Canberra Hire Pty Ltd v Koppers Wood Products Pty Ltd and Michael Agnew and Paul Cecil Shadbolt - [2013] ACTSC 162

CANBERRA HIRE PTY LTD V KOPPERS WOOD PRODUCTS PTY LTD AND MICHAEL AGNEW AND PAUL CECIL SHADBOLT
[2013] ACTSC 162 (12 August 2013)

CONTRACTS – General contractual principles – construction and interpretation of contracts – requirement to remediate contaminated land – whether the clause extended to remediation of ground water – what is the register under the contract – definition of ‘register’ – whether an application was lodged within time – definition of ‘lodge’ – turns on its own facts

CONTRACTS – General contractual principles – construction and interpretation of contracts – generally – using extrinsic material – the necessity of ambiguity – ambiguity necessary before having regard to extrinsic material – use of evidence of pre-contract negotiations – use of object and purpose of the contract – construction where the contract contains inconsistencies

CONTRACTS – General contractual principles – specific performance – requirements for – ability to complete the contract

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Environment Protection Act 1997 (ACT), ss 9, 21A, 91I, Div 2.3

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No. SC 822 of 2007

Judge: Refshauge J
Supreme Court of the ACT

Date: 12 August 2013

IN THE SUPREME COURT OF THE     )
  )          No. SC 822 of 2007
AUSTRALIAN CAPITAL TERRITORY )

BETWEEN:CANBERRA HIRE PTY LTD
Plaintiff

AND:KOPPERS WOOD PRODUCTS PTY LTD
Defendant

AND:MICHAEL AGNEW AND PAUL CECIL SHADBOLT
Third Parties

ORDER

Judge:  Refshauge J
Date:  12 August 2013
Place:  Canberra

THE COURT FINDS THAT:

Koppers Wood Products Pty Ltd is not contractually required under the contract between it and Canberra Hire Pty Ltd, dated 8 August 2005, to undertake any further remediation on the land being Lot 1210 Tralee Street Hume.

THE COURT ORDERS THAT:

Canberra Hire Pty Ltd inform the Court and Koppers Wood Products Pty Ltd in writing within 14 days whether, in light of the Court’s finding, it maintains its claim for specific performance.

If Canberra Hire Pty Ltd does inform the Court that it maintains that claim for specific performance, Koppers Wood Products Pty Ltd inform the Court within 14 days thereafter whether it maintains its application to cross-examine a representative of the financier of Canberra Hire Pty Ltd.

The parties be heard thereafter as to the orders to be made.

INTRODUCTION

Koppers Wood Products Pty Limited, the defendant, manufactured treated wood products and had done so, at a factory situated at Lot 1210 Tralee Street, Hume in the Australian Capital Territory, since 1989.

The preservation process for the wood products involved treating them with copper chrome arsenate, amongst other chemicals, a compound which contains highly toxic elements and which has what experts call “high leachability”, namely, a high capacity and inclination to dissolve into the soil.

After about fifteen years conducting the business at Hume, the defendant, whom, in these reasons, I will call Koppers, decided to end its activities and looked to sell the property.

In early 2005, expressions of interest were invited from various parties, one of which included the plaintiff, Canberra Hire Pty Limited, to whom I will refer as Canberra Hire.

On 8 August 2005, Koppers entered into a contract with Canberra Hire for the sale of the land to Canberra Hire.

Much of the negotiation in respect of the contract and some critical terms in the contract related to remediation of the site because of the activities that Koppers had conducted on it.

The parties are now in dispute over the terms of the contract and these proceedings confirm that.

THE PROCEEDINGS

On 23 November 2007, Canberra Hire commenced these proceedings by Originating Application supported by an affidavit of each of two of the directors of Canberra Hire and the Canberra lawyer agent for the lawyers for Canberra Hire.

On 3 October 2008, Koppers filed a Defence and Counter-Claim and also a Third Party Notice directed to Michael Agnew and Paul Cecil Shadbolt, directors of Canberra Hire. They became and remain third parties in the proceedings.

A number of amendments were made to the pleadings from time to time and on 4 February 2009, a Fourth Further Amended Originating Application with a Statement of Claim attached was filed followed by a Revised Defence and Counter-Claim making minor amendments to that earlier filed.

Finally, an Amended Reply to the Defence and Answer to the Amended Counter-Claim was also filed.

The hearing of the proceedings commenced on 3 February 2009 and, on 19 February 2009, I reserved my decision.

THE PLEADINGS

Canberra Hire pleaded, and Koppers admitted, that, by the contract for sale dated 8 August 2005, Koppers agreed to sell to Canberra Hire the unexpired residue of the lease of the land known as Block 1210 Tralee Street, Hume in the Australian Capital Territory for the sum of $2,470,000.00.

Canberra Hire pleaded that Koppers had obligations to remove improvements and to remediate the land to a specified level or as might be required by a condition for approval received by Canberra Hire in respect of its application for a change of use of the land or, alternatively, that Koppers had obligations to remove improvements and remediate the land to a specified level and have the remediation work certified, as set out in the pleadings.

Koppers admitted obligations under certain clauses of the contract but otherwise denied the allegations made by Canberra Hire.

Canberra Hire pleaded the date for completion of the contract to be ten business days after service of certain documents and that those documents were duly served.

Canberra Hire, however, says that the documents did not discharge Koppers obligations under the contract because of the following:

(a) the contract required an unconditional remediation but the certificate was subject to qualifications which rendered the remediation conditional;

(b) the certificate stated that the soil may not be suitable to remain since the soil may have a potential to leach at unacceptable concentrations resulting in ground water contamination;

(c) in the alternative, the remediation work had not been certified in the manner required by the condition of approval under the Change of Use obtained in accordance with the contract;

(d) in the alternative, Koppers had not discharged its obligation under the contract because it had not remediated the land as required by the condition of approval in respect of the Change of Use;

(e) in the alternative, Koppers had not complied with its obligations under the contract because the works in purported compliance with those obligations had not been completed in a manner consistent with the development approval of the ACT Planning and Land Authority (ACTPLA);

(f) in further alternative, that Koppers was obliged under the contract to remediate the land to the level that was be required for removal of the land from any register of contaminated sites; that the “Contaminated Sites Management Database” maintained by the Environmental Protection Authority of the Australian Capital Territory (“the EPA Database”) was a relevant register; and that the land was still recorded in the EPA Database as a contaminated site, thereby rendering Koppers to have failed to comply with its obligations under the contract;

(g) in further alternative, the contract contained an implied term that Koppers would meet all additional requirements that might lawfully be imposed with respect to its obligations under the contract and had not complied with them; and

(h) in the further alternative, the contract contained an implied term that Koppers would act in good faith and ensure that Canberra Hire obtained the benefit of the contract and Koppers had not complied with that obligation.

Further, Canberra Hire pleaded that it was and remains ready, willing and able to complete the contract.

Koppers denied these alleged breaches, pleading that the certificates did discharge its obligations, disputing the construction of the contract contended for by Canberra Hire, denying that the Change of Use Application was in accordance with the terms of the contract, denying that the inclusion of the land in the EPA Database was relevant to the performance of the contract and denying the implied terms alleged.

Koppers further pleaded what it said was the proper construction of the contract and its compliance with its obligation under the contract and set out in significant detail what it said was the position.

Koppers also pleaded that the contract required Canberra Hire to be responsible for all costs, expenses and taxes in relation to the Application for Change of Use and that any remediation in respect of the condition of approval would impose such a cost for which Koppers would be entitled to be indemnified by Canberra Hire.

Koppers claimed that, if any order for specific performance were made, it should only be granted on certain conditions of indemnity of Koppers by Canberra Hire for certain costs and expenses, especially of remediating the land. It pleaded that, as a matter of discretion, the claim for specific performance should not be granted because it would require the court to engage in constant supervision and, in any event, Canberra Hire had breached certain terms of the contract.

Canberra Hire by its reply pleaded an extension of time of the contract, put in issue the construction of clauses of the contract contended for by Koppers and pleaded that the obligation to indemnify Koppers would arise only in the event that the circumstances referred to by Koppers occurred after completion of the contract.

The Counter-Claim pleaded by Koppers was that the occasion for completion of the contract had arisen and that, as a result of the failure by the plaintiff to complete the contract, Koppers was entitled to rescind. In the alternative, it claimed that Canberra Hire was required to indemnify Koppers against liabilities suffered, paid or incurred by it for any requirement to remediate to a higher standard than referred to in the contract and that, if there were any liability to remediate, that would require Koppers to be indemnified by Canberra Hire for those costs.

Canberra Hire sought declarations that there was a valid and subsisting contract, that the circumstances had occurred whereby Koppers had not complied with its obligations under the contract or, in the alternative, that a declaration that there was an implied term that Koppers would meet additional requirements and that it had not complied with those obligations. It claimed, in further alternative, a declaration that the contract contained an implied term that Koppers would act in good faith and a declaration that it has not done so and it further claimed an order that Koppers specifically perform its obligations under the contract and that, until further order, Koppers be restrained from dealing with the land in any way inconsistent with Canberra Hire’s rights as a purchaser. It also claimed a further order restraining Koppers from rescinding the contract and, of course, claimed costs and interest on costs.

THE CONTRACT

The contract the subject of these proceedings was made, as noted above, on 8 August 2005 between Canberra Hire and Koppers for the sale of the residual unexpired residue of the lease of Block 1210 Tralee Street Hume (the Hume site) for $2,470,000. It was in accordance with the standard Contract of Sale of the Law Society of the Australian Capital Territory, but with a number of additional clauses. In particular, the following clauses are relevant:

26. REMOVAL OF IMPROVEMENTS
26.1Prior to Completion the Seller must remove from the Land any improvement, structure, plant, equipment, fitting, fixtures and all stock. The Seller shall make good any damage caused by such removal.
26.2The Seller must remove all buildings, including the concrete foundations and slabs. The Seller shall crush all concrete and stockpile it on the Land provided that the Seller must, if required to comply with its obligations under clause 29, remove any such concrete from the site at its expense.
...

29. REMEDIATION
29.1Before Completion the Seller must, at its cost remediate the Property to HIL “F” levels as per National Environmental Protection (Assessment of Site Contamination) Measure 1999 [NEPM] and have the remediation work certified by an EPA accredited third party auditor or otherwise as may be required by any condition of approval received by the Buyer (and served upon the Seller within 2 Business Days of receipt) in respect of the Buyer’s application for change of use under clause 30.
29.2The remediation work shall include:
(a)removing the three dams on the site and remediating the linings; and
(b)demolishing the sound walls located at various locations on the Land and ensuring any treated timber is disposed of in accordance with the regulatory requirements; and
(c)removing the CCA Plan located upon the Land including any concrete slab or other foundation materials; and
(d)removing the fuel pump and underground fuel storage tank(s) and associated plant and equipment.

29.3Without limiting clause 29.1, remediation must be to a level as may be required for either removal of the Land from any register of contaminated sites or similar register (for land used for General Industry (as that term is defined in the Australian Capital Territory - Territory Plan Industrial Land Use Policies Part B3, Precinct ‘a’) purposes) or endorsement as being remediated to HIL ‘F’ level as per NEPM maintained by an Authority (herein after referred to as “HIL ‘F’ Level”) and the Seller must at its cost, prior to Completion cause the Land to be removed from any such register or endorsed as being remediated to HIL ‘F’ Level. The Seller acknowledges that at the date of this Contract, the Land is not noted on any such register and the Buyer or the Seller each agree that they must notify the other party immediately, but not less than 2 Business Days after receipt of the certificate referred to in clause 29.1 if the Land appears on any such register or endorsed as being remediated to HIL ‘F’ Level as per NEPM. The Seller shall be entitled to extend the time for completion of this Contract to enable it a reasonable period of time to effect the removal of notification of the Land from any such register or the endorsement of the Land, as contemplated herein, on the register.

29.4The Buyer acknowledges that the Seller will surrender the Environment ACT licence on cessation of operations.
29.5If, after the Buyer has obtained consent to the change of use, the Contract is terminated by the Buyer as a result of the Seller failing to remediate the Land in accord with its obligations under this clause 29, the Seller agrees to indemnify the Buyer for its reasonable costs incurred directly in relation to the application for change of use and any betterment tax paid.
29.6The Buyer indemnifies the Seller against all Liabilities suffered, paid or incurred by the Seller from any breach of any Environmental Law or the escape of any Contaminant or Hazardous Substance into the Environment or any other Environmental Matters relating to the Land on and from completion and any requirement to remediate the Land to higher standard than that referred to in Clause 29.1. This clause shall not merge upon completion.

In this clause:
“Authority” means any Council and all and any other Governmental or Semi-Governmental entity entitled to regulate by law or otherwise the use and condition of the Land; as well as any court or tribunal or other body or person, constituted under a law of the Commonwealth, State or Territory with power of conciliation, arbitration or adjudication in relation to the Land; or a special board constituted under the law of a State or Territory in respect of any matter concerning, affecting or pertaining to the Land.
“Liabilities” means all liabilities, losses, damages, outgoings, costs and expenses of whatever description.
“Contaminant” means a solid, liquid or gaseous substance, odour, heat, sound, vibration or radiation which is or may be:
(a)Noxious or poisonous or offensive to the senses of human beings;
(b)Harmful or potentially harmful to the health, welfare, safety or property of human beings;
(c)Poisonous, harmful or potentially harmful to animals or plants; or
(d)Detrimental to any beneficial use made of the Environment.

“Environment” means the physical factors of the surrounds of human beings including the land, waters, atmosphere, climate, sound, odours, place, the biological factors of animals and plants and the social factors of aesthetics.
“Environmental Law” means a law regulating or otherwise relating to the Environment including land use, planning, pollution of the atmosphere, water or land waste, the storage and handling of chemicals, Hazardous Substances, or any other aspect of protection of the Environment.
“Environmental Matters” means all matters relating to the pollution, contamination, human health and/or the Environment, including matters relating to radiation, health and safety, waste, nuisance, discharges, emissions, deposits, disposals and releases to the Environment, Hazardous Substances or forms of energy.
“Hazardous Substance” means any substance which is, or may be, hazardous, toxic, dangerous or polluting or which is regulated by any law relating to the environment.

30. CHANGE OF USE
30.1The Seller consents to the Buyer making application for a change of use for the Land to General Industry (as that term is defined in the Australian Capital Territory – Territory Plan Industrial Land Use Policies Part 3B, Precinct ‘a’ (“General Industry”)).
30.2The Buyer must within twenty-one (21) days from the date hereof prepare and lodge with the relevant authority (the “Authority”) the application for change of use to General Industry (the “Application”) in respect of the Land. The Buyer warrants to the Seller that the Application shall be for such use or uses as are permitted under the present planning schemes affecting the subject land and shall in all other respects comply with the terms of such planning schemes and with the ACT Land (Planning and Environment) Act and Ordinances/Regulations. The Buyer covenants to the Seller that the Application (and all documents lodged with or relating to the Application and all dealings with the Authority relating to the Application) shall not directly or indirectly seek, suggest, represent, warrant or commit to remediate the Property to a level other than HIL ‘F’ Level.
30.3The Buyer must keep the Seller fully and properly informed of the progress of the Application and without limiting the generality of the foregoing the Buyer shall, as soon as the same comes into its possession, provide the Seller with copies of the Application to be lodged with the Authority and any approval or refusal which may be received from the Authority in relation to the Application. Further, the Buyer must provide the Seller with a copy of the Application (and all documents lodged with or relating to the Application) if there are variations to the earlier documents provided to the Seller, within 7 days lodgement, as well as a written report as to progress of the Application at the end of each calendar month.
30.4The Buyer shall pursue the Application with all due diligence and shall use its best endeavours to have the Application approved by the Authority.
30.5In the event that the Application is refused or is not approved within 5 months of the date of the Contract (“Sunset Date”) then the Buyer, provided that it has duly performed and observed all of its obligations pursuant to the terms of this Contract (including the provisions of this clause 30), may rescind this Contract by notice in writing served upon the Seller:
(a)no later than fourteen (14) days after the date of refusal; or

(b) within 5 Business Days after the Sunset Date,
whichever is earlier.

30.6The Buyer shall be responsible for all costs, expenses and taxes in relation to the Application including the betterment tax (“Charges”). The payment by the Buyer of the Charges is an essential term in this Contract and the Buyer indemnifies the Seller in respect of the Charges and all Claims and Losses incurred in relation to the Application or any subsequent change of use.
30.7Notwithstanding the provisions of clause 20 the effects of rescission under clause 30.5 are that:
(a) this Agreement will be of no further force or effect except for the provisions of this clause 30.7;
(b)except as provided in clauses 30.6 and 30.7(c) neither party is under any liability to the other in respect of any Claims or Losses arising from rescission;
(c)the Seller is at liberty to retain the deposit pursuant to clause 24.1(a); and
(d)no party will be entitled to make a claim for the payment of damage, costs or expenses arising out of a breach of any term or condition or warranty contained in this Contract.

31.COMPLETION
31.1The date for Completion of the Contract is 10 Business Days after the later of:
(a)service by the Seller upon the Buyer of both:
(i)the certificate contemplated by clause 29.1; and
(ii)notification that the Seller has complied with its obligations pursuant to clause 26; and

(b)the earlier of:
(i)the granting of the Application; or
(ii)the last day the Buyer may exercise the rights of rescission pursuant to clause 30.5;

unless extended by the Seller pursuant to clause 29.3 or by agreement between the parties.

31.2Provided that the Seller has served upon the Buyer the notices referred to in clause 31.1(a) in the event that Completion has not taken place within 60 days after the Sunset Date then the Seller may rescind this Contract by notice in writing served upon the Buyer.
31.3In the event that the Seller rescinds this Contract under clause 31.2 then notwithstanding the provisions of clause 20 the effects of such rescission are that:
(a)this Agreement will be of no further force or effect except for the provision of this clause 31.3;
(b)except as provided in clause 31.3(c) neither party is under any liability to the other in respect of any Claims or Losses arising from rescission;
(c)the Seller is at liberty to retain the deposit paid pursuant to clause 24.1(a); and
(d)no party will be entitled to make a claim for the payment of damages, costs or expenses arising out of a breach of any term or condition or warranty contained in this Contract.

THE FACTS

On 12 January 1989, the Commonwealth leased 20.05 hectares of land at Hume in the Australian Capital Territory to Koppers Australia Pty Limited. The purpose clause of the Crown Lease provided:

To use the premises only for the purpose of a timber treatment plant utilising the copper chrome arsenate timber preservation process in accordance with the controls set out in the schedules to the lease

In 1990, Koppers Australia Pty Ltd transferred the lease to a subsidiary which changed its name twice to become Koppers Wood Products Pty Ltd, that is the defendant, Koppers. Koppers is a wholly owned subsidiary of Koppers Australia Pty Ltd which in turn is a wholly owned subsidiary of Koppers Inc, a company listed on the New York Stock Exchange.

During 2003/2004, Koppers recommended to Koppers Australia Pty Ltd and to Koppers Inc that it should sell the Hume site. It appears that this recommendation was accepted and, on 18 March 2005, Koppers sent detailed expressions of interest to three companies, including Canberra Hire.

Koppers had already sought an environmental report on the Hume site and, in March 2005, the first such report prepared by Robert Carr and Associates Pty Ltd, trading as RCA Australia, was provided to it.

The report outlined a number of concerns about the main contaminants, including arsenic, copper and chromium from the treatment process, total petroleum hydrocarbons, benzene toluene ethyl benzene and xylenes from the fuel storage tanks, as well as chemicals from the oil used around the maintenance workshop and pesticides from previous agricultural site use.

The report referred to assessment of the soil on site by reference to a level of acceptable contamination referred to as “HIL ‘F’”. Accordingly, this was terminology known to Koppers in March 2005.

The report also referred to water quality on the Hume site and referred to ANZECC 2000, which was a publication of the Australian and New Zealand Environment Conservation Council: ANZECC, ‘Australian and New Zealand Guidelines for Fresh and Marine Water Quality’ (Paper No 4, October 2000).

One of the companies invited to express an interest in purchasing the Hume site offered to purchase it for $250,000 on certain terms and conditions, another offered $800,000, said to be on a “walk-in walk-out” basis but on the condition that the “site is to be a clean site (Contamination free)”, and the third offer was received from Canberra Hire. The Canberra Hire offer contained three alternatives as follows:

·     Price for site only, completely unconditional $1,030,000;

·     Price conditional on site remediated to EPA industrial standards $2,470,000;

·     Price on site with completed remediation & re-zoned to industrial, undeveloped with betterment tax paid $5,060,000.

The Canberra Hire expression of interest also included conditions as to the removal of certain items from the Hume site, though the purchaser was happy to assist in the disposal of some of them.

It appears that Koppers, understandably, considered the offer from Canberra Hire to be the appropriate one. At a preliminary meeting on 18 May 2005, officers of Koppers discussed the expression of interest and came to the view that remediation of the Hume site, on a worst case scenario, would cost about $100,000.

On 6 May 2005, Ms Toula Panagiotou sent a copy of the Canberra Hire offer to Koppers’ lawyers; a first draft of a contract was prepared based on option 2 of the Canberra Hire expression of interest and was forwarded to Koppers on 17 May 2005. It was not forwarded to Canberra Hire. It used language clearly taken from the Canberra Hire expression of interest, option 2.

On 23 May 2005, officers of Koppers met with an officer of Canberra Hire, Mr Paul Shadbolt. The officers of Koppers were Mr Mark Tildsley, General Manager of Koppers and formerly the Safety, Environment and Risk Manager of Koppers Australia Pty Ltd, and Ms Panagiotou. This was a significant meeting.

The outcomes of the meeting were set out in an email sent by Ms Panagiotou to the lawyers for Koppers on 24 May 2005, as follows:

·Agreed with price option 2 ($2,470,000) was the preferred option.
·[Mr Shadbolt] confirmed the price was conditional on site remediated to EPA Industrial Stds (scheduled to be provided by [Mr Tildsley] to be attached to the contract):
o   remove diesel bowser
o   remove all tanks
o   remove CCA treatment plant
o   remediate dams as required to meet industrial stds
o   remove site from EPA site management register
o   receive a certificate from EPA validating that site has been remediated to industrial stds
o   removing buildings and improvements is optional
o   if concrete floors – need to remediate
·[Mr Shadbolt] will have his lawyers apply for the variation to the lease and use of site
·[Mr Shadbolt] will pay all taxes including the betterment tax
·[Koppers] needs to give permission to [Mr Shadbolt] to apply for variation to change of use of land.

In the email of 24 May 2005, Ms Panagiotou instructed Koppers’ lawyers that no remediation was to be undertaken unless Canberra Hire provided evidence that approval to vary the use of the land had been granted by the relevant authorities.

In addition, in a contemporaneous note of the meeting, taken by Ms Panagiotou, she noted that the parties would “[n]eed a schedule of what needs to be remediated.” This, it was agreed, was to be prepared by Mr Tildsley. This was referred to in the email of 24 May 2005 in the following terms:

Remediation requirements – need schedule outlining [Koppers’] responsibilities ([Mr Tildsley] to provide us with details next week).

Ms Panagiotou also deposed in her affidavit to a reference by Mr Shadbolt at the meeting to a “contamination register”. Her evidence was:

I remember Paul Shadbolt saying words to the effect:
‘I have just finished cleaning up and remediating land I bought in Victoria. It ended up being on a contamination register and because I bought it I was left to clean it up. Because of this I would want the remediation to be certified and make sure that the land is not on any contamination register.’

Mr Tildsley gave some evidence about the meeting. In his affidavit, he deposed that he referred specifically to soil remediation only at the meeting; his evidence was that he said at the meeting:

‘You want the cleaning up to industrial standards. That means the HIL F levels because that is the industrial standard. It deals with soil only.’

In his affidavit, he deposed that Mr Shadbolt replied, “Fine”.

In his oral evidence, he explained that, in his role as Safety, Environment and Risk Manager for Koppers Australia Pty Ltd between 2002 and 2004, he was familiar with the standards for management of wood preservation sites and the regulatory environment that related to them. In particular, he was familiar with published standards for environmental assessment of sites.

Shortly after the meeting, Mr Tildsley met with Mr Mark Heckenberg, an officer from Environment ACT. A diary note apparently made at the time stated that Mr Heckenberg’s response was that there was no problem with what was proposed and that the remediation should be to what was described “HIL (F)” levels in accordance with the “NEPM”.

“NEPM” is the National Environment Protection (Assessment of Site Contamination) Measure 1999, a measure made on 10 December 1999 by the National Environment Protection Council under State and Territories Acts. I do not have to detail all the relevant provisions for the purposes of these proceedings.

“HIL (F)” refers to what is described in the NEPM as “health based investigation levels”. These provide a health risk assessment as a basis for estimation of these levels (HIL). Schedule B(1) to the NEPM, “Guideline on the Investigation Levels for Soil and Ground Water”, set out levels in Tables in the Schedule.

Table 5-A relates to “Soil Investigation Levels”. Of the six levels of HIL, level “F” was for “Commercial/Industrial: includes premises such as shops and offices as well as factories and industrial sites”. Thus, “HIL (F)” is a measure which relates expressly only to soil. Various forms of the level are used in the documents. For ease, I will, except when quoting from a document, refer to it as HIL-F.

Table 5-B set out “Groundwater Investigation Levels” separately. That Table, in a footnote, stated that “[f]or guidance on Industrial Levels, see ANZECC 1992”. That referred to a publication of ANZECC, “Water Quality Guidelines for Fresh and Marine Waters” (November 1992), presumably an earlier version of the document referred to above (at [33]).

Mr Tildsley said in evidence that what he asked Mr Heckenberg was:

whether he agreed with me [that is, Mr Tildsley] that HIL F would be the appropriate level of soil remediation for the site, to which he replied yes.

Neither the notes that Ms Panagiotou made at the meeting nor the email of 24 May 2005 mention “soil only” or “HIL-F”; both referred only to “remediated to industrial stds”, presumably meaning standards.

The notes of the meeting include some writing that Ms Panagiotou wrote before the meeting “to make sure I covered some of this stuff when we were there”. This included a notation “[f]ull remediation to industrial stds” as a subject for discussion. In neither is there a reference to HIL-F or to soil remediation only.

In her affidavit, annexing the notes of the meeting and the email, Ms Panagiotou set out her recollection of the meetings, which included the following:

There was discussion as to defining what remediation was to be done and it was agreed that Mark Tildsley would prepare a schedule to be attached to the contract. Mark Tildsley led the discussions on remediation ...
At this time we had not defined the level of remediation or what remediation was to be undertaken. All that was spoken about was that remediation occur to “Industrial Standards”.

In her oral evidence about this was:

Now you know now, don’t you, that the words that are in the contract include a reference to the HILF standard? ---. Yes.
And you agree, don’t you, that that standard was not referred to, in terms, at this meeting, was it? --- I do not recall, I don’t – yes, I don’t. ---
It wasn’t, was it? --- No, I don’t see it, yes.

Mr Mark Heckenberg was called to give oral evidence, but said nothing about his conversation with Mr Tildsley.

In his second affidavit, Mr Shadbolt denied that Mr Tildsley used the words “[i]t deals with soil only”. He said that during the meeting, he recalled that the reference to remediation at the meeting was “to industrial standards”.

In his oral evidence, he denied that Mr Tildsley referred to HIL-F, even though that was not denied explicitly in his affidavit. He said he did not recall any discussion of HIL-F.

Mr Tildsley said in his evidence that he remembered the conversation with Mr Shadbolt on 23 May 2005 “vividly”; indeed, he added, “I just recall the – recall the meeting vividly”.

Despite this, when asked whether there was a mention at the meeting of a draft contract, he said he could not recall that. He did not remember Mr Shadbolt referring, at the meeting, to having had to clean and remediate land in Victoria, though that was expressly mentioned in Ms Panagiotou’s affidavit, as noted above (at [42]). She even put his words in quotation marks, which, for such a careful witness as she, was telling. Mr Tildsley did not deny that Mr Shadbolt said this, but he did not recall it. He did not recall Mr Shadbolt being “insistent” that the land be removed from any EPA register. It did not seem to me that his memory was as vivid as to the contents of the meeting as asserted.

There were other challenges to Mr Tildsley’s evidence. They show that he has, at least, a creative approach to interpreting plain words. While I rely on that finding here, I prefer to base it on the evaluation of the direct evidence.

Having carefully considered the evidence, I am not satisfied that Mr Tildsley used the phrase “HIL-F ... soil only” at the meeting of 23 May 2005. He is the only one who recalls it; it is not noted in the contemporaneous notes or the report of the meeting, and it seems to me at least odd that, having used such a precise term, there would need to be confirmation from Environment ACT.

Subsequently, and as a result of the discussion with Mr Heckenberg, Mr Tildsley prepared a schedule and Koppers instructed its lawyers to prepare a contract. The schedule set out, inter alia:

1.Land to be remediated to HIL “F” levels as per National Environment Protection (Assessment of Site Contamination) Measure 1999 [NEPM]
...
5.Environment ACT licence to be surrendered on cessation of operations.

On 9 June 2005, the second version of the contract was prepared and sent to the lawyers for Canberra Hire. It was, of course, the first version of the contract seen by Canberra Hire. The clause concerning remediation, then numbered 28, was as follows:

Before Completion the Seller must, at its cost, remediate the Property to HIL “F” levels as per National Environmental Protection (Assessment of Site Contamination) Measure 1999 [NEPM] and have the remediation work certified by an EPA accredited third party auditor. The remediation work shall include:
(a)removing the three dams on the site and remediating the lining; and
(b)demolishing the sound walls located at various locations on the Land and treating the timber disposed of in accordance with the above requirements.

The first sentence of this clause became known in these proceedings as “the first limb” of the remediation clause and, save for one qualification briefly inserted and then removed, remained unchanged throughout the negotiations leading to the final contract.

Clause 29, in this second version of the contract, was, in simple terms, permitting a Change of Use Application to be made by Canberra Hire, but without completion being conditional on the approval of such a change, though making payment of any betterment tax by Canberra Hire an essential term of the contract.

There was also a clause requiring Koppers to surrender the Environment ACT licence and a clause providing that if Koppers removed the buildings and remediated the land but Canberra Hire did not complete the contract, Canberra Hire would indemnify Koppers for the cessation of the business, removal of the buildings and improvements and remediation of the land, including consequential losses. This latter clause was to meet the expressed concerns of Koppers that it may comply with its obligations under the contract, spending significant sums, and the contract may not ultimately be completed.

Canberra Hire responded, accepting clause 28.1, but suggesting some amendments, including a new subclause as follows:

28.2Without limiting clause 28.1 must be to a level as may be required:
(a)by any regulatory or approval authority for the use of the property for Industry (as that term is defined in the Australian Capital Territory – Territory Plan); and
(b)for removal of the site from any contamination or similar register and the Seller must at its cost prior to Completion cause the property to be removes [sic] from any such register.

In addition, the Change of Use was made a condition precedent to completion of the contract.

This draft appears to have been sent to Koppers on 23 June 2005.

On 5 July 2005, Koppers responded. It broadly accepted the additional subclause, though making some amendments. It attached further revised special conditions, including a qualification to what, at that stage, remained subclause 28.1. That added a proviso that the cost of remediation “does not exceed $500,000 or other agreed amount”. It also proposed an additional clause to deal with the contingency that the cost of remediation exceeded the cap of $500,000 as follows:

28.3If the cost of remediation is expected to exceed $500,000, the Seller may either:
(a)rescind this Contract and the provisions of clause 20 shall apply; or
(b)may notify the buyer of the items of expenditure which will exceed the $500,000 limit and ask the Buyer to pay the additional amount.

28.4The Buyer may within 5 Business Days approve the additional expenditure over $500,000 in which case the Buyer must pay the Seller for the amount of the additional expenditure on the earlier of Completion or before the date it must be paid by the Seller to the relevant contractor.
28.5If the Buyer does not approve the additional expenditure either party may, by written notice to the other, rescind this Contract and the provisions of clause 20 shall apply.

It converted the condition precent relating to the Change of Use to a more complicated process whereby Canberra Hire had 21 days after the date of the contract to lodge the Application for the Change of Use, had to fully inform Koppers of the progress of the application and had to pursue it with all due diligence. If the application was refused or not approved, Canberra Hire, provided it has duly performed its obligations under the contract, was permitted to rescind the contract. These conditions found their way into the final contract.

It appears from an internal diary note of Koppers produced in evidence that a concern of Koppers was also that it wanted to avoid the situation where, after completion, a claim was made that the property has not been properly remediated. Instructions were given to include a clause in the agreement that protected Koppers from this situation.

Koppers was also concerned about the possibility of an obligation to remediate to a higher level than HIL-F if required by a regulatory body.

It was clear at this stage that Koppers considered that the cost of remediation might be more than $100,000. Mr Tildsley sent an internal email which said:

If the remediation costs more than $250K I’ll give up! We have a quote to remediate the dam of around $30K, and a bit of earth works and additional testing should only come to $100K or so.

On 6 July 2005, Mr Shadbolt spoke to Ms Panagiotou and expressed disquiet with the cap in the remediation clause. He pointed out that his expression of interest included a price for the un-remediated land and the option that had been accepted was for completely remediated land (Option 2).

Further amendments were suggested by Canberra Hire. The remediation clause in the contract came, in a draft forwarded to Koppers on 12 July 2005, to be in the terms as ultimately agreed as clause 29, that is, with the second limb, which required remediation to a level required by any approval of the Application for a Change of Use. An additional clause required remediation also to be effected at a level as may be required for removal of the land from any register of contaminated sites or similar register for land use for industry purposes, noting that, at the date of the contract, the land was not on any such register.

A draft then prepared by the Koppers’ lawyer in response was sent to Canberra Hire’s lawyers by email dated 26 July 2005. However, it removed the second limb of the remediation clause and added some other proposals, in an endeavour to control the level of remediation. In the email, the lawyers for Koppers wrote to the lawyers for Canberra Hire:

You will note the changes go to the following issues:
-controlling the level of remediation our client is contracting to provide. During discussions your client has represented that it is aware of the requirements to achieve a change of use. If it is not level F then please provide relevant details of the appropriate level and cross referencing to the Territory Plan and supporting material, if any.
-recognising that the register must be maintained an authority.
-providing a rescission date if the matter is not completed within a designated time period. This provision is required due to the most recent changes sought to the document’.

On 3 August 2005, further amendments were made by Koppers. In particular, the second limb of clause 29.1 was restored. This became the final version of the contract with special conditions as set out relevantly above (see [26]).

The contract was then signed and exchanged on 8 August 2005.

Consequent upon the signing of the contract, it was necessary for two Development Applications to be lodged. Koppers was required to lodge a Development Application to authorise its obligation to remove buildings and remediate the site. It lodged its Development Application on 30 August 2005 and briefly described its proposal as follows:

·Removal of underground diesel storage tank & soil remediation;
·Removal of all buildings from site (5 in total); Relocation versus demolition. No waste; buildings to be relocated;
·Site remediation (soil & water) in consultation with Environment ACT.

On 24 August 2005, Canberra Hire lodged its Development Application, though it was dated 21 July 2005. The proposal in the Development Application was described as follows:

To vary the Purpose clause of the Crown Lease to Read:
Clause 3(a) ‘to use the said land for
i)General Industry
ii)light Industry
iii)Store; and/or
iv)Warehouse.

Koppers then approached Mr Rod Harwood, of Responsible Environmental Solutions Pty Ltd, an accredited auditor for the purpose of site audit reports, to prepare the Site Audit Report (SAR) and Site Audit Statement (SAS) needed to comply with the obligation of Koppers under clause 29.1 of the contract. Mr Harwood had read the March 2005 Environment Report referred to above (at [30]). Mr Harwood said in his letter making a proposal:

Items that require further assessment/consideration are as follows which will allow me to prepare site audit statement for ongoing commercial/industrial landuse:
...
·It is understood that the site has been assessed and will be remediated to the NEPM (1999) Health Investigation Levels (HIL) F – commercial/industrial landuse for soil and the ANZECC (2000) for groundwater, or in absence of criteria for particular analytes in these guidelines RCA will refer to other appropriate assessment/remediation criteria;

...
·Sampling of one existing 8m well (standing water level reported at 3-4m bgl) at the perimeter of the site, recorded elevated cadmium, lead, nickel and zinc. RCA conclude that these are naturally occurring and not a result of site activities. It is recommended that this statement be substantiated with the installation of up gradient and background wells;

The first dot point paragraph set out in the extract above (at [83]) was not included in the first version of his proposal. Mr Harwood said that, to the best of his recollection, the paragraph was included after a discussion with Mr Leon Porter, Safety, Health and Environment Co-Coordinator for Koppers. Mr Harwood’s evidence on affidavit was that his letter was amended:

[T]o ensure the criteria included in the March 2005 RCA report were included. The statement includes the RCA report of March 2005 the criteria used by RCA and does not make comment on its adequacy. The criteria taken from the RCA report included HIL(F) for soil and ANZECC 2000 for groundwater. This is simply a statement of what was to be included in the report.

Mr Tildsley did not recall directing Mr Porter to require the inclusion by Mr Harwood of the additional paragraph. Mr Porter did not recall requiring Mr Harwood to add the paragraph. He suggested that Mr Harwood insisted on the addition, though this seems unlikely.

Mr Porter agreed that, if usual processes were followed, he would have needed Mr Tildsley’s approval before he accepted Mr Harwood’s proposal. He had no doubt that those usual processes were followed. He agreed that he accepted Mr Harwood’s proposal because he understood that the site would be remediated in the way identified in Mr Harwood’s proposal.

In the event, Mr Harwood was retained by Koppers as the EPA accredited third party auditor on 12 September 2005.

On 16 September 2005, ACTPLA wrote to Canberra Hire about its Development Application, advising that it considered:

[T]hat the documentation submitted does not meet our minimum requirements for the type of development you propose. Therefore, the documents have not been validated for lodgement on this occasion.

A number of matters were raised by ACTPLA. These included:

· if general industry was proposed, the class (type) of industry should be identified;

· requirement for a concept site plan and floor plan, indication of the type of industry to be identified;

· a Preliminary Assessment may be required on the basis of class of general industry proposed.

The following was also noted:

The site may be contaminated due to the permissible use under the existing uses in the Crown Lease. Any change of purpose cannot be supported unless the site or part has been remediated and assessed to be suitable for the proposed uses.

It was suggested that contact be made with Environment ACT for further advice on site remediation.

This rejection by ACTPLA was advised by the lawyers for Canberra Hire to the lawyers for Koppers on 27 September 2005, with the advice that Canberra Hire still wished to proceed with the purchase of the property. It noted that the information required by ACTPLA, however, would not be capable of being prepared and submitted in time for ACTPLA to make a decision prior to the Sunset Date in the contract, which it noted was January 2006.

It suggested that there were two alternatives, namely:

1.to make the Contract immediately unconditional (as to change of use), for your client to proceed with the remediation works and for there to be an appropriate reduction in the price.
My client would be prepared to proceed on this basis if the Contract price is reduced to $1,800,000 (plus GST); or
2.alternatively, the Sunset Date is extended.

Koppers agreed on 30 September 2005 to extend the Sunset Date until 14 October 2005. In conveying that agreement, the lawyers for Koppers confirmed that Koppers had obtained Stage 1 and Stage 2 Environmental Reports and had appointed an auditor. They noted that Environment ACT was currently holding much of the information which may be required to assist with the development.

The stated extension of the Sunset Date does not make sense to me. That Date is defined in clause 30.5 as five months after the date of the contract, thus, at the date of the contract, the Sunset Date was already 8 January 2006. Perhaps what was thought by the lawyers was that this new date was the date from when the five months was now to run. I had no explanation for this oddity.

On 31 October 2005, the Sunset Date was again extended to “on or before 3 April 2006”. A formal agreement amending the contract was executed by both parties on 31 October 2005. The amendments included the deletion of the words and figures “within five months of the date of this contract” in clause 30.5 and substitution of the words and figures “on or before 3 April 2006”. Certain buildings were also excluded from clause 26.1 and it was agreed that the letter referred to above (at [88]) from ACTPLA should, for the purposes of the contract, and “without limitation [sic] clause 30.5” not amount to a refusal of the application within the meaning of that term in clause 30.5 of the contract.

In the meantime, Environment ACT considered the Development Application submitted by Koppers. An internal advice from Ms Helen McKeown, Conservator Liaison and Environment Coordination, referred to the ANZECC 1992 Guidelines and the need for “validation” to be undertaken to determine the level of risk associated with the past activities on the site. It continued:

To ensure the site is suitable for the proposed and permitted land use(s) and the protection of human health and the environment an assessment (including remediation as required) and validation must be undertaken to determine the level of risk associated with the past activities at the site. The assessment and remediation (if required) of the site and any off-site impacted areas (including groundwater) must be in accordance with the Environment ACT Contaminated Sites Environment Protection Policy 2000 [and other documents].

On 28 October 2005, ACTPLA made its decision on the Development Application lodged by Koppers, approving the application subject to conditions. One of those conditions related to the contaminated site and required an assessment (including remediation as required) and validation to be undertaken by “a suitable qualified environmental consultant” to assess the level of risk associated with the past activities on this site and to ensure suitability for the proposed and permitted land use(s) “and for the protection of human health and environment”.

It also stated:

The assessment and remediation (if required) of the site and any off-site impacted areas (including ground water) shall be in accordance with the Environment ACT Contaminated Sites Environment Protection Policy 2000.

It required, at the completion of the assessment, that an independent auditor provide a site audit statement and report to the ACT Environment Protection Authority for endorsement, indicating whether the site is suitable for the proposed and permitted uses.

Accordingly, it would appear that, in order to carry out the demolition works that Koppers was obliged to carry out under the contract, namely the removal of certain improvements, remediation of the site was a condition.

In the meantime, Canberra Hire had employed Mr Bernie Cusack, Environmental Consultant of Sellick Consultants, as a consultant to assist it in its Application for Change of Use.

Mr Cusack made contact with Koppers and, on 10 January 2006, requested a copy of the Remediation Action Plan that he understood Koppers was having prepared, to be included as part of the Preliminary Assessment Report on which he was then working. A Remediation Action Plan is required before remediation is undertaken.

He later had a telephone conversation with Mr Porter who then wrote to him on 20 January 2006, as follows:

As you requested in our recent phone conversation, this letter outlines the remediation being undertaken by Koppers Wood Products and its CCA Timber Treatment Plant located on Tralee Street, Hume ACT. All soil on site will be remediated to HIL “F” as per the National Environmental Protection (Assessment of Site Contamination) Measure 1999 (NEPM). All ground water will be remediated under the ANZECC (2000) water quality guidelines, using the 95% protection level for fresh water.
As per the Sales Contract for this site, all remediation work carried out is to be certified by a third party environmental auditor. Koppers are using the services of Mr Rod Harwood from RES to conduct the third party audit and certify the Remediation Action Plan.

Mr Porter did not recall whether he had spoken to Mr Tildsley before sending the letter. Mr Tildsley said he did not see the letter before it was sent.

On 30 January 2006, an officer of ACTPLA, as delegate of the Minister, directed Canberra Hire (incorrectly referred to as “Canberra High”) that the characteristics of the proposal required a mandatory Preliminary Assessment and that Canberra Hire was designated as the proponent and, as such, was required to prepare the Preliminary Assessment. Such a direction under s 113 of the Land (Planning and Environment) Act 1991 (ACT) became, under s 116 of that Act, a mandatory requirement. Mr Cusack advised Canberra Hire that it was possible to lodge a Preliminary Assessment before lodging the Development Application or with it.

On 2 February 2006, Canberra Hire advised ACTPLA that a Preliminary Assessment had been prepared. It was said to have been submitted with a Development Application to ACTPLA on 6 February 2006, but a technical check was undertaken to determine that all necessary components were included and ACTPLA determined that additional information with respect to site remediation works was required. A letter from Koppers about remediation that had been included was considered insufficient.

Mr Cusack spoke with Mr Tildsley and Mr Porter in an attempt to obtain more documentation. He was told that the Remediation Action Plan endorsed by the auditor would not be ready for four to six weeks but that an internal document of Koppers could be provided.

Canberra Hire was advised by Ms Middleton on 9 February 2006 that, while the Preliminary Assessment could be submitted, the risk of it being rejected was high because of the request that ACTPLA had made to include a contamination report. If the Preliminary Assessment were to be rejected, Canberra Hire would be required to provide a full Environmental Report, which was a much more onerous and comprehensive document.

On 10 February 2006, the lawyers for Canberra Hire wrote to the lawyers for Koppers confirming that a technical check, as a pre-requisite to the formal lodgement of a Preliminary Assessment, had been undertaken and that as part of the technical check ACTPLA had asked for a site contamination report and information about site remediation to be included in the Preliminary Assessment. It noted that Koppers had prepared a letter outlining the remediation work proposed and continued:

My client has now been informed by ACTPLA that the letter prepared by your client is insufficient in that it does not include detail as to the actual remediation work to be undertaken and the proposed disposal of the contaminated materials. In this regard I understand there has been a recent occasion where contaminated materials from the ACT has been ‘dumped’ inappropriately.

The letter continued that the Canberra Hire consultant, Mr Cusack, had attempted to obtain a copy of the Remediation Action Plan prepared by Koppers but that he was unable to obtain a copy as it was incomplete and had not been endorsed by a certifier.

The letter continued:

As I indicated in our telephone discussion my client now finds itself in a position where it has completed all work necessary to lodge its PA and DA but it is unable to do so because ACTPLA requires information relating to the remediation works to be undertaken at the site, which information is ultimately under the control of your client and outside my client’s control.

As a result, the lawyers suggested that the Sunset Date be further amended; the suggestion was to amend it to mean “on or before the date being three (3) calendar months from the date of successful lodgement of the Purchaser’s Preliminary Assessment and Development Application for Lease Variation with ACTPLA or 30 June 2006 whichever date is later”.

Ten days later, Mr Cusack sought from an officer of Koppers information as to when the Remediation Action Plan would be ready.

On 24 February 2006, RCA Australia submitted the draft of Phase 2 of the Environmental Site Assessment and Preliminary Remediation Action Plan. A summary of the recommendations and conclusions was as follows:

Based on the findings of the Phase 2 ESA and preliminary remediation/validation works, further site assessment is required at the site to render the site suitable for ongoing commercial use.
Areas of soil contamination that have been identified have been remediated and validated. Elevated concentrations of Cr (VI), TPH and Toluene have been detected in Groundwater.
A number of areas of the site require further investigation, including:
·Groundwater;
·Soil beneath the treatment plan concrete slab;
·Agricultural drainage line discovered during remediation of the diesel UST.

Based on the findings of additional proposed investigative works, further remediation may be required.

Mr Tildsley read the draft Remediation Action Plan and associated appendices. He had general concerns about the references to ground water.

In an internal email of 25 February 2006, Mr Tildsley said that he had “general concerns about the ground water”. It appears that part of his concern related to levels of contaminants that may have leached into the site from elsewhere.

On 27 February 2006, Mr Porter provided to Mr Cusack the draft Stage 2 Environmental Assessment which had been provided by Mr Harwood.

Ms Panagiotou had also considered the document provided by Mr Harwood and commented in an email of 28 February 2005 to Mr Tildsley:

At the end of the day we are responsible to clean up the site, the issue is what price do we sell the land at?

She then set out the three options from Canberra Hire and continued:

During the contract negotiations, we tried to put in a clause in the contract whereby remediation costs were capped. Buyer would not entertain [sic] and simply said he will revert back to his first offer of $1m. At the time stage 1 report of RCA indicated minor remediation cost ... I have asked our lawyer to review the agreement and advise us of any ‘out clauses’ we may have with remediation. I think none.

She then added:

Based on this I think we should grant the Buyer one last extension to get change of use application approved. Say three months. This will maintain the status quo and give us time to find out the results of phase 2 testing, cost to remediate and length of time.

On 3 March 2006, however, Canberra Hire was advised by its consultants that Environment ACT would not accept the draft Remediation Action Plan with the Preliminary Assessment and would possibly require the site to be remediated first.

On 4 March 2006, Canberra Hire advised Koppers that the draft Remediation Action Plan had been provided to ACTPLA but that it had indicated that the Development Application could not be approved until the site had been remediated and certified to the appropriate standard. In an internal email, Mr Tildsley remarked:

Does sound odd.
I wonder if this is a delaying tactic?
Surely they could process his DA and make final approval conditional on remediation completion.

On 16 March 2006, Canberra Hire’s lawyers communicated by email with Koppers’ lawyers and set out the situation as follows:

* the ACT Government has refused to accept my client’s application on the basis that it requires a complete and certified Remediation Action Plan (“RAP”);
* the RAP is a document to be prepared by your client (or its advisors);
* the RAP initially provided was not acceptable to the ACT - and on my instruction would have led to a rejection of my client’s application;
* your client - or its adviser - is preparing an appropriate RAP to lodge with my client’s application to the ACT Government;
* it is expected that the RAP will be available shortly;
* my client expects that completion of the review of its application (once lodged) should take between 6 to 10 weeks.

They then sought an extension of the Sunset Date. On 30 March 2006, the Sunset Date was extended to 7 April 2006.

On 7 April 2006, the Remediation Action Plan had still not been received and Canberra Hire’s lawyers again sought a further extension of the Sunset Date. It was understood that the Remediation Action Plan should be with Koppers within six weeks. Accordingly, an extension to 19 May 2006 was sought.

That was agreed and email correspondence between Koppers and the advisers for Canberra Hire indicated that the Remediation Action Plan was currently being redrafted upon advice from the auditor. It was expected to be reviewed before 19 May 2006 by the auditor and, depending upon his satisfaction with it, it was hoped that the Plan would be forwarded to Canberra Hire and its advisers before then.

The draft Remediation Action Plan, dated 12 May 2006, showed that the site investigation comprised the collection of soil samples from 177 locations and ground water samples from 24 locations; they disclosed contamination. It noted that, at the completion of preliminary remedial works, contamination remained in isolated surface soil in one area, shallow soil contamination in fill surrounding a dam and shallow ground water in various areas. Suggestions were made for addressing the soil contamination including excavation, land farming or disposal to land fill.

As to ground water, it recommended further analysis and, as a contingency for remediation should that be required, “air sparging” to promote natural attenuation.

As at 18 May 2006, the Remediation Action Plan had still not been received and an extension of the Sunset Date was agreed to 19 June 2006.

An internal email on 22 June 2006 gave an insight into the thinking by officers of Koppers. Mr Tildsley noted that Canberra Hire, despite an offer from Koppers to refund the deposit, was inclined to proceed with the sale. He then noted, in relation to Mr Shadbolt:

His position is, our contract says we will remediate to HIL “F” and that’s what he needs.
In essence as of tomorrow the sale proceeds.
I have asked that question before but got shot down by McEwan, but in my understanding, HIL “F” does not apply to groundwater. There is a NEPM for groundwater, and whilst the auditor is usning [sic] the Australian Water Quality Guidelines, contracturally [sic] we do not need to go to this level. I will do some homework now top [sic] clarify the matter.
We need to find a legal loophole, or Shadbolt will end up buying this site off us in 5 years at todays [sic] price!!
[emphasis original]

The reference to “McEwan” appears to be a reference to Mr Paul McEwan, then Safety, Health and Environment Co-Coordinator for Koppers.

On 23 June 2006, the lawyers for Koppers advised the lawyers for Canberra Hire that it was anticipated that the remediation of the property to HIL-F levels, required by clause 29.1 of the contract, would take approximately two months. It was advised that the obligations under clause 26 had been completed, and was noted that, under the present provisions of the contract, Canberra Hire had until 5:00 pm on Monday, 26 June 2006 to elect whether to rescind. It was noted that, in a without prejudice discussion, Koppers had indicated that if the contract was rescinded, Koppers would be prepared to allow a full refund of the deposit.

On 27 June 2006, Koppers’ lawyers noted, in a letter to Canberra Hire’s lawyers, that the Remediation Action Plan was still not finalised and then, for the first time, suggested that the contract did not require Koppers to provide a copy of the Plan to Canberra Hire and noted that the scope of the Plan was more extensive than the contractual requirements to remediate the soil on the land to NEPM HIL ‘F’. The letter continued:

Accordingly, ground water investigation and plans for monitoring and remediation of any contamination would be matters to be attended to after completion of the contract.

An extension of the offer to permit rescission without loss of deposit was also made.

On 30 June 2006, the environmental consultants retained by Koppers advised that a small scale ground water remediation would cost $100,000, but a full-scale remediation, detailed in the draft Remediation Action Plan, would cost an estimated $1,000,000. The consultants noted that the exact size and shape of the contamination was not clear and that remediation could only be accurately predicted after further monitoring.

On the same day, the lawyers for Canberra Hire responded to the lawyers for Koppers, maintaining an entitlement under the contract to a copy of the Remediation Action Plan on the basis that the contract, by implication, required Koppers to do “all things as are necessary ... to enable [Canberra Hire] to have the benefit of the contract”. They referred to clause 30 which required Canberra Hire to apply for a Change of Use and noted that ACTPLA now required, as a pre-condition to that application, a copy of the Remediation Action Plan.

They further argued that, despite there being no expressed requirement in the contract, the implication from the terms of the contract were that there was an obligation on Koppers to act reasonably, and thus to provide Canberra Hire with the means to apply for the Change of Use, in this case, by providing the Remediation Action Plan, and so allow Canberra Hire to have the benefit of the contract.

So far as the suggestion that the Remediation Action Plan went further than the scope of the contractual requirement, the lawyers for Canberra Hire say that is not a reason for not providing the document and then pointed to the second limb of clause 29.1, which may require further action by Koppers.

As to the suggestion that only soil needed to be remediated, the letter referred also to the second limb of clause 29.1 of the contract, which, it was asserted, would appear to contemplate this situation, namely a need for ground water remediation.

The letter concluded:

Our client therefore requires the vendor to perform its contractual obligation to remediate the property and, in the meantime, to provide the purchaser with a Remediation Action Plan, so enabling our client to pursue its application with the relevant authority for a change of use in respect of the land to General Industry.

An internal note of Ms Panagiotou, dated 4 July 2006, addressed a number of ground water issues, including questions asked by Mr Harwood and the cost of the investigation needed to determine the size of the issue. She raised also the question of the “Generally Accepted Accounting Principles in the United States, (called ‘GAAP’)”.

Ms Panagiotou explained in oral evidence that, as Koppers is ultimately a subsidiary of a US corporation, there was, internally, an obligation to comply with the GAAP, which she explained in her affidavit as follows:

Under GAAP and Koppers Inc policy, [Koppers] is required to explore, and if deemed necessary to include in its accounts contingencies for such things as expenditure to remediate land. The obligation to explore the need to make a contingency does not require there to be any legal obligation to remediate only that it may be a possibility even if not a probability.

A copy of the Internal Policy was also tendered, in which it referred to the potential costs of environment remediation requiring accrual where the cost is “probable and reasonably estimable”; probable is defined as “greater than 50% likelihood that remediation will occur”.

On 17 July 2006, in discussion between the officers of the respective parties, it was agreed that there should be a “stand still” under the contract whilst the remediation requirements were reviewed by Koppers, and, in particular, the remediation requirements for ground water.

Contamination

On 27 July 2006, a fourth report from RCA Australia was provided, this time a Soil Contamination Assessment only. Unlike earlier reports which had dealt with soil and ground water, this Report was limited to soil.

On 18 August 2006, Canberra Hire proposed that there be a “stand still” of the contract. Although the documentation was not clear, it appears that the stand still was then implemented.

In September 2006, Koppers obtained quotes from three organisations for remediation. The estimated remediation costs extended as high as $1,160,000.

On 11 January 2007, Mr Porter sent an email to Mr Harwood advising of a request that:

[W]e proceed with the issuing of a Conditional Site Audit Statement based on all soil on the Hume site meeting the NEPM (1999) HIL ‘F” Guidelines for soil ASAP. As discussed you were going to contact Environment ACT and question as to whether reference to potential impact of ground water from remaining soil on site would need to be included in such a statement. Whether such a reference is required in the audit statement or not, we would still request the audit statement.
Could you please advise as to the earliest possible time a Conditional Site Audit Statement based on the above could be made available to Koppers and an estimated cost.

In February 2007, an Addendum to the RCA Australia Phase 2 Environmental Assessment Report of March 2006 was delivered by Environmental Resources Management Australia Pty Limited. It showed that ground water contamination was limited to hexavalent chromium (Cr VI) emanating from two areas (the former treatment plant and agricultural drain).

It concluded that the ground water contamination, being hexavalent chromium, breached the ANZECC fresh water guidelines for hexavalent chromium, which allowed for a maximum level of 0.001 mg/l; the site showed areas of up to 24.3 mg/l and seven areas breached that guideline.

Sometime later, probably in March 2007, a draft of the SAS was provided by Mr Harwood for comment. Comments were provided by Mr Porter, including a request that “given that the Site Audit Statement is one concerning soil, is it appropriate to refer to the issue of ground water therein?”

Mr Harwood replied:

As indicated in previous correspondence, it is important that both consultants reports and audit reports are not misleading – I believe it is therefore very important to mention the groundwater.
In relation to whether the groundwater issue should be placed in the Site Audit Statement and not in the SAR, it should be in the SAR-there should be no issues in the SAS that are not covered in the SAR, and it is recommended that the SAS be read in conjunction with SAR.

Mr Paul McEwan then emailed Mr Harwood seeking clarification of whether, if he were to include groundwater in his final statement, he was able to use “site specific limits” determined as part of the risk assessment completed by ERM.

Mr Harwood replied, noting that he would need to seek comment from his Risk Assessment Support Reviewer on ground water acceptability concentration. He added that the process was very specific. He continued:

The more relevant issue is that not only do we need to agree on the appropriate ground water clean up or acceptable level, we need to agree on what is an appropriate level of soil concentration to protect the groundwater – this is what the current ERM proposal is all about – to determine what concentration in soil will result in the agreed SSTL for ground water

The Final Site Audit Report (SAR) was then produced, dated 8 May 2007. It found the subject site was suitable for commercial/industrial use, subject to conditions. The conditions were:

The acceptable level of soil to protect ground water has not yet been agreed until the results of leaching trials are calibrated against the risk assessment completed by the consultants. The acceptable level of soil to remain onsite has not been determined.
At present, the groundwater at the site should not be pumped or used for any beneficial use as its quality does not meet appropriate ANZECC or risk based water quality guidelines.
The groundwater on site will need to be remediated and/or managed to meet the requirements of ACT Environment Protection Authority.

Mr Harwood also made some additional comments, including:

Based on the soil results and assessments conducted by RCA, the Auditor concludes that soil quality across the site meets the NEPM (1999) health based investigation levels for commercial/industrial landuse (HIL-F) and NEPM accepted guidelines for the contaminants of concern associated with the former timber treatment plant ...
It should be noted however that even if site soil meets the applicable industrial/commercial landuse guidelines, the soil may not be suitable to remain since the soils may have the potential to leach an unacceptable concentrations resulting in ground water contamination.

Mr Harwood’s SAR noted that he had not audited “all environmental issues ... only soil”, noting that purpose, namely soil quality, was for the site’s suitability for ongoing commercial/industrial landuse by meeting the HIL-F for contamination associated with the timber treatment activities on the site. This is a theme that is made very clear throughout the Report. He does say, however:

· in any event, the circumstances and genesis of the indemnity under clause 29.6 was to protect Koppers from subsequent claims that were made over and above any obligation it had under the contract;

· the provision of a certificate which certified the completion of the remediation under clause 31.1 which triggers the obligation of completion shows that the intention was that remediation under clause 29.1 was intended and expected to be undertaken and completed prior to completion of the contract; and

· the phrase “on and from completion” clearly govern the whole of clause 29.6 and, accordingly, the clause does not apply to works under clause 29.1.

As to the claim that costs of remediation under a condition of approval of the Application for a Change of Use, are “costs, expenses or taxes” referred to in clause 30.6, it seems clear to me:

· the cost of such remediation is not a tax;

· such costs are costs or expenses but are not “in relation to” the Application for a Change of Use for, despite the width of the term “in relation to” (see above at [306]), they are an incident of the approval, that is not the preparing and lodging and having approved the Application for Change of Use but the post-decision implementation of the decision;

· there is no “discernible and rational link” (as per Technical Products Pty Ltd v State Government Insurance Office (Queensland) (1989) 167 CLR 45 at 48) between the Application for Change of Use and the cost of complying with a condition;

· that is reinforced by the reference in the clause expressly to the payment of the betterment tax as it would not necessarily otherwise be covered;

· in the same way that the betterment tax was an issue in the pre-contractual negotiations, so was a condition of approval (specifically mentioned in clause 29.1) and it is significant that the former is mentioned but not the latter;

· in any event, the specific reference to Koppers bearing the costs of remediation in clause 29.1 displaces the general reference to costs and expenses in clause 30.6;

· the costs of remediation under clause 29.1, contractually payable by Koppers, are not properly characterised as “Claims or Losses”.

In my view, the relevant question is answered as follows:

10. Assuming [clause] 29.1 imposes on Koppers an obligation to remediate groundwater at the Property, are the costs of such remediation capable of

a. being the subject of the indemnity in [clause] 29.6?

Answer: No.

b. Being “charges” for the purposes of [clause] 30.6?

Answer: No.

Issue – Completion of the Contract

Although not an issue specified in the list of issues provided by Canberra Hire, an issue arose in the course of the proceedings as to when, under clause 31, the date for completion had arrived. This was important, for it was a key to the claim in Koppers' Counter-Claim for a declaration that it was entitled to rescind the contract.

Koppers submitted that, relying on clause 31.1, the date for completion was 18 May 2007, that is, ten days after service of the SAS and SAR, the advice about compliance with clause 26 having been served on Canberra Hire on 23 June 2006 in a letter from Koppers’ lawyers to Canberra Hire’s lawyers.

Given that the standstill agreement was then in place, it is not entirely clear how that should affect the position. Koppers submitted that the standstill “expressly reserved each party’s rights”, but I am not at all clear that this meant that the standstill would permit a time to accrue during that period – that seems to me to be inconsistent with the notion of a standstill.

In any event, the standstill came to an end on 31 July 2007 and, at the worst, assuming the standstill did freeze any time that would otherwise run, the relevant date would be 10 August 2007, a date when Completion did not, in any event, occur.

Canberra Hire submits that clause 31.1 is simply inconsistent with clause 29.1, because the latter contemplates that remediation will occur prior to completion and the second limb contemplated the need for remediation in accordance with a relevant condition.

Canberra Hire pointed out that clause 31.1 was in its present form prior to the insertion into the contract of the second limb of clause 29.1 and was simply not adjusted to take account of that additional possibility. It submitted that this led to an inconsistency which should be resolved by giving effect to the “real intention” of the parties: Walker v Giles (1848) 6 CB 662 at 702; 136 ER 1407 at 1424 (Wilde CJ). That real intention, Canberra Hire submitted, was that remediation, whether under the first limb or the second limb of clause 29.1, should occur prior to completion.

Canberra Hire referred to the following principle of construction enunciated by Lord Halsbury LC in Glynn v Margetson & Co [1893] AC 351 at 357, where his Lordship said:

Looking at the whole of the instrument, and seeing what one must regard, for a reason which I will give in a moment, as its main purpose, one must reject words, indeed whole provisions, if they are inconsistent with what one assumes to be the main purpose of the contract.

It also referred to the following principle enunciated by the Privy Council in Forbes v Git [1922] 1 AC 256 at 259:

The principle of law to be applied may be stated in few words. If in a deed an earlier clause is followed by a later clause which destroys altogether the obligation created by the earlier clause, the later clause is to be rejected as repugnant and the earlier clause prevails.

See also Australian Guarantee Corp Ltd v Balding (1930) 43 CLR 140 at 151 (Isaacs J).

The rule, however, is not a rule of first resort which requires that an attempt be made to resolve any apparent internal inconsistencies on the basis that one provision qualifies the other and that gives to both meaning and effect: Re Media, Entertainment and Arts Alliance; Ex parte Hoyts Corp Pty Ltd (No 1) (1993) 178 CLR 379 at 386-7.

My attention was drawn to some recent and very helpful comments of Campbell J in North v Marina [2003] NSWSC 64, where his Honour considered the construction of contracts and, in particular, where there were inconsistencies in the document. His Honour said (at [43]-[46]):

43 In construing a document, one seeks to ascertain the intention of the parties arising from the document as a whole, and reading the document with such background information as was known by all parties to it. In McEntire v Crossley Bros (1895) AC 457, at 462-3 Lord Herschell LC said, in words quoted with approval by Isaacs J in Australian Guarantee Corporation Ltd v Balding (1930) 43 CLR 140 at 151.
... the agreement must be regarded as a whole – its substance must be looked at. The parties cannot, by the insertion of any mere words, defeat the effect of the transaction as appearing from the whole of the agreement into which they have entered. If the words in one part of it point in one direction, and the words in another part in another direction, you must look at the agreement as a whole and see what its substantial effect is. But there is no such thing, as seems to have been argued here, as looking at the substance, apart from looking at the language which the parties have used. It is only by a study of the whole of the language that the substance can be ascertained.

44 In Gwyn v Neath Canal Co (1868) LR 3 Ex 209 at 215 Kelly CB said:
... when a court of law can clearly collect from the language within the four corners of the deed or instrument in writing the real intentions of the parties, they are bound to give effect to it by supplying anything necessary to be inferred from the terms used, and by rejecting as superfluous whatever is repugnant to the intention so discerned.

45 The court tries, if it can, to give a meaning to all parts of a contract, and will only reject one clause as inconsistent if an attempt to read the contract in its entirety, and harmonise the provisions, fails. In Yien Yieh Commercial Bank Ltd v Kwai Chung Cold Storage Co Ltd (1989) 2 HKLR 639 Lord Goff of Chievelly, delivering the advice of the Privy Council, said:
Their Lordships wish to stress that to reject one clause in a contract as inconsistent with another involves a rewriting of the contract which can only be justified in circumstances where the two clauses are in truth inconsistent. In point of fact, this is likely to occur only where there has been some defect of draftsmanship. The usual case is where a standard form is taken and then adapted for a special need, as is frequently done in, for example, the case of standard forms of charterparty adapted by brokers for particular contracts. From time to time it is discovered that the typed additions cannot live with the printed form, in which event the typed additions will be held to prevail as more likely to represent the intentions of the parties. But where the document has been drafted as a coherent whole, repugnancy is extremely unlikely to occur. The contract has, after all, to be read as a whole; and the overwhelming probability is that, on examination, an apparent inconsistency will be resolved by the ordinary processes of construction.

46 There is a rule of construction whereby, as a last resort, inconsistencies between two clauses can be resolved by adopting the earlier of them. That rule (criticised and qualified as it has been – Durbin v Perpetual Trustee Company Limited (1995) NSW ConvR ¶ 55-725 at 55,604 per Kirby P) cannot apply to resolve inconsistencies which appear within the one drawing, as is the case with Mr Scott’s plan.

In my view, clause 31.1 does have to be read to be made consistent with clause 29.1. That can be resolved by reading clause 31.1 as subject to clause 29.1, and I would be prepared so to read it.

That, however, does not ultimately aid the case of Canberra Hire, for it has not obtained, for the purposes of clause 29.1, a condition to the approval of the Application to a Change of Use, which brings that clause into operation.

Thus, the proper construction of clause 31.1 as applied to the facts of this case leaves the date for completion at 15 August 2007, which is ten days after the last day when Canberra Hire may exercise its rights of rescission under clause 30.5 (namely under clause 30.5(b), five days after 30 July 2007 which is the new, extended Sunset Date), being the earlier of the events specified in clause 31.1(b). The granting of the Application for Change of Use (if one assumes such an Application can be taken into account) did not occur until 3 March 2008.

Accordingly, applying clause 31.2, Koppers was in a position to rescind the contract on 15 October 2007, that is, 60 days after 15 August 2007.

Issue – Specific Performance

Although I have found that Koppers was entitled to rescind on 15 October 2007, I still need to deal with the question of whether Canberra Hire is entitled to specific performance.

I can make the following findings.

Koppers mounted three arguments that, it submitted, showed that specific performance should not be granted, were it available, and two of them found their way into the issue listed above (at [175]), the third arising because of a late amendment to the pleadings.

(a) The terms of the specific performance decree would require the court to supervise the performance of the contract

It has long been clear that a court will not order specific performance of a contract where the court is then required to supervise the performance. As Dixon J said in J C Williamson Ltd v Lukey (1931) 45 CLR 282 at 297-8:

Specific performance is inapplicable when the continued supervision of the Court is necessary in order to ensure the fulfilment of the contract.

The reason for this was described in Rainbow Estates Ltd v Tokenhold Ltd [1999] Ch 64 at 69, that an objection to constant supervision:

[I]s designed to avoid repeated applications for committal which are likely to be expensive in terms of costs to the parties and the resources of the judicial system

The approach, however, to this issue has more recently moderated, especially in relation to building contracts (see, for example, York House Pty Ltd v Federal Commissioner of Taxation (1930) 43 CLR 427 at 437), but not so much where other contracts are involved. As NaderACJ explained in Skywest Airlines Pty Ltd v Northern Territory of Australia (1987) 45 NTR 29 at 50:

[T]he nature of building contracts in general is such that the work completed remains in existence to be inspected. The question whether a condition of a contract has been complied with is, in such a case, easier for a court to decide than in the case of aerial medical work, which once done, no longer exists. Its transient nature so distinguishes it from building work in a most significant way that the plaintiff’s submission in that respect fails.

In Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1, Lord Hoffmann delivered, in his speech, the decision of the House of Lords, with which the other Law Lords agreed. It was held that specific performance should not be ordered of an agreement to keep a supermarket operating for a period of nineteen years.

His Lordship gave consideration to this issue. His Lordship referred (at 11) to the “settled practice” whereby a court would “never grant a mandatory injunction requiring persons to carry on a business”, but went on (at 13) to consider a distinction between:

[O]rders which require a defendant to carry on an activity, such as running a business over or [sic] more or less extended period of time, and orders which require him to achieve a result. The possibility of repeated applications for rulings on compliance with the order which arise in the former case does not exist to anything like the same extent in the latter.

It is, of course, true, as noted by I C F Spry in his Equitable Remedies (LBC Information Services, 6th ed, 2001) at 669, that some results may be quite complicated and some activities quite simple.

His Lordship was at pains (at 16), however, to recognise that these matters and the other mentioned by him were part of the consideration that must inform what is, at all times, a matter for the discretion of the court. “There are”, his Lordship pointed out, “no binding rules, but that does not mean that there cannot be settled principles”.

This approach was followed by the High Court in Patrick Stevedores Operations (No 2) Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at 46-7; [79]-[80], where Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ said:

The significance of Lord Hoffmann’s speech for present purposes is not the rejection of the lessor’s submissions. That rejection, with respect, was virtually inevitable. What is significant is the acceptance by the House of Lords that the concept of ‘constant supervision by the court’ by itself is no longer an effective or useful criterion for refusing a decree of specific performance. Rather, Lord Hoffmann placed stress on other propositions. First, a person who is subject to a mandatory order attended by contempt sanction (which ‘must realistically be seen as criminal in nature’) ought to know with precision what is required; and, second, the possibility of ‘repeated applications for rulings on compliance’ with orders requiring a party ‘to carry on an activity, such as running a business over a more or less extended period of time’ should be discouraged.
Reference to constant court applications should not be misunderstood. The courts are well accustomed to the exercise of supervisory jurisdiction upon applications by trustees, receivers, provisional liquidators and others with the responsibility for the conduct of administrations. The reservation of liberty to apply to the Federal Court in respect of certain of the orders to be made is in no way out of ordinary in the exercise of equitable jurisdiction.
[footnotes omitted]

Applying these principles, it does not seem to me that there would be an impossible task for supervision; the condition to the approval of the Application for Change of Use was relatively specific, relying on experts who had been able to apply national standards of an apparently uncontroversial nature.

It seems to me that the condition was, in Lord Hoffmann’s categorisation, a result, not an activity, and, despite Dr Spry’s helpful qualification, one that is not too complicated.

I would not have denied specific performance on these grounds.

(b) Breach of contractual terms

It may be that the failure to lodge a Preliminary Assessment is a breach of the contract, as I have referred to above (at [357]-[358]). There are also findings as to possible breaches of other terms of the contract.

While it is accepted that a general equitable maxim is that a party who comes to equity must come with clean hands, it is clear that they do not have to be pristine and spotless.

As noted by Lawrence J in Dyster v Randall & Sons [1926] 1 Ch 932 at 942:

[W]hilst it is clearly settled that a plaintiff who has committed a breach of an essential term of the agreement cannot obtain specific performance, yet this principle does not, in my opinion, extend to non-essential or trivial breaches.

See also Mehmet v Benson (1965) 113 CLR 295 at 314; R Meagher, J D Heydon and M J Lemming, Meagher Gummow & Lehane’s Equity Doctrines and Remedies (LexisNexis Butterworths, 4th ed, 2002), at [20-115].

In my view, none of the breaches are such as would disentitle Canberra Hire to specific performance.

(c) That Canberra Hire was unable to complete the contract

During the trial, an amendment was made to the pleadings to allege that Canberra Hire was ready, willing and able to complete the contract. That was then denied by Koppers. In particular, it challenged whether Canberra Hire would have the funds necessary to complete the purchase.

A late affidavit by Mr Agnew was admitted, in which he had deposed that the National Australia Bank had offered funding for the purchase of the property. Those arrangements, however, expired on 28 February 2008.

Mr Agnew further deposed that Canberra Hire had sought further accommodation from the same bank. His affidavit annexed a letter which showed the Bank was “currently processing a credit application to reaffirm finance to assist with your purchase of the property”.

Subsequently, a letter was tendered from the Bank dated 18 February 2009 which offered the relevant finance.

Mr Agnew was cross-examined on this issue. He agreed that, though the Bank’s letter gave no time limit, offers of finance by Banks are not open ended. This was relevant, for Mr Agnew agreed that the remediation of the groundwater could take between a few months and many years, upwards of eight to ten years. Mr Agnew agreed that he would not expect the Bank’s “particular offer” to still be in place in ten years’ time.

Mr G Burton SC, who appeared with Mr R Clynes, for Koppers, sought to cross-examine the Bank Officer about the letter. That Officer was not available and it was agreed that, were I minded to order specific performance, that opportunity should first be given.

If I am asked to make an order for specific performance, I shall ensure that opportunity is provided.

Koppers also raised the question of the betterment tax. It submitted that the purchase price was not the only amount that Canberra Hire had to pay but also the betterment tax.

This tax, however, is payable prior to execution by ACTPLA of the lease variation: s 184A of the Land (Planning and Environment) Act. It does not have to be paid on consent or, in this contractual context, on completion.

The ability of Canberra Hire to pay that amount is not relevant to a consideration of whether Canberra Hire is able to complete by paying the purchase price.

The ability to complete a purchase contract by an applicant for specific performance is not required to be provided absolutely; the applicant needs to prove it to the satisfaction of the Court, but as Dixon CJ outlined in Rawson v Hobbs (1961) 107 CLR 466 at 481, the relevant approach is as follows:

One must be very careful to see that nothing but a substantial incapacity or definitive resolve or decision against doing in the future what the contract requires is counted as an absence of readiness and willingness. On the other hand it is absurd to treat one party as tied to the performance of an executory contract although the other has neither the means nor intention of performing his [or her] part when his [or her] turn comes, simply because his [or her] incapacity to do so is not necessarily final or logically complete.

I cannot see here “a substantial incapacity or definite resolve or decision” nor can I see that Canberra Hire has “neither the means nor intention of performing [its] part”.

It is accepted that, were remediation of the groundwater to take ten years, then it would be difficult to be able to ensure that Canberra Hire would then be able to complete. In Bahr v Nicolay [No 2] (1988) 164 CLR 604 at 621, Mason CJ and Dawson J put that risk in some perspective when they said:

The statement that the plaintiff bears the onus of proof of readiness and willingness may need some qualification in so far as it relates to the plaintiff’s ability to perform by paying the purchase price at some indefinite time in the future. In Mehmet v Benson, Windeyer J was prepared to participate in ordering specific performance, although he was not convinced that the plaintiff was then ready and willing to complete the contract. His Honour thought that the order should contain a proviso to meet the situation if he should prove unready to complete by payment in full. [footnote omitted]

The reference to the order that Windeyer J was prepared to make in Mehmet v Benson was to the following passage in his Honour’s judgment (at 315):

I do not think that in this case the appellant should have been refused specific performance because he did not prove all that he alleged. The case is difficult and unusual. I would, however, allow the appeal and substitute for the decree of the Supreme Court a decree for specific performance. But, as I am not convinced that the appellant is now ready and willing to complete the contract, I think there should be a proviso to meet the situation if he should prove to be unready promptly to complete the contract by payment in full. To that end the respondent should be expressly enabled to apply to the Supreme Court to fix a date for completion. If the appellant is not then ready to complete, the Supreme Court could make a decree for rescission.

Being generally satisfied with the ability of Canberra Hire to complete, were it necessary, some such approach as outlined by Windeyer J could provide a satisfactorily resolution.

(d) Conclusion on specific performance

As a result of my consideration of the issues, I answer the relevant issues as follows:

11. If Canberra Hire is otherwise successful, should specific performance be denied because of:

a. The asserted need to supervise the contract;

Answer: No.

a. Any breaches by Canberra Hire of [clauses] 30.1, 30.2, 30.3 or 30.4.

Answer: No.

Not specifically asked, but were it to be asked whether Canberra Hire were otherwise ready, willing and able to complete the contract, I would answer that question: yes, subject to any cross-examination of the relevant officer from Canberra Hire’s bankers.

CONCLUSION

Although I have found for Canberra Hire on a number of issues, I have not found in its favour on the contention that Koppers is required to conduct further remediation. I have also found that Koppers is now in a position to rescind the contract. It has, however, not yet done so.

That does not mean, however, that Canberra Hire is not entitled to specific performance, subject to any need to cross-examine an official from the bank which will fund it.

Given the time that, very regrettably, has passed since this case was heard, and for which the workload of the court must bear some significant responsibility, the parties should be given some time to consider their positions.

Thus, if Canberra Hire, notwithstanding that the Hume site has not had the groundwater remediated, wishes still to proceed with the contract, it may do so because there remains a valid and subsisting contract. Given that Koppers has not rescinded, despite its entitlement to do so, as I have found, it seems to me just that Canberra Hire should have the opportunity to proceed with the contract before Koppers is afforded its opportunity to rescind.

The position then is that I am prepared to consider further Canberra Hire’s application for specific performance, but on the basis that there is no further remediation required to be performed by Koppers. Koppers should, if it wishes, have the opportunity further to explore briefly whether Canberra Hire is able to do so.

In the event that Canberra Hire do not wish to proceed on that basis, then the following applies.

Canberra Hire set out six declarations that they sought, together with an order for specific performance and injunctions in support of that order.

Some of the declarations could be made. For example, I am satisfied that there is a valid and subsisting contract for the sale of the Property (as defined in the contract) though it is liable to be rescinded by Koppers.

I am also satisfied that, had a condition involving remediation of the Hume site been required for approval of an Application for Change of Use under clause 30, then Koppers would have been obliged to effect such remediation at its own cost, though no such condition subsists.

It seems to me, however, that since I decline to order that Koppers perform obligations under clauses 26 and 29.1 in ways that Canberra Hire has sought, there may be no utility in making any of those declarations, especially if Canberra Hire does not wish to proceed with specific performance. I shall, however, hear the parties as to any such orders.

So far as the Counter-Claim is concerned, I am prepared, subject to the above, to make the first declaration sought, namely, that Koppers is entitled to rescind the contract by serving notice in writing on Canberra Hire under clause 31.2 of the contract.

It is, therefore, unnecessary to make the alternative declarations, which I would, in any event, have declined to make.

As to the Third Party Notice, which was hardly mentioned by the parties during argument, I would not be prepared to make either of the declarations for the reasons set out earlier and it should be dismissed with costs.

Accordingly, I will hear the parties, as to the orders to be made:
I certify that the preceding four hundred and eighty-four (484) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Refshauge.
Associate:
Date: 12 August 2013

Counsel for the plaintiff:  Mr J Stevenson SC and Mr R Arthur
Solicitor for the plaintiff:  Macphillamy’s Lawyers
Counsel for the defendant:   Mr G Burton SC and Mr R Clynes
Solicitor for the defendant:  Goodman Law as agents for Etienne Lawyers
Counsel for the Third Party:  Mr J Stevenson SC and Mr R Arthur
Solicitor for the Third Party:  Macphillamy’s Lawyers
Date of hearing:  3-6, 19 February 2013
Date of judgment:  12 August 2013

· Price for site only, completely unconditional	$1,030,000;
· Price conditional on site remediated to EPA industrial standards	$2,470,000;
· Price on site with completed remediation & re-zoned to industrial, undeveloped with betterment tax paid	$5,060,000.