Rose v Manno Kingsway Pty Ltd (as trustee for the Manno Kingsway  Unit Trust) [2025] NSWCA 23

Decision

The decision in Rose v Manno Kingsway Pty Ltd (2025) 116 NSWLR 598; [2025] NSWCA 23(Bell CJ, Mitchelmore and Adamson JJA) has confirmed that although the advance of consideration chronologically before the execution of a formal agreement is generally considered 'past consideration' and renders the contract invalid, it may be that the contemporaneous conduct of the parties indicate that the events were a 'single transaction' and thus the agreement remains binding.

Facts

Mr Rose and Mr Manassen had together pursued varying property developments in New South Wales, where Rose was responsible for identifying and managing the developments, and Manassen supplied the requisite funding. Between 2016 and 2021, they attempted a development known as the Wavelength Project, which became unprofitable due to varying delays and the COVID-19 Pandemic. This resulted in Rose needing a loan from Manassen and led to the proceedings.

On 13 December 2021, the parties met and Manassen subsequently sent an email stating 'We will lend $1m for 1 year at 5% subject to [varying conditions]… Please confirm agreement', to which Rose replied 'Confirmed'. Subsequently on 24 January 2022, $1.3 million was transferred to Rose, and on 2 February 2022 Manno Kingsway entered into a contract with Rose as lender and borrower respectively. The contract provided that 'It is agreed in consideration of the lender agreeing to provide financial accommodation… that the parties are bound… by this document', and the 'Lender will lend the loan amount' subject to varying conditions. 

On 6 February 2023, Manno Kingsway notified Rose of his default due to the failure to repay the principal amount, and ultimately proceedings were commenced to recover the debt. The Supreme Court at first instance held that the exchange of emails gave rise to a binding agreement within the “fourth” category of Masters v Cameron (1954) 91 CLR 353 (i.e. that the parties intended to be immediately bound by the terms which they had agreed, whilst expecting to enter into a further contract which would include additional mutually agreed-upon terms).

The two main issues on appeal, leaving aside an argument in estoppel that was dismissed, were:

1. Did the 2021 emails gave rise to an agreement that could be enforced; and
2. if they did not, was the 2022 loan agreement valid or did the transfer of the money prior to the agreement being executed render it invalid for past consideration.

Reasoning

2021 Emails

The finding by the primary judge that the email gave rise to an agreement under the fourth category in Masters v Cameron necessarily entailed the conclusion that the parties by conduct manifested an intention immediately to be bound and create contractual relations: [41]-[43]. 

However, the court on appeal overturned the primary judge's conclusions for the following reasons:

1. The ambiguity in the emails, including the precise identity of the contracting parties and the terms of the deed of release: [45];
2. The expression "please confirm agreement" in the emails should be interpreted as seeking confirmation of the contents of the meeting, rather than an intention to be immediately bound by the contents of the email: [46];
3. None of the matters purportedly "confirmed" were implemented, no money was advanced, and no complaint was made for non-performance: [47]-[48].

2022 Loan Agreement 

1. The court confirmed that in certain circumstances, what is prima facie past consideration will nevertheless count as consideration if there was in effect a single contemporaneous transaction: [53]-[56].
2.  It was particularly relevant that there was no earlier transaction or obligation to render the advance of $1.3 million as consideration for anything. Rather, the advance was requested by the Appellant, and subsequently a formal agreement was executed documenting the transaction: [57]-[60].
3. The strict chronological order of promise and consideration is not necessary where the payment is made at the promisor's request and the parties understood it as such, and there is no other bar to enforceability: [61]-[64].
4. Therefore, the advance, despite predating the formal agreement, was good consideration.

 Takeaways

• Despite payment being rendered before a formal agreement was made, the consideration may still be valid where the circumstances indicate it is part of a single transaction. However, to avoid uncertainty, parties should ensure that the purported consideration is only exchanged after execution, and that the whole of the transaction is documented by deed.