BBB Constructions v Aldi Foods

[2010] NSWSC 1352

CITATION:	BBB Constructions v Aldi Foods [2010] NSWSC 1352
HEARING DATE(S):	12/10/10, 13/10/10, 14/10/10, 15/10/10, 18/10/10, 19/10/10, 21/10/10
JUDGMENT DATE :	2 December 2010
JURISDICTION:	Equity Division Commercial List
JUDGMENT OF:	McDougall J at 1
DECISION:	Proceedings dismissed with costs.
CATCHWORDS:	TRADE PRACTICES – misleading or deceptive conduct – where plaintiff negotiated with defendant for defendant to take lease of real property – where negotiations came to consensus on principal commercial terms of lease – where heads of agreement exchanged – where drafting of detailed terms of agreement of lease finalised – where defendant withdrew from negotiations and lease not executed – whether defendant engaged in misleading or deceptive conduct – whether representations made – silence – whether reliance – whether defendant engaged in unconscionable conduct – Trade Practices Act 1974 (Cth) ss 51A, 51AA, 51AC, 52. - ESTOPPEL – equitable estoppel – conventional estoppel – whether defendant estopped from resiling from a mutual or common assumption that defendant would enter into binding agreement for lease – whether reliance. - REMEDIES – restitution – quantum meruit – consideration of principles – whether plaintiff entitled to payment for work provided and costs incurred in connection with proposed lease.
LEGISLATION CITED:	Builders Licensing Act 1971 (NSW) Environmental Planning and Assessment Act 1979 (NSW) Trade Practices Act 1974 (Cth)
CATEGORY:	Principal judgment
CASES CITED:	Angelopoulos v Sabatino (1995) 65 SASR 1 Austotel Pty Ltd v Franklins Self Serviee Pty Ltd (1989) 16 NSWLR 582 Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Limited (2003) 214 CLR 51 Attorney-General of Hong Kong v Humphreys Estate (Queen’s Gardens) Ltd [1987] AC 114 Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221 Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 EK Nominees Pty Ltd v Woolworths Ltd [2006] NSWSC 1172 Falcke v Scottish Imperial Insurance Company (1887) LR 34 Ch D234 Fensom v Cootamundra Racecourse Reserve Trust [2000] NSWSC 1072 Giumelli v Giumelli (1999) 196 CLR 101 Leading Edge Events Australia Pty Ltd v Kiri Te Kanawa (2007) Aust Contract Reports 90–250 Lumbers v W Cook Builders Pty Ltd (In Liquidation) (2008) 232 CLR 635 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 84 ALJR 644 Nguyen v Cosmopolitan Homes [2008] NSWCA 246 Pavey & Matthews Proprietary Limited v Paul (1987) 162 CLR 221 Regalian Properties PLC v London Docklands Development Corporation [1995] 1 WLR 212 Roxborough v Rothmans of Pall Mall Australia Limited (2001) 208 CLR 516 Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603 Sabemo Pty Ltd v North Sydney Municipal Council [1977] 2 NSWLR 880 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Watson v Foxman (1995) 49 NSWLR 315 William Lacey (Hounslow) Ltd v Davies [1957] 1 WLR 932
TEXTS CITED:	Restitution Law in Australia (2nd edition, 2008)
PARTIES:	BBB Constructions Pty Ltd (Plaintiff) Aldi Foods Pty Limited (Defendant)
FILE NUMBER(S):	SC 2007/266522
COUNSEL:	GM Watson SC / F G Kalyk / L T Livingston (Plaintiff) R J H Darke SC / J B Spinak (Defendant)
SOLICITORS:	Knight Lawyers (Plaintiff) Carroll & O'Dea Lawyers (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

McDOUGALL J

2 December 2010

2007/266522 BBB CONSTRUCTIONS PTY LTD v ALDI FOODS PTY LIMITED

JUDGMENT

1 HIS HONOUR: The plaintiff (BBB) owns land located on Botany Road, Alexandria (the land). It negotiated with the defendant (Aldi) for Aldi to take on lease a stratum in a building to be constructed on the land. Those negotiations proceeded to the point where there was consensus on the principal commercial terms of the lease; heads of agreement had been exchanged; and the drafting of the detailed terms of an agreement for lease, to be executed and exchanged, was finalised. Aldi withdrew from the negotiations, and declined to execute the agreement for lease. BBB says that, in so doing, Aldi acted in a way that was misleading or deceptive, or unconscionable (both under the general law and by statute). Alternatively, BBB says, Aldi is estopped from denying that it had agreed to lease the stratum “on terms as finally agreed”. Aldi denies that it is liable in any of those ways. It says that the parties negotiated on the express basis that neither would be liable unless and until an agreement for lease, setting out all the terms of their bargain, was executed and exchanged.

The real issues

2 The parties agreed on the real issues in dispute. I set out those issues:

1. Whether the defendant has, in trade or commerce, engaged in conduct which was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 and 51A of the Trade Practices Act 1974 (Cth).
2. Whether the defendant has engaged in unconscionable conduct in contravention of sections 51AA of 51AC of the Trade Practices Act 1974 (Cth).
3. Whether, by reason of equitable estoppel, the defendant is estopped from resiling from representations, or conduct, which induced an expectation or assumption in the plaintiff that the defendant would enter into a binding agreement for lease of the premises.
4. Whether, by reason of conventional estoppel, the defendant is estopped from resiling from a mutual or common assumption, adopted by the parties as a basis of their relations, to the effect that the defendant would enter into a binding agreement for lease of the premises.
5. Whether the plaintiff is entitled to payment, by way of quantum meruit or restitution, for work provided and costs incurred in connection with the proposed lease, the redesign and construction of the site and the premises to meet the defendant’s requirements and the further redesign to meet the defendant’s requirements and the further redesign and construction to enable the provision of reasonably lettable space in place of the premises.
6. What loss or damage the plaintiff has suffered by reason of the defendant’s conduct.
7. Whether the plaintiff is entitled to damages from the defendant pursuant to s 82 of the Trade Practices Act 1974 (Cth) and, if so, in what amount.
8. What is the equity, if any, to which the plaintiff is entitled.
9. Whether the plaintiff is entitled to equitable compensation from the defendant and, if so, in what amount.
10. Whether the plaintiff is entitled to restitution from the defendant and, if so, in what amount.

Parties and personnel

3 BBB is a joint venture company formed to undertake a development of the land. Its name is derived from its three principals: Mr Philip Bart, Mr Nicholas Bettar and Mr Paul Bettar. Mr Bart and Mr Paul Bettar gave evidence. Mr Nicholas Bettar did not. For convenience, I shall refer to Mr Paul Bettar simply as “Mr Bettar”, and to his brother as “Mr Nicholas Bettar”.

4 Mr Bart had had experience in property development. Mr Bettar had not. His business experience had been in the clothing industry. Mr Nicholas Bettar was the managing director of Baseline Constructions Pty Limited (Baseline). Baseline, a building company, was owned by the Bettar family. It contracted to undertake the construction work on the land. Mr Bettar managed the project on behalf of BBB, but reported to and took advice and instruction from Mr Bart.

5 Aldi is a subsidiary of the well known German–based supermarket chain. At the relevant time (from May 2006 until August 2007) its “managing director” for New South Wales was Mr Stefan Kopp, and its “managing director” for Australia was Mr Michael Kloeters. Aldi employed a number of “property directors”, including Mr Joshua Brassington and Mr Jon Savell. It was part of their responsibilities to locate suitable sites for Aldi to establish a supermarket, and to negotiate the terms on which Aldi might acquire an interest in that site (either by way of purchase or by way of lease). However, the decision, as to whether Aldi should commit itself by the execution of a legally binding agreement, was one to be made by Mr Kloeters and Mr Kopp.

Approach to the assessment of evidence

6 In my view, the relevant principles, in a case such as this, are set out in the judgment of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318-319. His Honour there described the approach that the court should take to the assessment of evidence relating to disputed allegations of misleading or deceptive conduct said to have been perpetrated by means of oral representations. As his Honour said, the party asserting misleading or deceptive conduct needed to show what the conduct was and why it was misleading. Where the conduct is said to have been found in oral representations, it is necessary, his Honour said, "that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances". The need for precision was important because the question of whether the words were misleading might depend upon "relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition".

7 Further, as his Honour pointed out, human memory is fallible. Common experience suggests that fallibility increases with the passage of time. That is particularly so, his Honour said, "where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said".

8 In summary, as his Honour said:

All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.

9 His Honour pointed to the need for the court to feel some sense of actual persuasion of the existence of each element of the cause of action. That did not mean that proof is to be achieved other than on the balance of probabilities. It directs attention to the concept of proof, and the concept of satisfaction. (See, too, my judgment, with which McColl and Bell JJA agreed, in Nguyen v Cosmopolitan Homes [2008] NSWCA 246 at [44] to [55].)

10 The consequences of those considerations was, McLelland CJ in Eq said, that a party relying on spoken words as the foundation of a cause of action for misleading or deceptive conduct might face serious difficulties, "in the absence of some reliable contemporaneous record or other satisfactory corroboration".

Credibility

11 Mr Bart and Mr Bettar gave evidence by affidavit, and were cross-examined. I had concerns with aspects of the evidence of each of them. Further, I think, the evidence of each was overlaid, unconsciously or otherwise, by perceptions of self-interest and by a serious – indeed, fixed – view that BBB had been wronged at the hands of Aldi. In those circumstances, I think, the evidence of each of them, in relation to the relatively small areas of factual dispute, needs more than usually close examination before it can be accepted.

12 Each of Mr Bart and Mr Bettar insisted, at every possible opportunity, that BBB had reached a “binding agreement” with Aldi, and that they acted (and caused BBB to act) on the faith of that binding agreement. However, it appears, each of them perceived this binding agreement to be something less than a “legally binding agreement”. The distinction is one that is difficult to understand, and their evidence does not assist in this regard. Mr Bart’s evidence in particular is difficult to accept on this point, coming as it did from an experienced, and apparently astute, capable and successful, businessman. He recognised that, in general, for an agreement involving the disposition of an interest in land to be enforceable, it should be in writing. Nonetheless, he maintained, it was his understanding that BBB had achieved a “binding” agreement with Aldi.

13 There were other aspects of Mr Bart’s evidence that gave me concern: for example, his evidence that he believed that the parties were “wholly in agreement” by the end of September 2006. This was inconsistent with the facts, and no basis for such a belief was shown. Again, when questioned on BBB’s negotiations with another supermarket operator to take a lease of the space that was the subject of the discussions with Aldi, Mr Bart denied that he sought to use this in his “negotiations with Aldi to try to get Aldi over the line… “ (T176.30). That denial, which was clear and emphatic, was inconsistent with an email sent by Mr Bart to Mr Bettar on about 8 June 2007, instructing Mr Bettar to do that very thing in a meeting with Aldi to be held in a few days time. Even when confronted with this document, Mr Bart refused to acknowledge the obvious, and said that “[w]hat I was really doing was venting – venting my spleen and my frustration as much as anything else” (T177.25).

14 Further, as to Mr Bart, it became apparent during his cross-examination that he had no real recall of events. He relied very heavily on his affidavit, and I observed that whenever he was questioned about a matter of detail, he would refer to it carefully before giving an answer. I do not go so far as to say that Mr Bart did this to ensure that his evidence in cross-examination was consistent with his affidavit. I do however think that, as I have indicated, it shows that his recollection was otherwise defective.

15 Mr Bettar, too, was given to looking backwards and forwards through documents before answering questions. I noticed that, when he had a volume of the court book before him and was being questioned on a particular document, he would search back and forth through the court book either before answering or during his answer; and he would also do so while the next question was being formulated. He was requested to confine his attention to the particular document on which he was being questioned, but I noticed that he continued to look at other documents, although less frequently than before.

16 Further, as to Mr Bettar, it is clear that he is under some degree of financial strain. He said, more than once (and not always in response to the particular question that had been asked) that his family had mortgaged all of its assets to provide its share of the capital for the joint venture. I think that this is something that has contributed to – indeed, explains – the perception of self-interest and the view that BBB had been wronged by Aldi, to which I have referred.

17 Mr Bettar, too, was cross-examined about BBB’s dealings with another supermarket operator referred to at [13] above. He claimed to have been told by a representative of that operator that it could not trade out of the basement. However, both contemporaneous documents and Mr Bettar’s own affidavit (of 5 June 2009, para 13 read in conjunction with T144.5-.35) show otherwise.

18 Having said that, I acknowledge that many of the matters of which Mr Bettar gave evidence were consistent with his contemporaneous documents. It was not put to him that those documents were fabricated, or false, and I do not find that they were. Mr Watson submitted that the contemporaneous documents provide support for Mr Bettar’s evidence; and to some extent, they do. This is not always of great significance, because the documents report on (for example) conversations as one might expect: in a conclusory, impressionistic or summary form. Further, there is a tendency in Mr Bettar’s affidavit to overstate, or exaggerate, in a way beneficial to BBB, what is said in documents that he puts in evidence. I do not know whether this tendency is due to natural optimism, the factors of self-interest and grievance to which I have referred or a more general inclination to seek to improve BBB’s case. If that tendency were due to innate factors rather than factors connected with the litigation, it might give some reason for questioning the accuracy of Mr Bettar’s contemporaneous documents. However, notwithstanding those doubts, I am prepared to start with a predisposition in favour of accepting Mr Bettar’s evidence to the extent that it is supported by his contemporaneous documents.

19 Where there is no such foundation for Mr Bettar’s evidence, and as to Mr Bart’s evidence generally, I think that it is necessary to scrutinise what they say with care, and to weigh it against contemporaneous documents to the extent that they assist, and the probabilities objectively ascertained, before relying on it.

20 For Aldi, Messrs Brassington, Savell and Kopp gave evidence. Messrs Brassington and Savell are no longer employed by Aldi. Indeed, Mr Brassington left Aldi’s employ at the end of January 2007, whilst the negotiations were in progress; but he was retained thereafter to continue the negotiations as a consultant on behalf of Aldi. I do not know whether or not Mr Brassington has any ongoing business association with Aldi. Certainly, it was not put to him that he did; or that his evidence was influenced by any perception of self-interest arising out of whatever (if any) ongoing business association there may be.

21 I found Mr Brassington to be an impressive and reliable witness. He appeared to have a good recall of relevant events. His answers were straightforward and responsive. To the extent that his evidence can be tested against objective matters (such as contemporaneous documents), it appears to be accurate. I do not think that Mr Brassington was motivated by any desire to serve Aldi’s cause.

22 Mr Savell is now working for another company in the property management industry. He does not appear to have any ongoing connection with Aldi. I think he can be regarded as an independent and reliable witness, to the extent of his memory. However, and perhaps not surprisingly, he did not appear to have a detailed recollection of relevant events, although I am satisfied that his evidence, at least in the relatively broad terms in which it was given, can be accepted as reliable.

23 Mr Kopp was an impressive witness. He is still employed by Aldi (although with a different title). It was not put to him that he had tailored his evidence to suit his employer’s case. Nor do I think that he did so. On the contrary, I think, Mr Kopp’s evidence was straightforward and reliable. He seemed to have a clear recollection of relevant events, and gave his evidence in a forthright fashion.

24 One other matter that disposes me to accept the evidence of Messrs Brassington and Kopp is that, where appropriate, they made concessions, even where the concessions might have been seen not to be in Aldi’s interest. By contrast, Mr Bart to some extent and, more substantially, Mr Bettar were inclined to argue, and to seek to evade points of difficulty. Although I attribute that to the factors of self-interest and grievance to which I have referred, it diminishes my confidence in the reliability of their testimony.

25 In addition, BBB and Aldi called as witnesses the solicitors who had represented them in the transaction. BBB called Mr Robert Kalde, a principal of the firm then known as KQ Lawyers, and Mr Ben Rogers, then an employee of that firm. Aldi called Mr John Brophy, of Brophy Bridge and Mirow.

26 Mr Kalde was cross-examined, relatively briefly. Messrs Rogers and Brophy were not required for cross-examination.

27 Although I express no criticism of Mr Kalde’s honesty or objectivity, I note, with some disquiet, that he is now a partner of the firm of solicitors acting for BBB in this litigation, and indeed was present for most of the hearing to instruct counsel. There were two aspects of Mr Kalde’s evidence that were contentious. It is, in my view, undesirable for a lawyer both to act for a party to litigation and to give evidence on a contentious matter in the interest of that party. Having said that, I do not think that Mr Kalde sought to do other then give truthful evidence to the best of his ability.

28 Aldi also called an architect, Ms Gillian Donaldson, who had been engaged to prepare plans for its proposed supermarket. There was no attack on the credibility of Ms Donaldson’s evidence (which did not in any event go to the relatively few disputed questions of fact). I accept it.

29 As I have said, the disputes of fact are relatively limited, both in number and in extent. They involve, as to some meetings, a conflict between the evidence of Mr Bettar and Mr Brassington; and, as to another meeting, a conflict between the evidence of those two gentleman and their respective legal advisers. More generally, they involve disputes as to representations said to have been made by Mr Brassington at various meetings; but the significance of those disputes (and of the alleged representations) is much diminished when one takes into account what Mr Bettar in particular said in cross-examination.

30 For the reasons I have given, in general I prefer the evidence of Mr Brassington to that of Mr Bettar to the extent that they are in conflict, except in the cases to which I refer where Mr Bettar’s evidence is supported by contemporaneous documents. In respect of the meetings in which Mr Kalde was involved, I prefer the evidence of Mr Brassington to that of Mr Kalde. In this case, for reasons that I shall elaborate in dealing with the particular meetings (which took place on 8 November 2006 and 30 March 2007), I think that Mr Brassington’s evidence is consistent with the probabilities, regarded objectively; and that the comments attributed to him by Messrs Bettar and Kalde are inconsistent with those probabilities.

31 There is a minor conflict between Mr Brophy and Mr Rogers as to another conversation on 30 March 2007. Since neither of them was required for cross-examination, the dispute can be left, as apparently the parties were content to do, unresolved.

The expert evidence

32 The parties relied on the evidence of numerous experts. That evidence is relevant to BBB’s claim for damages. Since I have concluded that BBB’s claim must fail, and also because it was agreed in any event that if the question of damages arose, it should be dealt with (in the absence of agreement) once the question of liability had been decided, I shall not comment on that expert evidence. I do however note that the opposing experts conferred, and reduced the areas of disagreement between them in a very helpful way.

The project

33 The land is a site bounded by Botany Road to the east, McEvoy Street to the north, Wyndham Street to the west and Retreat Street to the south. BBB bought the land with the benefit of an existing development consent. Work under that consent had been commenced. Demolition was complete. Some works of excavation and piling were also complete.

34 The project, as approved, comprised the construction of four mixed use buildings on the site. Those buildings were titled by reference to the street that they fronted: building B (which is the building with which these proceedings are concerned), building M, building W and building R. BBB’s intention was to develop and sell building B and to retain buildings M, W and R in the longer term as investments.

35 The consent provided for a development (referred to in the evidence from time to time as “scheme A”) that comprised 122 residential apartments, 177 square metres of retail or commercial space and 112 residential car spaces. The consent effectively utilised the full allowable floor space ratio. Accordingly, any modification of the approved development, to increase the area for retail or commercial use, would require, in effect, that floor space be “exchanged” between one form of use and another; and in addition, there may have been absolute limits on the extent to which the responsible authority, Sydney City Council (the Council), would countenance expansion of particular uses.

36 The development approved by the existing consent provided for the retail or commercial space to be aboveground (I think, at street level) with the residential apartments built over it, and for the basement to be used only for carparking. The excavation and piling works that had been performed were adapted to those purposes.

The first stage of negotiations

37 The evidence traversed a vast number of meetings and discussions. I do not propose to refer to it all. What I will do is set out what seem to me to be the salient points, dealing in particular (but not only) with the discussions and letters which are particularised as giving rise to the representations alleged in para 8 of the contentions set out in BBB’s further amended commercial list statement (FACLS). I set out that paragraph (although not the detailed particulars) at [242] below.

The initial negotiations with Aldi

38 Once contracts for the purchase had been exchanged (the purchase was undertaken by a trustee for BBB, but nothing turns on this), Mr Bart instructed Mr Bettar to find tenants for the retail and commercial spaces. Mr Bettar approached a number of prospective tenants, some of whom expressed interest in taking a lease of the available retail or commercial space in building B. One of the perspective tenants that Mr Bettar approached was Aldi. He spoke to Mr Brassington. Mr Brassington was interested, because Aldi was looking to expand its operations into the inner southern and eastern area of Sydney.

39 On 31 May 2006, Mr Bettar, Mr Nicholas and Mr Brassington met at BBB’s offices in Wyndam Street. Mr Bettar prepared “minutes” of that meeting, which I accept as substantially accurate. Mr Brassington confirmed that Aldi was interested in taking about 1,150 square metres to 1300 square metres. He specified certain basic requirements that Aldi would have, and undertook to forward a “Generic Lessor / Lessee scope of works”. There was some discussion of a rental per square metre. However, Mr Brassington said, Aldi preferred to own rather than rent.

40 Mr Bettar’s minutes include the following items:

12. PB asked if Aldi would be interested in a shop front with escalators down to the basement level and then they would be able to have on grade parking. Joshua stated that that would definitely be his preference as they are destination shopping and signage is all they would need on street level. He also stated that on ground level he could not offer what we could get in the market.
13. NB advised that this would be a problem as we would loose [sic] FSR if we look [sic] this option and a cost of about $3.3 million would be incurred to go down another level.
14. Joshua stated that ALDI would defeinatel [sic] be interested in buying the whole level as a stratum with a shop front and he believed he could make it worth while.

41 Item 13 needs some explanation. If Aldi were to take a lease of a basement, building B would need substantial redesign. As approved, it contained one basement level (B1) for residential carparking. If that level were to be, in effect, given over to Aldi for use as a supermarket, BBB would need to construct a lower basement level (B2) for residential parking. In addition, since the approved development utilised all the available floor space ratio for the land, there would need to be some “juggling” of floor space ratio between the different uses. All of this meant that:

(1) the building would need to be substantially redesigned, and additional construction would be required;

(2) there would have to be an application to the Council under s 96 of the Environmental Planning and Assessment Act 1979 (NSW) (the EPA Act), to amend the existing consent; and

(3) as Mr Nicholas Bettar advised, there would be a substantial additional cost.

42 In addition, it must have been obvious to all, including Mr Brassington, that if BBB were to pursue this proposal, it would delay completion of building B.

43 After the meeting, Mr Brassington instructed Ms Donaldson to prepare some sketches for an Aldi supermarket in building B, either at ground level or in the basement. After Ms Donaldson received some preliminary sketches of the site from Mr Nicholas Bettar, she prepared the documents that Mr Brassington had requested.

Aldi’s offer to purchase

44 On 9 June 2006, Mr Brassington wrote to Mr Bettar. The letter referred to the meeting of 31 May 2006 and stated that Mr Brassington had “received plans that can form the basis of a commercial offer to your organisation”. It then stated:

Our offer to purchase the entire basement level for the purpose of the construction of an ALDI store and associated carparking is $6,500,000 (six million, five hundred thousand dollars).

45 Mr Bettar discussed the offer with Mr Bart and Mr Nicholas Bettar. Mr Bart said that the offer was too low, and that in any event his preference was to lease rather than sell.

The meeting of 28 June 2006

46 Messrs Bart, Bettar and Brassington met on 28 June 2006. According to Mr Bart, Mr Brassington said during that meeting that “Aldi is a very easy company to deal with”. That is inconsistent with Mr Brassington’s account of the conversation. According to Mr Brassington, he had pointed out that Aldi could be a difficult company to deal with.

47 Mr Bart also said that Mr Brassington said words to the effect that “board approval means the managing director looking at the site and giving it a tick”. Mr Brassington denied that he said words to that effect.

48 I prefer Mr Brassington’s account of the conversation. In part, that reflects my general preference for his evidence over that of Messrs Bart and Bettar to the extent of conflict. In addition, it seems to me that it is objectively more likely that Mr Brassington would have used words of the kind that he claimed to have uttered rather than words of the kind attributed to him by Mr Bart. That is because (as events proved) Aldi was anything but an easy company to deal with; and the requirement for “board approval” was anything but a formality. By June 2006, Mr Brassington had been working for Aldi, as a property director and in other roles, for about seven years. He impressed me as an intelligent and observant person. I cannot believe that he could have thought that Aldi was an easy company to deal with, or that it was inclined to regard “board approval” as, in effect, a formality. If Mr Brassington had used words of the kind attributed to him by Mr Bart, it would have been a serious and intentional misrepresentation of what, I think, was likely to have been his understanding at the time. It was not put to Mr Brassington that he had engaged in serious and intentional misrepresentation, and I am not prepared to find that he did so.

Aldi’s offer to lease of 29 June 2006

49 On 29 June 2006, Mr Brassington wrote to Mr Bettar. The letter referred to the meeting the previous day and stated:

We note that your preferred position is now to negotiate a Lease with Aldi Stores… . With that in mind, we now propose an alternate offer to our previous proposal of 9 June 2006.
Our offer to Lease is based on the following terms and conditions:
…

50 There followed a statement of “terms and conditions,” ranging from matters as basic as the area to be leased, the term of the lease and the price to be paid to matters of detail such as floor loadings, truck sizes and the like. The letter also stated, in relation to “Lease Documentation”:

ALDI’s standard agreement for lease and lease documentation is to be adopted.
Each party will be responsible for their own legal and consultant fees.
ALDI will pay stamp duty and lease registration costs.

51 In the penultimate paragraph of the letter, Mr Brassington stated:

This offer is subject to ALDI Board formal approval.

52 Mr Bettar agreed that he understood the reference to “ALDI Board formal approval” to refer to approval by Mr Kopp.

53 There was annexed to the letter a “Schedule of Lessor / Lessee (ALDI) works”. That schedule set out, in some detail, the scope of works required to make the premises suitable for Aldi’s requirements, and indicated whether the cost of doing that was to be borne by BBB or Aldi.

54 One of the matters raised in the letter of 29 June was responsibility for outgoings. Mr Brassington proposed that Aldi should not pay any share of outgoings. It is apparent, both from notations on the letter made either by Mr Bart or by Mr Bettar and from subsequent discussions, that BBB required Aldi to pay a proportionate share of outgoings such as council and water rates, land tax and strata levies. I note at this stage that the question of outgoings remained contentious, although BBB said that the issue had been resolved in principle by agreement to a formula for calculations of outgoings.

The meeting of 4 July 2006

55 On 4 July 2006, Mr Bettar met Mr Brassington to discuss the letter of 29 June 2006. Mr Bettar prepared minutes of that meeting. Those minutes were essentially reflected in a letter written by Mr Bettar to Mr Brassington three days later. I accept, as did Mr Brassington, that the letter (and therefore the minutes) accurately summarise the discussions. The topics discussed included:

(1) rental (Mr Brassington increased the offer hitherto made, but was told that it was still lower than Mr Bart’s expectation);

(2) the term of the proposed lease (Mr Brassington had proposed ten years with three five year options; Mr Bettar proposed fifteen years “plus options”);

(3) outgoings (Mr Bettar said that BBB wanted a substantial contribution, of about 15%, towards the outgoings of the building); and

(4) other, more detailed matters.

56 This is the first matter referred to in the particulars to para 8 of the FACLS. That paragraph of the particulars reads:

(a) On or about 4 July 2006, Mr Brassington said to Mr Bettar that: the defendant’s board approval process is far simpler than other organisations; it could be as fast and as simple as driving the managing director past the site and simply getting his approval to proceed; and the defendant’s managing director of NSW and the managing director of Australia had given Mr Brassington approval to proceed with an agreement for lease.

57 The remarks attributed to Mr Brassington in this item of the particulars are not reflected in Mr Bettar’s minutes or letter. Mr Bettar asserted, in his principal affidavit, that those words were said. Mr Brassington denied that he said that the two managing directors had given him approval to proceed with an agreement for lease. I prefer Mr Brassington’s evidence to that of Mr Bettar, for the reasons that I have given. I do not think that Mr Brassington is a man who would make serious and intentional misrepresentations of fact in the course of business negotiations.

58 I should note that, in his affidavit, Mr Bettar said that by 4 July 2006, he understood from what Mr Brassington had said at the meeting of that date “that Aldi’s board had given its approval for the entering of an agreement to lease the site”.

59 Mr Brassington denied that he said words to that effect, and I find that no such words were said. Further, Mr Bettar effectively backed down on this somewhat extreme statement in his cross-examination. To my mind, Mr Bettar’s preparedness to make such a strong statement, which he would not sustain in cross-examination, is another reminder of the need to scrutinise his evidence with extreme care. It is clear from Mr Bettar’s evidence as a whole that he understood, as at 4 July 2006 and for some time thereafter, that the only “approval” Mr Brassington had was an approval to continue with negotiations.

BBB’s letter of 7 July 2006

60 BBB’s letter of 7 July 2006 confirmed the matters discussed, and referred to the possibility of Aldi’s being given an option to buy the stratum “recognising, in the price, the total income of the area divided by the appropriate yield”. It then stated:

Joshua, basically all the above points other than the payment of outgoings, are basically in line with the offer you made during our meeting on Tuesday, 4 ^th July.
We are meeting with our architect on Tuesday 11 ^th and, as proposed Aldi layout has a significant impact on the rest of the building, we would appreciate your response sooner rather than later.
The last point to note is that the number of pages of general terms and conditions that you forwarded with your last offer needs to be considered carefully. We propose that if we can come to an “in principle” agreement quickly, we will then address in detail, all other, what I would refer to as , mechanical issues.

61 Mr Bettar acknowledged, by reference to the last paragraph of the letter that I have just set out, that as at 7 July 2006 there was not even an “in principle” agreement.

The meeting of 14 July 2006

62 The particulars next refer to a meeting between Messars Bettar and Brassington on 14 July 2006. The particulars are:

(b) On or about 14 July 2006, Mr Brassington said to Mr Bettar that the defendant liked the Site; it was ready to make an immediate deal and to commit; and it wanted to be operating as soon as possible.

63 Mr Brassington denied that he said that Aldi was “ready to make an immediate deal and to commit”. Although Mr Bettar’s account of those words is supported by both a contemporaneous note in his diary and a contemporaneous email to Mr Bettar, Mr Brassington’s position is confirmed by a letter that he wrote on 14 July 2006 to Mr Bettar. Omitting formal parts, that letter reads as follows:

I refer to your correspondence of 7 July 2006, and our meetings of 12 and 14 July 2006 regarding the above.
As per our most recent meeting of 14 July, I confirm ALDI’s position as follows:
1. Our preferred position is to purchase the retail stratum with associated carparks.
No other retailer to be located on the first level basement.
Our price for the purchase of the first level basement is $9,100,000.00.
2. Our second preference is to Lease.
Rental: As agreed at $425/m - however we will only require 1,100m2 to a maximum of 1,200m2.
Term: TBC. We note your preference for a 15 year term.
We concur with your 7 July correspondence and note that the above offer is based on the ‘details’ of any proposal being agreed between the parties.

64 There is no evidence of any protest from Mr Bettar to the effect that Mr Brassington had gone back on what he had said on 14 July 2006, or that Mr Brassington’s letter misrepresented (by understating) the true position.

65 In those circumstances, I prefer Mr Brassington’s denial to Mr Bettar’s assertion. I find that the disputed words were not said.

Aldi’s letter of 18 August 2006

66 Aldi’s letter is the third item referred to in the particulars. The particulars read as follows:

(c) By letter dated 18 August 2006, the defendant confirmed its “strong interest in the site” and stated that its communication “provid[ed] a level of comfort regarding our commitment”.

67 The letter did use the words stated in the particulars. However, those words were preceded by statements of Aldi’s position on various matters (including outgoings) in terms that suggested continuing disagreement on important points.

68 It might also be noted that the letter of 18 August 2006, when read in its entirety, is consistent with position stated in Mr Brassington’s letter of 14 July 2006, and inconsistent with the level of commitment attributed by Mr Bettar to Mr Brassington in their conversation that day.

Further negotiations leading up to “heads of agreement”

69 I have set out in some detail the initial stages of the negotiations, in an attempt to set the scene. I do not propose to take the same approach in dealing with the negotiations thereafter. It is sufficient to say that, in the course of numerous meetings and correspondence, Messrs Bettar and Brassington sought to negotiate the essential commercial terms on which BBB and Aldi could proceed.

70 Mr Bettar’s evidence was that he acknowledged that the negotiations, and consummation of the relationship, would involve three stages:

(1) agreement on the basic commercial terms;

(2) further and more detailed negotiations, leading to heads of agreement; and

(3) execution and exchange of a legally binding agreement for lease.

71 As the negotiations continued, further issues arose. As they arose, they were (as best they could be) dealt with.

The meeting of 6 October 2006

72 Messrs Bettar and Brassington met on 6 October 2006. That meeting is the fourth item referred to in the particulars:

(d) On or about 6 October 2006, Mr Brassington said to Mr Bettar that: Mr Brassington had been given approval by his boss, Stephan Kopp, for the defendant to proceed with the Site; approval by the defendant meant approval by Stephan Kopp, a director of the defendant; and this was the equivalent of board approval.

73 Mr Brassington denied that he used the words that are summarised in the particulars. Mr Bettar’s diary note says that Mr Brassington was “[g]iven approval to proceed with the site for ALDI by his boss”. An email sent by Mr Bettar to Mr Bart the same day refers to “verbal from his boss to proceed”, which will be “formalised next week as a report to his boss”.

74 However, on a fax sent by Aldi to Mr Bettar on the same day, Mr Bettar wrote that Mr Brassington was “re-presenting” the matter to his “boss next week”. Mr Bettar acknowledged in cross-examination that he understood from whatever Mr Brassington had said at the meeting that the approval was one to continue negotiations (T86.36 – 87.10):

Q. The note below the header--
A. Yes.

Q. --next to number 1 seems to read "re-presenting - boss next week", is that correct?
A. Yes.

Q. And that's a note of something--
A. He was representing, he told me, his package. The entire package now to his boss next week.

Q. And this was something that was in accordance with your understanding of how the process would proceed within Aldi, namely that Mr Brassington would from time to time keep his boss, Mr Kopp, informed of progress?
A. Yes, sir.

Q. And that if Mr Kopp was happy to continue the negotiations, he would give Mr Brassington approval to do so?
A. Yes.

Q. Again, in your affidavit I think at paragraph 76, you refer to Aldi being committed to leasing the B1 basement level. That commitment, as you understood it at that time, was nothing more than a commitment to genuinely pursue negotiations in relation to the site?
A. Yes, sir.

75 Clearly, Mr Bettar’s understanding of the effect of what had been said does not support the apparent strength of the assertions in the particulars; and in my view it is also inconsistent with the thrust of Mr Bettar’s evidence on the disputed remarks. I prefer Mr Brassington’s evidence.

Aldi’s letter of 16 October 2006

76 By 16 October 2006, Mr Brassington appears to have thought that the negotiations had got to a stage where it was reasonable to contemplate “entering into formal lease documentation as soon as possible”. On 16 October 2006, he wrote to Mr Bettar and set out, in tabular form, what he understood to be “the respective position of both parties”. The table covered some 32 subjects, ranging from such basic matters as the premises, the area to be leased, the rent and the term, through to matters of detail such as trading and delivery hours, signage, access and the like. Among other things, that letter stated, as item 30 (entitled “Conditions Precedent”):

This offer is conditional upon:
relevant Authority approvals;
ALDI Board approval;
BBB Board approval

77 The letter also dealt with access to and from Retreat Street:

Satisfactory Authority approvals with respect to turning right into/from Retreat Street into/from Botany Road. ALDI will accept a condition that limits right turn access to/from Retreat Street; i.e. no right turn from 7am to 9.30am and 4pm to 7pm.

78 The letter concluded:

Upon your acceptance of the above, we shall instruct our Solicitors to prepare Lease documents. Our intended timeframe for exchange of documents is by Christmas shutdown 2006.

79 This letter is the fifth item in the particulars:

(e) By letter dated 16 October 2006, the defendant informed the plaintiff that the defendant’s intended timeframe for exchange of lease documents was by Christmas 2006.

BBB’s letter of 30 October 2006

80 Mr Bettar replied on 25 October 2006. His letter indicated that there still remained areas of disagreement: for example, in relation to delivery hours.

81 As to the “Conditions Precedent”, Mr Bettar noted “OK”.

82 As to access to and from Retreat Street, Mr Bettar noted:

d) Authority approvals with respect to exist of Retreat Street – “BBB Constructions will use its best endeavours to obtain conditions limiting access but take no obligation.

Aldi’s letter of 30 October 2006

83 Mr Brassington replied on 30 October 2006, updating the table. It was apparent that the parties were not ad idem on delivery hours (nor, for that matter, entirely ad idem on outgoings). In relation to access to and from Retreat Street, Mr Brassington noted:

As discussed, this is an important issue. It will remain a special condition for ALDI.

84 It may also be noted that, in another part of his response, dealing with the time for BBB to satisfy conditions precedent under the agreement for lease that was proposed, Mr Brassington stated:

When we finalise terms (ie. exchange Agreement for Lease) the Lessor will have twelve months to satisfy any conditions precedent, ie. Development Approval, etc.

The meeting of 8 November 2006 and BBB’s letter of 13 November 2006

85 Messrs Bettar and Brassington met on 8 November 2006. Mr Bart and Mr Kalde attended this meeting.

86 Mr Bettar made notes of the meeting. Those notes suggest that the matters discussed were:

(1) how the cost of the carpark management system should be borne;

(2) the hours of delivery and related topics;

(3) “PT 12” (which I take to refer to Item 12, relating to outgoings, of the table that had been exchanged back and forth between Aldi and BBB); and

(4) access to and from Retreat Street.

87 As to this last matter, Mr Bettar’s note reads:

As mentioned BBB construction will use our best endevours [sic] to obtain approval for right access / egress to retreat [sic] during limited times.
Eg No Right Turn 6 – 10.00am
3 – 6.00pm

88 Mr Bettar’s affidavit expanded on those notes. As to the last point (access to and from Retreat Street), it attributed to Mr Brassington (after Mr Bart had said that BBB would use its best endeavours but could not guarantee the outcome) the following comment:

I understand, however I need to know that you will use your best endeavours and that you will provide me with all of the documentation in your DA application. If you don’t get it, it will not be a deal breaker as long as you make an attempt.

89 According to Mr Bart, Mr Brassington said “[a]t the end of this meeting”:

As to Botany Road, we agree that you are to use your best endeavours to get a right hand turn into Botany Road from Retreat Street, but we recognise that this may not be possible. We are now in full agreement on all matters and you should expect to receive our lease document very soon. Let’s get it signed.

90 Mr Bart referred to BBB’s letter of 13 November 2006 to Aldi – the final version of the attempt to reach heads of agreement. In relation to access to and from Retreat Street, it says no more than that “[a]s mentioned”, BBB would use its best endeavours.

91 Mr Kalde dealt with this meeting in his affidavit. He did not cover all the matters to which Mr Bettar had referred. However, as to the question of vehicular access, Mr Kalde set out the following (affidavit sworn 26 June 2008, para 4 (a)):

(a) As to vehicular access:
Mr Brassington said, “One of the issues of concern is ingress to and egress from Rawson Street. It is important to Aldi that there is adequate vehicular access to the store”.
Mr Bettar said: “We will submit to the council whatever you like, but you have to accept that they might not approve exactly what you want. You will of course have vehicular access approved, though perhaps not as good as you would like.”
Mr Brassington said, “Paul that’s fine. Because it will still work for Aldi. I just want you to submit it the way Aldi prefers, and we will accept whatever the Council approves.”
Mr Bettar, “We will do the best we can.”
Mr Brassington said, “That will be fine.”
(b) As to signage:
Mr Brassington said, “Please note the dimensions and location of the signage Aldi would like”.
Mr Bettar said, “We will submit it, no worries, but you have to be aware that Council might give you something less or change the location. We can’t have you wiggling out of the deal just because council does not give you what you want.”

92 Presumably, the reference to “Rawson Street” should be read as a reference to “Retreat Street”.

93 Mr Kalde also dealt with the question of signage. According to him, Mr Brassington asked for Aldi’s requirements to be noted, and Mr Bettar said that BBB would submit them to the Council, but that the Council might give something less. Mr Kalde said that Mr Brassington replied:

Aldi are confident we will be happy with whatever we get from council. We will accept what we get. We just want you to apply for what we want.

94 Finally, according to Mr Kalde, Mr Brassington said at the conclusion of the meeting:

That’s it then, we are agreed.

95 Mr Brassington denied that he said the words attributed to him by Mr Kalde in relation to vehicular access and signage, and did not recall saying “That’s it then, we are agreed”. He denied saying, as alleged by Mr Bettar, that if BBB did not get right hand access to and from Retreat Street “it will not be a deal breaker” as long as BBB tried its best to obtain what Aldi required. As to Mr Bart’s affidavit, Mr Brassington denied saying the words set out at [89] above.

96 There is not a great deal of consistency between the accounts given by Messrs Bart, Bettar and Kalde. Only Mr Bettar says that the expression “deal breaker” was used. That is a strong, indeed vivid, expression. If Mr Brassington had used those words, it might have been thought that the others at the meeting would remember that he had done so.

97 Mr Bettar does not say that, at the conclusion of the meeting, Mr Brassington said that “we had a deal” or that “we are now in full agreement on all matters”. Again, they are strong and decisive words, and one would have thought that, if Mr Brassington had used them, the others would have remembered. I acknowledge, of course, that Mr Kalde said that Mr Brassington said “we are agreed”, but without the additional flourishes contained in Mr Bart’s account.

98 I also that Mr Brassington believed that Aldi and BBB had taken negotiations as far as they could at that stage, and had agreed on how the negotiations were to progress. I accept, also, that after Mr Brassington received the letter of 13 November 2006, he treated it as “heads of agreement”, and sent it to Brophy Bridge and Mirow so that they could commence preparation of the documents.

99 However, it strikes me as highly unlikely that, in relation to signage, delivery hours or access to and from Retreat Street, Aldi would have committed itself to proceed on the basis of whatever the Council might permit, without having any indication of what might be permitted or how it would impact on Aldi’s operations.

100 Signage was a matter of great importance, in circumstances where Aldi’s store was to be located in a basement. Self-evidently, the ability to deliver stock in trade, and the hours in which that can happen, are matters of importance. It is clear that at all times up until November 2006 (and for some months thereafter), Aldi regarded the question of access to and from Retreat Street as important. I do not accept, as a matter of objective probability, that Mr Brassington would have agreed to have accept whatever it was that Aldi might be permitted under any of those heads.

101 I note also, in this context, that whilst Mr Bettar’s notes apparently record what was said by or on behalf of BBB, they do not record the various comments that are in dispute between Messrs Bart, Bettar and Kalde on the one hand and Mr Brassington on the other.

102 I do accept that Mr Brassington may well have said words to the effect that the parties were agreed on how to take the negotiations forward, and that their negotiations had reached a point where work could commence on detailed drafting. But in circumstances where matters of considerable importance to Aldi had been left unresolved, I do not think that Mr Brassington would have concluded that there was full or complete agreement; let alone that he would have said so.

103 I accept also that the letter of 13 November 2006 set out the current state of the negotiations. It was prepared by Mr Bettar. Mr Brassington forwarded it, as the “Heads of Agreement”, to Brophy Bridge and Mirow. But it does not follow that matters had gone beyond the stage described by Mr Bettar in his letter (“points… regarding the potential lease”) or as described by Mr Brassington when he sent the document to Brophy Bridge and Mirow (“our Heads of Agreement”).

Mr Brassington notifies his resignation from Aldi

104 After the meeting of 8 November 2006, but before the letter was sent on 13 November 2006, Mr Bettar received a letter from Mr Brassington notifying Mr Brassington’s resignation from Aldi. Mr Bettar rang Mr Brassington. He said that he expressed his concern, not wanting “to go through all this again with the new representative”, and that Mr Brassington replied:

Don’t worry mate, this will be exchanged and done well before I leave. We’ll have it done by Christmas. All the hard work’s been done.

105 Those words are the subject of the sixth item of the particulars:

On or about 9 November 2006, Mr Brassington advised Mr Bettar that a formal agreement for lease would be exchanged before Christmas and that “[a]ll the hard work’s been done” .

106 Mr Brassington did not deny that he said those words, but said that he could not recall saying them. They were not recorded in any contemporaneous note that was in evidence. On the contrary, when Mr Bettar wrote to Mr Brassington on 13 November 2006 (a few days after the conversation is said to have occurred), the letter made no reference to documents signed and in place at all, let alone by Christmas. Somewhat to the contrary, it referred merely to “the potential lease”.

107 Where Mr Brassington does not agree that he said the words, where the words (or their import) were not referred to in a letter sent at about that time, and where Mr Bettar’s evidence is not otherwise corroborated, I am not prepared to find that Mr Brassington did use the words attributed to him as set out above.

The conversation of 27 November 2006

108 Mr Bettar says that on 27 November 2006, Mr Brassington told him that Aldi’s solicitors were preparing a draft lease, which BBB should receive by the end of the week. This conversation forms the seventh item in the particulars:

On or about 27 November 2006, Mr Brassington informed Mr Bettar that the defendant’s solicitors were preparing a draft lease which should be received by the plaintiff that week.

109 Mr Brassington did not touch on this in his affidavit. In circumstances where Mr Brassington had instructed Brophy Bridge and Mirow to prepare the lease, it is possible that he did use the words attributed to him. Although Mr Bettar’s evidence is uncorroborated, I am, in this instance, prepared to accept it. In fact, the draft lease was dispatched within a week of that conversation.

Negotiation of the terms of the agreement for lease

110 I do not propose to deal in detail with the exchange of documents between the solicitors (Brophy, Bridge and Mirow for Aldi and KQ Lawyers for BBB). In the usual way, they sought to negotiate the detail of an agreement for lease (including, of course, the draft lease that the parties would execute if the various conditions precedent were satisfied). Nor do I propose to deal in detail with the various meetings and conversations that are said to have occurred in the months following 8 November 2006, up until the meeting held to thrash out the terms of the agreement for lease on 30 March 2007.

The first draft is sent

111 Brophy Bridge and Mirow sent the first draft of the lease out, to Mr Bettar, on 1 December 2006. It described the document as being “in respect of this prospective project” and sent for “preliminary discussions”. The letter stated:

Please note that the document does not have the formal approval of our client and is submitted as a draft.

112 On 15 December 2006, Brophy Bridge and Mirow, having been informed that KQ Lawyers were acting for BBB, sent a copy of that letter and of the agreement for lease to KQ Lawyers.

Comments on the first draft

113 On 10 January 2007, KQ Lawyers replied. They sent back a copy of the documents with changes marked up. The letter stated:

Please note, although we understand that our proposed amendments reflect the heads of agreement reached by the parties, we have not yet had an opportunity to take our client’s formal instruction thereto. As such, the enclosures are provided in draft form only.

The conversation of 7 February 2007

114 Mr Bettar says that, on 7 February 2007, he had a telephone conversation with Mr Brassington. That conversation is the eighth item referred to in the particulars:

On about 7 February 2007, Mr Brassington said to Mr Bettar words to the effect: “[E]verything will be ok. You are just going through the lease formalities. I wouldn’t worry about it; everything is under control. … Don’t worry, the lease is done.

115 Mr Brassington does not deal directly with this conversation. However, it is inconsistent with my observations of him that he would have expressed himself in the terms he did: particularly, in circumstances where he had just left the employ of Aldi. Mr Bettar’s account of the conversation is uncorroborated. In the absence of corroboration, and bearing in mind the objective circumstances (including not only that Mr Brassington had just left Aldi’s employ, and that the negotiations on the scope of works, which were an essential part of the overall transaction, were far from complete), I do not find that Mr Brassington used the words attributed to him.

BBB’s letter of 9 February 2007

116 On 9 February 2007, Mr Bettar wrote to Mr Francis (who by then had replaced Mr Brassington at Aldi). The letter stated:

I have made several attempts over the past few weeks to contact you on your mobile and office. I have also faxed a letter requesting information and confirming discussions that took place on 22 ^nd January.
Please confirm that all is still on track as per the Lease and Agreement.
We are concerned, as we have spent an immense amount of money and time on this project for Aldi.
…

117 Mr Francis was ill, and on extended sick leave. Mr Savell took over Mr Francis’ responsibilities in relation to the negotiations with BBB. On Mr Savell’s recommendation, Aldi then retained Milestone to provide Mr Brassington’s services as a consultant.

118 On 27 February 2007, Messrs Bettar and Brassington met. According to Mr Bettar’s diary note of the meeting, Mr Brassington “reassured me that the lease documents will be finalised and that Aldi are proceeding”. Although Mr Brassington did not recall that conversation (to which Mr Bettar had deposed in his affidavit), I find, based on the existence of the diary note, that it occurred.

119 This is the ninth item referred to in the particulars:

(i) On about 27 February 2007, Mr Brassington said to Mr Bettar words to the effect: “The lease documents will be finalised. Don’t worry. Aldi are proceeding.”

378 Two things are conspicuously absent from the negotiations that followed the meeting of 31 May 2006:

(1) any clear or explicit statement on behalf of BBB that it would only proceed as it did, or incur expenditure as it claims to have done, if Aldi accepted some obligation in respect of that expenditure; and

(2) any explicit request by Aldi of BBB that it undertake any such expenditure.

379 Mr Watson submitted that it was clear, in all the circumstances, that BBB was only proceeding as it did, and incurring expenditure, so as to put itself in a position to meet Aldi’s requirements. That may be one way of putting what happened. But acted as it did in the knowledge that:

(1) Mr Brassington’s authority was to negotiate, rather than to decide (and so too, if it is relevant, was Mr Savell’s);

(2) Mr Kopp was the ultimate decision-making authority;

(3) Mr Kopp would not decide until all the terms of the deal had been negotiated; and

(4) the requirement that Mr Kopp give his approval was not a matter of formality, or of applying a rubber stamp.

380 To the extent that the fourth proposition is inconsistent with the evidence of Messrs Bart and Bettar, I do not accept that evidence at face value, or in terms, for the reasons that I have given both in dealing with their credibility and in dealing with the particular alleged representations on which Mr Watson placed reliance in his submissions.

381 In summary, Mr Kopp decided not to proceed with the transaction because he decided, overall, that it was not in Aldi’s interests to proceed. It is correct to say, as Mr Watson submitted, that many of the elements to which Mr Kopp referred (either on his own account of the decision-making process or as attributed to him by Mr Savell) were matters that had been the subject of negotiation and agreement between Messrs Bettar and Brassington. But those negotiations, which were intended to take the matter as far as they could between those two gentleman, were not decisive. Mr Kopp’s approval was required to the whole of the proposal, and it was not something that could be assumed, or taken for granted.

382 Further, as Mr Kopp explained, in assessing any proposal to lease, it is necessary to balance all the positive and negative factors. Where a particular consideration is a “deal-breaker”, then, of course, the transaction would not proceed. But when some aspects of the transaction were acceptable, and some less so, it was, as Mr Kopp agreed, a matter of balancing them. It was his role to assess, in Aldi’s interests, all the elements of the transaction. That is precisely what he did.

383 Of course, and again as Mr Watson submitted, Mr Kopp relied on factors that did not have to do with the objective commercial merits of what had been negotiated: the “values” of BBB. Although Mr Watson strove to portray this as some idiosyncratic and unsustainable subjective assessment, I think that what Mr Kopp was saying was that he had doubts about BBB, based both on the way negotiations had been conducted on its behalf and on the terms of the letter of 26 July 2007, and had decided that this was not a promising start for what should have been a long–term relationship. That reading of Mr Kopp’s reasons is supported by the comments attributed to him by Mr Savell.

384 Mr Kopp may have been right in forming what appears to have been a negative assessment of BBB’s “values”; or he may have been wrong. But he was certainly right to take into consideration that the relationship, if consummated, would last for at least 12 years, and that of necessity there would need to be some give and take along the way. (By way of example: the trolley bay licence, which whilst not a matter essential for the conduct of Aldi’s business was clearly of benefit to it, was, at BBB’s insistence revocable at will.)

385 As I have said, I accept Mr Kopp as a witness of truth. I accept his evidence of his reasons for deciding not to proceed with the transaction, and it follows that I accept that he made, overall, a commercial judgment of the transaction in what he believed to be Aldi’s best interests.

386 It follows that the present facts can be distinguished from those considered by Sheppard J, in particular, in relation to what I have identified as the matter that was central to his Honour’s reasons. In those circumstances, I do not propose to take any further the first question posed at [371] above. That is because, for the reasons I have given, the answer to the second of those questions is “no”; and on that basis, even if Sabemo should be followed, it does not govern the outcome of this aspect of BBB’s claim.

387 Accordingly, I conclude that BBB’s claim on a quantum meruit or restititonary basis, based on the decision in Sabemo, fails.

388 If the claim is to be considered on some wider basis, then it would be necessary to identify the features of the transaction that made it unconscientious for Aldi to withdraw, at least without making compensation or restitution for the expense incurred by BBB. Since Mr Watson did not address those matters separately (in his submissions on issue 5) I have assumed that he intended to rely on his submissions on unconscionable conduct as applying, to the extent necessary, to issue 5.

389 I should say that it is by no means clear that Mr Watson did intend to advance a wider restititutionary case. It appears to be reasonably well established, at least by first instance authorities decided since Pavey & Matthews, that it would be necessary to show at least the conferral of a benefit and the acceptance of that benefit in circumstances in which it would be unconscientious for the beneficiary not to make payment. Mr Watson’s submissions did not address the “benefit” said to have been conferred and received, nor (except to the extent that I have just indicated) why it would be unconscientious for Aldi to retain any such benefit without making some restitution on account of the costs of providing it.

390 In any event, in circumstances where, as I have said, BBB regarded itself as uncommitted, and free to withdraw, before an agreement for lease was executed and exchanged, it can hardly have been unconscientious for Aldi to take the same approach.

391 Issue 5 should be answered “no”.

Sixth to tenth issues: relief

392 To the extent that these issues were to be dealt with in the hearing with which these reasons are concerned and not (should it be necessary) subsequently, they do not arise having regard to the conclusions that I have reached on the first to fifth issues.

Conclusion and orders

393 BBB’s case fails. The proceedings must be dismissed with costs. I so order.

**********