant to clause 2 as amended from time to time in accordance with this Agreement.

Practical Completion means the execution of the Landlord’s Works to a stage where:

(a)    the Landlord’s Works have been completed:

(i)    in accordance with the Plans and Specifications;

(ii)    in accordance with the Landlord’s Approvals; and

(iii)    in accordance with the imposed requirements of any relevant Authority,

but excluding any works which cannot be completed until after the completion of the Tenant’s Works and minor alterations, defects or omissions which do not materially and adversely affect the ability of the Tenant to use and occupy the Landlord's Works as contemplated under the Lease;

(b)    all authorisations necessary to use and occupy the Landlord’s Works are in force, except for any which cannot be obtained until the Tenant’s Works have been completed, the Tenant’s Approvals or any which are required for a specific activity or business carried on by the Tenant (for example, liquor licence, business licence or accreditation); and

(c)    all services and installations incorporated in the Landlord’s Works, including mechanical, electrical, hydraulic, water and fire protection services, are:

(i)    physically completed and commissioned; and

(ii)    initially and finally tested, as any Authority may require,

except where the failure to satisfy these requirements is caused by the Tenant failing to complete the Tenant’s Works unless the failure is beyond the Tenant’s control, and except for minor alterations, defects or omissions which do not materially and adversely affect the ability of the Tenant to use and occupy the Landlord's Works as contemplated under the Lease.

…

Tenant’s Approvals means all consents, permits, licences and approvals required to carry out the Tenant’s Works and for the Tenant to operate its business from the Premises.

…

Tenant’s Plans and Specifications has the meaning given to it in clause 2.2(a)(i)(A).

Tenant’s Works means the works (including the fitout works and installation of the Tenant’s Property) to be undertaken by or on behalf of the Tenant on the Premises as detailed in the Tenant’s Plans and Specifications.

I note that the expression “Plans and Specifications” related to the Landlord’s Works and that it is defined by reference to Annexure A to the Agreement for Lease (see further below).

34 Clause 1.2 deals with interpretation and includes:

The following rules of interpretation apply unless the context requires otherwise.

…

(n)    Unless expressly stated in a particular provision, the Landlord may withhold its consent or approval under this Agreement in its absolute discretion.

35 Clause 2 is a critical provision for the purposes of this proceeding.  It provides (noting that this is the version that appears in Agreement for Lease (A)):

2. DESIGN APPROVAL

2.1 Agreement conditional

This Agreement and the Lease is conditional on the Landlord and the Tenant agreeing on the scope and design of:

(a)    the Landlord’s Works and the Plans and Specifications; and

(b)    the Tenant’s Plans and Specifications,

in accordance with this clause 2 (Design Condition) by no later than the date that is 90 days after the date of this Agreement (Design Condition Deadline).

2.2 Consultation and agreement

(a)    Promptly after execution of this Agreement:

(i)    the Tenant must:

(A)    prepare plans and specifications detailing the Tenant’s Works (which the Tenant must ensure are prepared with due skill care and diligence and in compliance with all laws) (Tenant’s Plans and Specifications); and

(B)    submit the Tenant’s Plans and Specifications to the Landlord for approval; and

(ii)    the parties must consult and discuss the scope and design of the Landlord’s Works and the Plans and Specifications.

(b)    The Landlord and the Tenant must use reasonable endeavours to satisfy the Design Condition by the Design Condition Deadline.

(c)    Subject to clause 2.3, once the scope and design of the Landlord’s Works and the Plans and Specifications are agreed by the parties, the Landlord is authorised to insert:

(i)    the Plans and Specifications in Annexure A of this Agreement; and

(ii)    a plan of the Premises in annexure A of the Lease.

(d)    The Tenant accepts responsibility for the functionality and performance of the design of the Tenant’s Works and the Landlord is neither liable nor responsible for that functionality or performance due to any approval given by the Landlord with respect to the Tenant’s Works under this clause 2.

2.3 Termination

(a)    If the Design Condition is not satisfied on or before the Design Condition Deadline, then at any time after the Design Condition Deadline but before the Design Condition is satisfied, either the Landlord or the Tenant may terminate this Agreement and the Lease by notice to the other.

(b)    If this Agreement is terminated under this clause 2.3, in addition to any other rights provided by law, each party:

(i)    is released from its obligations to continue performance under this Agreement and the Lease; and

(ii)    retains the rights it has against the other party in respect of any past breach.

(Underlining emphasis added.)

36 As noted above, in clause 2.1 of Agreement for Lease (B), the period of “60 days” appears rather than “90 days”.  It may be inferred that the reason for the shorter period for Agreement for Lease (B) was that it related to only one floor (Level 12) and the tenant’s works were simpler.

37 Although clause 2.2(c) states that “once the scope and design of the Landlord’s Works and the Plans and Specifications are agreed by the parties, the Landlord is authorised to insert … the Plans and Specifications in Annexure A of this Agreement”, suggesting that Annexure A would be added later, it seems that Annexure A was included at the time of execution.  The Agreements for Lease in evidence contain an Annexure A (see further below).

38 Clause 3 in Agreement for Lease (A) deals with “Landlord’s Approvals”.  As noted above, there is no equivalent to this clause in Agreement for Lease (B).  (It appears from communications between the parties (discussed later in these reasons) that planning approval was not expected to be required for the Landlord’s Works in relation to Level 12.  This perhaps explains why there is no such clause in Agreement for Lease (B).)  Clause 3.1 provides:

3.1 Landlord to obtain Landlord’s Approvals

(a)    Subject to the Tenant complying with clause 3.2, the Landlord, at its cost, must use its reasonable endeavours to procure the Landlord’s Approvals as expeditiously as possible.

(b)    The Landlord and the Tenant acknowledge that the Landlord will not be able to lodge its application for the Landlord’s Approvals until the Tenant’s Plans and Specifications have been finalised and agreed between the parties.

39 Clause 3.3 deals with a situation where the Landlord is not able to obtain the Landlord’s Approvals relating to Level 2 of the premises.

40 Clause 4 of Agreement for Lease (A) deals with the Landlord’s Works.  The corresponding clause in Agreement for Lease (B) is clause 3.  The clause contains provisions relating to Practical Completion of the Landlord’s Works and deferral of the Commencement Date under the related Lease (in the event that Practical Completion of the Landlord’s Works did not occur by the Commencement Date).  As it happened, the Agreements for Lease and the Leases were purportedly terminated on 21 February 2024, which was before the Commencement Date specified in the Leases (28 February 2024).

41 Clause 4.4 provides that if Practical Completion (of the Landlord’s Works) has not occurred by the Sunset Date (27 February 2025), either party could terminate the Agreement and the related Lease.

42 Clause 4.5 provides that:

4.5 Design

The Tenant acknowledges that prior to the date of this Agreement it has consulted with, and provided directions to, the Landlord in relation to the design of the Landlord’s Works and on or after the date of this Agreement it may need to further consult with, and provide directions to, the Landlord in relation to the design of the Landlord’s Works. Without limiting the Landlord’s responsibility in relation to the quality of construction of the Landlord’s Works, the Landlord accepts responsibility for the design of the Landlord’s Works to the extent of the Tenant’s input into that design.

As discussed later in these reasons, there was extensive discussion between the parties (after the Agreements for Lease were entered into) about the scope and design of the Landlord’s Works, particularly in relation to the roof structure for Level 2.

43 Clause 5 of Agreement for Lease (A) deals with the Tenant’s Approvals and Liquor Licence.  The corresponding clause in Agreement for Lease (B) is clause 4.  In order to provide context for issues in the case, I set out clause 5 of Agreement for Lease (A) in full:

5. TENANT’S APPROVALS AND LIQUOR LICENCE

5.1 Tenant to apply

The Tenant must, at its own cost:

(a)    prepare and submit the Tenant’s proposed applications for Tenant’s Approvals to the Landlord for the Landlord’s approval (which approval must not be unreasonably withheld or delayed) within 15 Business Days after the date the Tenant’s Plans and Specifications are agreed pursuant to clause 2;

(b)    immediately after lodgement, deliver copies of the application [for] the Tenant’s Approvals, as lodged, to the Landlord;

(c)    do everything necessary to obtain the Tenant’s Approvals as expeditiously as possible; and

(d)    produce a copy of the Tenant's Approvals to the Landlord as soon as each of them is obtained.

5.2 Information

The Tenant must keep the Landlord informed of:

(a)    all things done by the Tenant under clause 5.1; and

(b)    the content of all communications from any Authority in relation to the applications made pursuant to clause 5.1.

5.3 Liquor Licence

(a)    The Landlord must, at the Tenant’s cost, use reasonable endeavours to obtain all licences, and/or permits necessary under the Liquor Legislation to sell, dispose of or permit consumption of liquor on the Premises as part of the operation of the Tenant’s business on the Premises as permitted by the Lease and in accordance with the purpose specified in Item 9 of the Lease in respect of the Premises (Liquor Licence).

(b)    The parties must work together in good faith to obtain a satisfactory Liquor Licence as expeditiously as possible.

(c)    The Tenant agrees that notwithstanding that the application for the Liquor Licence is in the name of the Landlord that the Tenant will, at its cost, manage the process to obtain the Liquor Licence.

(d)    If the Liquor Licence obtained pursuant to clause 5.3(a) contains conditions that are unacceptable to the Tenant, the Tenant may within 14 days after receipt of the Liquor Licence terminate this Agreement and the Lease by written notice to the Landlord (time being of the essence).

(e)    For the avoidance of doubt, if the Tenant does not terminate this Agreement and the Lease pursuant to clause 5.3(d) the Tenant will be deemed to have accepted the Liquor Licence.

(f)    Subject to clause 5.3(g), if this Agreement is terminated pursuant to clause 5.3(d):

(i)    neither party is liable to the other party for any costs incurred by the other party under or in respect of this Agreement or the Lease;

(ii)    the Landlord is not obliged to grant and the Tenant is not obliged to accept the Lease; and

(iii)    the Tenant has no claim against the Landlord and no further interest in the Premises.

(g)    The termination by [the Tenant] of this Agreement pursuant to clause 5.3(d) shall not prejudice either party from making any claim against the other party in connection with any breach, default, negligence, act or omission carried out by the other party, or any party acting on its behalf, which occurred prior to the termination date.

(h)    The Landlord agrees that immediately upon receipt of the Liquor Licence … the Landlord will transfer the Liquor Licence to the Tenant and the Tenant will accept such transfer. The parties agree that they will do all things reasonably necessary to give effect to the transfer of the Liquor Licence from the Landlord to the Tenant.

5.4 Landlord to Assist Tenant

At the request of the Tenant, the Landlord must:

(a)    participate in and render all assistance reasonably requested by the Tenant or any relevant Authority (including but not limited to preparing and progressing the relevant applications associated with the Tenant’s Works or the use of the Premises permitted under the Lease); and

(b)    provide all information reasonably requested by the Tenant or any relevant Authority in connection with any of the applications for the Tenant’s Approvals including applications in respect of any environmental and hazardous issues associated with the Tenant's Works or the use of the Premises permitted under the Lease.

(Underlining emphasis added.)

It is significant for the issues in the case that, under clause 5.3(d) of Agreement for Lease (A) (and the comparable clause of Agreement for Lease (B)), if the Liquor Licence contained conditions that were unacceptable to the Tenant, the Tenant could terminate the Agreement for Lease and the related Lease.

44 Clause 6 deals with the Tenant’s Works. Clause 6.1 deals with access to the premises.  Clause 6.2 deals with access arrangements and contemplates that the Landlord’s Works and the Tenant’s Works may be carried out at the same time.  Clause 6.3 deals with construction of the Tenant’s Works and includes a requirement that the Tenant’s Works be carried out “in accordance with the Tenant’s Plans and Specifications”.  Clause 6.5 deals with alterations and provides in part:

The Tenant’s Plans and Specifications may only be altered with the prior written consent of the Landlord, which consent, must not be unreasonably withheld or delayed.

Clause 6.8 deals with completion of the Tenant’s Works and commencement of trading.

45 Clause 7 deals with the Landlord’s contribution towards the Tenant’s Works. (The comparable clause in Agreement for Lease (B) is clause 6.)  Clause 7.1 provides in part:

(a)    Subject to:

(i)    the Tenant providing the bank guarantee required under the Lease; and

(ii)    the Tenant’s termination right under clause 5.3(d) no longer applying and/or no longer being applicable,

the Landlord will pay to the Tenant or the Tenant’s contractor (at the Landlord’s election) an amount up to a maximum of $3,363,750 (excluding GST) (subject to clause 3.3(a)(v)) (Contribution Cap) as a contribution towards the actual cost to the Tenant of the fitout portion of the Tenant’s Works (Tenant’s Works Contribution) pursuant to this clause 7.

(b)    The Landlord and the Tenant acknowledge and agree that the Tenant’s Works Contribution may be paid in instalments or as a lump sum payment within 30 days of the last to occur of:

(i)    the Landlord approving the Tenant’s Works (or that part of the Tenant’s Works to which an instalment will apply …) (including the rectification of any defects identified by the Landlord);

(ii)    the Tenant remedying any breach of this Agreement and the Lease advised by the Landlord;

(iii)    the Tenant providing to the Landlord:

(A)    invoices establishing to the satisfaction of the Landlord the amount(s) that the Tenant has spent on fitout in relation to the Tenant’s Works approved by the Landlord in respect of the fitout of the Premises in accordance with this Agreement; and

(B)    a valid tax invoice for the Tenant’s Works Contribution (or that part of the Tenant’s Works Contribution that the Tenant is seeking payment for).

(Underlining emphasis added.)

In Agreement for Lease (B), clause 6.1(a) provides for an amount of up to $3,038,750 (excluding GST).  As discussed below, in late 2023 and early 2024, one of the points of tension between the parties related to the Landlord’s contribution to the Tenant’s Works.

46 Clause 8 deals with a rent-free period.

47 Clause 9 deals with warranties.  This includes a warranty by each party to the other that (among other things) “it has not relied on any undertaking, conduct or representation from or on behalf of the other party except as set out in this Agreement”.

48 Clause 10 deals with non-disclosure.  Clause 11 relates to GST.  Clause 12 is a dispute resolution clause.  Clause 13 concerns termination.  Clause 14 deals with assignment.  Clause 15 deals with a bank guarantee.  Clause 16 concerns notices.

49 Clause 17 deals with miscellaneous matters and includes a “no waiver” clause:

17.5 No Waiver

No failure to exercise and no delay in exercising any right, power or remedy under this Agreement will operate as a waiver. No single or partial exercise of any right, power or remedy will preclude any other or further exercise of that or any other right, power or remedy.

50 Clause 18 deals with a guarantee.  Clause 19 is a clause relating to COVID-19.  Clause 20 deals with limitation of liability.

51 Annexure A to Agreement for Lease (A) is a one-page document headed “Plans and Specifications”.  There is a sub-heading “Lessor works required (at a minimum)”.  It appears that this annexure formed part of the agreement at the time it was executed (rather than being inserted later as indicated in clause 2.2(c)).  The list of works in the annexure was arranged under headings: Electrical; Mechanical; Exhaust; Fire protection; Hydraulic; Gas; Telephone; Grease Drainage; and Other building requirements.  The annexure included:

Mechanical

* Air-conditioning – heat load allowance of 80W/m2 (light & power load), temperature sensor, supply air ducts and registers to open plan layout

…

Other building requirements:

…

* Level 2 glass structure with openable roof and walls

52 Annexure A to Agreement for Lease (B) has the same format as Annexure A to Agreement for Lease (A).  While there is some similarity, there are also differences between the text of the two annexures.

53 I note that the expression “Plans and Specifications” is defined as meaning “the plans and specifications for the Landlord’s Works agreed between the parties pursuant to clause 2 and annexed to this Agreement as Annexure A pursuant to clause 2 as amended from time to time in accordance with this Agreement”.  However, Annexure A to each Agreement for Lease merely sets out a list of items and does not include any plans; further, little detail is set out in Annexure A to each Agreement for Lease.

Factual findings

General matters

The Pelligra Group

54 The Pelligra Group undertakes medium and large-scale commercial developments throughout Australia.  The Pelligra Group has its own internal staff and also engages external professional consultants and contractors to work on its many projects.

55 In addition to the witnesses from the Pelligra Group referred to above, Mr Anastasios (Tas) Dendes, the Head of Finance at the Pelligra Group, was involved in some of the relevant communications.

56 Spring UT is part of the Pelligra Group.  In November 2022, Spring UT as trustee of the Spring Unit Trust settled the purchase of land at 85 Spring Street, Melbourne.  There is a 16-storey building on the site, which is above Parliament Station and had historically been the headquarters of ESANDA Finance.  The property was purchased with vacant possession and had been vacant for approximately 15 years.

57 Spring UT engaged Pelligra Construction Group Pty Ltd, which is another company in the Pelligra Group, to undertake the refurbishment of 85 Spring Street.

58 The Pelligra Group obtained finance for the project at 85 Spring Street, Melbourne (including the development of the premises) through a fund manager named Barrenjoey Capital Partners (Barrenjoey).  One of the principals of Barrenjoey who communicated with the Pelligra Group about matters relating to 85 Spring Street, Melbourne was Mr Phuong Huynh.

59 Between June 2023 and February 2024, Mr Taylor was the principal point of contact between Spring UT and Ms Doyle, Mr Walls, Pheonix A and Pheonix B regarding the leases of part of the ground floor, part of Level 1, part of Level 2 (proposed to be leased by Pheonix A), and Level 12 (proposed to be leased by Pheonix B).

Pheonix A and Pheonix B

60 As noted above, Pheonix A and Pheonix B are special purpose vehicles which were established by Ms Doyle for the purposes of conducting hospitality businesses at the premises covered by the Agreements for Lease and Leases.

61 The parent company of Pheonix A and Pheonix B is Pheonix 85 Pty Ltd (Pheonix 85), which was also established by Ms Doyle.

62 As at March 2023, Ms Doyle operated the Birdies venues at Ryde, Sydney (known as Birdies Top Ryde) and at Forest Hill, Melbourne.

63 Splinter Society was engaged by Pheonix 85 (not Pheonix A and Pheonix B) to prepare architectural plans in relation to the project at 85 Spring Street.  This work was principally carried out by Mr Stanley and Mr Jake Wilson.

64 In December 2023, Pheonix A and Pheonix B engaged Kinematics Building Solutions Pty Ltd (Kinematics) to provide services engineering services in relation to the project at 85 Spring Street.  Mr Venkat Patil was the principal person at Kinematics who provided these services.

2020

65 On 23 July 2020, an application was made to the Victorian Commission for Gambling and Liquor Regulation (the Victorian Gambling and Liquor Commission) seeking to have Birdies Mini Golf Pty Ltd endorsed on the licence in respect of premises at level 3, 270 Canterbury Road, Forest Hill, Victoria (the July 2020 Application).  It appears that, at the time of the application, the directors of the company were Ms Doyle and Mr Walls.

66 A copy of the July 2020 Application was served on Victoria Police, which objected to the application.  Victoria Police submitted that Mr Walls had provided false or misleading information in the applicant questionnaire as he had failed to disclose his criminal history.  Victoria Police submitted that Ms Doyle was not a suitable director as she had an unsuitable associate, namely Mr Walls.

67 In or about September 2020, Birdies Mini Golf Pty Ltd sought to amend the July 2020 Application.  The company indicated that Mr Walls had resigned as a director of the company.  Also, Ms Doyle explained that she had completed the applicant questionnaire and declaration of associates of Mr Walls without consulting him as he was frequently away on business.  Ms Doyle noted that she ought not to have signed Mr Walls’s name on the forms and she apologised for doing so.

68 On 27 October 2020, a delegate of the Victorian Gambling and Liquor Commission decided to refuse the July 2020 Application (CB E.0351).  The delegate noted that Ms Doyle made admissions that she had fraudulently completed the questionnaire and declaration of associates on behalf of Mr Walls when he was a director of Birdies Mini Golf Pty Ltd.  The delegate considered that Ms Doyle had been dishonest in knowingly submitting a questionnaire and declaration of associates on behalf of another person and that this made her unsuitable to hold or carry on business under the licence.

69 On 16 December 2020, Birdies Mini Golf Pty Ltd made a fresh application for an on-premises liquor licence for the venue at Forest Hill (the December 2020 Application).

2021

70 On 24 February 2021, Mr Martin Towey of LGS Legal, acting for Birdies Mini Golf Pty Ltd, wrote to the Victorian Gambling and Liquor Commission in relation to the December 2020 Application (CB F.0026).  The letter included a submission that Ms Doyle was suitable to be a director of the applicant entity and therefore that the applicant entity was suitable to hold a liquor licence.  The letter acknowledged that Ms Doyle had provided false and misleading information in the earlier application and noted that she had been dealt with at the Magistrates Court by way of diversion, with the diversion ending on 8 February 2021.  The letter expressed regret for these matters on behalf of Ms Doyle.  The letter stated that an obvious and major contributing factor to Ms Doyle’s problems was her then ignorance of her business partner’s extensive criminal record.  The letter stated that, having now become aware of this, it was now possible to offer a condition on any licence issued to Birdies Mini Golf Pty Ltd “that Mr Walls is not to attend the licensed premises at any time or be involved in the business of the supply of liquor”.  The letter stated that the company would accept such a condition on its licence and set out the text of the proposed condition.

71 On 23 April 2021, a delegate of the Victorian Gambling and Liquor Commission decided to refuse the December 2020 Application (CB E.0352) (the April 2021 Decision).  Among other things, the delegate was not satisfied that Mr Walls was not an associate of Ms Doyle.

72 Birdies Mini Golf Pty Ltd sought internal review of the April 2021 Decision (the 2021 Application for Review).

73 Ms Doyle prepared a witness statement dated 9 July 2021 in support of the 2021 Application for Review (CB F.0009).  In the statement, Ms Doyle stated that she relied on her earlier submission to the Commission where it was proposed that Mr Walls be excluded from the business of the licensee and the premises.

74 On 1 November 2021, the Victorian Gaming and Liquor Commission determined to set aside the April 2021 Decision and grant the on-premises licence, subject to a condition relating to Mr Walls (CB E.0353).  The Commission considered various issues concerning the suitability of Ms Doyle, but did not consider these to provide a basis not to grant the licence.  In relation to Mr Walls, the Commission found that he was not currently an associate of the applicant company or Ms Doyle.  However, in light of Mr Walls’s previous involvement and to avoid any doubt, the Commission considered it appropriate to impose a condition on the grant of the licence that prohibited any potential involvement in the business or attendance at the premises by Mr Walls (para 128).  The condition imposed by the Commission was:

Mr David Walls is prohibited from holding any financial or beneficial interest, or exercising any power, (whether directly or indirectly and in his own name or otherwise) in the business of the licensee involving the supply of liquor at the licensed premises.

Mr David Walls is prohibited from entering into, or remaining on, the licensed premises.

2022

75 In or about September 2022, Birdies Mini Golf Pty Ltd applied to the Victorian Gambling and Liquor Commission to vary the licence relating to the Forest Hill premises by removing the second paragraph of the condition relating to Mr Walls (the Application for Variation).

1 January 2023 to 11 October 2023

Birdies Forest Hill ceases operation (April 2023)

76 In April 2023, Birdies Forest Hill closed.

May and June 2023

77 On 31 May 2023, Mr Walls sent an email to Ross Pelligra and Paul Pelligra (copied to Ms Doyle) with the subject “Flagship Proposal – Birdies” (CB E.0003).  The email constituted an initial enquiry about the conduct of a hospitality business at premises of the Pelligra Group.  The email “signoff” contained both the business name “19THHOLE” and a link to the website of the Birdies business, “birdies.com.au”.  The email included:

We believe in supporting local businesses. At Birdies Top Ryde we have 18 craft beers on tap, at Birdies Forest Hill we have 12 craft beers on tap – all from Australia’s independent, craft breweries. Our wine list is inspired by wines that are crafted locally in Australia and have ALL achieved a Halliday Wine Companion rating of more than 94 points. And our house spirits (with the exception of tequila and bourbon) are made at local, Australian distilleries.

(Emphasis added.)

78 The email attached an information memorandum titled “Birdies (Flagship)” (the May 2023 Information Memorandum).  The memorandum included (on page 2) photographs of Mr Walls and Ms Doyle, who were described as the “Team”.  In relation to Mr Walls, the following details appeared underneath his photograph:

David has 25 years’ experience developing world-class businesses. He focuses on negotiations and our construction projects.

79 In relation to Ms Doyle, the following details appeared underneath her photograph:

Stephanie has more than 25 years’ marketing experience transforming global businesses. She focuses on our customers’ needs, expectations and experience.

80 The memorandum contained numerous references to Birdies Forest Hill (on pages 4, 9, 15) but did not state or indicate that Birdies Forest Hill had closed.  Paul Pelligra gives evidence (which I accept) in para 10 of his witness statement (annexed to his affidavit) that Ms Doyle told him in July 2023 that Birdies Forest Hill was “temporarily closed” for renovations.  There is a conflict in the evidence as to whether Ms Doyle and Mr Walls disclosed to the Pelligra Group in the period May to October 2023 that Birdies Forest Hill had permanently closed.  Having regard to the communications generally (in particular, the transcript of the meeting on 21 September 2023, discussed below), I find that Ms Doyle and Mr Walls did not disclose to the Pelligra Group that Birdies Forest Hill had permanently closed.  Further, having regard to the evidence generally, I find that the Pelligra Group was not aware (prior to entering into the Agreements for Lease and the Leases) that Birdies Forest Hill had permanently closed.

81 On page 16 and following, the memorandum presented the “Flagship Concept”, which appears to have been an early proposal for the development of a hospitality venue or venues.

82 On 1 June 2023, Mr Taylor responded by email to Mr Walls (copying in Ross Pelligra and Paul Pelligra) (CB E.0005).  Mr Taylor indicated that the Pelligra Group had space available at its prestigious location at 85 Spring Street, Melbourne.  The email attached an information memorandum about the Building.

83 On 6 June 2023, a meeting took place between Mr Taylor and Mr Walls at 85 Spring Street.  Mr Taylor showed him through parts of the building.  Mr Taylor told Mr Walls that he thought Birdies was a great concept, but that the Pelligra Group was looking for a more elevated dining concept.

84 On 23 June 2023, a meeting over coffee took place between Ross Pelligra, Mr Taylor and Mr Walls at Café Excello on Spring Street, Melbourne.

85 On 26 June 2023, Mr Walls sent an email to Ross Pelligra (copied to Ms Doyle and Mr Taylor) with the subject “Baron x 85 Spring”, attaching an information memorandum titled “Baron x 85 Spring Street” (the June 2023 Information Memorandum) and additional documents (CB E.0013).  The name “Baron” was apparently the proposed brand name for some or all of the hospitality venues.

86 Pages 2-3 of the memorandum described the “Team”, comprising Mr Walls, Ms Doyle and Mr Clint Jaeger, a successful chef.  The details relating to Mr Walls and Ms Doyle were the same as in the May 2023 Information Memorandum, set out above.

87 The memorandum described the following proposed hospitality venues, which were to be located in the Building:

(a) The Baron on Little Collins (ground level);

(b) The Baron – fine dining restaurant and bar (Levels 1 and 2); and

(c) 85 at the Baron – bar (Level 12).

88 During June and early July 2023, the parties negotiated heads of agreement (which were entered into on 3 July 2023 – see below).  The negotiations were principally handled by Mr Walls on behalf of the tenant and Ross Pelligra and Mr Taylor on behalf of Spring UT.

Birdies Forest Hill – refusal of Application for Variation (June 2023)

89 On 28 June 2023, a delegate of the Victorian Liquor Commission (which, along with the Victorian Gambling and Casino Control Commission, is the successor to the Victorian Gambling and Liquor Commission) refused the Application for Variation (CB F.0027).  In other words, the delegate refused the application to remove the second paragraph of the condition relating to Mr Walls.

Consultancy Agreement with Mr Walls (2 July 2023)

90 On 2 July 2023, Pheonix 85 and Mr Walls entered into an “Agreement for Consultancy Services” in relation to the proposed venues at 85 Spring Street (CB E.0018) (the Consultancy Agreement).  The Recitals included:

A.    The Company [i.e. Pheonix 85] wishes to receive the consultancy services which the Consultant [i.e. Mr Walls] is able to provide, in relation to the construction, set up and operation of their new venues at 85 Spring (Consultancy Services).

91 Clause 2 of the agreement provided that the Consultant (Mr Walls) would provide the Consultancy Services to the Company (Spring 85 Pty Ltd) according to the Specification in Schedule 1 to the agreement.  Clause 4 dealt with fees and profit share, and anticipated an agreement which would continue for several years.  Schedule 1 comprises five pages and is arranged under the headings “Pre-Opening” and “Post-Opening”.  The services to be provided by Mr Walls in relation to both periods were extensive.  This indicates (and I find) that Ms Doyle and Mr Walls intended that Mr Walls would have an active role in the operation of the proposed hospitality venues at 85 Spring Street after they opened.

Heads of Agreement (3 July 2023)

92 On 3 July 2023, heads of agreement (in the form of a letter) were entered into between Spring UT as landlord and The Baron – DS Spring St Pty Ltd as tenant in relation to a retail tenancy at 85 Spring Street (the Heads of Agreement).  A copy of the signed Heads of Agreement was attached to an email from Mr Taylor to Ms Doyle (copied to Ross Pelligra and Mr Walls) dated 3 July 2023 (CB E.0020). Although the tenant in this document was referred to as The Baron – DS Spring St Pty Ltd, ultimately the Agreements for Lease and Leases were entered into by Pheonix A and Pheonix B as tenants.

93 The Heads of Agreement were signed by Mr Walls on behalf of the tenant and Ross Pelligra on behalf of Spring UT.  The fact that this document was signed by Mr Walls illustrates that he played an important role in the negotiations leading up to entry into the Agreements for Lease and the Leases.

94 The premises were identified as part of the ground floor, part of Level 1, part of Level 2 and Level 12 of 85 Spring Street.  Clause 14 was titled “Landlord and Tenant Works” and stated:

The Landlord requires the Tenant’s fit-out, shop front, signage, lighting displays and general presentation to be of the highest standard and quality as may be appropriate for the permitted use. The landlord will not unreasonably refuse or reject any plans.

The Tenant must supply the Landlord with detailed information including but not limited to floor plan, elevations, sections, plans, for approval. The Tenant and/or its representative must work closely and collaboratively with the Landlord and/or its representative, in order to effect the above.

The Tenant must apply for, and provide copies to the Landlord, of all approvals necessary for the Tenant’s Works prior to the commencement of the Fitout Period.

The Landlord will complete the following works as part of the base build:

-    Landlord works to include proposed lift and level 2 balcony works including indoor/outdoor structure

-    Extraction / exhaust and grease trap permitted on Level 1

-    Provision of all items, where possible, outlined in the Annexure 2 ‘Lessor Works’

-    The Landlord will provide available extraction options for Level 12.

-    Lease is subject to council approval, liquor license and completion of Lessor’s works

(Underlining emphasis added.)

95 Clause 20 stated that the terms contained in the Heads of Agreement were not intended to comprise a binding lease or agreement to lease.  Clause 21 (headed “Incentive”) provided for the landlord to contribute $6,402,500 (excluding GST) towards the costs of the Tenant’s Works and rent abatement (if applicable).  Annexure 1 to the Heads of Agreement comprised floor plans of the relevant levels, identifying the relevant premises.  Annexure 2 was a one-page document headed “Draft lessor works”.

July and August 2023

96 In July 2023, Ms Doyle or Mr Walls suggested to the Pelligra Group that, in the interests of efficiency, it would be best if the Pelligra Group applied for the liquor licence on behalf of the tenant, with the tenant to manage the process and pay the fees; the licence would be transferred later to the tenant.

97 On 6 July 2023, a meeting took place on site (i.e. at 85 Spring Street) between Ms Doyle, Mr Walls, Ross Pelligra, Mr Taylor and Paul Pelligra.

98 On 11 July 2023, Ms Doyle sent an email to Mr Towey (of LGS Legal) and Mr Taylor in which she introduced Mr Taylor to Mr Towey (part of the email chain at CB E.0037).  Ms Doyle stated that, as discussed, two liquor licences were required, and the applications needed to be lodged because they were working towards opening in November 2023. Ms Doyle’s email indicated that the applications would be made by the landlord and then transferred to her entities prior to trading.  She indicated that the tenant for the ground floor, Level 1 and Level 2 would be Pheonix A and the tenant for Level 12 would be Pheonix B.

99 On 12 July, Mr Taylor sent a responding email addressed to Mr Towey (CB E.0037).  Mr Taylor stated that Pelligra was happy to apply for the liquor licence on behalf of the tenant.  He provided a copy of the sale contract of the Building as proof of ownership.

100 On 14 July, a meeting took place at 85 Spring Street between Ms Doyle, Mr Walls, Mr Stanley and Mr Taylor.  It was Splinter Society’s first site inspection.

101 On 19 July 2023, Mr Taylor travelled to Sydney with Mr Dendes and Paul Pelligra to inspect Birdies Top Ryde and to meet Mr Jaeger.  Ms Doyle met them at the Birdies venue.  Mr Walls did not attend this meeting.

102 On 21 July 2023, Pheonix 85 and Splinter Society entered into a Client Architect Agreement (CB E.0047). It is not clear why this agreement was with Pheonix 85 rather than Pheonix A and Pheonix B.  Nothing turns on this for present purposes.

103 On 25 July 2023, Mr Walls sent an email to Mr Taylor and Ms Doyle in which he asked: “Can you sent the literature/drawings/etc as discussed.  This will aid Splinter Society” (part of the email chain at CB E.0052).  Mr Taylor responded on 26 July 2023, stating: “Please see attached” but the document in evidence (being an email chain) does not include the attachment.  Mr Taylor’s email included a link to LouvreTec’s website, showing an openable roof system that had been installed at a different location.  On the same day, Mr Walls sent an email with the question: “Are there any engineering drawings?”.  I infer that this question related to the openable roof system.

104 On 28 July 2023, Mr Walls sent an email to Mr Taylor (copied to Ms Doyle) with the subject “Staircase” (CB E.0055).  Mr Walls stated that “[k]ey to our layouts is knowing the requirements for that fire stair from ground to 2nd”.  He asked if the Pelligra Group or its surveyor would have an answer on this “as it will change everything if required”.  Mr Taylor states in his witness statement (at para 62) that Mr Walls had proposed removing a fire stair, but that the Pelligra Group could not agree to this as the fire escape stair was required to be kept.  Mr Taylor does not state when or how this was communicated to Ms Doyle and Mr Walls.

105 On 1 August 2023, a meeting took place involving Mr Walls, Mr Stanley, Mr Wilson, Mr Taylor, Mr Sijercic and another person.  Following the meeting, on 1 August 2023, Mr Taylor sent an email to Mr Walls, Mr Stanley, Mr Wilson, Mr Paris, Mr Sijercic and others with the subject “Restaurant Design Meeting – 85 Spring St” (CB E.0059).  In the email, Mr Taylor set out “minutes” of the meeting.  After setting out “Indicative Capacities” for each of the ground floor, Level 1, Level 2 and Level 12, the minutes were arranged under the following headings: “Base Build”; “Ground Level”; “Level One”; “Level Two”; “Level Twelve”; and “Action Items”.  Under several of the headings, there were a number of items listed as “TBC” (to be confirmed).  For example, in relation to the base build, one of the items was: “Fire services are TBC due to patron density”.  Another item under that heading was: “Advice will be obtained regarding DDA regarding performance solution”.  I understand “DDA” to refer to the Disability Discrimination Act 1992 (Cth).  Mr Taylor gives evidence (which I accept) at para 65 of his witness statement that the meeting was a general design meeting and was not confined to services.

106 On 7 August 2023, Mr Walls sent an email to Mr Taylor (copied to Mr Wilson, Mr Stanley, Ms Doyle and Mr Jaeger) with the subject “Staircase” (CB E.0063).  Mr Walls’s email forwarded an email from Mr Wilson asking if Mr Walls had received confirmation from the Pelligra Group regarding the fire stair, as it was “restricting how far we can take the concept design”.

107 On 14 August 2023, Mr Paris sent an email to Mr Walls (copied to Mr Wilson, Ms Doyle, Mr Stanley, Mr Sijercic, Mr Taylor and another person (CB E.0075).  Mr Paris stated: “For now, please assume no lift to Lt Collins GF and that Stair can be opened”.

Mr Stanley’s evidence

108 Mr Stanley gives evidence in para 14 of his first statement that the Tenant’s Works to fit out the premises would:

need to align with the landlord’s services, such as bathrooms (water services), roof terrace works, including structure, drainage and fire engineering, waste, exhaust for the kitchens, condenser chiller units for equipment and air conditioning services.

I accept that there was a relationship between the Tenant’s Works to fit out the premises and the Landlord’s Works and services.

109 In paragraph 28 of his first statement, Mr Stanley gives evidence (which I accept) that:

Throughout the project at 85 Spring Street, each time I or a member of my team at Splinter provided plans or updated plans to Stephanie [Doyle] and David [Walls] I was careful to make sure to tell them that our plans had been prepared having had no access to the Pelligra Group’s services consultants, building surveyors or engineers. We were never given access to Pelligra Group’s services consultants, building surveyors or engineers for comment on the work we were doing nor did we have any direct consultation with them. In numerous meetings we had with David, Stephanie and Pelligra’s representatives I would tell them all of the information we needed from the landlord and its consultants to ensure our designs for the tenant’s fit out would ultimately align with the landlord’s works and services. In addition, I could see a number of potential compliance issues, and permit approvals that would be required by the landlord to meet the desired timelines.

110 Mr Stanley gives evidence (principally in his reply statement) that, although he requested it early in the process, Splinter Society was not provided with:

(a) the National Construction Code assessment for the building – he wanted to know which version of the Code the project was to be assessed under (para 41 of his reply statement; T318, T327);

(b) existing structural drawings and existing building services drawings (para 41 of his reply statement, T324, T332).

111 In cross-examination, Mr Stanley accepted that there were not any requests in writing about which version of the Code applied.  He said that there were, however, many requests about whether the proposed facilities were compliant (T319).

112 In relation to existing structural drawings and existing building services drawings, it does not appear from the documentary record that these matters featured prominently in requests made to the Pelligra Group.

113 Mr Stanley gave evidence that, although he had requested access to the landlord’s building surveyor, this was not provided; rather, the Pelligra Group acted as a conduit for matters that Mr Stanley wanted to raise with the building surveyor (T311-313).

No side letter

114 In August 2023, Ms Doyle and Mr Walls proposed that the parties enter into a “side letter” which would include termination rights for the tenant and the payment of a “break fee” by the landlord.  The proposal to enter a side letter was also raised by Ms Doyle and Mr Walls on several subsequent occasions.  I find that a side letter was not entered into at any time.  There does not appear to be any real issue about this.  Ms Doyle accepted during cross-examination that the proposed side letter was not agreed to (T180).  In his witness statement, Mr Taylor states in clear terms that a side letter was never agreed and was never signed (see paras 82, 92, 98, 117, 128-129, 134, 259).  He was not challenged on that evidence during cross-examination. Ross Pelligra also gives evidence that no side letter was entered into (see, eg, paras 70, 95, 103 of his witness statement).  He was not challenged on that evidence during cross-examination.  I note for completeness that in her oral evidence Ms Doyle said that the side letter was suggested by the Pelligra Group rather than by her (T180).  I do not accept that evidence.  The evidence generally supports the proposition that it was Ms Doyle and Mr Walls, rather than the Pelligra Group, who suggested a side letter.

September and early October 2023

115 On 4 September 2023, Ms Doyle sent an email to Mr Paris (copied to Mr Walls and Mr Taylor) with the subject “Drawings” (CB E.0104).  The email requested a copy of the mechanical ventilation drawings.  It also asked for the extraction point locations for the kitchens on Level 1 and Level 12.  Ms Doyle sent a follow-up email in relation to the mechanical ventilation plans on 12 September 2023 (CB E.0113).

116 On 7 September 2023, a meeting took place between the parties.  The meeting was held on-site, i.e. at 85 Spring Street, Melbourne.  At this meeting, Ms Doyle or Mr Walls provided floor plans for all relevant levels to the Pelligra Group (Ms Doyle’s first statement, para 85).  A copy of these floor plans is at CB E.0107.

117 On 12 September 2023, Mr Taylor sent an email to Mr Walls and Ms Doyle stating that Pelligra Group had updated the Landlord’s Works (CB E.0115).  Mr Taylor stated that he attached Landlord’s Works and plans for the two tenancies, and asked for approval for these documents to be inserted into the Lease and Agreement for Lease for execution.  Attached to the email were:

(a) a one-page document headed “Lessor works required (at a minimum)” referable to the ground floor, Level 1 and Level 2, together with one-page plans of each of those floors; and

(b) a one-page document also headed “Lessor works required (at a minimum)” referable to Level 12, together with a one-page plan of that floor.

118 On 12 September 2023, Ms Doyle sent an email in response to Mr Taylor stating “Thanks Ryan.  Agreed” (CB E.0116).

119 On 12 September 2023, Mr Stanley sent an email to Ms Doyle and Mr Taylor (copied to Mr Wilson and Mr Walls) regarding exhaust points (part of the email chain at CB E.0117).  Mr Stanley raised certain matters with Mr Taylor and asked for confirmation from the relevant building surveyor (RBS).  Mr Taylor sent a reply email stating that he had forwarded the email to the RBS and would get back to Mr Stanley when he received a response.

120 On 14 September 2023, Ms Doyle or Mr Walls provided kitchen and bar plans for the ground floor, Level 1 and Level 2 (comprising a total of three pages) to the Pelligra Group in person on site (Ms Doyle’s first statement, para 96).  A copy of these plans appears at CB E.0119.  The plans are akin to floor plans but are focused on the kitchen and bar.

121 On 19 September 2023, Mr Taylor sent an email to Ms Doyle with responses (in red) to five questions she had asked in an email of 18 September 2023 (part of the email chain at CB E.0129).

122 On 19 September 2023, Ms Doyle or Mr Walls provided revised floor plans for all levels to the Pelligra Group.  The plans were provided in person on site (Ms Doyle’s first statement, para 98).  A copy of these plans appears at CB E.0121.

123 On 20 September 2023, Mr Paris sent an email to Mr Wilson and Mr Taylor (copied to Mr Stanley, Ms Doyle and Mr Walls) (CB E.0136).  Mr Paris provided a response to Mr Wilson’s earlier query regarding the location of the column.

124 On 20 September 2023, Mr Dendes sent an email to Ross Pelligra raising concerns about the proposed deal and saying that as currently proposed it would not be supported by the Pelligra Group’s financiers (CB E.0133).  The email was forwarded by Mr Taylor to Mr Walls and Ms Doyle on the same day.  Ms Doyle responded on the same day, inserting red comments into Mr Dendes’s email and requesting an urgent meeting with Mr Taylor.

125 On 21 September 2023, a meeting took place between Ross Pelligra, Mr Taylor and Ms Doyle.  The context of the meeting was the email exchange of the previous day.  It appears that the meeting took place online as Ms Doyle was in Sydney.  Mr Walls did not participate in the meeting; it seems that he was feeling unwell.  An audio recording of the meeting exists and was played during the cross-examination of Ms Doyle.  The meeting lasted about 35 minutes.  The evidence includes a transcript of that recording, with “RP” referring to Ross Pelligra, “RT” referring to Ryan Taylor and “SD” referring to Stephanie Doyle (CB F.0052).  I find that the transcript is substantially accurate.

126 Based on the transcript, the conversation included the following passages.  In the context of discussing Level 12, the following exchange took place (on p 3):

RT:    … Level 12 – and that’s what was – you know, in this email, there is a reduced risk for (level 12) (indistinct) fee because there’s no planning approvals required, so it’s a lot less risky for both parties, I guess.

RP:    So, level 12’s (not)-----

RT:    No, not as much of an issue. It’s just the liquor licence. And I believe – actually, sorry to, to stop that, but do we have an update on the liquor licence, Steph?

SD:    Oh, he just said we’re in (line) – look, I reckon, it’s a couple of weeks away. There’s no – it’s just still in the queue.

RT:    Okay.

SD:    But it’s not that far away.

RT:    Yeah. So, once the liquor licence is obtained for level 12, then there’s virtually no risk. Yeah.

RP:    No risk.

(Emphasis added.)

By stating that “I reckon, it’s a couple of weeks away”, Ms Doyle was conveying that in her opinion it was likely that the liquor licence would be issued promptly.

127 Later in the conversation, and having discussed the risks in relation to the lower levels (which required planning approval and therefore were considered to pose greater risk than Level 12), the following exchange took place (at p 5):

SD:    The liquor licence-----

RT:    -----just try and (indistinct)-----

SD:    ------99 per cent of liquor licence get approved. I can’t see any reason why this isn’t going to get approved. You, you hold liquor licences already. When we transfer it, I already hold liquor licences. The only reason you applied for it was because I legally couldn’t apply for it without a lease. And I’m glad we did it that way, or we would still be – you know, then (over) the Christmas closure, we’d still be waiting in February for a licence. So, I think, that was the right strategy. But I-----

RP:    But the thing is, is------

SD:    I’m not nervous about the liquor licence.

RP:    Yeah.

SD:    I can live with-----

RP:    If we don’t get the-----

SD:    ------changing the liquor licence clause. I can live with, with removing that because I feel really confident that it’s going to get through.

RP:    So, you’re happy to remove the liquor licence on level 12.

SD:    No, no. Not the liquor licence. The right to terminate. Isn’t that what your financier is worried about? Isn’t it worried about that it’s contingent on the liquor licence, that’s the concern?

RP:    Yes.

(Emphasis added.)

By making the statements which I have emphasised in the above passage, Ms Doyle was conveying (again) that in her opinion the liquor licence was likely to be issued promptly.

128 As appears on p 7 of the transcript, Ms Doyle was viewing the three venues as forming part of one precinct.  Also, as she indicated in that part of the conversation, it was planned that the kitchen would be on Level 1 and would service Level 12; Level 12 would be a satellite kitchen.  The conversation also included (on pp 10-11; see also pp 12-13) discussion about the rooftop structure for Level 2, which was proposed to be a glass system, and the uncertainty about obtaining a planning permit for that structure.  The concern of the Pelligra Group (as expressed during the meeting) was the lease being conditional on obtaining such approvals; Ross Pelligra said: “I need an unconditional lease” (p 12).  Ross Pelligra indicated that the Pelligra Group could not give the tenant any money (which I infer referred to the landlord’s contribution to the Tenant’s Works) until the lease was unconditional (p 12).

129 Later in the meeting, Ross Pelligra raised an issue regarding “David” or “Dave” (p 14):

RP:    Now, one of the things that’s raised an eyebrow as well, given now that maybe David’s not on the lease, there was an issue with Dave (with some landlords) in Court, if you search the media.

SD:    Yeah.

RP:    They, they actually raised that (indistinct). They did their DD.

SD:    Yeah.

130 I infer that the references to “David” or “Dave” were to Mr Walls and that the references to “they” were to the Pelligra Group’s financiers.  The conversation continued (at pp 14-16):

RP:    That there was an issue with some landlords for – which properties were they?

RT:    Is this for [Forest] Hill?

SD:    What about it?

RP:    (Indistinct) there’s some big dispute with the landlord there.

…

SD:    No. With [Forest] Hill? There’s no dispute with the landlord.

RP:    Were you involved in that project as well, Steph?

SD:    I’m the sole Director. I’m the sole Director of [Forest] Hill. I’m the sole Director of here, and Sydney as well.

RT:    There’s also a (indistinct) that’s been brought to our attention, a Supreme Court of Queensland document involving a legal dispute for Queensland.

SD:    There was. There was.

RP:    Let’s get a copy of (where they’ve searched), and we’ll just give them a copy.

SD:    There was a – there was a dispute with Queensland.

RP:    (Indistinct) just give us – just get us – we have to reply to (them), because they’ve asked us why------

SD:    Yeah. There’s only been one legal dispute, and the legal dispute has been with Queensland. So, the shopping centre, the short story is, that the shopping centre sold and they changed hands to a new owner. We were three quarters – well, actually more than three quarters of the way through construction of a Birdie’s there, and there was some negotiations we were still going back and forth with, even though we had a lease. There was some additional things that needed to be raised because they were changing the shopping centre a little bit. And the landlord terminated the lease and said that it was repudiated. We got an injunction. We went to Court. It was in the Supreme Court. The Judge upheld that it was repudiated because there was a few problems with the fit-out company. I totally disagree. I actually think we had the wrong lawyer, but there’s a lot of things you’d change in hindsight. And that’s where it is. There’s no more lease.

RP:    Are you back in there as a tenant?

SD:    No. No, we can’t. We can’t be back in there as a tenant.

RT:    What location was that for?

SD:    That’s in Strathpine, in Queensland.

RT:    Okay.

SD:    We were, like, eight weeks away from opening.

RT:    Okay.

SD:    So, personally, I’ve lost – I’ve lost a lot of money. I’ve lost about 2.5 million. I’ve also lost all my assets that were in there. All the kitchen equipment, that wasn’t even unpacked and installed, that they won’t return. I’ve lost that. I’ve lost my bank guarantee. I lost the security of costs through the Court. And then, yeah, everything above and beyond that I paid, above the fit-out contribution.

RP:    (Indistinct) but why wouldn’t the landlord – you’re going to be paying rent if you were about to open. I don’t understand how – it just doesn’t make sense (indistinct).

…

SD:    Look, it doesn’t – no, it didn’t make sense at all. It didn’t – none of it made sense. All that I could surmise, because they wouldn’t ever have conversations, was that they didn’t want the Birdie’s style venue in their asset. They decided that they wanted to have a different type of usage. Because it didn’t make sense. Because, you know, half – I think half of the contribution had been paid by that point, and – yeah, and then there’d been a lot of money that had been chipped in over and above that. That’s the only legal dispute that there’s been. There hasn’t been any other legal dispute.

RP:    Well, what I (indistinct) I just want to make sure I don’t have an issue with you guys going in there. (With this complicated contribution) I want to make sure (indistinct) that’s why I’m trying to resolve everything now.

SD:    Yeah, yeah. I understand that.

RP:    I’m just trying to be diligent, because I don’t want an issue for (indistinct) construction work, you can’t get the money, you know what I mean.

SD:    Yeah.

RP:     Because there’s, there’s all these little blocks of – that the, the lease – you know what I mean. So, that, that disagreement that happened, was that in your name or in David’s name?

SD:    My name. I was sole Director. My name.

RP:    All right. Clarifying what the questions are, (indistinct), and – that they’ve got and let’s just (try and satisfy them).

RT:    Yeah.

RP:    Okay. And then at least we can tick the box.

RT:    Yeah.

(Emphasis added.)

It is apparent from the above exchange that the Pelligra Group were aware of a judgment of the Supreme Court of Queensland involving one of Ms Doyle’s companies. The meeting concluded very soon after the end of the above exchange.

131 On 25 September 2023, Mr Taylor sent an email to Ms Doyle (copied to Ross Pelligra) with the subject “[Pheonix] A & B – Lease Redraft” (CB E.0139).  The email stated in part:

After numerous conversations with our finance team, we have been advised that to move forward with a deal we need to remove the onerous provisions in the documents. We note the following issues and seek your approval to revise the clauses related to each. Subject to this, I will instruct David to update the lease for your review. We are happy to apply reasonable dates and timeframes for the below to ensure a positive outcome for both parties.

1.    Given we are procuring the approvals for the landlord’s and tenant’s works, there should be a deadline to agree on the plans/scope after the AFL is signed, say 30/60 days. Otherwise, this process could go on indefinitely. A failure to agree within the timeframe should give rise to a walkaway right with no liability.

…

3.    The position regarding the liquor licence that was previously proposed by us needs to apply – the tenant will have 14 days after receipt of the liquor licence to either accept it or terminate the AFL. If the AFL is not terminated, the liquor licence is deemed to be accepted. Commencement of the lease and payment of rent should not be linked to the acceptability of the liquor licence. (Note: I believe that you have already agreed to this over the teleconference, please confirm).

(Emphasis in original.)

132 On 25 September 2023, Ms Doyle sent an email to Mr Taylor (copied to Mr Walls and Ross Pelligra) with the subject “85 Spring Level 2 Rooftop” (CB E.0140).  The email followed up on an earlier request for information which had come from Mr Stanley.  Mr Stanley’s email related to a fire performance solution, and asked for confirmation from the RBS.

133 Ms Doyle gives evidence (at paras 107 and 115 of her first statement) that an updated Level 1 kitchen plan (CB E.0130) and a revised Level 12 floor plan (CB E.0138) were provided in person on site on 26 September 2023.  However, that evidence is disputed: see Mr Taylor’s witness statement at paras 127, 136.  Despite Ms Doyle’s reply statement at para 70, I am not satisfied that revised versions of the floor plans were provided on 26 September 2023.  Ms Doyle’s reply evidence does not provide any detailed, objective material to confirm that the plans were provided in person and on site on that date.  The same is true of subsequent paragraphs of her reply statement dealing with whether plans were provided in person on site on a particular day.

134 On 28 September 2023, Mr Taylor sent an email to Mr Walls and Ms Doyle (copied to Ross Pelligra) with the subject: “AFL and Lease – [Pheonix] A & B – 85 Spring St, Melbourne” (CB E.0145).  The email attached updated drafts of the Agreements for Lease and the Leases and stated in part:

As discussed with David, the only thing we may have not already discussed in detail was a period to agree to the Landlord’s and Tenant’s plans and specifications, as they cannot be inserted into the lease. I have allowed 60 days for [Pheonix] B, and 90 days for [Pheonix] A. This Clause also provides a method of motivation for both parties to work towards a date to finalise design.

135 On 29 September 2023, Ms Doyle sent an email to Mr Taylor (copied to Mr Walls and Ross Pelligra) with five bullet point queries (CB E.0149).  Mr Taylor gives evidence (in para 145 of his witness statement) that he responded orally as there set out.  He was not challenged on that evidence and I accept it.

136 On 29 September 2023, Ms Doyle sent an email to Ross Pelligra (copied to Mr Walls and Mr Taylor) attaching revised floor plans for all levels (CB E.0150).

137 Ms Doyle gives evidence in para 128 of her first statement that a revised kitchen plan for Level 1 and a revised Level 1 floor plan (CB E.0151) were provided in person on site to the Pelligra Group on 3 October 2023.  However, that evidence is queried or disputed in Mr Taylor’s witness statement at para 147 and Ross Pelligra’s witness statement at para 119.  I am not satisfied that these plans were provided.

138 Ms Doyle gives evidence in para 133 of her first statement that revised floor plans for all levels (CB E.0156) were provided in person on site to the Pelligra Group on 6 October 2023.  However, this evidence is queried or disputed in Mr Taylor’s statement at para 153 and Ross Pelligra’s statement at para 121.  Despite Ms Doyle’s reply statement at para 71, I am not satisfied that these plans were provided.

139 On 8 October 2023, Mr Walls emailed revised floor plans for all levels to Ross Pelligra (copied to Paul Pelligra and Mr Taylor) (CB E.0157).

The Agreements for Lease and the Leases (11 October 2023)

140 On 11 October 2023, Agreement for Lease (A) and the related Lease were entered into by Spring UT and Pheonix A and Agreement for Lease (B) and the related Lease were entered into by Spring UT and Pheonix B.  These agreements have been described earlier in these reasons.

Representations

141 I find that in the period leading up to entry into the Agreements for Lease and the Leases, Ms Doyle and Mr Walls (on behalf of Pheonix A and Pheonix B) represented to the Pelligra Group (including Spring UT) that Ms Doyle and Mr Walls were competent, professional and capable of running licensed venues, and that both Ms Doyle and Mr Walls would be involved in operating the licensed premises which were the subject of the Agreements for Lease and the Leases.  Both the May 2023 Information Memorandum and the June 2023 Information Memorandum featured Mr Walls as part of the “team” for the operation of the venues.  They also conveyed that Ms Doyle and Mr Walls were competent, professional and capable of running licensed venues.  These representations were also conveyed by Ms Doyle in meetings with the Pelligra Group in the period leading up to entry into the Agreements for Lease and the Leases.  Paul Pelligra gives evidence (which I accept) in para 23 of his witness statement (annexed to his affidavit) that Mr Walls told him that he would be running Pheonix A’s and Pheonix B’s businesses at 85 Spring Street. I have found, above, that Ms Doyle and Mr Walls intended that Mr Walls would have an active role in the operation of the proposed hospitality venues at 85 Spring Street after they opened.  In these circumstances, it is likely (and I find) that they represented this in their meetings and other communications with the Pelligra Group.

Licence conditions not disclosed

142 I find that, in the period before entry into the Agreements for Lease and the Leases, Ms Doyle and Mr Walls did not inform the Pelligra Group of the existence of the conditions relating to Mr Walls on the Birdies Forest Hill liquor licence.  Ms Doyle accepted during cross-examination that she did not tell Spring UT about the licence conditions (T149).  Mr Walls also accepted that he did not tell the Pelligra Group about the licence conditions (T383). Mr Taylor gives evidence in the first para 48 of his witness statement (there are two paragraphs with this number) that Mr Walls did not tell him of the conditions.  He was not challenged on this evidence during cross-examination.  Ross Pelligra gives evidence (at paras 34 and 46 of his witness statement) that Ms Doyle and Mr Walls did not disclose the conditions on the Birdies Forest Hill liquor licence.  He was not challenged on this evidence.

No awareness of licence conditions

143 During cross-examination, Mr Taylor accepted that he could have found out if Birdies Forest Hill had a liquor licence and that he could have found out what conditions there were on that licence (T445).  But it was not put to him that he had found out those conditions before entry into the Agreements for Lease and Leases.

144 Ross Pelligra gives evidence in his witness statement that he first became aware of the conditions in about January 2024 (paras 22 and 210 of his witness statement). During cross-examination, it was put to him that he became aware of the conditions in September 2023 (T566) or around the time Mr Towey was engaged to obtain the liquor licence (i.e. around July 2023) (T573, T575).  Ross Pelligra denied this (T566-568, T573, T575-578).  I accept that denial.  There is no documentary or other objective evidence that Ross Pelligra became aware of the conditions in about July 2023 or in September 2023. Further, if the Pelligra Group had become aware of the conditions in July 2023 or early September 2023, this is likely to have been raised by the Pelligra Group during the meeting on 21 September 2023, discussed above.  However, it was not raised during that meeting.

Spring UT would not have entered agreements

145 Ross Pelligra gives evidence in para 34 of his witness statement that, if he had known of the conditions on the liquor licence for Birdies Forest Hill, he would not have dealt with Mr Walls or Ms Doyle.  He states: “I would not have knowingly risked the LCV [Liquor Commission of Victoria] refusing to grant a liquor licence for the premises or becoming embroiled in a dispute with the liquor licensing authorities”.

146 Mr Taylor gives evidence in para 48 of his witness statement (the second para 48) that:

David Walls told Ross Pelligra, Paul Pelligra and me that he was involved in managing and running the Birdies Forest Hill venue. If we had known the Birdies Forest Hill liquor licence contained the conditions [relating to Mr Walls] and that David Walls, Stephanie Doyle and Birdies Forest Hill had been operating in breach of the liquor licence, we would not have dealt with David Walls, Stephanie Doyle or the applicants. We would not have agreed to lease premises to them and would not have agreed to apply for a liquor licence and transfer it to them. The Pelligra Group’s business interests include hotels, resorts, sports stadiums, restaurants and other licenced venues. The Pelligra Group cannot afford to risk its standing and good reputation with the licensing authorities.

147 I note that the above paragraph includes a statement or contention that “Birdies Forest Hill had been operating in breach of the liquor licence”.  I do not consider it necessary for the purposes of resolving this case to make a finding about that contention. I am, however, satisfied on the basis of the evidence set out at [145]-[146] above, and the evidence generally, that had Ms Doyle or Mr Walls disclosed to the Pelligra Group that the liquor licence for Birdies Forest Hill was subject to conditions relating to Mr Walls, and the substance of those conditions, the Pelligra Group would not have entered into the Agreements for Lease or the Leases.  I note, in particular, that under each Agreement for Lease the Tenant had a right to terminate the Agreement for Lease and the related Lease if the liquor licence contained conditions that were unacceptable to the Tenant (see clause 5.3(d) set out at [43]).  In the circumstances, I consider it likely that any liquor licence issued in respect of the relevant premises at 85 Spring Street would be subject to conditions like those attaching to the Birdies Forest Hill liquor licence.  If such conditions were imposed, it would (at least arguably) be open to the Tenant to say that the conditions were unacceptable and to terminate the Agreements for Lease and the related Leases on that basis.  Having regard to these matters, I am satisfied that, had Ms Doyle or Mr Walls disclosed the existence of the conditions on the Birdies Forest Hill liquor licence, the Pelligra Group would not have entered into the Agreements for Lease or the Leases.

12 October 2023 to 21 February 2024

Mr Stanley’s evidence

148 Mr Stanley gave oral evidence, which I accept, that he was not provided with a copy of the Agreements for Lease and the Leases at any relevant time (T301, T310).

149 Mr Stanley also gave evidence that he was not aware that plans and specifications had to be provided to the landlord by 10 December 2023 for Level 12 (T326).

150 Mr Stanley gave evidence in his first statement to the effect that a number of the plans that Splinter Society prepared were “in a form capable of being approved by the landlord” (see, eg, para 19 of his first statement).  Mr Stanley was taken to that paragraph during cross-examination and gave the following evidence (T307-308):

And when you say being approved by the landlord, it was your understanding that approval was required under the leases?---No. No. I was never contracted to provide a set of approval documents.

Right?---It is – it is normal practice that, at some point, some level of dialogue or approval will occur, but it was not part of my agreement to produce anything specifically by a certain date.

And the plans that you were producing, then, were not explicitly or expressly produced for the purpose of the landlord giving approval for the works to be done?---They were part of a dialogue, because there’s decisions we need to be able to make to progress our design, and we issued the drawings to our clients and communicated to the landlord very regularly about how our design was progressing and the impacts that would have on the building and the dialogue between the landlord’s works and the tenant’s works. So there was a – that was a constant conversation from very early in the process.

(Emphasis added.)

As the above passage indicates, Mr Stanley did not understand his task as being to prepare a set of plans and specifications for approval, and saw the plans as part of a “dialogue” between the tenant and the landlord (see also T326).

151 Mr Stanley referred in his oral evidence to the need to obtain planning approval for the roof structure for Level 2 and for the ground floor.  He indicated that there was a limit to how far it was sensible to take the plans before planning approval had been obtained (T310, T331, T333).  In contrast, as planning approval was not needed for Level 12, this was not a factor bearing on the preparation of plans or drawings for that level.

152 Mr Stanley gave evidence that Level 12 was “a lot less complicated” than the other levels and was “a more usual scenario where you’re doing fit-out works that are confined to a floor” (T314).  In contrast, the ground floor, Level 1 and Level 2 were “much more complicated” because they involved external works to the building (T314).

153 In the course of cross-examination, Mr Stanley was asked questions about the role of a services engineer in a project such as this.  Initially, Mr Stanley accepted that service engineering advice would feed into his designs (T320).  He was then asked questions about the appointment of Kinematics as services engineers on 20 December 2023 (T321).  He then resisted the proposition that the design and documentation of the engineering services would inform his designs and said that it was the “other way round” (T321).  Ultimately, he accepted that there was “a little bit of back and forth … to fine tune the requirements” (T322).

12 October to mid-November 2023

154 On 12 October 2023, Mr Stanley sent an email to Mr Taylor with the subject “85 Spring – Secondary Consent” (part of the email chain at CB E.0161).  The email included queries relating to the Level 2 roof structure which information was necessary to resolve the window heights and supporting columns.  The email sought input from the RBS so that Mr Stanley could determine the exhaust locations.  The email stated Mr Stanley’s understanding that Splinter Society’s drawings would be inserted into the planning package as a secondary consent (or amendment).  Mr Stanley expressed the view that it would be more efficient to maintain the Pelligra Group’s planning consultant team than to have Splinter Society undertake the application.

155 On 13 October 2023, Mr Taylor responded to Mr Stanley’s email (CB E.0161):

We will provide advice from the RBS and structural engineer based on your requests below. We intend to maintain the same planning team. However, council will be interested in a material schedule and renders of the design. I suggest we organise a meeting to finalise the package so we are all on the same page. Can you please advise if you are available for a meeting at Point Architect’s office Monday at 3.00pm or Tuesday morning at 11.00am? We can dial in Steve or any other attendees who are required if they cannot attend physically.

156 On 16 October 2023, a meeting took place at Point Architects’ office.  The meeting was attended by Ms Doyle, Mr Walls, Mr Stanley, Mr Wilson, Mr Taylor, Mr Paris, Mr Dugdale and others.

157 Ms Doyle gives evidence at paras 146 and 147 of her first statement that kitchen and bar details and bar layouts (CB E0167, E.0170) were provided in person on site to the Pelligra Group on 24 October 2023.  This is disputed by Mr Taylor (at para 171 of his statement) and Ross Pelligra (at para 132 of his statement).  Despite Ms Doyle’s reply evidence (at para 72 of her reply statement), I am not satisfied that these plans were provided.

158 On 26 October 2023, Mr Huynh of Barrenjoey sent an email to Mr Taylor and others with some “preliminary questions” relating to 85 Spring Steet (part of the email chain at CB F.0064).  The questions mainly related to construction matters.  The email also referred to the leases with Pheonix A and Pheonix B “for spaces where the Baron is going in”.  (I note that “the Baron” was the brand name for the venues to be operated by Pheonix A and Pheonix B at 85 Spring Street.)  The email asked: “Can you help me understand what is the leasing status here?”.

159 On 27 October 2023, Mr Huynh of Barrenjoey sent an email to Mr Taylor and others seeking more information (including financial information) about Pheonix A, Pheonix B and Ms Doyle (CB F.0063).

160 On 1 November 2023, Mr Walls sent an email to Mr Paris (copied to Mr Taylor, Ms Doyle, Mr Stanley, Mr Wilson and another) attaching a one-page draft ground floor elevation (CB E.0177).

161 Ms Doyle gives evidence (in paras 148 and 153 of her first statement) that a Level 12 bar plan and elevation (CB E.0173) and revised floor plans for all levels (CB E.0180) were provided to the Pelligra Group in person on site on 3 November 2023.  This is disputed by Mr Taylor (at paras 171 and 183 of his statement) and Ross Pelligra (at paras 132 and 137 of his statement).  Despite Ms Doyle’s reply evidence (at para 73 of her reply statement), I am not satisfied that these plans were provided.

162 On 10 November 2023, Mr Taylor sent an email to Ms Doyle (copied to Mr Walls, Ross Pelligra and Paul Pelligra) with the subject “Bank Guarantee and Important Dates – [Pheonix] A & B” (CB E.0184).  The emails reminded Ms Doyle that certain bank guarantees were due the next day.  Mr Taylor also stated:

While we are on the topic of reminders, it is important to note that the deadline to agree on plans and specs (plans outstanding for both) is 11/12/23 for [Pheonix] B and 11/1/24 for [Pheonix] A. I also note that this date can be extended if agreed.

163 On 10 November 2023, Mr Huynh (of Barrenjoey) sent an email to Mr Dendes, Paul Pelligra, Mr Taylor and Mr Sijercic (of the Pelligra Group) relating (in part) to 85 Spring Street (CB F.0066).  The email referred to a meeting that morning and included:

By way of follow up, we’ve compiled a list of follow ups from this morning’s session:

…

85 Spring

* Updated capex and incentives cost to complete cashflows reflecting revised timelines, including: base build, agreed incentives, spec fitout and provisions for balance space.

* Confirmation of lease commencement dates for … the Baron, including key intermediate milestones (agreement of Landlord Works, Tenants Works, timelines DA, licensing).

…

* Landlord works sign off from The Baron …

164 In para 157 of her first witness statement, Ms Doyle states that on 11 November 2023 she called Mr Taylor and had a conversation in which she said words to the effect “why did you add deadlines into the email you sent me yesterday as all plans were approved on 11 October?”.  In his witness statement at para 188, Mr Taylor states that the conversation alleged by Ms Doyle did not occur.  He was not challenged on that evidence.  I accept Mr Taylor’s evidence and find that a conversation as alleged by Ms Doyle did not occur.

165 On 13 November 2023, Mr Taylor sent a reply email to Mr Huynh (CB F.0067), with responses in red text embedded in the email from Mr Huynh of 10 November 2023.  Mr Taylor’s responses included (with the red text appearing in italics in the extract below):

By way of follow up, we’ve compiled a list of follow ups from this morning’s session:

…

85 Spring

* Updated capex and incentives cost to complete cashflows reflecting revised timelines, including: base build, agreed incentives, spec fitout and provisions for balance space. Attached

* Confirmation of lease commencement dates for … the Baron, including key intermediate milestones (agreement of Landlord Works, Tenants Works, timelines DA, licensing).

…

* Baron – Landlords works already agreed and attached to Lease. Expected to agree on plans in next 2 weeks for [Pheonix] B, and next 6 weeks for [Pheonix] A. Landlords Approvals and Works completed by March ’24. Tenant’s Works completion expected August ‘24.

…

* Landlord works sign off from The Baron … Landlord works are attached to the Baron Leases, hence this has been completed. With 67 Pall Mall, we expect to have the Landlords Works and Plans agreed in coming 2-3 weeks. It is important to note that the termination right in the lease is not an intention for either party to terminate – it is simply a date to keep us moving promptly. In the event this date was not met, the parties would simply extend the date. Pall Mall have announced internally that they are coming to 85 Spring St and it would affect their share price to pull out of the deal.

During cross-examination, Mr Taylor was taken to the last paragraph of the above extract (T504-505).  The questions proceeded on the basis that the sentence commencing “It is important to note that the termination right in the lease …” and the following sentences were applicable to the Baron (and not just Pall Mall, another tenant).  Mr Taylor in effect accepted that those sentences were applicable to the Baron and not just Pall Mall.

166 On 14 November 2023, Mr Walls sent an email to Mr Taylor (copied to Ms Doyle and Mr Stanley) with the subject “85 Spring roof structure” (CB E.0191).  The email referred to a proposal by Mr Stanley regarding the roof structure and sought Mr Taylor’s agreement to the proposal.

167 Ms Doyle gives evidence (in paras 154 and 159 of her first statement) that Level 1 kitchen plans (CB E.0181) (being a one-page plan) and revised floor plans for all levels (CB E.0188) (comprising four pages) were provided to the Pelligra Group in person on site on 14 November 2023.  This is queried or disputed by Mr Taylor (at paras 184 and 190 of his statement) and Ross Pelligra (at paras 138 and 143 of his statement).  I am not satisfied that these plans were provided.

15 November 2023

168 On 15 November 2023, a telephone conversation and an email exchange took place between Ms Doyle (on behalf of Pheonix A and Pheonix B) and Mr Taylor (on behalf of the Pelligra Group) regarding approval of plans and specifications.  There is a dispute between the parties as to the nature and effect of these communications.  I will now discuss the relevant evidence and make findings.

169 By way of background, on 15 November 2023 (at 9.21 am), Mr Huynh (of Barrenjoey) sent an email to Paul Pelligra, Mr Dendes, Mr Taylor and others at Pelligra Group with the subject “85 Spring … Model Walk Through” (CB E.0200).  Parts of the email were in red text.  The email included (with the passages in red text appearing in italics in the extract below):

Hi all,

We thought it would be useful to summarise all outstanding information requests in one place. Tas [Mr Dendes], we’ll give you a call in the morning to run through these to see how best to close them out. The yellow shaded item [the first bullet point below] remains the highest priority.

Thanks,

Phuong

85 Spring

* Landlord works sign off from The Baron … We have received the plans for the landlord works for Baron, however, this does not answer the request. Can you please provide the written approval from the Tenant required under the AFL. …

* Trade letting status. Outstanding.

It is apparent from the italicised text in the above passage that the financier’s request related to approval of the Landlord’s Works by the Tenant.

170 At some time between 9.21 am and about 3.30 pm on 15 November 2023, a telephone conversation took place between Mr Taylor and Ms Doyle.  It is not controversial that, during the conversation, Mr Taylor requested Ms Doyle to send him an email, which she subsequently did.  However, other aspects of the telephone conversation are contentious. Ms Doyle’s and Mr Taylor’s accounts of the conversation differ.  I consider that Mr Taylor’s account of the conversation (particularly at T505-506) is more plausible, having regard to the context (including the email that he had received from Mr Huynh at 9.21 am that day) and the circumstances generally.  I find that, during the telephone conversation between Mr Taylor and Ms Doyle, Mr Taylor requested Ms Doyle to provide confirmation that the Landlord’s Plans and Specifications had been approved by the Tenant (rather than requesting confirmation that the Tenant’s Plans and Specifications had been approved by the Landlord or that both sets of plans and specifications had been agreed by the parties).  Further, I do not consider it likely that Mr Taylor dictated a form of words for Ms Doyle to use in an email to him, being the form of words set out in her file note of that date and email of about 3.30 pm that day (see further below).

171 The evidence includes a file note made by Ms Doyle on or about 15 November 2023 (presumably during or shortly after a telephone conversation with Mr Taylor) in which she wrote (CB E.0195):

Email    we have agreed to the plans for pheonix A + pheonix B and therefore consider the lease unconditional.

172 Subsequently, at about 3.30 pm on 15 November 2023, Ms Doyle sent an email to Mr Taylor (copied to Ross Pelligra and Mr Walls) with the subject “Plans” (CB E.0196).  This email was in substantially the same terms as the file note, stating:

Hi Ryan

A quick email to confirm that we have agreed the plans for Pheonix A and Pheonix B and therefore consider the leases to be unconditional.

Kind regards

Stephanie

The terms of Ms Doyle’s file note and subsequent email are ambiguous.  I will discuss the email further at the end of this section of these reasons.

173 On the same day at 3.51 pm, Mr Taylor sent an email to Mr Huynh in reply to the email of 9.21 am of that day referred to above (CB F.0070).  Mr Taylor stated: “Please see the attachments and comments in blue”.  Mr Taylor then embedded comments in blue text in the 9.21 am email.  These included (with the blue text appearing in italics in the extract below):

Hi all,

We thought it would be useful to summarise all outstanding information requests in one place. Tas [Mr Dendes], we’ll give you a call in the morning to run through these to see how best to close them out. The yellow shaded item [the first bullet point below] remains the highest priority.

Thanks,

Phuong

85 Spring

* Landlord works sign off from The Baron … We have received the plans for the landlord works for Baron, however, this does not answer the request. Can you please provide the written approval from the Tenant required under the AFL. … Email Attached

* Trade letting status. Outstanding. Status schedule attached …

Attached to Mr Taylor’s email were a number of documents, including a copy of Ms Doyle’s email of about 3.30 pm that day. To the extent that Pheonix A and Pheonix B submit that, by sending a copy of Ms Doyle’s email to Barrenjoey, Mr Taylor was representing to Barrenjoey (and himself considered) that the Agreements for Lease and Leases were now unconditional (or now unconditional as regards clause 2.1), I do not accept that submission. Viewed in the context of Barrenjoey’s request, I consider it more likely that Mr Taylor considered the email from Ms Doyle to constitute confirmation that the Landlord’s Plans and Specifications had been approved by the Tenant.

174 On the same day at 4.04 pm, Mr Taylor sent a reply email to Ms Doyle (CB E.0197) in which he stated:

Thanks Stephanie

175 On the same day at 4.15 pm, Ms Doyle sent a reply email (CB E.0198) in which she stated:

Hi Ryan

You’re welcome.

The plans, as was discussed today, are attached to this email for approval.  The toilets may change as by reconfiguring the space, we can have more cubicles which are needed for compliance.

We look forward to hearing from you.

Kind regards

Stephanie

(Emphasis added.)

Attached to the email were revised floor plans for the ground floor, Level 1, Level 2 and Level 12 of 85 Spring Street (comprising four pages in total). The fact that Ms Doyle attached these plans “for approval” is a powerful indication that she did not consider that they had already been approved.

176 On the same day at 8.13 pm, Ms Doyle sent an email to Mr Paris with a query regarding the ceiling height in the storage area, and asking about “any services such as fire” that the tenant would need to plan for when designing the storage area (part of the email chain at CB E.0279).

177 I now make further findings about the email communications between Ms Doyle and Mr Taylor on 15 November 2023 (at about 3.30 pm and 4.04 pm).  Although Ms Doyle’s email of 15 November 2023 (at about 3.30 pm) and her earlier file note are ambiguous, I find that the email was intended by Ms Doyle (and understood by Mr Taylor) to operate as confirmation that the Landlord’s Plans and Specifications had been approved (or agreed to) by the Tenant and that that aspect of the condition in clause 2.1 had been satisfied (rather than, for example, confirmation that both the Landlord’s and the Tenant’s Plans and Specifications had been approved or agreed to and that the condition in clause 2.1 had been satisfied in its entirety).  The parties had already reached agreement about the broad content of the Landlord’s Plans and Specifications, as set out in Annexure A to each Agreement for Lease.  The same cannot be said for the Tenant’s Plans and Specifications, which had not been approved or agreed to prior to the email exchange on 15 November 2023.  Indeed, later on 15 November 2023 (at 4.15 pm), Ms Doyle sent an email to Mr Taylor attaching floor plans “for approval”.  As stated above, this is a powerful indication that she did not regard the plans and specifications for the Tenant’s Works as having already been approved or agreed upon.

The balance of November 2023

178 On 20 November 2023, Mr Walls sent an email to Mr Taylor (copied to Mr Stanley, Ms Doyle and others) with the subject “Revised Bathroom Layouts” (part of the email chain which is CB E.0203).  The email referred to updated toilet plans for Levels 1, 2 and 12.  The plans were not initially attached but were subsequently provided.  The plans comprise four pages of bathroom layouts.

179 On 22 November 2023, Mr Taylor sent a “reply all” email in response to Mr Walls’s email of 20 November 2023 (CB E.0204).  Mr Taylor stated:

We have reviewed the plans and the new proposed bathroom layouts and have the following comments.

To agree on the plans, we need to understand where the kitchen waste and grease waste points are to be located. If you do not have a kitchen design finalised, are you able to nominate the location for these on the plan? I also would like to make a comment that we don’t think the L12 bathrooms will work. The spaces between the urinals and basins are too tight, and we run into issues with interruption on the lower level. Is there any way you can utilise the existing configuration?

(Emphasis added.)

The above email provides further evidence that the parties had not agreed upon the Tenant’s Plans and Specifications on or by 15 November 2023.

180 On 23 November 2023, Ms Doyle sent a follow-up email to Mr Paris regarding her queries relating to the storage area (part of the email chain at CB E.0279).

181 On 26 November 2023, Ms Doyle sent an email to Mr Taylor (copied to Mr Walls) with the subject “Hoarding and other items” (CB E.0206).  The email stated that “[w]e also urgently need answers this week regarding the garbage [c]hute, storage services, exhaust air UV light treatment and other outstanding queries”.

182 On the same day, Ms Doyle sent an email to Mr Taylor (copied to Mr Walls) with the subject “Level 2” (CB E.0207).  The email sought an update in relation to the roof on Level 2.

183 On 29 November 2023, Mr Sijercic (of the Pelligra Group) sent an email with the subject “Revised Bathroom Layouts” (part of the email chain at CB E.0214).  The email contained feedback on the revised plans, including that the “design … falls short of compliance with NCC requirements, leading us to refrain from endorsing it”.

184 On 30 November 2023, Mr Taylor sent an email with the subject “Revised Bathroom Layouts” (part of the email chain at CB E.0214).  Mr Taylor stated:

Today we are due to agree to the plans for [Pheonix] B (L12) as per the terms of the Lease. We have reviewed your plans sent as below and specifically the requested layout for the bathrooms. The front of house areas are okay, but I have forwarded the comments below from Genan [Sijercic] and attached marked up comments from Selvia regarding the bathroom layouts. Can we get Splinter to rectify as we cannot agree to something that will not be compliant. We also cannot delete the load bearing columns and risers which were removed in Splinter’s drawings. I have also attached the lower-level bathroom comments as well.

(Emphasis added.)

185 Shortly after the above email was sent, Mr Walls sent an email to “Jake/Chris” (i.e. Jake Wilson and Christopher Stanley of Splinter Society) asking to discuss “asap” (part of the email chain at CB E.0214).

186 In his first witness statement at para 77, Mr Walls gives evidence about a conversation he had with Mr Taylor on 30 November 2023.  Mr Walls’s evidence is that he said words to the following effect: “what is going on… please stop playing games with the plans… the plans were approved 7 weeks ago, design is 80% complete and the tender package will be ready to price in four weeks”.  Mr Walls gives evidence that, in response, Mr Taylor said words to the following effect: “I’m sorry, I am overwhelmed, yes the plans are great, I can’t wait to price the tender”.  Mr Taylor disputes this evidence at para 216 of his witness statement.  He was not challenged on that evidence.  I accept Mr Taylor’s evidence.  I find that a conversation as described by Mr Walls did not occur.

187 On 30 November 2023 (at 7.44 pm), Mr Wilson sent an email to Mr Walls (copied to Mr Stanley, Ms Doyle and another person at Splinter Society) with the subject “Revised Bathroom Layouts” (part of the email chain at CB E.0214).  The email contained detailed responses on behalf of Mr Stanley and Mr Wilson to the Pelligra Group’s comments.  The comments were arranged under two headings – “First & Second Floor” and “Twelfth Floor”.

December 2023

188 On 1 December 2023, Mr Walls sent an email to Mr Taylor (copied to Ms Doyle, Mr Stanley, Mr Wilson and others) with the subject “Revised Bathroom Layouts” (CB E.0214). This email forwarded the earlier email from Mr Wilson and provided additional comments from Mr Walls. Attached to the email were revised bathroom layout plans for Levels 1, 2 and 12 (comprising four pages).  Mr Walls’s email concluded by stating that they would like to convene a meeting urgently on the toilets and on the rooftop (Level 2) “so we are all aligned”.

189 On 1 December 2023, Ms Doyle sent an email in the email chain with the subject “Revised Bathroom Layouts” (CB E.0215).  Ms Doyle’s email followed on from an email from Mr Walls which requested that the meeting take place soon, rather than waiting a week (as had been proposed by Mr Taylor due to Mr Sijercic’s absence).  Ms Doyle stated that she agreed (with Mr Walls).  Ms Doyle also stated: “Matt – also still waiting on responses from you.  We have followed up numerous times”.  I infer that this related to Ms Doyle’s earlier request (addressed to Mr Paris) for information relating to the storage area.

190 On 4 December 2023, Mr Taylor sent an email to Mr Walls with the subject “Level 2” (part of the email chain at CB E.0216).  The email referred to plans which had been prepared by Point Architects, which Mr Taylor attached “in an effort to keep things moving”.  Mr Taylor stated that “[w]e are happy to submit this and confident in its buildability”.

191 On the same day, Mr Walls sent a “reply all” email in response to Mr Taylor’s email (CB E.0216).  Mr Walls stated that “[t]here are a lot of columns in inconvenient places” and that it was “[v]ery frustrating that we have experts that are being ignored”.

192 Ms Doyle gives evidence (in para 173 of her first statement) that Level 1 kitchen plans (CB E.0208) (comprising four pages) were provided to the Pelligra Group in person on site on 5 December 2023.  This is queried or disputed by Mr Taylor (para 208 of his statement) and Ross Pelligra (para 154 of his statement).  I note that in the context of disputing the evidence given at para 173 of Ms Doyle’s first statement, para 154 of Ross Pelligra’s statement asserts that hard copies of the plans were not provided on 27 November 2023.  I infer that Ross Pelligra’s reference to 27 November 2023 in this paragraph is intended to be a reference to 5 December 2023, being the date referenced by Ms Doyle in para 173 of her statement.  Despite Ms Doyle’s reply evidence (para 74 of her reply statement), I am not satisfied that these plans were provided.

193 On 6 December 2023 (at 12.22 am) (i.e. shortly after midnight), Ms Doyle sent an email to Mr Taylor (copied to Mr Walls, Ross Pelligra and Paul Pelligra) with the subject “Meeting tomorrow” (CB E.0222). It appears that this was a reference to a proposed meeting on 6 December 2023.  Ms Doyle’s email attached three documents.  The first document comprised 28 pages of plans prepared by Point Architects in relation to the ground floor, Level 1, Level 2 and Level 12 of 85 Spring Street.  The second and third documents comprised photographs of two pages of plans with the headings “Level 13 Restaurant – Indicative Only” and “Level 14 Restaurant – Indicative Only”.  These plans relate to another tenancy in 85 Spring Street.  Ms Doyle’s email stated:

Ahead of tomorrow’s meeting, I wanted to send you a list of points we would like added to the agenda for discussion and resolution. Many of these items have been with you and/or your team for [months] and as raised previously, you are stopping us from advancing.

* Rooftop design

* Toilets

* Level 1 and Level 2 toilets

* Level 12 toilets

* Unsure why Level 13 and Level 14 can change their layout, but it’s an issue for us. Refer attached initial plans by Point Architects and plans by Rockett.

* Slab penetrations

* Staircase

* Floor on Level 12 – to be flush for polished concrete

* Mechanical

* Heating/cooling

* Exhaust, UV light treatment

* Storage

194 On 6 December 2023, an online meeting took place.  The meeting was attended by Mr Taylor, Mr Paris, Mr Sijercic, Ms Doyle, Mr Walls and representatives of Splinter Society (see Mr Taylor’s witness statement, para 226).  Paul Pelligra did not attend the meeting (see para 16 of Paul Pelligra’s witness statement, which is annexed to his affidavit).

195 On 6 December 2023 (at 10.17 pm), Mr Walls sent an email to Mr Taylor (copied to Ms Doyle and others) with the subject “Blowair AirSmart Quote … – 85 Spring Street, Melbourne” (CB E.0223).  This email followed on from two earlier emails (dated 19 October 2023 and 24 October 2023) relating to the air conditioning system, which was an aspect of the Landlord’s Works.  Mr Walls’s email of 6 December 2023 referred to a report that had been sent six weeks earlier and attached a further report.  Mr Walls’s email concluded with:

We would appreciate if we started working together on these important issues – we have been unable to progress many items as we have not received any feedback.

It seems that the focus of this email was an aspect of the Landlord’s Works.

196 On 6 December 2023 (at 10.19 pm), Ms Doyle sent an email to Mr Taylor and Mr Paris (copied to Mr Walls, Mr Stanley, Mr Wilson and another person) with the subject “Follow up after today’s meeting” (CB E.0224).  Ms Doyle’s email set out a number of actions to be carried out by each of the Pelligra Group and Pheonix 85 (i.e. Pheonix A and Pheonix B):

Actions for Pelligra

1.    Advise commencement date to Pheonix 85, and circulate program by 8/12/23

2.    Setup a meeting with your engineer to discuss the level 2 structure with Chris (Splinter) and Steve (Eurola) and load points, staircase [and] bathroom penetrations

3.    Submit Level 2 design to Town Planning – this was agreed at a meeting at Point Architect’s office on 16/10/23 and has not progressed in almost 8 weeks, whereas it should have been in the Council system and advancing by now

4.    Relocation of plumbing is landlord works given current configuration is not fit for purpose

5.    Check with building surveyor if Level 12 riser can be smaller

6.    Provide feedback on UV treatment system – this is the solution versus running pipework over 50m of the venue

7.    Provide a solution to storage given there will not be access for 3-4 months and Pheonix 85 requires storage in order to be able to trade. Pheonix 85 is open to Pelligra providing storage elsewhere in basement and repurposing the existing storage for your other tenants

Actions for Pheonix 85

1.    Further to information from engineer, Splinter to update design with new column location – to be updated and completed immediately following discussion with Pelligra engineer

2.    Send mechanical report to Pelligra and setup meeting for discussion – re-sent 6/12 (this was also sent 6 weeks ago)

3.    Resend email re Level 12 polished concrete floor to Pelligra – re-sent 6/12

I observe that the action items for both parties focus more on the Landlord’s Works than on the Tenant’s Works, but there is reference (in point 1 of the actions for Pheonix 85) to the provision of an updated design by Splinter Society.  I note also that, in his witness statement at para 229, Mr Taylor disputes Ms Doyle’s record of the meeting.  I do not consider it necessary to resolve the differences in the evidence as to what was agreed at the meeting.

197 In Ms Doyle’s first statement (at para 182) she states that revised floor plans for all levels (CB E.0220) (comprising ten pages) were provided to the Pelligra Group in person on site at a meeting held on 6 December 2023.  This is disputed by Mr Taylor (at para 223 of his statement).  I am not satisfied that these plans were provided.

198 Ms Doyle gives evidence that, at a meeting on 6 December 2023, Paul Pelligra said words to the effect that “until secondary consent was granted, level 2 design could not be finalised”; “the lower levels would be on ‘pause’ until planning was resolved”; “[t]hank you for achieving the lease milestones and deadlines ahead of schedule” (see Ms Doyle’s first statement at para 184; see also Mr Walls’s first statement at para 78).  In his statement (annexed to his affidavit), Paul Pelligra gives evidence at para 16 that he did not attend any meeting with Pheonix A and Pheonix B on 6 December 2023.  I have found, above, that he did not attend the meeting on 6 December 2023.  During cross-examination, Ms Doyle said that she may have the date wrong and it might have been the next meeting; she maintained that Paul Pelligra made the statements set out above (T245, T249).  During cross-examination, Mr Walls also said that he had the date wrong and that Paul Pelligra made the statements on 12 December 2023 (T403, T417).  In his reply statement (at para 60), Mr Stanley gives evidence that in early December 2023, Mr Walls contacted him and said that there had been a meeting with the Pelligra Group and Mr Walls instructed Mr Stanley to stop working on designing the ground floor, Level 1 and Level 2.  Mr Stanley gives evidence (subject to a limited use ruling) in the same paragraph of his reply statement that Mr Walls informed him that the instruction was given because Paul Pelligra had told Mr Walls and Ms Doyle to pause designing the lower levels, and that Mr Walls informed Mr Stanley that this was to allow for the Level 2 roof secondary consent application to be made and processed.  Having regard to the evidence generally, I am not satisfied that Paul Pelligra made the statements set out in paragraph 148 of Ms Doyle’s first statement (whether on 6 December 2023 or on another date in early December 2023).  It is unnecessary to make a finding as to whether Mr Walls instructed Mr Stanley to stop working on designing the ground floor, Level 1 and Level 2.

199 On 7 December 2023, Ms Doyle sent an email to Ross Pelligra (copied to Mr Walls) with the subject “Level 2 planning permit” (CB E.0226).  The email related to the application for a planning permit for the Landlord’s Works for Level 2 of 85 Spring Street.  In particular, the email related to the rooftop structure (which formed part of the Landlord’s Works).  The email commenced with the following words (in bold in the email):

Further to the call this afternoon, please submit our design to Council, not the Point Architects design.

200 The email set out a history of the discussions about the roof structure for Level 2, including:

On 9 August 2023, David visited the [Adelaide] site and following that visit confirmed with Paul that we do not want a louvre system, and instead confirmed the glass structure by Eurola. The louvre system leaks. Eurola has a wow factor and Steve is the best in the business. We signed up to “wow”, not average.

201 The email stated that it had been agreed at a meeting on 14 November 2023 that the Pelligra Group would submit the Splinter Society design for the rooftop structure.  The email concluded:

We have also been asking for months to meet with your engineer and [other] consultants (eg fire) so that this can be advanced, and we have been blocked at every turn for four months. This was again raised at yesterday’s meeting.

That said, if the submission to Council triggers a new application, that’s fine. Better we FINALLY get started than waste more time.

It’s time to push the button.

202 On 8 December 2023, Mr Walls sent an email to Mr Taylor (copied to others) with the subject “Follow up after today’s meeting” (CB E.0225).  The email stated that action 1 in Ms Doyle’s email of 6 December 2023 “is due” and asked, “When can we expect?”.

203 On 8 December 2023, Mr Taylor sent an email to Mr Walls (copied to others) with the subject “Follow up after today’s meeting” (part of CB E.0229).  The email followed in the same email chain as Ms Doyle’s email of 6 December 2023 with the same subject line.  Mr Taylor’s email asked whether Mr Walls was free to come to a meeting at 3.30 pm in Keilor on Monday “to discuss all outstanding issues and help assist with your queries”.  The email stated that Paul Pelligra, Mr Sijercic, Mr Paris and Mr Taylor himself would be present.

204 On the same day, Mr Walls sent a “reply all” email in the following terms:

With all due respect a meeting is not what is required. We do not need yet another meeting to discuss the meeting.

Your team committed to action items on Wednesday and even the one item that had a deliverable of today (with the date set by your team) has not been met, and even worse there is zero communication. Driving to Keilor is not going to assist with any of these items.

As a reminder – by COB today you were to advise the commencement date and circulate the program.

We are getting nowhere fast. Stephanie advised Ross that as a result of the lack of action and responsiveness from your team, we won’t be opening any time soon.

Please respond to the items in the attached email. And please submit our design to Council. Ross agreed to do this.

I am available to chat now, or over the weekend.

205 It seems that, despite the first sentence in Mr Walls’s email, a meeting between the parties did take place during the week commencing Monday, 11 December 2023 (see Mr Paris’s email of 19 December 2023, referred to below).

206 I note that 10 December 2023 was the deadline for satisfaction of the condition in clause 2.1 of Agreement for Lease (B) (relating to Level 12).

207 On 11 December 2023, Ms Doyle sent an email to Mr Taylor (copied to Mr Walls) with the subject “Fit Out Contribution Claim” (CB E.0233).  The email stated:

Please find attached invoices for both Pheonix A and Pheonix B fit out contribution.  Relevant supplier invoices (all paid) are also attached.  Note that in the next two weeks we also anticipate sending further claims for kitchen equipment, furniture, tiles and lighting.

(Emphasis added.)

The email attached an invoice from Pheonix A (for $130,882.66) and an invoice from Pheonix B (for $135,888.51).  It appears that other invoices (from suppliers to Pheonix A and Pheonix B) were also attached but these do not appear in the document at CB E.0233.  The invoices from Pheonix A and Pheonix B identified that the contribution claim was for services provided by Zelo, Splinter Society and Mr Jaeger.  Although the above email stated that the supplier invoices were “all paid”, that was not correct (T144-145, T228, T305).

208 On 12 December 2023, a meeting between the parties took place.  The meeting was attended by Ms Doyle, Mr Walls, Splinter Society, Mr Taylor, Mr Paris, Mr Sijercic and Paul Pelligra.

209 On 13 December 2023, Mr Wilson sent an email to Mr Walls (copied to Ms Doyle, Mr Stanley and another person) with the subject “Latest Floor Plans” (CB E.0234).  The email attached floor plans for the ground floor, Level 1, Level 2 and Level 12 of 85 Spring Street.  This email did not include the Pelligra Group.

210 Ms Doyle gives evidence (at paras 188 and 195 of her first statement) that updated Level 12 kitchen plans (CB E.0227) (comprising one page) and revised floor plans for all levels (CB E.0234) (comprising four pages) were provided by Splinter Society to Ms Doyle on 8 December 2023 and 13 December 2023 and then provided to the Pelligra Group in person on site on 14 December 2023.  Although this is disputed by Mr Taylor (at paras 237 and 246 of his statement) and by Ross Pelligra (at paras 172 and 179 of his statement), in the course of cross-examining Mr Stanley, counsel for Spring UT proceeded on the basis that the revised floor plans had been submitted to Spring UT on 14 December 2023 (T330, T338).  In light of this, I will treat it as common ground, and I find, that the revised floor plans (CB E.0234) were provided to the Pelligra Group on 14 December 2023 (the 14 December 2023 Floor Plans).  It is unnecessary to make a finding as to whether the updated Level 12 kitchen plans were also provided on that date, because detailed sets of tender documents for Level 12 were provided later (see below).

211 The 14 December 2023 Floor Plans were the last version of the floor plans for the ground floor and Levels 1 and 2 provided to the Pelligra Group before the termination letters of 21 February 2024.  (As discussed below, more detailed plans and specifications for Level 12 were provided before 21 February 2024.)  Mr Stanley gave the following evidence (which I accept) during cross-examination about the nature of the 14 December 2023 Floor Plans (T330-331):

The last plans for the lower levels, ground, 1 and 2, the last version which you submitted was 14 December; is that right?---Yes. Quite – yes, I mean, that’s – yes.

And they were still in a preliminary stage; is that right?---Yes, they were. Yes.

They still had more work to be done on them. And what sort of – that’s a “yes”. I saw you nodding?---Yes. Well, yes. Absolutely. Of course, yes.

And what sort of additional work was required in order to finalise them?---So it’s – the answer to that is different for each level. Level 2 was very unknown because we were aware that was subject to a planning approval process, so whilst we would develop the look and the feel of the space, we knew what we wanted it to look like, we would develop the joinery detail and the aesthetic, we – the long – the long game was getting a planning permit, and we – we – we – rule of [thumb] is you don’t develop a project too far if a planning permit is outstanding because if you don’t get that planning permit for some reason or something changes, then you have to redo your work. Level 1 was more developed because it – whilst it had some changes possibly to the windows at the front, it was more of a closed entity. We – it contained the kitchen, and there were some sort of big unknowns around it and exhausting it, which you would know – it’s in my statement. But it was – it was pretty developed from – from a design perspective. From a compliance perspective, it still had a number of gaps because we weren’t able to progress that …

… was one of the gaps the design of the kitchen on the lower level?---No, no. The gap – that – how it was exhausted is a gap, absolutely, but the actual kitchen design was – had been really worked through in detail … So that kitchen wasn’t changing; we just needed to know where to exhaust it to.

…

And I think we got to – you were about to start on level 2?---… But ground floor, to touch on that, again, the layout was resolved. We – we knew – because it was also the front entry to the venue, so the questions around that fire stair were really important, because if that had to remain an isolated fire stair you can’t have as the main entry of your building because it has got a closed smoke seal door on it, and it’s not going to operate as a fine dining kind of establishment front entry. But our design resolution on the ground level was, again, quite developed. We knew that there were some planning changes there, albeit minor, required that we believed could be done by secondary consent, from our experience, because it was really just shopfront things. But there was also some – we had requested, from memory, the – the fire services for the entire building prior, in its previous permit, were just next to our entry there – the fire hydrant and the booster assembly – and we weren’t clear whether that was remaining there or being moved, whether the building was being reengineered or not. So that has a pretty big impact on how you’re designing the shopfront to your ground floor wine bar if there could potentially be a large fire booster assembly located in your shopfront window. So we progressed as far as we could without understanding the answer to some of those items.

(Emphasis added.)

212 Mr Stanley indicated during cross-examination (and I accept) that, sitting behind the floor plans for the ground floor, Level 1 and Level 2, were additional drawings that Splinter Society had prepared (T338).  However, Mr Walls did not ask Mr Stanley to provide these (T338-339).

213 In mid-December 2023, the Pelligra Group received notice that the application for the liquor licence for the relevant venues had progressed and that public advertisement would commence on 18 December 2023 (CB F.0072).

214 On 16 December 2023, Mr Walls sent an email to Mr Taylor (copied to others) with the subject “Follow up after today’s meeting” (CB E.0235).  Mr Walls stated in part:

This is now getting urgent based on August/September conversations had on Friday.

We have been working towards an April opening, so this is now a 4-5 month delay.

215 On 17 December 2023, Mr Walls sent an email to Mr Taylor and Mr Paris (copied to Mr Stanley, Mr Wilson and Ms Doyle) with the subject “Level 12” (CB E.0237).  The email followed on from earlier emails relating to having a polished concrete floor on Level 12.  Mr Walls’s email of 17 December 2023 stated:

Can we start getting some answers on this stuff? – it is frustrating that nothing gets responded to in writing. We have lost months on issues not being responded to.

As regard to base build/cat 1 works, we will forward the service drawings early/mid January.

216 On 18 December 2023, Ms Doyle sent an email to Mr Taylor following up on payment for the fit-out contribution claim (part of the email chain at CB E.0254).  Ms Doyle stated that the payment was due today (18 December 2023).  Ms Doyle also stated that “[w]e also haven’t received the program, answers to questions etc”.  She sought a response as a matter of urgency.

217 On 19 December 2023, Mr Paris sent an email to Mr Walls and Ms Doyle (copied to others) with the subject “Follow up after today’s meeting” (CB E.0244).  The email followed on from the earlier emails with the same subject line.  Mr Paris’s email stated:

Firstly, our apologies for not getting back to you as soon as we would have liked with regards to a projected completion date of the landlords works.

As you can appreciate there are a few moving parts behind the scenes and it’s a complex task [bringing] an 80’s office building in line with today’s numerous building codes & regulations.

Our meeting last week certainly did assist with clearing up the scope of the works required from the landlord and whilst there are still some final items to be closed out between the parties, we can begin to project a completion date for these works.

With regards to the landlords works, current projection is to have these completed by July 2024 (Obviously subject to Town Planning & Procurement processes). If PCG [Pelligra Construction Group] are to be completing the fitout works, then some of the scope could be completed concurrently which would likely yield a September [2024] completion date (pending review of final [Splinter Society] design and assuming all procurement is local).

Putting aside any authority delays, the entire building should be commissioned by November 2024 which will enable our Building Surveyor to provide a CFI (Certificate of Final Inspection) for the works and third party fit-outs to commence.

Hopefully the finalisation of design and the subsequent confirmation of the landlords works in their entirety to our construction team will assist in the further refining of a completion date for the works.

Believe Friday’s meeting has been pushed to next year so please have a safe and pleasant Christmas break and we’ll see you both in the new year.

PS – with regards to the query on the lift – we do not currently believe we have the capacity to open the cart to take oversized material, however we will confirm and also send over the dimensions so you can plan ahead.

(Emphasis added.)

218 On 20 December 2023, Pheonix A and Pheonix B engaged Kinematics as services engineers for the project at 85 Spring Street (CB E.0340).

219 On 20 and 21 December 2023, Mr Walls and Mr Taylor exchanged text messages (CB E.0251).  In the messages, Mr Walls asked “[a]re we getting any answers to any of our queries”.  Mr Taylor responded by apologising for the delay and stating that he had pestered Paul Pelligra and Ross Pelligra, and that Paul Pelligra “will be dealing with all of them from now on” and “we are doing all this on Friday”.  Mr Walls sought clarification of what the Pelligra Group would be doing on Friday, to which Mr Taylor responded:

1.    Timeline

2.    [Contribution]

3.    Landlord works

220 In a further text, Mr Taylor apologised again and said that it was “an extremely tough time on our end” and “[n]ext year will come around good”.  Mr Walls responded that “[y]ou know that November is unacceptable though”.  I take this to be a reference to the November 2024 date referred to in Mr Paris’s email of 19 December 2023 set out above.  Mr Taylor responded “[w]e will get through it”.

221 On 21 December 2024 (at 2.17 pm), Mr Taylor sent an email to Ms Doyle in reply to her email of 18 December 2023 referred to above regarding the fit-out contribution claim (part of the email chain at CB E.0254).  Mr Taylor stated:

Hi Stephanie,

I refer to the Lease and the terms [on] which we can issue contribution payments.

We have not yet satisfied the conditions of the Lease. It is still conditional upon the design condition, and the liquor license. We must satisfy the conditions of the lease, up until then no contribution payments can be made.

Secondly, the fit out contribution payment cannot include consultants fees. Regarding the deposit for Zelo, we can pay this once goods have arrived on site. To clarify, please see some examples of the nominated items that can be paid for with the contribution.

(i) shopfront;

(ii) ceilings;

(iii) flooring;

(iv) lighting;

(v) air conditioning plant and equipment;

(vi) alterations or modifications to the services to accommodate the works by or on behalf of the Tenant;

(vii) internal partitions;

(viii) fixtures and fittings;

(ix) wall finishes;

(x) signage; and

(xi) other works.

In essence, they must be physical items that can be assessed by a quantity surveyor.

Also finally, the payment terms stated on your invoice are not in line with the conditions of the lease. To remind you, we have agreed on 30-day terms. A reminder that this is 30 days from the date that approval on invoices is offered by the Landlord.

If there are any questions, please let me know.

(Bold emphasis added.)

The emphasised words in the above email indicate that, as at 21 December 2023, Mr Taylor did not consider the design condition in clause 2.1 to have been satisfied.  Given the email exchange on 15 November 2023 (which constituted confirmation that the Landlord’s Works had been agreed), I infer that Mr Taylor considered that, as at 21 December 2023, the Tenant’s Plans and Specifications had not yet been approved.

222 On 21 December 2023, Ms Doyle sent an email in reply to Mr Taylor’s email about the fit-out contribution claim (part of the email chain at CB E.0254).  Ms Doyle stated:

Hi Ryan

I hope you are having a good afternoon. Thanks for your email.

Contingency of payment

The payment of the Contribution amounts is not dependent on the Lease becoming unconditional. I refer you to the side letter. As you will be aware, the side letter with the Liquor Licence Conditions contemplates that the Contribution may have been paid to us notwithstanding that the AFL/Lease may be terminated as a result of the conditions.

The great news is that we do anticipate the liquor licence to be finalised soon, given that it is being advertised at the moment, as you know.

Nature of invoices

The Contribution is for the reimbursement of Tenant’s Works. No doubt you are aware that Tenants Works is defined in the AFL as “the works (including fitout works and installation of the Tenant’s Property) to be undertaken by or on behalf of the Tenant on the Premises as detailed in the Tenant’s Plans and Specifications”.

Accordingly, it is entirely reasonable and in compliance with the AFL to include consultants fees in the invoices as this forms part of the Tenant’s Works.

Timing of payment

Payment is also not contingent on the goods being delivered to site. Clause 7.1(b) of the AFL provides that payments will be made by the Landlord as soon as invoices for payment are raised by the contractor undertaking the Tenant’s Works and in any event within 14 days of the invoice date. Furthermore, clause 7.1(c) provides that the Landlord will pay these invoices on time and without set off until the Contribution Cap has been achieved.

Accordingly, we require payment of the invoices submitted to date no later than 11 January 2024.

(Underlining emphasis added.)

223 I make the following findings or reach the following conclusions about the above email:

(a) Insofar as Ms Doyle refers to a “side letter”, I have found, above, that a side letter was not entered into.

(b) Insofar as Ms Doyle states that “[t]he payment of the Contribution amounts is not dependent on the Lease becoming unconditional”, this is inconsistent with the terms of the Agreements for Lease: see clause 7.1(b)(i) of Agreement for Lease (A) (set out at [45] above).

(c) Insofar as Ms Doyle stated that the Agreements for Lease provide that “payments will be made by the Landlord as soon as invoices for payment are raised by the contractor undertaking the Tenant’s Works and in any event within 14 days of the invoice date”, this does not accord with clause 7.1(b) of Agreement for Lease (A) (see [45] above) or the comparable clause of Agreement for Lease (B). In particular, clause 7.1(b) provides that payment is to be made “within 30 days” of “the last to occur” of three alternatives (only one of which relates to invoices).  Further, the clause refers to the Tenant providing to the Landlord “invoices establishing to the satisfaction of the Landlord the amount(s) that the Tenant has spent on fitout”.  This indicates that the Tenant needs to have spent (paid) the amount before the Landlord is required to pay the contribution to the Tenant.

January 2024

224 On 8 January 2024 (at 11.32 am), Mr Taylor sent an email to Ms Doyle in reply to her email relating to the fit-out contribution claim (part of the email chain at CB E.0254).  Mr Taylor stated:

Hi Stephanie,

Happy New Year! Apologies for the late reply, as I had a few days off over the Christmas period.

Can you please produce the executed documents to which you are referring …, particularly the side letter.

225 On the same day (at 11.44 am), Ms Doyle sent an email in reply to Mr Taylor (part of the email chain at CB E.0254) in which she stated:

Hi Ryan

You have copies of all of these.  Let’s not play games please, and start the New Year on a positive note.

I observe that, contrary to the thrust of Ms Doyle’s email, Mr Taylor’s request for the executed documents (and particularly the side letter) was quite reasonable in circumstances where: (as I have found) a side letter was not entered into by the parties; and Ms Doyle’s email of 21 December 2023 did not reflect the terms of the Agreements for Lease.

226 On the same day (at 11.58 am), Mr Walls sent an email to Ms Doyle (copied to Mr Taylor, Ross Pelligra and Paul Pelligra) about the fit-out contribution claim (CB E.0254).  This email followed on from Ms Doyle’s email of the same date.  The text of Mr Walls’s email was addressed to Ross Pelligra and stated:

Hi Ross

Can we please have a meeting.

This project is some 18 months behind what we discussed in June last year.

And now you’re playing dumb about our invoice - disappointing!!

I infer that Mr Walls’s comment about the Pelligra Group “playing dumb” about the Tenant’s invoice was a reference to Mr Taylor’s email requesting copies of the executed documents to which Ms Doyle had referred in her email (particularly the side letter).  However, for the reasons I have given above, it was quite reasonable for Mr Taylor to request these documents.

227 On the same day (at 12.30 pm), Mr Taylor sent a reply email to Ms Doyle’s email of the same day which referred to “playing games” (part of the email chain at CB E.0255).  Mr Taylor wrote:

Hi Stephanie,

There is no intention to play any games. Please see attached the full suite of leasing documents for both tenancies. We do not have any executed side letter which is where I am getting confused.

I am purely referring to the documents attached to what I interpret as the agreement between the parties. I also wish to start and continue the relationship positively.

228 On the same day (at 12.41 pm), Ms Doyle sent an email reply to Mr Taylor’s email (CB E.0255).  She stated:

The side letter was always contemplated and part of the discussions. That aside, the AFL is clear about the payment of contributions (Refer [to] Clause 7.1(b)). Additionally, as per the email you have (that you required for finance), we deem the leases to be unconditional.

Also, as per David’s email, please advise a meeting time, this week, so we can advance.

(Emphasis added.)

I make the following observations.  First, Ms Doyle did not provide a copy of a side letter; rather she said that such a letter was “always contemplated”.  Secondly, insofar as Ms Doyle states that “as per the email you have (that you required for finance), we deem the leases to be unconditional”, this appears to be a reference to the email exchange between Ms Doyle and Mr Taylor on 15 November 2023 and Ms Doyle appears to saying that, by the email exchange of 15 November 2023, the parties had deemed the Agreements for Lease to be unconditional.  However, for the reasons given above, I have found that Ms Doyle’s email of 15 November 2023 was intended by Ms Doyle (and understood by Mr Taylor) to operate as confirmation that the Landlord’s Plans and Specifications had been approved (or agreed to) by the Tenant and that that aspect of the condition in clause 2.1 had been satisfied.

229 On the same day (at 1.50 pm), Mr Walls sent an email in reply to Mr Taylor’s email of 8 January 2024 (at 11.32 am) (part of the email chain at CB E.0258).  Mr Walls stated:

Then pay the invoice Ryan.

We have spent $1.5m to date, and you have not spent $1 on our 4 floors.

That’s why Stephanie mentioned games.

The lease is clear for invoicing and it needs to be paid.

However, as indicated above, the position adopted by Ms Doyle and Mr Walls (relating to contribution payments) was inconsistent with the terms of the Agreements for Lease.

230 I note that 9 January 2024 was the deadline for satisfaction of the condition in clause 2.1 of Agreement for Lease (A) (relating to parts of the ground floor, Level 1 and Level 2).

231 On 9 January 2024, Ms Doyle sent an email to Mr Taylor following up on Mr Walls’s request for a meeting (in his email of 8 January 2024 at 11.58 am) (CB E.0258).

232 On 10 January 2024 (at 9.07 am), Mr Taylor sent an email stating that the application for planning approval had not been lodged as the Pelligra Group’s architect “unfortunately went on holiday before finishing the detail” (CB E.0259).

233 On the same day (at 10.42 am), Ms Doyle sent an email in response, complaining about the delay (part of the email chain at CB E.0261).

234 On the same day (at 4.31 pm), Mr Taylor sent an email to Ms Doyle (copied to Mr Walls, Paul Pelligra and Ross Pelligra) about the fit-out contribution claim (part of the email chain at CB E.0261).  Mr Taylor stated:

Hi Stephanie,

There seems to be a very large disconnect here which I hope to alleviate. If there are any further concerns, I encourage you to bring them up in our meeting next week.

Firstly, regarding your concern about the contribution payment, I want to ensure you are looking at the right set of documents. Please see a screengrab of the contribution clause in the AFL below. I have also attached it for your reference.

[Clause 7.1(a) and part of (b) of Agreement for Lease (A) were then set out]

* The landlord has not offered their approval as per Clause 7.1 (b) (i) of the invoice, which was notified in per my email on the 21/12, I confirm that design consultant fees cannot form Nominated Items under the Tenant’s Works Contribution.

* The enquiry regarding the program was dealt with in an email from Matt Paris on 19/12.

* The secondary consent application was not submitted due to the absence of agreement in design, not because of negligence. We understand that you are the tenant and are particular about the design intent, but as the landowner, we must also be comfortable with the design. After the design was agreed upon at our onsite meeting, we have progressed. Unfortunately, we cannot control when our consultants go on leave. We have been able to confirm that it will be submitted next week as stated.

* We confirm no meeting with the structural engineer is required. Our engineer supports the rooftop design.

(Emphasis added.)

I observe that, in this email, Mr Taylor reiterated (by reference to clause 7.1(b)(i) of Agreement for Lease (A)) that the Landlord had not yet approved the Tenant’s Works.

235 On the same day (at 5.35 pm), Ms Doyle sent a reply email in which she inserted into Mr Taylor’s email of 4.31 pm her responses to his email (CB E.0261).  Ms Doyle’s responses were in red text.  I set out below the second part of Mr Taylor’s email, with Ms Doyle’s response inserted.  In the extract below, Ms Doyle’s comments are set out in italics rather than red text:

* The landlord has not offered their approval as per Clause 7.1 (b) (i) of the invoice, which was notified in per my email on the 21/12, I confirm that design consultant fees cannot form Nominated Items under the Tenant’s Works Contribution. You have approved the works as per the email you require for finance. You cannot have it both ways and rely on an email from me for your finance yet disregard the same email when it comes to complying with the AFL. Consultant fees relating to the fitout are not excluded under the AFL they are part of tenant’s works.

The AFL provides that payments will be made by the Landlord as soon as invoices for payment are raised by the contractor undertaking the Tenant’s Works and in any event within 14 days of the invoice date. That’s exactly what we have done. The invoice is due and payable tomorrow, 11 January 2024.

* The enquiry regarding the program was dealt with in an email from Matt Paris on 19/12. No, only a date was provided not a program. A program was committed to many times by your team, and documented in follow up emails, and has never been provided.

* The secondary consent application was not submitted due to the absence of agreement in design, not because of negligence. We understand that you are the tenant and are particular about the design intent, but as the landowner, we must also be comfortable with the design. After the design was agreed upon at our onsite meeting, we have progressed. Unfortunately, we cannot control when our consultants go on leave. We have been able to confirm that it will be submitted next week as stated. Ross was happy with the design on 8 December 2023 and told me if I wanted it submitted it would be immediately. That was confirmed in writing by me on the same day. It wasn’t submitted and clearly still hasn’t been.

* We confirm no meeting with the structural engineer is required. Our engineer supports the rooftop design. Our architect has requested a meeting with your engineer in relation to other aspects of the fitout not just the roof, yet you continually say yes in meetings and then say you will set the meeting up and it never occurs.

(Bold emphasis added.)

I observe that, in her responses, Ms Doyle stated that “you” (a reference to Mr Taylor or the Pelligra Group) “have approved the works as per the email you require for finance”.  I infer that this is (again) a reference to the email exchange of 15 November 2023.  I have made findings, above, about that email exchange and it is not necessary to repeat them.  I also observe that Ms Doyle’s comments about the Agreements for Lease are again inconsistent with their plain terms – for example, the reference to “14 days”, when clause 7.1(b) refers to “30 days”.  It may be that, as Mr Taylor suggested in his earlier email, Ms Doyle was not looking at the correct documents.

236 Ms Doyle gives evidence (at paras 198, 211 and 212 of her first statement) that Level 12 tender documents and other plans were provided to the Pelligra Group in person on site on 15 January 2024.  This is disputed by Mr Taylor (at paras 274 and 275 of his statement) and by Ross Pelligra (at paras 182, 194 and 195 of his statement).  Despite Ms Doyle’s reply evidence (at para 76 of her reply statement), I am not satisfied that these plans were provided.

237 On 16 January 2024, an online meeting took place between the parties.  The meeting was attended by Ms Doyle, Mr Walls, Ross Pelligra, Mr Taylor and Paul Pelligra.  There is a difference in the evidence as to the content of the discussion at the meeting.  However, I do not consider it necessary to resolve that difference.

238 On 16 January 2024, Mr Taylor sent an email to Ms Doyle, Mr Walls and others with the subject “[Pheonix] Meeting Follow Up” (part of the email chain at CB E.0264).  The email stated:

Hi Stephanie,

Thanks for meeting with us. For clarity, please copy any outstanding questions you have that have … not yet been answered and we will endeavour to get responses this week.

However, typically it is easiest to get comments on drawings. Can you please advise when you think you will have these to us?

I will send a [separate] email regarding the contribution this afternoon

(Emphasis added.)

239 On the same day, Mr Walls sent a reply email (CB E.0264) stating:

Ryan

As discussed many times, you can’t get comments on drawings until YOU give us the info we require.

Some of the issues are 4 months outstanding.

Put simply, they are ignored.

(Emphasis added.)

240 On the same day, Mr Paris sent a reply email (part of the email chain at CB E.0272):

Hi David/Steph,

Hope you’re both doing well.

Believe in the meeting we had on 12th December with Splinter, Paul [Pelligra] and Genan [Sijercic] present we resolved most queries and we have been seeking Splinter’s latest set of drawings so our Surveyor and Engineer can review?

Believe there was also a meeting at Splinter’s to be scheduled late December however we likely ran out of time leading up to Christmas.

If we could please get the latest set of documentation for the proposed works would be great as all consultants are now back onboard after the festive break and we want to get this moving.

Apologies in advance if any querie[s] have been missed, however believe we’ve actioned everything we can from our end?

(Emphasis added.)

241 On the same day, Mr Walls sent a reply email (part of the email chain at CB E.0272):

Hi Matt

I’ll keep it simple.

You have NOT answered ANY queries to date.

242 On 17 January 2023, Ms Doyle sent an email in the same email chain to Mr Taylor (copied to Mr Paris and Mr Walls) (CB E.0272).  The email stated:

Hi Ryan

Further to yesterday’s meeting, I have again listed below the questions that require answering in order for us to finalise drawings and also send out for tender:

* Fire rated door requirements – fire escapes, lift doors, lobby doors, etc.

* Is a smoke lobby / curtain required to the lifts?

* Other fire rating requirements – caulking, mechanical systems, etc. Please advise.

* Extent of demolition carried out by Pelligra (requirements from new contractor)

* When [will] the disused plant room equipment be [removed]?

* Stair nosing requirements to central booth (concrete to carpet flooring)

* Has the kitchen exhaust and make up locations / pathways for ducting been decided yet, and how / who is fire rating this?

* Who is doing the fire penetrations and caulking them up?

* Where can condensers for the coolrooms go?

* Will the fire system remain live during fitout?

* Coordination of lift doors / hardware, DDA bathroom fixtures, locker finishes

* Please advise fitout trade access, deliveries, lift access, protection works, isolations, hours etc.

(Emphasis added.)

243 On 18 January 2024, Mr Walls sent an email to Mr Taylor (copied to Ms Doyle and Mr Paris) with the subject “Tender Documents – level 12” (CB E.0275).  The email included a link to a copy of the documents (the 18 January 2024 Tender Documents).  The email also stated:

We will await your feedback on the questions that we sent through yesterday, but in essence it should not affect your pricing. Once received, services drawings will be forwarded including mechanical, electrical, hydraulic and fire protection.

The copy of this email in evidence does not include the documents that were the subject of the link.  However, I infer that the documents were similar to a revised set of tender documents for Level 12 that were provided later, by way of an email from Ms Doyle to Mr Taylor dated 19 February 2024 (CB E.0314) (see below).  The latter email attached 30 pages of drawings in relation to Level 12 of 85 Spring Street.  The drawings are described below.  I infer that drawings of the same type, and with a comparable level of detail, were provided on 18 January 2024, by the link in Mr Walls’s email of that date.

244 On 19 January 2024, Mr Paris sent an email in the email chain with the subject “[Pheonix] Meeting Follow Up” (CB E.0280).  This provided responses (in blue) to the list of questions raised by Ms Doyle in her 17 January 2024 email.  Some of Mr Paris’s responses raised questions for Ms Doyle.

245 On 22 January 2024, Mr Walls sent an email to Mr Paris (copied to Ms Doyle, Mr Taylor, Mr Stanley and Mr Patil (of Kinematics) (CB E.0288).  Mr Walls stated:

Hi Matt

Our engineer needs the details of your service engineers. This is for mechanical, electrical, hydraulic and fire protection.

Are you able to provide their details urgently.

246 On the same day, Mr Wilson sent an email in the email chain with the subject “[Pheonix] Meeting Follow Up” (CB E.0290).  Mr Wilson’s email (which was addressed to Ms Doyle, Mr Paris and Mr Taylor) set out, for each of the questions in Ms Doyle’s email of 17 January 2024, the response that had been provided by Mr Paris (indicated by the letter “P”) in his email of 19 January 2023, and then comments or questions raised by Splinter Society (indicated by the letters “SS”).  Although the email indicates that Splinter Society’s comments and questions are in red, the version of the document in evidence does not have colour.  For several of the questions, Splinter Society thanked Mr Paris for his response.  For several of the questions, further questions were raised.  In some cases, where Mr Paris had raised a question, Splinter Society provided an answer to the question.

247 On 24 January 2024, the Pelligra Group lodged the application for planning approval in relation to the Level 2 roof structure (CB E.0292).

248 On 31 January 2024, Ms Doyle sent an email to Mr Taylor (copied to Mr Walls) (CB E.0296) in which she stated:

Hi Ryan

I can clearly see that you don’t see the time sensitivity here given you are in no rush to have us open and trading. We feel differently and would like to be trading as soon as possible. It takes time to transfer a licence and we need to get that process started as soon as possible. We should be actioning that now (given that we expected the licence any day) rather than being ok with further delays.

The fact is that the signs were displayed well past the documented date of 15 January. If the council or whomever sent you the letter have that wrong, and that’s the basis for readvertising, then that can be corrected very quickly as we have photographic evidence. You should be wanting to correct this misunderstanding so we don’t lose more time and can advance.

So my question to you is why are you ok with delays when we were fully compliant?

1 to 21 February 2024

249 On 2 February 2024, Ms Doyle sent an email to Mr Taylor (copied to Ross Pelligra, Mr Paris and Mr Walls) (CB E.0299) regarding an objection from Council to the Level 2 structure and issues relating to the liquor licence.  The email concluded:

It’s not ok to brush this aside and basically say – don’t worry about this as we are in go slow mode and won’t have base build done until June so it won’t impact you. You have missed the point entirely – you have failed to communicate transparently with us. As a result you have not [communicated] all of the relevant information to other parties. It’s a domino effect. Don’t twist this – sending back information is not contesting anything, it’s providing information that’s highly relevant to proof of display.

I note that, in his witness statement at para 298, Mr Taylor rejected the statements made by Ms Doyle in the above passage.  It is not necessary for present purposes to resolve that difference in the evidence.

250 During cross-examination, Ms Doyle gave evidence that Mr Walls left Pheonix 85 in early February 2024 (T169-171).  Evidence to this effect had not been included in her witness statements.  I do not accept this evidence.  It is inconsistent with the communications discussed below, which show that Mr Walls continued to be involved in the project up to and including 21 February 2024.

251 On 12 February 2024, Ms Doyle sent an email to Mr Taylor (copied to Mr Walls) (CB E.0311) in which she raised six questions about the “base build” relating to Level 12, noting that a number of the questions had been asked previously and not answered.  She stated that this was now holding up the Tenant’s services drawings.

252 On 15 February 2024, Pheonix A and Pheonix B entered into a contract with IMF Fitouts Pty Ltd for the Tenant’s Works at 85 Spring Street (CB E.0312).

253 On 16 February 2024, Mr Taylor sent an email to Ms Doyle in reply to her email of 12 February 2024 regarding base build questions (CB E.0313).  He provided responses to the six questions.

254 On 19 February 2024, Ms Doyle sent an email to Mr Taylor (copied to Mr Stanley, Mr Walls, Mr Patil, Mr Wilson and another person) with the subject “Responses to service consultants questions” (CB E.0314).  Attached to the email was a revised set of tender documents for Level 12 (comprising 30 pages of drawings) (the 19 February 2024 Tender Documents).  The attached drawings comprised: floor plans; a coverings plan; ceiling plans; lighting plans; a door and windows schedule; bar plans; kitchen plans; a keg room plan; moon wall plans; lobby and office plans; booth plans; table type plans; and cabinetry type plans.  Mr Stanley states in his reply statement (at para 70), and I accept, that this comprised “a significant document package for level 12”.  Mr Stanley gives the following evidence (which I accept) in para 71 of his reply statement about the 19 February 2024 Tender Documents:

Those plans included detailed architectural layouts and specifications for plumbing, electrical, lighting, and data. I agree that those plans did not include engineering drawings or specifications relating to plumbing, electrical, data layouts, fire sprinklers, fire detection systems (including speakers and emergency alert systems), and mechanical systems (includ[ing] heating, air conditioning, exhaust systems for kitchens and bathrooms, and also smoke management systems). I also agree that we did not prepare or provide services drawings.

255 In cross-examination, Mr Stanley gave the following evidence (which I accept) about the 19 February 2024 Tender Documents (T332):

… is it correct that still in 19 February 2024, the plan was still in a preliminary state at that time?---No. They were extraordinarily developed at that point in time. There were some gaps for it to be able to achieve a building permit because, without sort of repeating myself, there were some key information that we weren’t sure how to respond to regarding the compliance and the integration to the building’s services. But from an architectural package, there was an enormous amount of detail – probably more than I have ever done on any job because this was intended to be a very high-end hospitality offering, so, you know, we had gone to incredible detail on designing the architectural elements of all aspects of the project.

(Emphasis added.)

256 On 21 February 2024 (at 8.10 am), Mr Patil (of Kinematics) sent an email to Ms Doyle with the subject “Quote please” (part of the email chain at CB E.0316).  The email set out a list of 14 questions about which further information was needed by Mr Patil to proceed with a “detail[ed] design”.

257 On the same day at 9.50 am, Mr Stanley sent an email which provided responses (in green text) to some of the questions raised by Mr Patil (part of the email chain at CB E.0316).  The text of Mr Patil’s email, with Mr Stanley’s responses, is set out below.  In the extract below, I have used italics for the text that is in green in the email (being Mr Stanley’s responses):

Hi Stephanie,

We still need the following info to proceed with the detail design stage:

1.    150A, 3 phase power allocated – does it include power for the NEW AC proposed?

2.    What pressure & MJ of gas is required for kitchen?

3.    Where is the gas riser?

4.    I assume the dropper proposed for trade waste adjacent to smoke exhaust shall be run to grease trap by base building.

5.    What are the power requirements of the Cold store & KEG Room refrigeration system.

6.    What are the electrical requirements of new fridges and bar equipment.

7.    What is applicable standard for sprinklers, smoke detectors and alarm system – note this is change of class for 5 to 6 - hence requirements will differ. Base building needs to confirm as every new system needs to be integrated with base building.

8.    New Hot water unit/s for the floor – do you want them to be gas or electric? If gas - it needs a flue to outside and with electric - it will need additional power. We will need to understand if the selected dish / glass washers require hot water. Most do due to rapid cycle….. that [will increase] demand and may require instantaneous. Once we get equipment specs can you advise please [V]enkat [i.e. Mr Patil].

9.    Existing smoke exhaust for the level – how will it be integrated or operate with the new independent AC system now being proposed. Recommend base building be involved in integration works to ensure the system as whole will operate.

10.    Status of existing HVAC equipment has not been clarified – will it be retained in plant rooms or all removed as ductwork is being demolished.

11.    Location for new condensing units (I assume will be on roof) to be confirmed by base building. Existing HVAC is all [going] to be removed. We have a grille in the facade of the plant room for fresh air intake.

12.    Arch plan shows a large island type hood in the kitchen? As size of hood dictates airflow rates, is [it] possible to reduce the hood to cover the cooking equipment only? Smaller hood – smaller duct in ceiling space to base building riser.

13.    Lighting layout – I assume is being selected by arch. We need the data sheet of each fitting type proposed. Yes all fittings and layout has been [selected] by us. It will be running on a Dynalite / cbus system. We are working with Zelo on this. It might be good to have a quick chat between you us and them to understand your requirements here [V]enkat?

14.    Fan for kitchen exhaust – I assume it shall be located on roof – exact location to be confirmed by base building to enable us to size the duty of the fan. Base building to confirm who will supply the exhaust riser to roof & fan on roof?

258 In relation to the balance of the questions (i.e. those that were not answered by Mr Stanley), some of these were questions for the landlord to respond to, and some were questions for the tenant to respond to (re-examination of Mr Stanley at T339-341).

259 On the same day at 12.01 pm, Mr Walls forwarded Mr Patil’s email (with Mr Stanley’s responses) to Mr Taylor and requested his prompt response to the further questions (CB E.0316).

Termination of the Agreements for Lease and Leases

260 In about January 2024, Ross Pelligra became aware of the conditions on the Birdies Forest Hill liquor licence relating to Mr Walls.  The evidence about this has been discussed at [144] above.  Ross Pelligra gives evidence in para 22 of his statement that he regarded Ms Doyle’s and Mr Walls’s misrepresentation (i.e. the failure to disclose the conditions) as the “last straw”.  He states (at para 22) that: “As the leases had become voidable at the option of either party, I decided that Spring UT would exercise its right to terminate the agreements for lease and leases”.  I find that one of the reasons why Ross Pelligra decided to terminate the Agreements for Lease and the Leases was that he became aware of the conditions on the Birdies Forest Hill liquor licence and considered that Ms Doyle’s and Mr Walls’s failure to disclose this in about July 2023 was a misrepresentation.  Another reason was that Ross Pelligra considered the tone of the emails the Pelligra Group was receiving from Ms Doyle and Mr Walls to be rude and belligerent (see the cross-examination of Ross Pelligra at T588-590).  I am not satisfied that this was the reason for terminating the documents (as put to Ross Pelligra in cross-examination at T590).  However, I am satisfied that it was one of the reasons.

261 On 21 February 2024 (at 1.05 pm), Moray & Agnew (acting for Spring UT) sent two emails to Ms Doyle (copied to others) attaching letters of the same date purporting to terminate the Agreements for Lease and the Leases (CB E.0320 and E.0321).  One letter was addressed to Pheonix A and related to Agreement for Lease (A) and the related Lease.  The other letter was addressed to Pheonix B and related to Agreement for Lease (B) and the related Lease.  The letter to Pheonix A was in the following terms:

Dear Ms Doyle

Premises: Part Ground Floor, Part Level 1, Part Level 2, 85 Spring Street, Melbourne, Victoria

Notice of termination of Agreement for Lease and Lease

1.    As you are aware we act on behalf of Spring UT Pty Ltd as Trustee for the Spring Unit Trust (Spring UT), which is the registered proprietor of the land comprised in Certificates of Title Volume 9560 Folio 379 and Volume 11870 Folio 358 and known as 85 Spring St Melbourne Victoria.

2.    On 11 October 2023 Spring UT entered an agreement for lease with Pheonix A Pty Ltd (Pheonix A) in respect of Part Ground Floor, Part Level 1, Part Level 2, 85 Spring Street (the Agreement for Lease). Subject to the Agreement for Lease, the lease is to commence on 28 February 2024 (Lease).

3.    Under clause 2.1 of the Agreement for Lease, both the Agreement for Lease and the Lease are subject to and conditional on Spring UT and Pheonix A agreeing on:

(a)    the scope and design of the Landlord’s Works and the Plans and Specifications; and

(b)    the Tenant’s Plans and Specifications.

by no later than 90 days after the date of the Agreement for Lease (the Design Condition) being 10 January 2024 (“the Design Condition Deadline”).

4.    [Pheonix] A failed to comply with the Design Condition by the Design Condition Deadline and … the Design Condition has not been satisfied.

5.    The time within which the Design Condition was required to be satisfied was over 6 weeks ago.

6.     We advise that Spring UT has determined to exercise its rights pursuant to clause 2.3(a) of the Agreement for Lease to terminate the Agreement for Lease and the Lease and Spring UT hereby gives Pheonix A notice that the Agreement for Lease and the Lease are both terminated with immediate effect.

(Underlining emphasis added.)

262 The letter addressed to Pheonix B was in substantially the same form save for the necessary changes to account for the differences between the Agreements for Lease.

263 I note that, in opening submissions, Pheonix A and Pheonix B submitted that para 3 of the letter does not accurately reflect the terms of clause 2.1 (set out at [35] above).  The letter locates the words “the scope and design” in sub-para (a), which relates only to the Landlord’s Works and the Plans and Specifications, rather than in the chapeau (or opening lines) of para 3 of the letter.  To properly reflect clause 2.1, the words “the scope and design” should have appeared in the opening lines of para 3.  As Pheonix A and Pheonix B point out, the condition in clause 2.1 is that the parties agree on the scope and design of (a) the Landlord’s Works and the Plans and Specifications; and (b) the Tenant’s Plans and Specifications.

Latest versions of plans provided

264 Based on the above chronology, the latest versions of the plans and specifications for the Tenant’s Works provided by Ms Doyle or Mr Walls to the Pelligra Group as at 21 February 2024 were as follows:

(a) In relation to the ground floor, Level 1 and Level 2:

(i) a one-page elevation of the ground floor provided on 1 November 2023 (CB E0177);

(ii) revised bathroom layouts provided on 1 December 2023 (four pages in total) (CB E.0214); and

(iii) the 14 December 2023 Floor Plans (one page per level) (CB E.0234).

(b) In relation to Level 12, the 19 February 2024 Tender Documents (CB E.0314).  These comprised 30 pages and have been described above.

No approval of Tenant’s plans and specifications

265 I find that, at no time in the period up to 21 February 2024, did the Pelligra Group approve plans and specifications for the Tenant’s Works.  There is no document in evidence in which the Pelligra Group states that it approves the plans and specifications for the Tenant’s Works.  Insofar as Ms Doyle’s email to Mr Taylor of 15 November 2023 (at about 3.30 pm) (CB E.0196) and Mr Taylor’s reply email on the same day (at 4.04 pm) (CB E.0197) might be said to constitute such approval, for the reasons given at [177] above, I do not accept that contention.  Further, the Pelligra Group did not give oral approval for the plans and specifications for the Tenant’s Works. Insofar as Ms Doyle and Mr Walls give evidence that Mr Taylor gave oral approval of the plans and specifications, this is disputed by Mr Taylor (at paras 155, 163, 187, 188, 199, 200, 202 of his statement).  I accept Mr Taylor’s evidence, which is consistent with the majority of the documents discussed above and the circumstances generally.  Insofar as Ms Doyle gives evidence that Ross Pelligra gave oral approval of the plans and specifications, this is disputed by Mr Pelligra (at para 170 of his statement).  I accept Ross Pelligra’s evidence, which is consistent with the majority of the documents discussed above and the circumstances generally.

After 21 February 2024

266 Mr Taylor accepted in cross-examination that he did not provide a copy of the termination letters to Barrenjoey (T524).  Mr Taylor gave evidence that the Pelligra Group did not report the termination letters to Barrenjoey because there was “confusion as to whether or not the tenants [were] going to accept the termination” (T526).

267 Mr Taylor accepted that, as at 14 May 2024, no one at the Pelligra Group had spoken to Barrenjoey (referred to as “the bank” in the question) about termination of the Baron tenancies (T530, with reference to CB F.0082).

268 On 30 May 2024, Mr Taylor sent an email to Mr Hunyh (part of the email chain at CB F.0083) with responses to a list of questions that had been asked by Barrenjoey in relation to three tenancies in 85 Spring Street.  In relation to the Baron (i.e. Pheonix A and Pheonix B), Mr Taylor’s email listed the following questions and provided the following responses (in bold):

Baron

* Status update on the liquor license application? Objections have been responded to, estimate is to receive in 4-6 weeks

* When are landlord works expected to be completed? Estimate of 30th July

* When does the Baron expect to commence tenant works in relation to this tenancy? Noting that the senior Loan Agreement has a review event if not commenced by 30/6/24

* Tenant works are expected to be completed concurrently with landlord works for lower levels, so this won’t be an issue. Expected to commence 1st July.

This email conveys the false and misleading impression that the Baron tenancies were still on foot.  Mr Taylor accepted in cross-examination that each of the above items (other than the status of the liquor licence application) was a “lie” (T533).

269 The false and misleading impression of the above email was further conveyed by a follow-up exchange of emails on 3 and 4 June 2024 (part of the email chain at CB F.0083) in which Vincent Jiang of Barrenjoey asked, in relation to the Baron, “Tenant works are expected to commence 1 July and complete concurrently with landlord works with an estimate date of 30 July?” and Mr Taylor responded “That is the target, yes”.  Mr Taylor accepted in cross-examination that he deliberately deceived Barrenjoey (referred to as “the bank” in the question) (T535).

270 For completeness, I note that during cross-examination, Ross Pelligra stated that he informed two directors of Barrenjoey (in the period late February to May 2024) that the Baron leases had been terminated (T613-621).  I do not accept that evidence.  It is most unlikely that, if that had occurred, it would not have been passed on to the others at Barrenjoey who sent the emails discussed above; and Barrenjoey were evidently of the view that the Baron leases were on foot.

People not called to give evidence

271 Each side made submissions that certain adverse inferences should be drawn from the failure of the other side not to call certain people.  Pheonix A and Pheonix B referred to the failure of Spring UT to call Mr Dendes (of the Pelligra Group) or Mr Towey (of LGS Legal).  In the case of Mr Dendes, I consider that it was unnecessary for Spring UT to call him as his evidence would have been duplicative of the evidence of witnesses who were called to give evidence.  In the case of Mr Towey, it was not apparent from Pheonix A and Pheonix B’s pleadings or outline of submissions that there was a need for Spring UT to call him to respond to any particular proposition.  Thus, I am not satisfied that Spring UT might reasonably have been expected to call Mr Towey.

272 Spring UT referred to the failure of Pheonix A and Pheonix B to call Mr Wilson (of Splinter Society) or Mr Jaeger.  In the case of Mr Wilson, I consider that his evidence would have been duplicative of the evidence of Mr Stanley.  In the case of Mr Jaeger, I consider that his evidence would have been duplicative of the evidence of Ms Doyle and Mr Walls.

273 Accordingly, I do not draw any adverse inferences from the fact that certain people were not called to give evidence.

The claim

274 Omitting the good faith claim (which is not pressed), Pheonix A and Pheonix B allege in summary that:

(a) Spring UT breached clause 2.2(b) of the Agreements for Lease (a duty to take reasonable endeavours to satisfy the condition in clause 2.1); clause 5.4 of Agreement for Lease (A) and clause 4.4 of Agreement for Lease (B) (a duty to render all assistance reasonably requested by the tenant); and an implied duty to cooperate (statement of claim, paras 11-24, 25, 26);

(b) further or in the alternative, in circumstances where the parties had agreed on the Tenant’s Plans and Specifications by 11 October 2023 (or alternatively, by 15 November 2023) and/or Spring UT was in breach of clauses 2.2(b) and 5.4 of Agreement for Lease (A) and clauses 2.2(b) and 4.4 of Agreement for Lease (B) and the duty to cooperate, the purported termination of each Agreement for Lease (and the related Lease) was invalid and amounted to a repudiation of each Agreement for Lease (and the related Lease) (which repudiation was accepted by Pheonix A and Pheonix B); as a result of the repudiation, Pheonix A and Pheonix B have suffered loss or damage (statement of claim, paras 11-24, 27, 28);

(c) further or alternatively, at all relevant times from 11 October 2023 (or alternatively, from 15 November 2023), the parties had a common understanding and assumption (or Pheonix A and Pheonix B believed and assumed) that the condition in clause 2.1 of each Agreement for Lease had been satisfied and that the Agreements for Lease and related Leases had become unconditional; Spring UT is acting unconscionably in resiling from the common understanding and assumption (alternatively, the assumptions which Spring UT induced Pheonix A and Pheonix B to adopt) and Spring UT is estopped from contending that the condition in clause 2.1 was not satisfied (statement of claim, paras 29-34);

(d) further or alternatively, the conduct of Spring UT was unconscionable within the meaning of s 20 or 21 of the Australian Consumer Law; Ross Pelligra was a person involved in Spring UT's contraventions of those provisions; Pheonix A and Pheonix B have suffered loss and damage as a result of that conduct (statement of claim, paras 4-5, 11-24, 35-38).

275 By their amended defence, Spring UT and Ross Pelligra contend (among other things) that the parties to each Agreement for Lease had not agreed on the scope and design of the Tenant’s Plans and Specifications for the purposes of clause 2.1 of each Agreement for Lease; in particular, neither Pheonix A nor Pheonix B ever prepared or submitted a complete and compliant set of plans and specifications for their respective works (all they submitted were indicative floorplans).

276 Insofar as Spring UT’s and Ross Pelligra’s amended defence alleges misleading or deceptive conduct, I will consider this allegation under the heading “The cross-claim” later in these reasons.  In light of the conclusions that I reach on other issues, it is not necessary to deal with Spring UT’s and Ross Pelligra’s allegations based on unconscionable conduct.  It is also unnecessary to consider their allegations that Pheonix A breached the good faith obligation in clause 5.3 of Agreement for Lease (A) and that Pheonix B breached the good faith obligation in clause 4.3 of Agreement for Lease (B).

277 I will consider the issues raised by Pheonix A’s and Pheonix B’s claims and the aspect of the amended defence summarised at [275] above under the following headings:

(a) Whether the parties agreed on the scope and design of the Tenant’s Plans and Specifications.

(b) Whether Spring UT is estopped.

(c) Whether Spring UT breached certain clauses or the duty to cooperate.

(d) Whether Spring UT engaged in unconscionable conduct.

(e) Whether the Agreements for Lease and Leases were validly terminated.

278 While this ordering of the issues does not match the structure of Pheonix A’s and Pheonix B’s pleading and submissions, it seems to me that the logical (or at least convenient) starting point is the question whether the condition in clause 2.1 of the Agreements for Lease was satisfied, and that it is logical (or at least convenient) next to consider the estoppel contention.

Whether the parties agreed on the scope and design of the Tenant’s Plans and Specifications

279 Clause 2.1 of Agreement for Lease (A) has been set out earlier in these reasons, but for ease of reference I set it out again:

2.1 Agreement conditional

This Agreement and the Lease is conditional on the Landlord and the Tenant agreeing on the scope and design of:

(a)    the Landlord’s Works and the Plans and Specifications; and

(b)    the Tenant’s Plans and Specifications,

in accordance with this clause 2 (Design Condition) by no later than the date that is 90 days after the date of this Agreement (Design Condition Deadline).

280 As noted above, clause 2.1 of Agreement for Lease (B) is in the same terms, save that the period of time referred to in the last part of the clause is “60 days” rather than “90 days”.

281 It has already been noted that the words “scope and design” appear in the chapeau (or opening lines) of clause 2.1 and not at the beginning of para (a) (as assumed in the termination letters) (see [263] above).  Accordingly, the condition is that the Landlord and the Tenant agree on the scope and design of the Landlord’s Works and the Plans and Specifications and the scope and design of the Tenant’s Plans and Specifications.  It may be accepted that, as submitted by Pheonix A and Pheonix B, agreement on the scope and design of the Tenant’s Plans and Specifications requires something less than agreement on the Tenant’s Plans and Specifications.  However, ultimately, I do not think much turns on that distinction in the circumstances of this case.

282 There is no issue that, as at 21 February 2024, there had been agreement on the scope and design of the Landlord’s Works and the Plans and Specifications.  That agreement was reached by 11 October 2023, when the parties entered into the Agreements for Lease, which annexed the Plans and Specifications as Annexure A.  It was confirmed by the email exchange between Ms Doyle and Mr Taylor on 15 November 2023.  The issue to be discussed in this section of these reasons is whether, as at 21 February 2024, the Landlord and Tenant had agreed on the scope and design of the Tenant’s Plans and Specifications.

283 The expression “Tenant’s Plans and Specifications” is defined in clause 1.1 by reference to clause 2.2(a)(i)(A).  For ease of reference, I set out clause 2.2(a) again:

(a)    Promptly after execution of this Agreement:

(i)    the Tenant must:

(A)    prepare plans and specifications detailing the Tenant’s Works (which the Tenant must ensure are prepared with due skill care and diligence and in compliance with all laws) (Tenant’s Plans and Specifications); and

(B)    submit the Tenant’s Plans and Specifications to the Landlord for approval; and

(ii)    the parties must consult and discuss the scope and design of the Landlord’s Works and the Plans and Specifications.

284 Reading the definition of “Tenant’s Plans and Specifications” in clause 2.2(a)(i)(A) into the condition in clause 2.1, and focussing on the relevant part of the condition, the agreement was conditional on:

… the Landlord and the Tenant agreeing on the scope and design of:

…

(b)    [plans and specifications detailing the Tenant’s Works (which the Tenant must ensure are prepared with due skill care and diligence and in compliance with all laws)]

in accordance with this clause 2 by no later than [the applicable deadline].

285 I have found, at [265] above, that at no time in the period up to 21 February 2024 did the Pelligra Group (which includes Spring UT) approve plans and specifications for the Tenant’s Works.  That finding does not directly address whether the Landlord and the Tenant agreed on the scope and design of the Tenant’s Plans and Specifications.  I will address that now.

286 Insofar as Pheonix A and Pheonix B contend that the Landlord and Tenant agreed on the scope and design of the Tenant’s Plans and Specifications by 11 October 2023, that contention is rejected.  There is no document dated 11 October 2023 or earlier that constitutes or reflects such an agreement.  I am not satisfied that there was any oral agreement before or on 11 October 2023 to the effect alleged.  I note that, while the statement of claim (at para 27(a)) includes the contention that the parties reached agreement on the Tenant’s Plans and Specifications by 11 October 2023, that contention was not given much emphasis in Pheonix A and Pheonix B’s oral and written submissions.

287 Insofar as Pheonix A and Pheonix B contend that the Landlord and Tenant agreed on the scope and design of the Tenant’s Plans and Specifications (and therefore that the Agreements for Lease and the Leases became unconditional) on 15 November 2023, that contention is rejected.  I have found that Ms Doyle’s email of that date was intended by Ms Doyle (and understood by Mr Taylor) to operate as confirmation that the Landlord’s Plans and Specifications had been approved (or agreed to) by the Tenant and that that aspect of the condition in clause 2.1 had been satisfied (see [177] above). Further, having regard to the wording of clause 2.1 and for the avoidance of doubt, I find that Ms Doyle’s email of that date was intended by Ms Doyle (and understood by Mr Taylor) to operate as confirmation that the scope and design of the Landlord’s Works and the Plans and Specifications had been approved (or agreed to) by the Tenant and that that aspect of the condition in clause 2.1 had been satisfied. I am not satisfied that the exchange of emails (or the other communications) on that day constituted or evidenced the Landlord and the Tenant agreeing on the scope and design of the Tenant’s Plans and Specifications. That conclusion is supported by, among other things, Ms Doyle’s email at 4.15 pm on the same day (CB E.0198) attaching plans “for approval”.  Insofar as Pheonix A and Pheonix B submit (at para 47 of their outline of submissions) that that email concerned further plans, I find that explanation unpersuasive.  The plans attached to that email were floor plans for the ground floor, Level 1, Level 2 and Level 12.

288 Further, I find that at no other time in the period up to 21 February 2024 did the Landlord and the Tenant agree on the scope and design of the Tenant’s Plans and Specifications.  There is no document in which Spring UT states that it agrees to the design and scope of the Tenant’s Plans and Specifications.  Further, Spring UT did not give oral approval for (or agreement to) the design and scope of the Tenant’s Plans and Specifications.  Insofar as Ms Doyle and Mr Walls give evidence that Mr Taylor gave oral approval of the plans and specifications (or the design and scope of the plans and specifications), this is disputed by Mr Taylor (at paras 155, 163, 187, 188, 199, 200, 202 of his statement).  I accept Mr Taylor’s evidence, which is consistent with the majority of the documents discussed in the “Factual findings” section of these reasons and the circumstances generally.  Insofar as Ms Doyle gives evidence that Ross Pelligra gave oral approval of the plans and specifications (or the design and scope of the plans and specifications), this is disputed by Mr Pelligra (at para 170 of his statement).  I accept Ross Pelligra’s evidence, which is consistent with the majority of the documents discussed in the “Factual findings” section of these reasons and the circumstances generally.

289 For the purposes of making the above findings, it is not necessary to decide how detailed the plans and specifications provided by the Tenant to the Landlord needed to be for the purposes of clause 2 (eg, whether floor plans were sufficient), an issue that occupied considerable attention in the parties’ submissions.  Regardless of the level of detail required, the fact is that at no time during the period up to 21 February 2024 did the Landlord and the Tenant agree on anything purporting to constitute the scope and design of the Tenant’s Plans and Specifications.  Thus, it is unnecessary to determine whether the latest version of the plans provided for the ground floor, Level 1 and Level 2 (see [264] above) was sufficiently detailed to be capable of being approved.  Likewise, it is unnecessary to decide whether the latest version of the plans provided for Level 12 (see [264] above) was capable of being approved.

290 For these reasons, I conclude that at no stage in the period up to 21 February 2024 did the Landlord and the Tenant agree on the scope and design of the Tenant’s Plans and Specifications.

291 Therefore, prima facie, the condition in clause 2.1 of each Agreement for Lease was not satisfied at the time that Spring UT purported to terminate the Agreements for Lease and the Leases (21 February 2024).

Whether Spring UT is estopped

292 Pheonix A and Pheonix B rely, in the alternative, on the principles of election and estoppel.

293 Insofar as election is concerned, senior counsel for Pheonix A and Pheonix B put the argument in the following way in oral opening submissions (at T29) and in oral closing submissions (at T731-732).  He submitted that, as at 15 November 2023, Spring UT had a power to choose between: (a) an existing right (the contingent right to terminate the documents if the condition in clause 2.1 were not satisfied); and (b) entering into new rights (treating the documents as now unconditional).  In closing submissions, senior counsel for Pheonix A and Pheonix B put the argument as follows (at T731-732):

The correct analysis, as we set out in our oral opening, is that up to 15 November 2023, Spring UT had a contingent right to terminate based on clause 2.3 of the AFL. It had that at that point. It held that in its hand – the contingent right to terminate if the design condition was not met in just under a month’s time. That is, the condition – the design condition, condition precedent, was, at that point, it says, not satisfied, and it therefore had in its hand, waiting to use, the contingent right to terminate. … As I think I said in the opening, it was [coming] over the hill but not yet there. That contingent right was and is inconsistent with rights that did not, at that time, otherwise exist, namely, the rights that would flow from treating the AFLs and leases as unconditional, in the sense of having the singular pre-condition met. … [T]he authorities dealing with election, deal with pre-conditions, and our friends have been at pains to tell us how this is a pre-condition, and it is a pre-condition. It’s the only pre-condition in the agreements.

But they – here, it’s relevant to note that the design condition, other than that, there is no other pre-conditions; all other conditions were conditions subsequent or give rise to separate rights of termination, such as the tenant had in respect of the liquor licence; and the position taken by Spring UT on and after 15 November 2023 – that is, to treat the only pre-condition as having been met – is inconsistent with the maintenance of the previously extant contingent right to terminate under clause 2.3. And in that circumstance, the authorities are clear as to the following, we say.

Where, as here, a party, being the landlord, abandons a contingent right to rely on a pre-condition by taking a course of action in the context of its knowledge of circumstances … the party is taken to have elected to act inconsistently with the continued existence of the contingent right, and, in that regard, it is extinguished.

(Emphasis added.)

294 In support of these contentions, Pheonix A and Pheonix B rely on Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 [2022] HCA 38; 277 CLR 445 at [38]-[39], [47]-[51], [59]-[60].

295 The fundamental difficulty with Pheonix A and Pheonix B’s contentions based on election is that I do not accept the factual premise that Spring UT made a choice on 15 November 2023 (or at any other time) to treat the precondition as having been satisfied (or to treat the Agreements for Lease and the Leases as unconditional).  I have found that Ms Doyle’s email of about 3.30 pm on 15 November 2023 was intended by Ms Doyle (and understood by Mr Taylor) to operate as confirmation that the Landlord’s Plans and Specifications had been approved (or agreed to) by the Tenant and that that aspect of the condition in clause 2.1 had been satisfied (see [177] above).  Further, and for essentially the same reasons, I find that the email exchange and other communications between Ms Doyle and Mr Taylor on 15 November 2023 did not constitute or evidence a choice by Mr Taylor to treat the condition in clause 2.1 as having been satisfied (or to treat the Agreements for Lease and the Leases as now being unconditional).

296 Insofar as estoppel is concerned, relying on Mineralogy Pty Ltd v Sino Iron Pty Ltd [2017] FCAFC 55 at [332]-[333], Pheonix A and Pheonix B submit that the elements of estoppel by convention are:

(a) the parties have proceeded on the basis of an underlying assumption of sufficient certainty to be enforceable;

(b) each party has, to the knowledge of the other, expressly or by implication accepted the assumption as being true for the purposes of the transaction;

(c) such acceptance was intended to affect their legal relations in the sense that it was intended to govern the legal position between them;

(d) the proponent was entitled to act and has, as the other party knew or intended, acted in reliance upon the assumption being true and binding;

(e) the proponent would suffer detriment if the other party were allowed to resile or depart from the assumption; and

(f) in all the circumstances, it would be unconscionable to allow the other party to resile or depart from the assumption.

297 Applying those principles in the present case, Pheonix A and Pheonix B submit that:

(a) the parties reached the unequivocal position stated in the emails of 15 November 2023, namely that the Leases (and implicitly the Agreements for Lease) were now unconditional;

(b) when Spring UT sought to resile from that position in an email on 10 January 2024 (CB E.0261, discussed at [234] above), Ms Doyle immediately wrote back correcting the position; and

(c) Pheonix A and Pheonix B suffered clear detriment by relying on the position stated in the 15 November 2023 email, because they undertook significant work (including incurring consulting fees the subject of the invoice referred to in CB E.0261) on the assumption that there was an unconditional agreement between the parties.

298 Again, the fundamental difficulty is that I do not accept the factual premise of Pheonix A and Pheonix B’s contention.  I do not accept that the parties reached an unequivocal position on 15 November 2023 (or any other day) that the Agreements for Lease and the Leases were now unconditional.  I have found that Ms Doyle’s email of about 3.30 pm on 15 November 2023 was intended by Ms Doyle (and understood by Mr Taylor) to operate as confirmation that the Landlord’s Plans and Specifications had been approved (or agreed to) by the Tenant and that that aspect of the condition in clause 2.1 had been satisfied (see [177] above).  Further, and for essentially the same reasons, I find that the parties did not reach an unequivocal position that the Agreements for Lease and the Leases were now unconditional.

299 For these reasons, I conclude that Pheonix A’s and Pheonix B’s allegation that the parties had a common understanding and assumption (or that Pheonix A and Pheonix B believed and assumed) that the condition in clause 2.1 of each Agreement for Lease had been satisfied, and that the Agreements for Lease and related Leases had become unconditional, is not made out.  It follows that I do not accept that Spring UT is estopped from contending that the condition in clause 2.1 was not satisfied.

Whether Spring UT breached certain clauses or the duty to cooperate

300 In the alternative to other arguments, Pheonix A and Pheonix B contend that, in circumstances where Spring UT was in breach of clauses 2.2(b) and 5.4 of Agreement for Lease (A), clauses 2.2(b) and 4.4 of Agreement for Lease (B) and the duty to cooperate, the purported termination of each Agreement for Lease (and the related Lease) was invalid and amounted to a repudiation of each Agreement for Lease (and the related Lease) (which repudiation was accepted by Pheonix A and Pheonix B).  As a result of the repudiation, Pheonix A and Pheonix B are said to have suffered loss or damage.

301 Clause 2.2(b) of each Agreement for Lease provided that “[t]he Landlord and the Tenant must use reasonable endeavours to satisfy the Design Condition by the Design Condition Deadline”.

302 Clause 5.4 of Agreement for Lease (A) and clause 4.4 of Agreement for Lease (B) provided that “[a]t the request of the Tenant, the Landlord must … participate in and render all assistance reasonably requested by the Tenant or any relevant Authority (including but not limited to preparing and progressing the relevant applications associated with the Tenant’s Works or the use of the Premises permitted under the Lease)”.  I will proceed on the basis that that clause is not limited to assistance in relation to applications for Tenant’s Approvals and extends to assistance under the contract generally.

303 Pheonix A and Pheonix B submit that: “[i]t is implied by law that all contracts (with irrelevant exceptions) contain a negative covenant that a party is not to hinder or prevent the fulfilment of the purpose of the express promises made in the contract”; the phrase “hinder or prevent” is capable of catching conduct that does not render performance impossible (Bensons Property Group Pty Ltd v Key Infrastructure Australia Pty Ltd [2021] VSCA 69 (Bensons) at [125]); there is also a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary to enable the other party to have the benefit of the contract (Coonwarra Pty Ltd v CornoNero Pty Ltd [2023] VSC 781 at [599], citing Adaz Nominees Pty Ltd v Castleway Pty Ltd [2020] VSCA 201 at [106]‑[107]; see also Re Estate of Vaughan; Dunn v Dunn-Vaughan [2024] VSC 7 at [67]; Peters (WA) Ltd v Petersville Ltd (2001) 205 CLR 126 at [36]; Bensons at [107]); the principle, sometimes referred to as the “duty to cooperate”, is often traced back to Mackay v Dick (1881) 6 App Cas 251 at 263.

304 Pheonix A and Pheonix B submit that:

(a) As the Court of Appeal stated in Bensons at [128], “[f]reedom to engage in conduct that substantially impedes the opportunity of the other party to satisfy the conditions of the contract would entirely undermine the bargain.  The term is implied because it is necessary for the integrity of the bargain to prevent the parties from engaging in such conduct”.

(b) In Bensons at [98]-[103], the Court explained the possible consequences of a breach of the duty to cooperate by reference to the “prevention principle”.  Observing that the principle is sometimes couched as a manifestation of the broader concept that a person should not benefit from their own wrongdoing, the Court noted that the principle arises in different ways.  The Court explained that the principle has been applied where an innocent party has been unable to satisfy a contractual condition owing to the wrongful conduct of the other party.  The solution to the preventative act has been to treat compliance as having been satisfied or dispensed with.  How it is used in a given case may depend on whether it is deployed defensively or in an action for damages or a claim for specific performance: Bensons at [103].

(c) As the Court of Appeal explained, there are two interrelated aspects of the doctrine.  The first is wrongful conduct and the second is its consequences: Bensons at [111].  In gauging whether the acts or omissions are wrongful, the impugned conduct is measured against the obligations of the contract: Bensons at [112].  For example, in Bensons, an obligation to procure a planning permit for the project was the central obligation assumed by the respondent: Bensons at [120].  The Court observed that the agreement “did not contemplate that Bensons would play any active role in that process.  However, it was necessary that Bensons not do anything to thwart satisfaction of the condition for to do so would jeopardise [the respondent’s] ability to get the benefit that it had contracted for.  It goes without saying that Bensons could not act to frustrate [the respondent’s] ability to secure the permit”: Bensons at [121].

305 In the course of the hearing, Pheonix A and Pheonix B’s counsel handed up a schedule titled “Applicants’ Summary of Requests for Information” (MFI-A2).  This schedule lists requests for information made by Pheonix A and Pheonix B.  The broad contention is that these requests were not responded to by Spring UT in a timely manner or at all.

306 Pheonix A and Pheonix B submit that they provided to Spring UT all the plans and drawings they were able to provide, given the repeated failure of Spring UT to provide information requested by Pheonix A and Pheonix B.

307 Further, Pheonix A and Pheonix B submit that it was perverse for Spring UT then to rely on the purported failure to provide Tenant’s Plans and Specifications to terminate the Agreements for Lease; the termination did not have a proper basis and constituted a repudiation of the Agreements for Lease (and the Leases); the repudiation was accepted by Pheonix A and Pheonix B, and they are entitled to seek damages for the loss and damage they suffered as a result.

308 I accept that the Agreements for Lease contained a duty to cooperate as alleged by Pheonix A and Pheonix B.  Further, I accept that, by virtue of the duty to cooperate and the express clauses of the Agreements for Lease relied on by Pheonix A and Pheonix B, Spring UT was under an obligation to provide information that was reasonably required by Pheonix A and Pheonix B to complete the plans and specifications for the Tenant’s Works.

309 I have considered each of the documents listed in the schedule titled “Applicants’ Summary of Requests for Information” (MFI-A2).  Most of the communications listed in that schedule are referred to in the “Factual findings” section of these reasons.  Having analysed the items in the schedule, and the responses (if any) to those requests, I make the following findings and reach the following conclusions.

(a) While there was some delay (or even failure) on the part of the Pelligra Group to respond to some requests for information made by Pheonix A and Pheonix B, such delays (or even failures) were not nearly as significant as Ms Doyle and Mr Walls made out in their emails during the relevant period.  I consider that, overall, the Pelligra Group was reasonably responsive to Pheonix A and Pheonix B’s requests for information.  For example, in the following emails, the Pelligra Group responded to information requests or otherwise provided feedback on plans that had been provided:

(i) Mr Taylor’s email of 13 October 2023 (see [155] above);

(ii) Mr Taylor’s email of 22 November 2023 (see [179] above);

(iii) Mr Sijercic’s email of 29 November 2023 (see [183] above);

(iv) Mr Taylor’s email of 30 November 2023 (see [184] above);

(v) Mr Taylor’s email of 4 December 2023 (see [190] above);

(vi) Mr Paris’s email of 19 December 2023 (see [217] above);

(vii) Mr Taylor’s email of 16 January 2024 (see [238] above);

(viii) Mr Paris’s email of 16 January 2024 (see [240] above);

(ix) Mr Paris’s email of 19 January 2024 (see [244] above); and

(x) Mr Taylor’s email of 16 February 2024 (see [253] above).

(b) A number of the requests for information listed in the schedule “Applicants’ Summary of Requests for Information” (MFI-A2) were followed by meetings between the parties at which the requests for information were discussed and, it may be inferred, responses were provided.  In particular:

(i) Mr Walls’s email of 1 December 2023 (CB E.0214), Ms Doyle’s email of 1 December 2023 (CB E.0215) and Ms Doyle’s email of 6 December 2023 (CB E.0222) were followed by an online meeting between the parties on 6 December 2023 (see [194] above).

(ii) Mr Walls’s email of 8 December 2023 (CB E.0225) was followed by a meeting between the parties on 12 December 2023 (see [208] above).

(c) Where there were delays in providing responses to some questions in late December 2023, the Pelligra Group was apologetic and provided an explanation: see, eg, the text exchange between Mr Walls and Mr Taylor on 20 and 21 December 2023 (see [219]-[220] above). Based on the correspondence and the evidence, I do not have any sense that the Pelligra Group deliberately withheld responses to information requests to delay the project or to hinder the Tenant in the preparation of the Tenant’s Plans and Specifications.

(d) Insofar as Pheonix A and Pheonix B rely on a request for information made by their services engineer (Kinematics) (CB E.0316), this request was not made until 21 February 2024, which was the very day on which Spring UT purported to terminate the Agreements for Lease and related Leases.  Given that timing, I do not consider that the failure of Spring UT to respond to that information request is relevant for present purposes.

310 In light of the above, I am not satisfied that Spring UT breached the duty to cooperate or the express clauses of the Agreements for Lease relied on by Pheonix A and Pheonix B.

311 Further, in relation to the ground floor, Level 1 and Level 2, I do not accept the proposition that the delay in providing more detailed plans and specifications (beyond floor plans and a few other drawings) was attributable to a failure by the Pelligra Group to respond to information requests.  Rather, I consider that the real reason why the plans and specifications for those levels (or at least for Level 2) did not progress further was the delay in finalising the design of the roof structure for Level 2 and the need to obtain planning approval.  The roof structure for Level 2 was part of the Landlord’s Works, but it was open to the Tenant to have input into the design.  The issue of the design became a major sticking point between the parties in late December 2023.  Further, planning approval was needed for the roof structure for Level 2.  As Mr Stanley explained, there was a limit to how far it was sensible to take the plans and specifications for the Tenant’s Works before planning approval had been obtained (see [151] above).  Having regard to the chronology of events and the communications between the parties, I do not consider the delay in finalising the design of the roof structure was the fault of either party; it just took longer than expected.  I am not satisfied that the Pelligra Group delayed unreasonably in responding to questions relating to the roof structure or in finalising the design or making the application for planning approval.

312 The delay in preparing and providing the detailed plans and specifications for the Tenant’s Works for Level 2 (by reason of the matters discussed in the preceding paragraph) left Pheonix A in a vulnerable position under Agreement for Lease (A), in that it was at risk of the agreement being terminated under clause 2.3 on the basis that the condition in clause 2.1 was not satisfied.  Pheonix A could have sought to extend the deadline in clause 2.1 in light of the delay, but it did not do so.  The consequence was that the deadline passed without the Landlord and Tenant having agreed on the scope and design of the Tenant’s Plans and Specifications, and it became open to either party to terminate on the basis of non-satisfaction of the condition in clause 2.1.

313 I also find that part of the reason for the delay in the provision of the Tenant’s Plans and Specifications to Spring UT (for all levels) was the way in which Ms Doyle and Mr Walls engaged Mr Stanley.  Mr Stanley was not provided with copies of the Agreements for Lease (see [148] above).  He was not aware that plans and specifications had to be provided to the Landlord by 10 December 2023 for Level 12 (see [149] above).  He was not contracted to provide a set of approval documents; he did not see it as part of his engagement to produce anything specifically by a certain date; and he saw the plans he was preparing as being part of a “dialogue” between the Tenant and the Landlord (see [150] above).

314 In relation to Level 12, very detailed plans and specifications were provided on 18 January 2024 (the 18 January 2024 Tender Documents).  These were subsequently revised, and the revised set of plans and specifications was provided on 19 February 2024 (the 19 February 2024 Tender Documents).  In circumstances where the 18 January 2024 Tender Documents were subsequently revised, I do not consider it open to Pheonix B to contend (and it does not contend) that Spring UT’s failure to agree to the 18 January 2024 Tender Documents constituted a breach of the duty to cooperate (or a breach of any other term).  Further, in relation to the 19 February 2024 Tender Documents, given that the termination letters were sent only two days later, I do not consider it open to Pheonix B to contend (and it does not contend) that Spring UT’s failure to agree to the 19 February 2024 Tender Documents constituted a breach of the duty to cooperate (or a breach of any other term).

315 For these reasons, I conclude that, insofar as Pheonix A and Pheonix B allege that Spring UT breached clause 2.2(b) of the Agreements for Lease, clause 5.4 of Agreement for Lease (A) (and the comparable clause of Agreement for Lease (B)) and the duty to cooperate, those allegations are not made out.

316 Accordingly, I am not satisfied that Spring UT was precluded from terminating the Agreements for Lease and the Leases on the basis that Spring UT was itself in breach of the agreements.

Whether Spring UT engaged in unconscionable conduct

317 Further to or in the alternative to other arguments, Pheonix A and Pheonix B contend that the conduct of Spring UT was unconscionable within the meaning of s 20 or 21 of the Australian Consumer Law; and that Ross Pelligra was a person involved in Spring UT's contraventions of those provisions.

318 The unconscionable conduct claim largely relies on the same facts and matters as the contentions considered in the two previous sections of these reasons.  In support of the unconscionable conduct claim, Pheonix A and Pheonix B rely on the following key propositions:

(a) Spring UT induced Pheonix A and Pheonix B to believe that the Agreements for Lease and the Leases were unconditional;

(b) Spring UT induced its financier (Barrenjoey) to believe that the Agreements for Lease and the Leases were unconditional;

(c) Spring UT persistently failed to provide information requested by Pheonix A and Pheonix B;

(d) Spring UT terminated the Agreements for Lease and the Leases without a basis for doing so;

(e) Spring UT deceived Barrenjoey as to the status of the Leases;

(f) it is against conscience for Spring UT to say that the Agreements for Lease and the Leases were always treated as conditional or subject to lawful termination, when in fact Spring UT expressly represented to Barrenjoey, falsely, that Spring UT had not purported to terminate the contract, and Spring UT continued to have “further discussions” with Pheonix A and Pheonix B after termination; and

(g) Spring UT needed finance in order to progress the development of the Building.

319 In relation to (a) above, I reject this proposition for the reasons given earlier in these reasons (see [177], [292]-[299] above).

320 In relation to (b) above, I do not see how the communications between Spring UT and its financier can be relied on to support an unconscionable conduct claim brought by Pheonix A and Pheonix B against Spring UT.  While the communications between Spring UT and its financier form part of the context, and may be used to evaluate the evidence and make factual findings, the question whether Spring UT engaged in unconscionable conduct vis-à-vis Pheonix A and Pheonix B is essentially concerned with the communications and other conduct that took place between them.

321 In relation to (c), I reject this proposition for the reasons given in the preceding sub-section of these reasons (see [300]-[316] above).

322 In relation to (d), I reject this proposition for the reasons given earlier in these reasons (see [279]-[291] above).

323 In relation to (e), I refer to my reasoning in relation to (b).  The same reasoning applies.

324 In relation to (f), it follows from my rejection of the preceding propositions that I also reject this proposition.

325 In relation to (g), I accept that Spring UT needed finance in order to progress the development of the Building.  However, I do not consider this matter to take the unconscionable conduct claim very far.

326 For these reasons, I conclude that Pheonix A’s and Pheonix B’s allegations that the conduct of Spring UT was unconscionable within the meaning of s 20 or 21 of the Australian Consumer Law are not made out.

Whether the Agreements for Lease and Leases were validly terminated

327 It follows from the conclusions set out above that the condition in clause 2.1 of each Agreement for Lease was not satisfied as at 21 February 2024.  Therefore, Spring UT was entitled to terminate the Agreements for Lease and the Leases under clause 2.3 of each Agreement for Lease. Accordingly, I conclude that Spring UT validly terminated the Agreements for Lease and the Leases on 21 February 2024.

328 In light of that conclusion, it is unnecessary to deal with the issue of loss or damage.

The cross-claim

329 I will now deal with Spring UT’s and Ross Pelligra’s allegations or claims (contained in the amended defence at paras 41-45, which are adopted in the cross-claim) that Pheonix A and Pheonix B engaged in misleading or deceptive conduct (or conduct that was likely to mislead or deceive) contrary to s 18 of the Australian Consumer Law.

330 In light of the conclusions that I reach on the misleading or deceptive conduct claims, it is not necessary to deal with Spring UT’s and Ross Pelligra’s claims based on unconscionable conduct (paras 48-51 of the amended defence, which are adopted in the cross-claim).

331 Spring UT’s and Ross Pelligra’s misleading or deceptive conduct claims can be summarised as follows.  They contend that:

(a) prior to entry into the Agreements for Lease and the Leases, Pheonix A and Pheonix B made the representations set out in para 41 of the amended defence (referred to in these reasons as the Paragraph 41 Representations) and did not disclose the information set out in para 41A of the amended defence (referred to in these reasons as the Paragraph 41A Information);

(b) the Paragraph 41 Representations were false;

(c) Pheonix A and Pheonix B engaged in conduct that was misleading or deceptive (or likely to mislead or deceive) contrary to s 18 of the Australian Consumer Law by making the Paragraph 41 Representations and by not disclosing the Paragraph 41A Information.

332 Paragraph 41 of the amended defence pleads the following representations:

41.    Further, prior to and in order to induce [Spring UT] to enter Agreement [for Lease (A)] and Lease 1 and Agreement [for Lease (B)] and Lease 2, between May 2023 and October 2023 Pheonix A, Pheonix B, David Walls and Stephanie Doyle represented to [Spring UT and Ross Pelligra] in trade or commerce that:

(a)    Stephanie Doyle and David Walls were successful and experienced operators of licensed premises, including venues called “Birdies” which were owned by their company Birdies Mini Golf Pty Ltd and which they operated from locations at North Ryde in New South Wales and [Forest] Hills in Victoria;

(b)    David Walls and Stephanie Doyle were competent, professional and capable of running licensed venues;

(c)    Birdies North Ryde and Birdies Forrest Hill were both trading successfully and profitably;

(d)    Stephanie Doyle and David Walls had partnered with Clint Jaeger who they said was a leading chef and [restauranteur] and would be a shareholder and their “culinary director”;

(e)    David Walls was a competent and experienced property developer and had 25 years experience developing world class businesses and focused on negotiations and construction projects;

(f)    all David Walls and Stephanie [Doyle’s] companies and businesses were privately owned and that there was no debt in any company/businesses and that all equipment and inventory was owned outright;

(g)    Stephanie Doyle and David Walls enjoyed an excellent reputation in the entertainment industry;

(h)    both Stephanie Doyle and David Walls would be involved in operating the licensed premises;

(i)    David Walls could deliver a top quality concept;

(j)    David Walls would source supply of quality Australian wines for the business[.]

(Particulars omitted; emphasis added.)

333 Paragraph 41A of the amended defence is in the following terms:

41A.    [Pheonix A and Pheonix B] did not disclose and concealed material information from [Spring UT] which was known to [Pheonix A and Pheonix B] and their director Stephanie Doyle that:

(a)    it was a condition of the liquor licence held by Birdies Mini Golf Pty Ltd for the premises Birdies Forest Hill that:

(i) David Walls is prohibited from holding any financial or beneficial interest, or exercising any power, (whether directly or indirectly and in his own name or otherwise) in the business of the licensee involving the supply of liquor at the licensed premises;

(ii) David Walls is prohibited from entering into, or remaining on the licensed premises

(b)    the reason why the conditions were imposed on the Birdies licence;

(c)    Birdies had been operating in breach of its liquor licence and that both Stephanie Doyle and David Walls had caused Birdies Mini Golf Pty Ltd to operate in breach of its liquor licence by permitting David Walls to breach the conditions referred to in sub-paragraph (a) hereof.

(“the material information”)

when [Pheonix A and Pheonix B] had a duty to disclose the information to [Spring UT] by reason of having made the representations made in paragraph 41 and because [Pheonix A and Pheonix B] were proposing to enter agreements to lease premises from [Spring UT] to use as licenced premises and seeking contribution from [Spring UT] towards [Pheonix A’s and Pheonix B’s] costs of fit out of the premises for use as licenced premises, thereby creating the false impression that there was no impediment to [Pheonix A and Pheonix B] obtaining liquor licenses to operate their businesses. Had [Pheonix A and Pheonix B] disclosed the material information to [Spring UT and Ross Pelligra], as they were obliged to do, [Spring UT and Ross Pelligra] would not have dealt with Stephanie Doyle or David Walls at all and [Spring UT] would not have entered Agreement [for Lease (A)] and Lease 1 with Pheonix A and Agreement [for Lease (B)] and Lease 2 with Pheonix B.

(Particulars omitted; emphasis added.)

334 There is no real issue between the parties as to the principles relating to misleading or deceptive conduct within the meaning of s 18 of the Australian Consumer Law.  These principles have been discussed in many cases and are well established.  It is sufficient to set out the following key relevant principles.

335 In Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd [2023] HCA 8; 277 CLR 186, Kiefel CJ, Gageler, Gordon, Edelman and Gleeson JJ stated at [80]-[82]:

80    The principles are well established. Determining whether a person has breached s 18 of the ACL involves four steps: first, identifying with precision the “conduct” said to contravene s 18; second, considering whether the identified conduct was conduct “in trade or commerce”; third, considering what meaning that conduct conveyed; and fourth, determining whether that conduct in light of that meaning was “misleading or deceptive or … likely to mislead or deceive”.

81    The first step requires asking: “what is the alleged conduct?” and “does the evidence establish that the person engaged in the conduct?”. The third step considers what meaning that conduct conveyed to its intended audience. As in this case, where the pleaded conduct is said to amount to a representation, it is necessary to determine whether the alleged representation is established by the evidence. The fourth step is to ask whether the conduct in light of that meaning meets the statutory description of “misleading or deceptive or … likely to mislead or deceive”; that is, whether it has the tendency to lead into error. Each of those steps involves “quintessential question[s] of fact”.

82    The third and fourth steps require the court to characterise, as an objective matter, the conduct viewed as a whole and its notional effects, judged by reference to its context, on the state of mind of the relevant person or class of persons. That context includes the immediate context — relevantly, all the words in the document or other communication and the manner in which those words are conveyed, not just a word or phrase in isolation — and the broader context of the relevant surrounding facts and circumstances. It has been said that “[m]uch more often than not, the simpler the description of the conduct that is said to be misleading or deceptive or likely to be so, the easier it will be to focus upon whether that conduct has the requisite character”. That said, the description of the conduct alleged and identified at the first step should be sufficiently comprehensive to expose the complaint, because it is that conduct that will ultimately, as a whole, be determined to be or not to be misleading or deceptive.

(Footnotes omitted.)

336 In the present case, there is no issue as to the second step referred to in [80] of the above passage, namely that the relevant conduct was in trade or commerce.

337 The present case involves an allegation that certain representations were made to identified individuals (or an identified company) as distinct from the public at large (or a section of the public).  That distinction was referred to in, for example, Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; 202 CLR 45 at [100]-[103] and in Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; 218 CLR 592 at [36]-[37].

338 The need to look at the relevant course of conduct as a whole was emphasised by Gummow, Hayne, Heydon and Kiefel JJ in Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; 238 CLR 304 at [102] (referring to s 52 of the Trade Practices Act 1974 (Cth), which is the predecessor of s 18 of the Australian Consumer Law):

Using tools of analysis drawn from the common law of deceit (misrepresentation and reliance) within the statutory framework provided by ss 42 and 68 of the Fair Trading Act may sometimes be helpful in identifying contravening conduct and deciding whether loss or damage was suffered by the contravention. But as McHugh J correctly pointed out in Butcher v Lachlan Elder Realty Pty Ltd, the “conduct” with which s 52 of the Trade Practices Act 1974 (Cth) deals is not confined to “‘representations’, whether they be representations as to matters of present or future fact or law”. This proposition applies with equal force to s 42 of the Fair Trading Act. References to misrepresentation or reliance must not be permitted to obscure the need to identify contravening conduct (here, misleading or deceptive conduct) and a causal connection (denoted by the word “by”) between that conduct and the loss and damage allegedly suffered. As McHugh J also pointed out in Butcher, with particular reference to s 52 of the Trade Practices Act, but with equal application to s 42 of the Fair Trading Act:

“The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact. In determining whether a contravention of s 52 has occurred, the task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself. It invites error to look at isolated parts of the corporation’s conduct. The effect of any relevant statements or actions or any silence or inaction occurring in the context of a single course of conduct must be deduced from the whole course of conduct. Thus, where the alleged contravention of s 52 relates primarily to a document, the effect of the document must be examined in the context of the evidence as a whole. The court is not confined to examining the document in isolation. It must have regard to all the conduct of the corporation in relation to the document including the preparation and distribution of the document and any statement, action, silence or inaction in connection with the document.”

(Emphasis in original; footnotes omitted.)

339 The principles relating to misleading and deceptive conduct by non-disclosure were discussed by French CJ and Kiefel J in Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; 241 CLR 357 at [14]-[23].  That passage included:

15    For conduct to be misleading or deceptive it is not necessary that it convey express or implied representations. It suffices that it leads or is likely to lead into error. …

16    The circumstances in which silence or non-disclosure of information can be misleading or deceptive are various. The understanding of the place of silence or non-disclosure in the characterisation of conduct as misleading or deceptive was affected, in early decisions on s 52, by the view that the section was concerned with misrepresentations that would have been actionable under the general law. That view was linked to the proposition, expressed in Taco Co of Australia Inc v Taco Bell Pty Ltd, that conduct could not be misleading or deceptive for the purposes of s 52 unless it conveyed a misrepresentation. It was also linked to the proposition that at general law “mere silence, with regard to a material fact, which there is no legal obligation to divulge, will not avoid a contract, although it operate as an injury to the party from whom it is concealed”. In the early development of the law about misleading or deceptive conduct, there were rather cautiously expressed views about the role of silence, albeit the importance of the statutory words was acknowledged.

17    The 1992 decision of the Full Court of the Federal Court in Demagogue Pty Ltd v Ramensky represented what has been described accurately as “an emphatic acknowledgment … of the unique nature of the statutory prohibition”. The Full Court upheld the decision of the primary judge that a vendor of land had created a clear but erroneous impression in the purchasers that there was nothing unusual concerning access to the land and, in particular, had been silent as to the necessity of a grant of a licence by a statutory authority to enable such access.

18    Gummow J, who wrote the leading judgment and with whom Black CJ and Cooper J agreed, said:

“it should be no inhibition to giving effect to what, on its proper construction, is provided for in the legislation, that the result may be to achieve consequences and administer remedies which differ from those otherwise obtaining under the general law.”

Silence, as Black CJ said in his concurring judgment, was to be assessed as a circumstance like any other:

“the question is simply whether, having regard to all the relevant circumstances, there has been conduct that is misleading or deceptive or that is likely to mislead or deceive.”

Gummow J referred to the limitation that “unless the circumstances are such as to give rise to the reasonable expectation that if some relevant fact exists it would be disclosed, it is difficult to see how mere silence could support the inference that the fact does not exist”.

19    The language of reasonable expectation is not statutory. It indicates an approach which can be taken to the characterisation, for the purposes of s 52, of conduct consisting of, or including, non-disclosure of information. That approach may differ in its application according to whether the conduct is said to be misleading or deceptive to members of the public, or whether it arises between entities in commercial negotiations. An example in the former category is non-disclosure of material facts in a prospectus.

20    In commercial dealings between individuals or individual entities, characterisation of conduct will be undertaken by reference to its circumstances and context. Silence may be a circumstance to be considered. The knowledge of the person to whom the conduct is directed may be relevant. Also relevant, as in the present case, may be the existence of common assumptions and practices established between the parties or prevailing in the particular profession, trade or industry in which they carry on business. The judgment which looks to a reasonable expectation of disclosure as an aid to characterising non-disclosure as misleading or deceptive is objective. It is a practical approach to the application of the prohibition in s 52.

(Footnotes omitted; emphasis added.)

340 The above passage was cited with approval by Kiefel CJ, Gageler, Steward and Gleeson JJ in H Lundbeck A/S v Sandoz Pty Ltd [2022] HCA 4; 276 CLR 170 at [69].

341 I will now consider the issues raised by Spring UT’s and Ross Pelligra’s claims based on misleading or deceptive conduct under the following headings:

(a) Whether Pheonix A and Pheonix B made the alleged representations.

(b) Whether Pheonix A and Pheonix B failed to disclose the licence conditions.

(c) Whether Pheonix A and Pheonix B engaged in misleading or deceptive conduct.

(d) Whether declaratory relief should be ordered.

Whether Pheonix A and Pheonix B made the alleged representations

342 The issue is whether Pheonix A and Pheonix B made any of the Paragraph 41 Representations, which have been set out above.  I consider it sufficient to consider whether Pheonix A and Pheonix B made the representations set out in paras (b) and (h) of para 41 of the amended defence, namely that:

(b)    David Walls and Stephanie Doyle were competent, professional and capable of running licensed venues;

…

(h)    both Stephanie Doyle and David Walls would be involved in operating the licensed premises …

343 I have made findings about whether these representations were made in the “Factual findings” section of these reasons.  As set out in [141] above, I have found that, in the period leading up to entry into the Agreements for Lease and the Leases, Ms Doyle and Mr Walls (on behalf of Pheonix A and Pheonix B) represented to the Pelligra Group (including Spring UT) that Ms Doyle and Mr Walls were competent, professional and capable of running licensed venues; and that both Ms Doyle and Mr Walls would be involved in operating the licensed premises which were the subject of the Agreements for Lease and the Leases.

Whether Pheonix A and Pheonix B failed to disclose the licence conditions

344 Paragraph 41A of the amended defence refers to three categories of information in sub-paras (a), (b) and (c) of that paragraph.  It is sufficient for present purposes to focus on the first category of information, namely the conditions on the Birdies Forest Hill liquor licence (set out in para 41A(a)).

345 The issue to be determined is whether Pheonix A and Pheonix B failed to disclose that information to Spring UT before entry into the Agreements for Lease and the Leases.  I have made a finding about this in the “Factual findings” section of these reasons.  As set out in [142] above, I have found that, in the period before entry into the Agreements for Lease and the Leases, Ms Doyle and Mr Walls did not inform the Pelligra Group of the existence of the conditions relating to Mr Walls on the Birdies Forest Hill liquor licence.  It follows that, in the period before entry into the Agreements for Lease and the Leases, Pheonix A and Pheonix B did not disclose to Spring UT the existence of the licence conditions.

Whether Pheonix A and Pheonix B engaged in misleading or deceptive conduct

346 The issue to be determined is whether, in the period before entry into the Agreements for Lease and the Leases, Pheonix A and Pheonix B engaged in conduct that was misleading or deceptive (or likely to mislead or deceive) as alleged.  In particular, the issue is whether Pheonix A and Pheonix B engaged in misleading or deceptive conduct (or conduct likely to mislead) by not disclosing the existence of the conditions relating to Mr Walls on the Birdies Forest Hill liquor licence.

347 As the cases set out above emphasise, it is necessary to have regard to the course of conduct as a whole.  The detailed chronology of events has been set out in the “Factual findings” section of these reasons.  I have had regard to that chronology and the facts and matters set out for the period from May 2023 to 11 October 2023.

348 In my opinion, important aspects of the circumstances and context are as follows:

(a) In the period before entry into the Agreements for Lease and the Leases, Ms Doyle and Mr Walls made the representations referred to at [342] above, namely that: Ms Doyle and Mr Walls were competent, professional and capable of running licensed venues; and both Ms Doyle and Mr Walls would be involved in operating the licensed premises which were the subject of the Agreements for Lease and the Leases.

(b) It was fundamental to the Agreements for Lease and Leases that the businesses operating at the premises would hold a liquor licence.  I do not consider that there is any real issue about this.  The parties spent time discussing the obtaining of a liquor licence.  For example, this topic was a focus of the discussion during the meeting between the parties on 21 September 2023.  The Agreements for Lease contained a specific clause relating to the obtaining of a liquor licence.  It was always anticipated by both parties that the businesses to be operated at the relevant premises would be licensed to sell liquor.

(c) It was a term of each Agreement for Lease that the Tenant could terminate the Agreement for Lease if the liquor licence contained conditions which were unacceptable to the Tenant: clause 5.3(d) of Agreement for Lease (A) (set out at [43] above) and the equivalent clause of Agreement for Lease (B) (clause 4.3(d)).

349 As set out early in the “Factual findings” section of these reasons, obtaining a liquor licence for Birdies Forest Hill was a difficult and protracted process.  A liquor licence was obtained only after Birdies Mini Golf Pty Ltd proposed a condition that excluded Mr Walls from entering or remaining on the licensed premises and from exercising any power in the business of the licensee involving the supply of liquor at the premises.

350 Given that background, and viewing the matter as at May 2023 to 11 October 2023, it seems likely (and I infer) that the Victorian Liquor Commission would impose a comparable condition on any liquor licence granted in respect of the premises that were to be the subject of the Agreements for Lease and the Leases.

351 Were that to occur, it would mean that Mr Walls could not be involved in operating the licensed premises, contrary to the representation that had been made that he would be so involved.

352 Further, were that to occur, it would (at least arguably) give Pheonix A and Pheonix B the ability to terminate the Agreements for Lease and the Leases (pursuant to clause 5.3(d) of Agreement for Lease (A) and clause 4.3(d) of Agreement for Lease (B)) on the basis that the condition on the liquor licence was unacceptable to them.

353 In my view, having regard to these facts and matters, and the course of conduct as a whole, the Pelligra Group were entitled to assume, and would have assumed, that there was no known impediment to Mr Walls being involved in the operation of the businesses; and that there was no known impediment to the obtaining of a liquor licence or a liquor licence free of conditions.  Indeed, during the meeting on 21 September 2023, Ms Doyle conveyed the opinion that it was likely that the liquor licence would be issued promptly.  Putting this another way, I find that the Pelligra Group held a reasonable expectation that: (a) if there was any known impediment to Mr Walls being involved in the operation of the businesses, this would be disclosed; and (b) if there was any known impediment to the obtaining of a liquor licence or a liquor licence free of conditions, this would be disclosed.  In this context, I consider that it was misleading or deceptive (or likely to mislead or deceive) for Pheonix A and Pheonix B not to disclose the existence of the Birdies Forest Hill liquor licence conditions to the Pelligra Group (including Spring UT) before entry into the Agreements for Lease and the Leases.

354 For these reasons, I conclude that Pheonix A and Pheonix B engaged in conduct that was misleading or deceptive (or likely to mislead or deceive) in contravention of s 18 of the Australian Consumer Law.

Whether declaratory relief should be ordered

355 Spring UT and Ross Pelligra seek declarations that each Agreement for Lease (and the related Lease) is void ab initio.  The declarations are sought pursuant to ss 237 and 243 of the Australian Consumer Law.

356 Section 237(1) relevantly provides that:

(1)    A court may:

(a)    on application of a person (the injured person) who has suffered, or is likely to suffer, loss or damage because another person has engaged in conduct in contravention of a provision of Chapter 2, 3 or 4; or

(b)    …

make such order or orders as the court thinks appropriate against the person who engaged in the conduct, or a person involved in that conduct.

(Emphasis added.)

Section 18, which is the basis of the claim in the present case, is contained in Ch 2 of the Australian Consumer Law.  Section 237(1) requires a causal connection – indicated by the word “because” – between the contravening conduct and the loss or damage or likely loss or damage.

357 Section 237(2) provides:

(2)    The order must be an order that the court considers will:

(a)    compensate the injured person, or any such injured persons, in whole or in part for the loss or damage; or

(b)    prevent or reduce the loss or damage suffered, or likely to be suffered, by the injured person or any such injured persons.

358 Section 243 relevantly provides:

Without limiting section 237(1), 238(1) or 239(1), the orders that a court may make under any of those sections against a person (the respondent) include all or any of the following:

(a)    an order declaring the whole or any part of a contract made between the respondent and a person (the injured person) who suffered, or is likely to suffer, the loss or damage referred to in that section, or of a collateral arrangement relating to such a contract:

(i)    to be void; and

(ii)    if the court thinks fit—to have been void ab initio or void at all times on and after such date as is specified in the order (which may be a date that is before the date on which the order is made);

359 In the “Factual findings” section of these reasons, I have found that, had Ms Doyle or Mr Walls disclosed to the Pelligra Group that the liquor licence for Birdies Forest Hill was subject to conditions relating to Mr Walls, and the substance of those conditions, the Pelligra Group would not have entered into the Agreements for Lease and the Leases (see [147] above).  Thus, there is a causal connection between Pheonix A and Pheonix B’s misleading or deceptive conduct (not disclosing the conditions on the Birdies Forest Hill liquor licence) and entry into the Agreements for Lease and the Leases.  I reach that conclusion notwithstanding the warranty in clause 9 of Agreement for Lease (A) and the comparable clause in Agreement for Lease (B).

360 Had I concluded that Spring UT had not validly terminated the Agreements for Lease and the Leases, I would have concluded that the requirements of ss 237 and 243 were satisfied and that it was appropriate to declare the Agreements for Lease and the Lease void ab initio.  In that scenario, viewing the matter as at the time of entry into the Agreements for Lease and the Leases, Spring UT was likely to suffer loss or damage because of Pheonix A and Pheonix B’s misleading or deceptive conduct, the likely loss or damage being constituted by the disadvantage of incurring contractual obligations which would not have been incurred but for the conduct complained of: see Harvard Nominees Pty Ltd v Tiller [2020] FCAFC 229; 282 FCR 530 at [40], [69], [76], [77].  Further, in that scenario, declaring the Agreements for Lease and the Leases void ab initio would “prevent or reduce the loss or damage … likely to be suffered” by Spring UT (s 237(2)(b)).

361 However, in circumstances where I have concluded that Spring UT validly terminated the Agreements for Lease and the Leases, I am not satisfied that the requirements of ss 237 and 243 are satisfied or that it is otherwise necessary or appropriate to make the declarations.  For the reasons given in the preceding paragraph, I accept that, viewing the matter as at the time of entry into the Agreements for Lease and the Leases, Spring UT was likely to suffer loss or damage because of the contravening conduct.  However, in my view, the requirements of s 237(2) are not satisfied.  The first alternative in s 237(2) is that the order must “compensate the injured person … in whole or in part for the loss or damage”.  A declaration would not achieve that.  The second alternative is that the order must “prevent or reduce the loss or damage suffered, or likely to be suffered, by the injured person …”.  In circumstances where (as I have concluded) the agreements were validly terminated, a declaration that the agreements are void ab initio would not prevent or reduce the loss or damage suffered, or likely to be suffered, by Spring UT.  Therefore, the requirement in s 237(2) is not satisfied.  Further and in any event, in circumstances where (as I have concluded) the agreements were validly terminated, a declaration that the agreements are void ab initio does not have practical utility.

362 For these reasons, I do not consider it necessary or appropriate to make declarations that the Agreements for Lease and the Leases are void ab initio.

Conclusion

363 It follows from the conclusions reached above that Pheonix A’s and Pheonix B’s originating application is to be dismissed.  In relation to the cross-claim, as I have decided not to make the declarations sought, the appropriate order is that the cross-claim be dismissed.

364 In relation to costs, my preliminary view is that the following orders are appropriate:

(a) Pheonix A and Pheonix B pay Spring UT’s and Ross Pelligra’s costs of the originating application; and

(b) Pheonix A and Pheonix B pay Spring UT’s and Ross Pelligra’s costs of the cross-claim.

365 However, I will give the parties the opportunity to make submissions if they seek different costs orders.

Associate:

Dated:    12 June 2026

SCHEDULE OF PARTIES