FJ & PN Curran Pty Ltd v Almond Investors Land Pty Ltd

[2019] VSCA 236

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2018 0093

F.J. & P.N. CURRAN PTY LTD	Applicant
V
ALMOND INVESTORS LAND PTY LTD	Respondent

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JUDGES:	Whelan, Niall and Ashley JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	19 September 2019
DATE OF JUDGMENT:	22 October 2019
MEDIUM NEUTRAL CITATION:	[2019] VSCA 236
JUDGMENT APPEALED FROM:	FJ & PN Curran Pty Ltd v Almond Investors Land Pty Ltd (No 1) [2018] VCC 722 (Judge Cosgrave)

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CONTRACTS – Construction of contracts – Rural land – Option to purchase – Lease – Development works for almond farming rendered land unusable – ‘Crop compensation’ paid – Whether crop compensation payable under contractual documents – No entitlement to crop compensation under contract.

EQUITY – Estoppel by convention – Whether representations regarding crop compensation made – Evidence that crop compensation would be paid supported by objective circumstances and compelling inferences – No lack of clarity or precision in evidence – Representations made – Whether oral evidence of pre-contractual negotiations can found conventional estoppel – Retirement Services Australia RSA Pty Ltd v 3143 Victoria Street Doncaster Pty Ltd (2012) 37 VR 486; Johnson Matthey Ltd v AC Rochester Overseas Corp (1990) 23 NSWLR 190 considered – Unnecessary to decide – Representations made in continuum of conduct between parties – Mutual assumption found – Conventional estoppel found.

EQUITY – Equitable estoppel – Promissory estoppel pleaded as positive right to crop compensation payments – Whether promissory estoppel has defensive character only - Saleh v Romanous (2010) 79 NSWLR 453; DHJPM Pty Ltd v Blackthorn Resources (2011) 83 NSWLR 728 considered – Not appropriate case in which to decide principle.

LIMITATION OF ACTIONS – Limitation of Actions Act 1958 s 27 – Whether payments by mistake – Payments not by mistake – Conventional estoppel – Any mistake discoverable by 2007 – Counterclaim for repayment of crop compensation statute-barred.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr J K Arthur	Cahills Solicitors
For the Respondent	Dr E Peden	Clear Lawyers

WHELAN JA
NIALL JA
ASHLEY JA:

1. On 25 May 2018 a County Court judge delivered reasons for judgment[1] in a proceeding brought by F.J. & P.N. Curran Pty Ltd (‘the plaintiff’) against Almond Investors Land Pty Ltd (‘the defendant’ or ‘AIL’) seeking, in substance, what was described as ‘crop compensation’ for the years 2012 to 2015 inclusive.[2]  The claim arose in connection with an option to purchase agricultural land which had been granted by the plaintiff to the defendant.  AIL defended the plaintiff’s claim, and as well brought a counterclaim against the plaintiff.  AIL sought, in substance, to recover the amount of crop compensation[3] paid by it to the plaintiff in the years 2007 to 2011 inclusive.  The judge dismissed the plaintiff’s claim, and upheld the counterclaim.  Judgment was entered in accordance with his Honour’s reasons on 6 June 2018.

   [1]FJ & PN Curran Pty Ltd v Almond Investors Land Pty Ltd (No 1) [2018] VCC 722 (‘Reasons’)

   [2]Or, alternatively, damages.

   [3]As will be seen, the use of that term was apt in a practical sense, but was somewhat confusing in the context of the documentation which was created between the parties.

1. Now the plaintiff seeks leave to appeal against the judgment; and, if leave is granted, that the appeal be allowed.  The plaintiff also seeks leave to appeal against two interlocutory rulings in which the judge refused applications by the plaintiff, made at the trial of the proceeding, for leave to amend its statement of claim.[4]

   [4]F J & P N Curran Pty Ltd v Almond Investors Land Pty Ltd (No 2) [2018] VCC 723; F J & P N Curran Pty Ltd v Almond Investors Land Pty Ltd (No 3) [2018] VCC 724.

1. In our opinion, for the reasons which follow, the plaintiff should have leave to appeal and its appeal should be allowed.  There should be judgment for the plaintiff. The counterclaim should be dismissed.

Circumstances generally described

The plaintiff and the land

1. For many years prior to 2006, Frank Curran (‘Curran’) farmed land north of Swan Hill.  At trial in November 2017 he said that he had been a farmer for 50 years, so he must have been a man of advancing years.  One of the parcels which he farmed, purchased by the plaintiff (the corporate vehicle of Curran and his wife) in 1986, was Crown Allotment 2, Parish of Tyntynder North.[5] (‘CA2’ or ‘the land’).  The land was about 885 acres in area.

   [5]Certificate of Title Volume 8060, Folio 660.

1. In the years leading up to 2006, the plaintiff used the land for broadacre dry land cropping, using the minimum tillage method.  In essence, minimum tillage does away with disturbing the land by working up the soil with offset discs.  Rather, seed is drilled directly into the ground after a weed spraying program.

The defendant

1. By deed dated 24 November 2006 (‘the 2006 option’), the plaintiff granted an option to purchase CA2 to AIL, the responsible entity, trustee and project manager of an investment scheme for the commercial cultivation of almonds. The option was exercisable by the delivery of documents to the plaintiff’s solicitors, the end date being 15 June 2010.  Before the option was sought and granted, AIL had conducted soil testing so as to determine the suitability of the land for the growing of almonds.

1. AIL was at all relevant times a company whose active participants were very few.  There was Graham Johns (‘Johns’), Wayne Overall, Mr Overall’s daughter Vanessa Overall and one or two other persons.

1. Johns was a director and the secretary of AIL until his death in 2014.  On behalf of AIL, he executed a number of documents, including the 2006 option, the first interim headlease (of which more later) in 2007, an option amendment deed of 2008, an option variation deed of 2010 and the last interim headlease granted by the plaintiff (dated 8 June 2011).  He was the person who had face to face contact with Curran.  Apart from his position as director/secretary, and his involvement in the CA2 project, he also managed another almond project run by AIL.

1. Mr Overall was a director of the company until his death in July 2017.  Vanessa Overall described herself when giving evidence as ‘head of legal and compliance’.   She gave an expansive description of her duties when giving evidence. We will later refer to it in more detail.   She had no legal training.

Election

1. The 2006 option provided that AIL was entitled, during the option period, to carry out ‘development works’ on CA2.  ‘Development works’ were defined to mean:

all works in connection with preparing the Property (or any part of it) for an Almond Project including, without limit, survey works, the planting of almonds and installing any necessary irrigation and other infrastructure.

1. If AIL desired to carry out such works, the mechanism provided was as follows: the 2006 option required AIL to give written notice to the plaintiff or its solicitor that it elected to carry out or procure the carrying out of development works.  The notice was required to specify the area which was to be the subject of such works.  Except in the case of fallowed land, notice had to be given in any year in the period between 1 January and 14 June, and could be given in any or all of years 2007 to 2010 inclusive.[6]  The area specified became ‘the Leased Area’.  The plaintiff was required to give AIL an interim headlease of that land, which provided for reasonable access to the leased area.  The form of interim headlease was annexed to the 2006 option.  By this regime, agreed in by the plaintiff, the defendant (as its counsel orally submitted in this Court) was given expansive rights to enter upon and develop all or part of the land.

   [6]Clause 5.1(c) of the option could also be read as meaning that work had to be undertaken in that period.  But clause 5.2 shows that this would not be the correct reading.

1. In each of the 2007, 2008, 2009 and 2010 calendar years, AIL did elect to undertake development works on the land.  With one exception, in each of those years the election specified the entirety of the land, excepting such parts as from time to time were ‘sold’ to investors.

1. Notice of election having been given, in each year an interim headlease was granted by the plaintiff to AIL.  In each instance, the term of the lease was lengthy.  But all of the leases made provision for surrender.  Surrender would occur in the event that there was settlement under a contract of sale following exercise of the option,[7] or otherwise automatically ‘as at 7 July in the first year’ of the lease.[8]  Automatic surrender was subject to some exceptions.  It did not apply to ‘the compensated area’ — of which more later; and it did not apply to any small allotments which had been ‘sold’ to investors in the particular year.  ‘Sale’ took the form of grant by AIL to the investor[9] of an ‘allotment sub-lease’.

   [7]Clause 15.1 of the headlease annexed to the 2006 option (‘Headlease’).

   [8]Headlease clause 15.2.

   [9]Or to the custodian of a non-grower MIS: Headlease clause 15.2(c).

1. In respect of allotments so sold, assuming that settlement of a contract exercising the option was not imminent,[10] AIL was obliged by clause 3(b)(ii) of the headlease to pay the plaintiff at the rate of $1,100 per acre.  That was the per acre price at which the 2006 option was exercisable.[11]

   [10]See the opening part of Headlease clause 3(b)(ii).

   [11]See Headlease clause 15.  If any GST was payable, it was an add-on.

1. From AIL’s standpoint, the existence of a headlease from time to time was critical, because it was the foundation of its ability to grant allotment sub-leases to investors.  Any such sub-lease was followed up by a management agreement between AIL and the investor.  Ms Overall gave evidence that AIL had to provide certain information to the ATO shortly before 30 June each year about investor transactions.  The details of what was likely a tax-useful scheme for investors were not in evidence.

Development works

1. AIL undertook major development works over some weeks in March – May 2007.  The usable land[12] was deep ripped, to a depth of about a metre.  Large quantities of soil were moved about.  Mounds were created on part of the land on which trees were to be planted.  Curran estimated that 270 kilometres of deep ripping was undertaken, about 25 kilometres of mounds established, and about 60,000 cubic metres of soil moved.  No evidence controverted Curran’s description of the works which were then undertaken by AIL.

   [12]Curran gave evidence that it was about 85% of the entire acreage of the land.

1. In each of the years 2008 to 2010, work was done effectuating the project by the progression of other infrastructure, the planting of trees and the ‘sale’ of small allotments to investors — each sale leading to an allotment sub-lease and a management agreement between AIL and the investor.

1. According to Curran’s evidence, the major works done in 2007 rendered the land unsuitable for minimum tillage cropping.  It is the fact that the plaintiff did not crop the land at any time in the period which commenced in mid-2007 and which ended when the option as varied was exercised in June 2015.  Only one invoice[13] rendered by the plaintiff related to cropping activity. Relevantly, it referred to activity undertaken before commencement of the major development works to which we have referred at [16] above. Thus, the land — the evidence showed that it was subject to a mortgage — generated no income at all from farming activities between 2007 and 2015.

   [13]Dated 22 August 2007.

1. Ms Overall gave evidence that, as at 2011, work remained to be done on the land. She referred to more tillage, establishing more mounds, planting trees and installing irrigation. There was no evidence that Ms Overall had ever seen the land; but whether or not she had done so, what she said, with respect, was self-evident. By that time, something less than 250 acres had been fully developed in response to investor demand. The witness’s evidence in no way gainsaid the accuracy and reliability of Curran’s evidence noted at [18] above.

Crop compensation under the 2006 option

1. If AIL gave an election notice in any year, then by clause 6 of the option deed[14] it was required, in certain circumstances, to pay the plaintiff ‘crop compensation’.  The heading and subclauses 6.2 and 6.3 read as follows:

   [14]Clause 6 was identical in all material respects in the 2006 option and the 2010 option variation deed.

CROP COMPENSATION

6.1…

6.2      Compensation

AIL must pay the Grantor compensation for the Grantor’s loss of use of the Property or any part of it due to AIL electing to carry out the Development Works in accordance with and limited to the amount determined by this Clause 6.

6.3Compensation Amount

If, as at the date the Election Notice is given to the Grantor or the Grantor’s Solicitors, the Grantor has prepared any part of the Leased Area, the subject of that particular Election Notice, for the sowing or harvesting (or both) of any farming crops to recognised industry standards up to but not including the stage of actual harvesting, then:

(a)the Grantor may provide to AIL copies of all relevant documents evidencing the reasonable costs and expenses incurred by the Grantor in preparing the Leased Area for sowing or harvesting (or both) to recognised industry standards (including, without limit, tax invoices and wage sheets); and

(b)after (and only after) receipt of the same (together with a tax invoice, if applicable), AIL must reimburse the Grantor for those costs.

1. Remembering that no cropping, or work preparatory thereto, was undertaken between mid-2007 and June 2015 then, subject to several submissions advanced by the plaintiff to which we later refer, if clauses 6.2 and 6.3 represented the entirety of the plaintiff’s potential entitlement to compensation during the option’s currency, no compensation could have been payable.

The compensation provision in the interim head leases

1. Each of the leases entered into between the plaintiff and AIL in the years 2007 to 2010 inclusive contained a clause headed ‘Compensation’.  This is what clause 21 of the interim Headlease annexed to the 2006 option said:

21.      COMPENSATION

For any part of the Land if:

(a)the Settlement Date is not scheduled to occur in the same calendar year as the calendar year in which this Lease commences;

(b)as at 7 July in the first year of this Lease, such part of the Land is not subject to an Allotment Sub-lease Agreement;

(c)compensation is payable for such part of the Land under clause 6.3 of the Option to Purchase Deed to the Lessor as grantor; and

(d)such part of the Land is not Surplus Land,

then the Responsible Lessee must pay to the Lessor compensation for such part of the Land, at the rate of $40 (plus GST) per acre (with a proportional adjustment for any part of an acre), by 15 December of that calendar year.

1. Clause 21 employed terms which must later be discussed: ‘Settlement Date’, ‘scheduled’ and ‘Surplus Land’.  We note also that the amount of $40 plus GST per acre, set out in the form of interim Headlease attached to the 2006 option, was not the amount set out in the interim head leases for each of the years 2007 to 2010.  Rather, under those leases, compensation was payable at $60 per acre plus GST.  The change in amount came about as the result of discussion between Curran and Johns.  That discussion is of importance to the resolution of this matter, and we must later address it.

Amendment and variation of the 2006 option

1. The 2006 option was amended by deed of amendment in 2008.  The principal change made by the amendment was to permit the exercise of the option on multiple occasions and over parts only of the land.

1. The 2006 option was varied by deed in 2010.  The substance of the variation was to extend the end date for its exercise to 15 June 2015.  It was uncontroversial that Johns, on behalf of AIL, requested this extension.  As we have already noted, as at 2010 only a relatively small portion of the land had been fully developed and sold to investors.  Yet, from AIL’s standpoint, much work had been done and money spent in undertaking development works.

Election in 2011

1. In 2011, AIL made its last election to undertake development works.[15]  It did so pursuant to the option as varied.  The plaintiff granted AIL an interim headlease dated 8 June 2011, but commencing on 14 June (‘the 2011 lease’).  The subject of the lease was 259.2 hectares — that is, about 640.5 acres.[16]  The term of the lease was 17 years, five days.

   [15]The notice of election was not included in the Appeal Book, but nothing turns on it.  A notice of election was the necessary precursor to the grant of an interim headlease.

   [16]This illuminates the fact that by then only a smallish part of the land had been fully developed - allowing for unusable land, probably about 200 acres.

Legal representation

1. The 2006 option, the 2008 amendment deed, the 2010 variation deed, interim head leases for the years 2007 to 2011 inclusive and deeds of surrender were prepared by AIL’s solicitors.  In the case of the 2006 option, it was Herbert Geer and Rundle.  The 2008 amendment deed was prepared by Allens Arthur Robinson.  By 2010, the firm of McMahon Clarke Legal of Brisbane was acting for AIL.  It was that firm which prepared the 2010 variation deed and the 2011 lease.

1. For its part, the plaintiff was represented at all relevant times by Mr Alastair Lyall of Cahills Solicitors, Bendigo.

Invoices for ‘crop compensation’

1. The plaintiff invoiced AIL for ‘crop compensation’ for each of the years 2007 to 2011 inclusive. As noted at [20] above, that was the term used in the heading to clause 6 of the 2006 option and its successor. But in each instance, the invoice claimed payment at $60 per acre for the entirety of the land less that part which AIL had sold to investors. This was the amount fixed by clause 21 of the original form of headlease as amended after discussion between Curran and Johns, and by clause 20 of the 2011 lease (for convenience, hereafter ‘the compensation clause’). The clause did not use the term ‘crop compensation’, and the amount of $60 per acre was not tied to cropping expenditure. But the parties constantly referred to what was claimed and paid as crop compensation, and it is convenient to maintain that description.

1. In the event, the invoice for 2007 related to 880 acres.  For 2008, it was 787.2 acres.  For 2009, it was 736.321 acres.  For 2010, it was 640 acres.  Finally, for 2011, it was 618.7 acres.  That was close to, but not identical with, the 640.5 acres the subject of the 2011 lease.  Each of the acreages in respect of which claim was made was determined by Curran to be the area of ‘unused land’.

1. Each of the invoices for the years 2007 to 2011 inclusive was paid by AIL.  In all, over that period, AIL paid the plaintiff $241,706.59 in crop compensation.  The last of the invoices to which we have just referred was paid in ‘dribs and drabs’ over a protracted period in 2012 and 2013.  Ms Overall’s evidence was that investor interest had dried up in 2010 and 2011.  That was why, AIL asserted, it had given a surplus land notice with respect to the 2011 lease.  Of that assertion, more later.

1. The delay in payment of the 2011 invoice is suggestive that money was tight for AIL.  This impression is fortified by the fact that no development work was thereafter undertaken until the option was exercised in June 2015; and that it was exercised not by AIL, but by another entity introduced by AIL.  Ms Overall’s evidence was that AIL was unable to develop the land itself.  Absent headleases, there could have been no allotment subleases to investors over that period of years.  This must necessarily have impacted upon AIL’s receipts from the land.

1. From 2012 onwards, the plaintiff continued to invoice AIL for crop compensation at $60 plus GST per acre per year, applied to 618.7 acres.  Constant reference to 618.7 acres recognised the fact that no development works were carried out on the land in 2011 or thereafter.

1. By its amended statement of claim, the plaintiff pleaded that the total of the invoices for the period from 2012 onwards was $186,052.27 — largely crop compensation, but also interest and sundry charges.  AIL paid the sundry charges, but nothing else.  The crop compensation component, ascertainable by recourse to invoices presented by the plaintiff, was $163,336.80.[17]

   [17]$37,122 plus GST of $3,712.20 for each of the four years.

Surrender and the 2011 lease:  an excursus

1. So far as the plaintiff’s claim at trial relied upon the compensation clause in the 2011 lease it depended, in the first place, upon the lease being extant up until the option was eventually exercised.  Apart from such a lease ending at the expiry of its term, we have already noted that it could be brought to an end by surrender.  Clause 15 of the 2011 lease said this:

15.1     Acquired Land

Provided that settlement under the Contract of Sale occurs, this Lease is automatically surrendered as to that part of the Land that is the subject of the Contract of Sale, with effect from midnight on the day immediately before the Settlement Date (“First Surrender Date”).

15.2Surrendered Land

As at the first 7 July following the Commencement Date (“Second Surrender Date”), this Lease is automatically surrendered as to that part of the Land that is not:

(a)the subject of the Contract of Sale; or

(b)the subject of an Allotment Sub-Lease Agreement (which for the sake of clarity will be granted when a tenant under a sub-sub-lease has accepted an application from a Grower for an interest in a Grower MIS); or

(c)the subject of a sub-lease to a custodian of a Non-Grower MIS; or

(d)the Compensated Area,

with effect from midnight on the Second Surrender Date.  Land may be surrendered even if it is the subject of the Licence.

1. Clause 15.1 was irrelevant in this case.  The exception created by clause 15.2(a) was likewise irrelevant.

1. The commencement date of the 2011 lease was 14 June 2011.  Thus, as the parties agreed in this Court, surrender under clause 15.2 occurred on 7 July that same year.  That it did so is consistent with this evidence given by Ms Overall as to the defendant’s methodology:

You’ve spoken briefly about ASIC Regulation and ATO Regulation and constitutions and the Corporations Act.  Did any of those regulations have an impact on agreements relating to land as far as you’re aware?---Yes, they did.  The ATO granted our projects a product ruling which really meant that the growers in those MIS were in the business of growing almonds and in order for them to be considered to be in the business they had to have a valid allotment sub-lease agreement and a valid allotment management agreement as at 15 June in any year or in the year that they began their operation of growing an almond business.  So our disclosure statements had a disclosing date of 15 June each year and it was at that point we issued the allotment management agreements and the allotment sub-lease agreements which put them in the business of growing almonds.

If there were no investors sufficient for a project, do you know what the business did with land that was leased?---The allotment sub-leases and the allotment sub-leases that I just referred to were derived from the lease that was in place in that year between Curran and almond investors land [sic] and so every year we wanted to try and give ourselves the best chance of making as many sales as we possibly could so we leased as much land as we possibly could.  If in any project year we didn’t end up getting sales to fill that entire area of land that was under the lease the portion that was not required for an almond project was surrendered.

So was your understanding that surrender could occur a few weeks after entering into a lease?---Yes, that is true.

1. Clause 15.2(b) and (c) operated to preserve the lease insofar as there had been sub-leases either to individual investors or to a custodian of a non-grower managed investment scheme.  Ms Overall’s email to Curran dated 19 August 2011 — see [44] below — suggests that paragraph 15.2(b) had a small application as at 7 July 2011.

1. The term ‘Compensated Area’ in clause 15.2(d) had the meaning given to it by clause 1.1.  It meant ‘that part of the Land the subject of compensation under [the compensation] clause’.  We have set out that clause at [22][18] above.  Under the compensation clause (subject to other exceptions) there was an entitlement to compensation for a part of the land which was not ‘surplus land’.

   [18]The language of clause 21 of the 2006 option, which is set out at [22], and clause 20 of the option as varied were the same.

Surplus land

1. Clause 14.1 of the 2011 lease read:[19]

   [19]Clause 14, overall, was similar to, but not identical with, clause 14 of the form of Headlease annexed to the 2006 option.

14.1     Surplus Land

By no later than the Surplus Land Date, the Lessee may notify the Lessor or the Lessor’s Solicitors of any part of the Land that is not required by the Lessee for Developments Works, which notice (“Surplus Land Notice”) must identify the part of the Land not so required (“Surplus Land”).

1. If a Surplus Land Notice was given, clause 14.2 provided that:

14.2     Licensed Land

(a)If a Surplus Land Notice is given, the Lessee (as licensor) must, if requested to do so by written notice from the Lessor (“Lessor Notice”), grant to the Lessor (as licensee) a licence to use all or part of the Surplus Land in accordance with this Clause 14 and upon payment of a licence fee of $10.00 (plus GST), if demanded by the Lessee (as licensor) (“Licence”).

(b)Any Lessor Notice must identify which part of the Surplus Land is to be the subject of the Licence (“Licensed Area”).

(c)The Lessor (as licensee) may use the Licensed Area for any use permitted by law, subject to compliance with all laws.

1. Clause 14.1 referred to the ‘Surplus Land Date’.  This was defined by clause 1.1 to mean ‘the first 10 May following the commencement date’.  The 2011 lease having commenced on 14 June 2011, the Surplus Land Date became 10 May 2012.

1. The fact that the Surplus Land Date was 10 May 2012 said nothing as to whether the lessee was legally entitled to give a Surplus Land Notice at any particular time.

1. It is uncontroversial that on 19 August 2011, Ms Overall, on behalf of AIL, emailed the plaintiff as follows:

Dear Frank,

We refer to your Invoice Number 85 for crop compensation for financial year 2011 and confirm that we have today posted you a cheque for $32,240 (being $42,240 less $10,000 that AIL paid on 30 November 2010), representing the balance owed in relation to the 640 acres/259 hectares not used in our 2008, 2009 or 2010 Projects (please refer to the attached Map 1).

We recently sold 69 plantable 0.125ha allotments (8.625ha) in our 2011 Project.  For your reference, these allotments are located in yellow on the attached Map No 2.

As you are aware, over the last couple of years, the demand for our almond orchard projects has significantly declined due to the collapse of a number of competitor corporations which has destroyed investor confidence and low almond prices due to the high Australian dollar.  Consequently, we are not planning a retail project for the 2012 financial year.  We are exploring other opportunities (primarily with overseas investors) for 2013 so we are hopeful that we may have a future need to purchase the remaining land on Vol 8060 folio 660.

You are therefore free to plant a crop on the balance of land immediately (i.e. on the remaining 250.375 hectares).  Please take this email as Notice that we do not require you to reserve the balance of the property for AIL in the 2012 financial year.  Under the Interim Head Lease between FJ & PN Curran Pty Ltd and Almond Investors Land Pty Ltd dated 8 June 2011 we must provide you with Notice by 10 May 2012, however we are notifying you now as a matter of courtesy and to give you more than enough time to plant a crop this year.  By giving you this Notice now we have no liability for crop compensation in respect of the 2012 financial year.

If investor appetite increases and we are able to have an almond project in 2013, we will of course advise you.  Accordingly, please be mindful of Clause 8 in our Option Agreement which relates to the use of weedicides.

As always we thank you for the spirit of our working relationship.

If you have any queries, please address them to either Graham Johns or Wayne Overall.  Please be aware, Graham is away on leave from 16^th August to 17^th September 2011 and I will begin maternity leave on 2 September 2011.

1. In the proceeding, AIL contended — and the plaintiff disputed — that this was a Surplus Land Notice.

1. We pause to make this observation.  Ms Overall there demonstrated an apparently clear understanding of one way in which AIL could avoid payment of compensation under the compensation clause.  That was the very clause about another aspect of which, at trial, AIL contended it was mistaken until 2016.

1. Curran responded by email dated 24 August 2011:

I would like to point out that I am well aware of the various problems that the Almond Industry has faced over the last few years.

However I was dissapointed [sic] in and totally reject your assertion that AIL have no liability for crop compensation in respect of the 2012 financial year.

In April-May 2007 when AIL carried out extensive earthworks on CA 2 in preparation for an almond plantation it rendered the block unsuitable for normal cereal cropping.

Some 18 months ago I discussed this matter with Graham Johns and as recently as last week with Rex Booker where it was generally agreed that given the land had been prepared for the plantation of almonds, there were considerable hurdles to be overcome before any cereal cropping could take place on CA 2.

In recognition of the fact that CA 2 is not suitable for normal cereal cropping, AIL has made a crop compensation payment on the balance of the block for the last 4 years and I would expect that to continue until the block is fully developed.

1. On 29 August 2011, Ms Overall sought comment from Johns, noting that her father was to consult with a barrister the following day.

1. That same day, Curran emailed Ms Overall as follows:

Further to the crop compensation issue, it is somewhat unfortunate that Graham Johns is away on leave.

In April 2010 when Graham came over to discuss and ask us to extend the Option Agreement he assured me that the crop compensation, on land not already planted out to almonds on CA 2, would continue.  I am sure that Graham will be able to verify this when he returns from leave.

1. On 30 August 2011, Johns responded to Ms Overall’s email of the previous day.  This is what he said:

Subject:  Crop Compensation

Hi Vanessa,

Frank’s responses are no different than on other occassions [sic] when I have tried to discuss planting a crop in CA2.  On past occasions when these discussions have occurred, which have been around December or early new year when the crop compensation has been paid, Frank has said he could not plant a crop because he would have needed to have been told in August to have had time to prepare the land to plant the crop in addition to address the issues Frank sees we have created by ripping and cutting and filling the land in preparation for almond development.

Frank needs to say exactly what needs to be done now and by when for him to plant a crop on the land around late April early May 2012 when seed is normally sown.  This would need to be done ASAP to avoid missing the correct timing of any agronomic tasks that need to be done to get the seed in in 2012.  Rex may have already determined what has to be done in Frank’s opinion and by when.

I would then suggest Kym Luitjes from Sunraysia Environmental be engaged to verify that the tasks Frank nominated should be done and the timing of these tasks are correct and necessary or is there a simpler way of preparing the land for planting a crop in 2012.  I would initially take this advice from Kym verbally.  Kym may need to inspect the property before making his comments and if this is required he should do this ASAP.  Kym comes from a farming background and will know exactly what has to be done and the quickest and least costly way to get a crop planted in 2012.

Regarding Frank’s comment that he signed the extension to the Option Agreement after a discussion with me in April when Frank says I told him crop compensation would continue to be paid, all I recall saying was that there would be no changes to the existing agreement other than an extension to the Option Period for another five years.

1. At trial, the defendant understandably relied upon the last paragraph of that email.  But two other features of the email may be noted.  First, it confirms that Curran had consistently asserted that he could no longer crop the land.  Second, Johns proposed that an agricultural consultant look into what could be done with the land which would permit a crop to be planted in 2012.  On its face, this was implicit recognition that a problem existed with respect to cropping the land.

1. There was no evidence that a consultant was engaged.

1. On 3 October, Mr Overall, who, by this time, it appears, had conferred with counsel, emailed the plaintiff as follows:

I reaffirm that AIL has had and always wishes to have a warm relationship with you.  I think it is true that we have both benefited from our contractual relationship.

As you are aware due to very difficult industry economics it is very likely that AIL will not have a project for year ended 30^th June 2012.  Therefore we very consciously gave you early notice that you should plant a crop if you so wish and that accordingly AIL did not have any liability for crop compensation under our contract.

As always AIL will honour all its’ [sic] contractual obligations.

I regret that you are of the view that we have somehow hindered your future operations.  We are of the view that we have met in full our contractual obligations.

Thank you for your invitation for me to visit your land.  I do not see how this will be productive as I have no special knowledge of crop farming conditions.

I hope both this year and future years are good ones for your business.

1. AIL relied upon this email also as a Surplus Land Notice.  The plaintiff disputed that it was such a notice.

1. As at 7 July 2011, the date of automatic surrender under clause 15.2 of the 2011 lease, no Surplus Land Notice had been given.  Because no part of the leased land had become Surplus Land, compensation was not denied by paragraph (d) of the compensation clause.  Whether the leased area or any part of it was ‘the Compensated Area’, and so excluded from automatic surrender by operation of clause 15.2(d) of the lease depended upon the operation of the compensation clause.  Paragraphs (a) and (c) were important in that connection, and must later be considered.

1. Assuming for the moment that paragraphs (a) and (c) of the compensation clause were satisfied as at 7 July 2011 in respect of the leased land,[20] then, it not being Surplus Land for the purposes of paragraph (d) of the compensation clause, automatic surrender did not apply to it.  That was because, viewed as at 7 July 2011, the land[21] would have constituted ‘the Compensated Area’ under clause 15.2 of the lease.  As at that date, on the above assumption, compensation was payable in accordance with the compensation clause.

   [20]And paragraph (b) being admittedly satisfied.

   [21]Except for any small area which had been allotted under sub-leases.

1. The corollary of the assumption discussed in the preceding paragraph is that, the lease being extant, it would have been nominally open to AIL to give a surplus land notice.  But why would it do so if the consequence was that, in addition to liability having crystallised under the compensation clause, it was also obliged to give the plaintiff a licence to use the surplus land (whether or not the land was capable of being exploited)?

1. If, contrary to the assumption made at [56] above, either paragraph (a) and/or (c) of the compensation clause was not satisfied as at 7 July 2011, then the leased land could not have been ‘the compensated area’. In that situation, automatic surrender would eventuate, and it would follow that a subsequent Surplus Land Notice would be ineffectual. That would be the situation with respect to the two emails which the judge found were (valid) Surplus Land Notices.

Conversations relied upon by the plaintiff

1. The plaintiff did not rest its claim for compensation for the years 2012 to 2015, and its response to the defendant’s counterclaim, only upon a contractual basis. Far from it. The plaintiff pleaded claims founded upon alleged misleading or deceptive conduct by the defendant, alternatively negligent misstatement. It also sought to rely upon promissory estoppel, alternatively estoppel by convention. The causes of action and reliance upon estoppels significantly turned upon evidence given by Curran of two conversations between himself and Johns,[22] and also an email sent to him by Ms Overall dated 30 April 2010. The reliance upon estoppels additionally focussed upon the conduct of the parties from late 2007 onwards.

   [22]Mention was made also of a conversation between Curran and Rex Booker of the defendant.

1. The first conversation, Curran said, took place in late 2007.  This was his evidence:

---… Yeah, to the best of my recollection towards the end of 2007 we had a discussion about what had happened on CA2.

What was the substance of that discussion?---Well, we agreed, Graham Johns and I agreed that it would not be possible for me to sow crops on that land in the condition that it was because, as I’ve already said earlier, we were into minimum till dry land cropping.

Had you been required to restore the land so that you could resume dry land cropping on that land what would have been involved?---To restore the land we would have had to initially – well, this didn’t come into account until 2011 when they gave notice that you referred to earlier on.

Perhaps we will leave it til we get to 2011?---But just to finish your question.  Graham Johns and I discussed at the end of 2007 the condition of the land and it was generally agreed by both of us that I could not conduct my normal dry land cropping on there.

Was there any discussion about compensation for that?---Yes.

What was that discussion?---We agreed that I would be compensated, because of the fact I couldn’t crop the land I would be compensated $60 an acre for not being able to crop it.  Now, that figure $60 an acre was a price slightly above what a normal lease rate at that time was.

Was this to be a once off payment or an annual payment?---It was to be an annual payment on land that wasn’t developed.

1. The second conversation with Johns about which Curran gave evidence took place in about April 2010.  It did so in the context that AIL was seeking an extension of the option period.  This is the evidence that Curran gave:

Did you have a discussion with Graham Johns in about April 2010?---Yes, yes.

Where was that discussion held?---At the farmhouse, our farmhouse.

And that was where?---That was the farmhouse at just opposite CA1 and that was Graham had come over to see if I would extend the option agreement for a further five years.

You had a discussion about this at the farmhouse?---We did, yes, yes.

Can you relate to his Honour what was said?---They would like – because they’ve got a lull in the almond industry at the time or invested at the time, they would like to extend the lease on CA2 for a further five years under the terms of the previous contract.  I specifically asked him if that would still include the crop compensation that had been paid for the previous four years.  He said it would be the same on the new extended lease.  So that crop compensation would remain the same here he assured me.

1. Asked about the effect of the assurance given by Johns, Curran gave evidence that ‘it had a positive effect knowing that the crop compensation would continue’ and ‘[i]f the existing crop compensation wasn’t included, we wouldn’t have extended the contract.’

1. Curran was cross-examined about the 2010 conversation, but not about the 2007 conversation.

1. In cross-examination, Curran agreed that he realised that he had no obligation to extend the option in 2010.  He said that he felt he had a moral obligation to grant an extension.  He stated also that negotiation took place.  He agreed that his solicitor had an opportunity to review the documentation and that he, Curran, had the opportunity to discuss anything about the documentation with him.  He said that he made the decision to agree to an extension following that process.  He did not give evidence, however, that he in fact conferred with the solicitor; or, specifically, that he raised with the solicitor the plaintiff’s entitlement to continuing crop compensation.  If one were to accept the evidence which he gave about his 2010 conversation with Johns, following upon the late 2007 conversation and the course of events thereafter, it would be understandable that he did not do so.

1. In cross-examination, Curran was asked these questions and gave these answers:

In the conversation that took place between you and Graham Johns before the process we’ve just discussed Mr Johns indicated to you that he was not proposing any changes to the existing agreement other than an extension to the option period for another five years didn’t he?---He did, but at the same time he emphasised that the existing contract included crop compensation for CA2, undeveloped parts of CA2.

That was your understanding of the contract as well wasn’t it?---It was.

1. Taken to the email dated 30 August 2011 from Johns to Ms Overall and her father — see [50] above — Curran denied that before 2010, Johns had conversations with him suggesting that he plant a crop on the unused portion of the land.

1. With respect to what Johns had said about the conversation between the two men in April 2010 — that is, that all Johns recalled saying at that time was that there would be no changes to the existing agreement other than an extension to the option period for another five years — Curran gave evidence that Johns had also said that the option as extended would include crop compensation to continue as it had up to that period.

1. This answer, the plaintiff submitted at trial, was supported by contemporary documentation.  Ms Overall had emailed Curran on 30 April 2010, relevantly saying this:

I refer to your discussion with Graham Johns regarding extending the Option Agreement that was entered into on 24 November 2006, as amended by the Amendment Deed on 10 June 2008, for volume 8060 folio 660.

As you are aware, Almond Investors Land Pty Ltd would like to extend the Call Option Period for a further 5 years (that is, until 15 June 2015).  We would like to do so on the existing terms (including the existing crop compensation arrangements as requested by yourself).  If you are agreeable, I can arrange for our solicitors to draft a simple Amendment Deed which we will give to Alastair Lyall for his review and approval.

1. The plaintiff relied upon the author’s reference to ‘the existing crop compensation arrangements as requested’ by him.  It understandably submitted that this was a reference to it receiving from AIL, year on year, $60 per acre for all the unused land.

1. We return to Curran’s cross-examination.  The defendant relied upon this question and answer:

As we’ve been over, that was on the basis that that was what was included in the current agreement?---Yep.

1. Curran was taken to a letter dated 28 July 2015, from his solicitor to the defendant’s solicitors, explaining why crop compensation was said to be payable.  He agreed, and it is the fact, that the letter did not contain any reference to any representation by Johns.

1. So far as that letter did not refer to the 2010 conversation between Curran and Johns, its only apparent relevance could have been to support a submission of recent invention on Curran’s part, so as to undermine his credit. But in our view there was no such point to be made. After all, Curran had specifically raised the matter and relied upon it in his emails to Ms Overall dated 24 and 29 August 2011. See [47] and [49] above.

1. In re-examination, Curran was taken to the conversation which he had with Johns in April 2010.  He said this:

Graham Johns came and visited us at the farm and discussed the fact that they would like to extend the option agreement for a further five year period.  We had discussions over a 15 minute period I guess.  Among those discussions, Your Honour, Graham assured me that the extension be on existing terms which included the existing crop compensation payments, payment arrangement.

1. Johns being deceased at the time of trial, and Mr Overall not only being deceased but in fact not having engaged in any relevant conversation with Curran, the only witness called for the defendant was Ms Overall.

1. In examination in chief, Ms Overall was taken to an email sent by her to Curran in which she explained how compensation had been calculated.  She had said that crop compensation for 2009 was ‘based on the acres of CA2 not already purchased, leased for existing projects.’  Then there were these questions and answers:

What was that method of calculation based on?---The number of acres that were leased minus the number of acres that were taken up in the almond project.

Why did you think that that was the way that it ought to be calculated?---That was what Graham Johns advised me.

HIS HONOUR:  Sorry, can you just say that methodology again please, the number of acres?---Say if we had a lease, so for example this email here, for 884 acres, and we took up 147 acres for our project then the total of unused areas in our almond project was 736, so 884 minus 147 equals 736.

COUNSEL:  As far as you’re aware had anyone within the almond business received advice on how the crop compensation clause in the option operated up until this time?---No.  At this time there was no problems I didn’t think associated with these payments.  Graham advised me that that was his understanding of the agreements.  He was a director of almond investors land.  I saw no reason to challenge him or saw no red flags as to how or why there was a problem with what we were doing.

Was it part of your role to go and check agreements before invoices were paid to check that they were properly construed?---Well, I didn’t do that for this particular agreement.  With hindsight maybe I should have, but I didn’t at this time because I relied on Graham’s arrangements with Frank.

1. Johns’ understanding, which had been advised to Ms Overall, was evidently that crop compensation was to be paid for the total of unused acres in the CA2 project, at $60 per acre per year.  That understanding could not affect the proper construction of the relevant documents; but it was surely relevant to Curran’s evidence of what he and Johns had agreed in 2007, and what he said Johns represented to him in April 2010.  It bore squarely upon the causes of action other than that dependent upon construction of the documents.

1. As to the basis for Johns’ understanding, the defendant relied upon Ms Overall’s attribution to the deceased man the words ‘his understanding of the agreements’.  If one was to accept that evidence, the question remained: what was to be made of the plural ‘agreements’?

1. Ms Overall gave evidence of a conversation which she had with Johns subsequent to receiving his email dated 30 August 2011.  This is what she said:

He reiterated to me that he had not promised Mr Curran crop compensation indefinitely and had not guaranteed it in any way but that he had indicated that the clauses that were in the original agreement would not be changed, the only thing that would be changed in the amendment would be term, i.e. to extend it for a further five years.

1. This was a very considerable enlargement upon what Johns had said in his email was the limit of his recollection: ‘all I recall saying was that there would be no changes to the existing agreement other than an extension to the Option Period…’.[23]  That email was the only evidence emanating directly from Johns as to what he had said.

   [23]See paragraph [50] above.

1. In cross-examination, Ms Overall stated that she did not have any conversations with Curran, and that all the discussions between AIL and Curran with respect to the extension of the option were conducted by Johns on behalf of AIL. She gave this account of what Johns had told her, which differed in several respects from her evidence as noted at [78] above:

[Johns] told me that the existing – that the existing crop compensation clauses in the existing agreement were to remain and that … Mr Curran was adamant that he wanted those existing crop compensation clauses to remain, that he had requested that and that’s why they remained in the amendment deed.

1. That evidence was silent as to what Johns had said to Curran about crop compensation.

Payment by mistake?  Discoverability of the mistake

1. The gist of the defendant’s counterclaim was that crop compensation payments had been made because of a mistake as to the meaning of the compensation clause in the successive headleases.  One part of the plaintiff’s answer was that the counterclaim was statute-barred.  The defendant’s response in that connection was that the mistake was not reasonably discoverable at least until counsel’s advice was taken in August 2011.  In that connection, the defendant relied upon Ms Overall’s evidence of the way in which Johns told her that crop compensation was to be calculated.

1. Ms Overall described her role in the business this way:

I spend the majority of my time ensuring that the management investment schemes that we manage are implemented and adhere to the constitutions, to their compliance plans, that the ATO product volumes [sic] that were granted for our almond projects are implemented and in accordance with those rulings.  I attend compliance committee meetings.  I liaise with our external auditors.  I liaise with our external custodian which is Sandhurst Trustees and I’m also involved on occasion with some elements of our investor service regime and I do some office administration as well.

What is your title?---Head of legal and compliance.

Do you have any legal qualifications?---No, I do not.

And you’re head of legal and compliance, how many people do you head up?---There’s actually only four people in our entire organisation so nobody reports directly to me.

1. The witness said that she did not negotiate any terms with any of the external parties, that she did not give legal advice as to any of the terms within contracts or agreements, and that she had no role in the creation of the 2006 option deed.  She said that when she wrote the email of 30 April 2010 to Curran, she was ‘not familiar with every term in the option, the original option agreement or the amendment deed’.

1. It appears, as we have said earlier, that in August 2011 the defendant obtained advice from a barrister as to its liability to pay crop compensation thereafter.  But, according to the evidence of Ms Overall, it was not until the defendant was served with the writ that it sought legal advice about the payments for crop compensation that had been made for the years 2007 to 2011.

1. The defendant adduced no evidence as to precisely what advice was sought from counsel in August 2011, or precisely what advice was given.  Whether legal professional privilege with respect to the advice could have been maintained in the circumstances was never debated.  There is no utility in speculating as to the precise terms of the advice sought or given.  What can be said, however, is this: the advice must have involved consideration of clause 6.3 of the option deed, and of the surrender, surplus land and compensation clauses in the 2011 lease.

1. Ms Overall agreed that throughout the period of creation of documents between the parties, the defendant had ‘top law firms’ acting for it in the drafting exercises.

1. She explained the defendant’s failure to raise a counterclaim at the outset by referring to the grave illness of her father in 2016 and his subsequent death in March 2017, and to the serious illness of her mother at the time.  She said:

It wasn’t until we delved into the level of detail that this case requires did we really realise the extent of our mistake.

The judge’s reasons

1. The judge described the ‘main issues to be resolved’ as follows:

(a)Is Curran entitled to crop compensation and, if so, how much, under its Agreement with AIL?

(b)Is the email from AIL to Curran dated 19 August 2011 a Surplus Land Notice with clause 14 of the lease which AIL was entitled to serve and, if so, what is its effect?

(c)Did AIL engage in misleading and deceptive conduct in breach of section 18 of the Australian Consumer Law, or act negligently and thereby cause loss and damage to Curran?

(d)Is Curran entitled to damages for any loss suffered as a result of misleading and deceptive conduct or negligent misrepresentation by AIL?

(e)Is AIL entitled to recover the sum of $241,000 paid to Curran as crop compensation as money paid under a mistake?

(f)If AIL is prima facie entitled to the return of the moneys paid to Curran, is its counterclaim, or any part thereof, statute barred?

(g)Is AIL estopped from:

(i)giving the surplus land notice;

(ii)relying upon clause 6.3 of the Option Deed to avoid paying the crop compensation for the years 2012-2015 inclusive?[24]

[24]Reasons [46].

Was Curran entitled to crop compensation payments and, if so, how much?

1. The judge set out the principles which govern contractual interpretation in commercial contracts at Reasons [48]-[52]. It is not submitted in the present application that his Honour misdirected himself in relation to the identification of those principles.

1. The judge stated that whether or not Curran was entitled to crop compensation depended on the construction of clause 20 of the 2011 lease.  That, of course, was true only insofar as the plaintiff laid its claim in contract.  His Honour said that it was appropriate to consider the purpose of the lease and other relevant clauses when giving meaning to clause 20.  The purpose of the 2011 lease, his Honour stated:[25]

was to enable AIL to market investment opportunities to investors potentially interested in almond farming.  The lease gave AIL security over the land to be able to sell entitlements or allotments to investors in the various almond projects.  If there were sufficient investors available to make a project viable, then AIL held the land pursuant to lease until it purchased the same from Curran.

[25]Reasons [54].

1. We pause to note that the plaintiff submitted in this Court that the purpose thus identified was no more than the defendant’s subjective intent, which was beside the point.

1. His Honour correctly stated that the parties contemplated that there may be no sale of CA2, and hence no settlement, or else that the settlement of any sale could be delayed for some time.[26]  In that connection, his Honour referred to the rental provision, including the provision for payment of moneys at $1,100 per acre for allotments which had been ‘sold’.[27]

   [26]Reasons [55].

   [27]Reasons [57].

1. His Honour referred to the ability of AIL to carry out development works.  His Honour noted that:[28]

while some development works were done on CA2 in 2007, it did not render the whole property ready for an almond project.  The final part of CA2 was not prepared for development until 2015 when there was re-ripping and mounding of the land, irrigation installed, and the planting and staking of trees.

[28]Reasons [60].

1. This was, with respect, having regard to the entirety of the evidence, an understatement of the development works which had been undertaken in 2007.  At [19] above, we have adverted to the inutility of certain evidence given by Ms Overall about work still to be undertaken as at 2011.

1. His Honour then referred to the surplus land provisions in the successive head leases, and to the provision with respect to surrender.  In the last-mentioned connection, his Honour referred to the term ‘the Compensated Area’, this calling into play clause 20 of the 2011 lease.

1. His Honour stated that:[29]

[b]oth parties agreed that, in order for the compensation to be payable, each of the four preconditions of clause 20 had to be satisfied.  Both parties also agreed that clause 20(b) was satisfied.

That accurately stated the position of the parties in this Court also.

[29]Reasons [66].

1. The judge then addressed each of paragraphs (a), (c) and (d) of the compensation clause.  He concluded that none of the three was satisfied.

1. So far as paragraph (a) is concerned, we should first set out the definition of ‘Settlement Date’ in clause 1.1 of the 2011 lease:

Settlement Date means the first 7 July following the Commencement Date or such other date as may be specified in the Contract of Sale as the settlement date[.]

1. Then consider paragraph (a) of the compensation clause itself:

(if) the Settlement Date is not scheduled to occur in the 12 month period from the Commencement Date…

1. It was the common position of the parties that the first meaning of ‘Settlement Date’ as defined was not in point.  The judge agreed.  He further held that the interpretation urged by AIL should be adopted.  That interpretation was that paragraph (a) would be satisfied ‘only if a settlement date is indeed scheduled but on a date not within the 12 month period’.[30]  This involved giving the word ‘scheduled’ in paragraph (a) the meaning that it ‘implied a positive act’, and only where that date fell outside the 12 month period from the commencement date.[31]  Scheduling carried with it the idea that a contract of sale had been entered into.  The call option not having been exercised until June 2015, there was no contract of sale until after that date, and, consequently, at the time the 2011 lease was entered into, there was no settlement date scheduled.

   [30]Reasons [78].

   [31]Reasons [74].

1. With respect to paragraph (c), having noted that the plaintiff contended that it could not be read literally because ‘it flouted common sense and led to an absurd operation’,[32] his Honour noted what he said was the plaintiff’s inability to formulate with clarity the way in which the paragraph ought to be read down.

   [32]Reasons [84].

1. His Honour expressed these conclusions with respect to the meaning of paragraph (c):[33]

   [33]Reasons [97]-[100].

I consider that Curran has not satisfied clause 20(c) of the June 2011 lease. First, Curran effectively conceded that, read naturally, it could not satisfy the requirements of clause 20(c) of the lease and clause 6.3 of the Further Amended Option Deed. It was because the requisite factual underpinning was absent that Curran was forced to contend for a ‘read down’ version of clause 6.3. Secondly, there was in my view no proper basis to ignore the wording of the existing clauses and substitute a new formula advanced by Curran which was different from the written documentation embodying the parties’ agreement. If Curran had wanted to amend the Further Amended Option Deed or the June 2011 lease in or after 2010 to better reflect its position after AIL gave the notice regarding development work in 2007, it had the time and opportunity to do so. It is not acceptable for Curran to try and force a significant change upon AIL in relation to a written agreement signed by them because the circumstances affecting Curran have changed in a way which Curran did not anticipate or foresee.

Finally, the circumstances do not warrant the court finding the clause absurd and construing it in the way for which Curran contended. Courts do not readily find absurdity in contractual clauses. Usually, the cases involving this phenomenon have an obvious error, for example:

• typographical errors;

• “shorter” being read as “longer”;

• “inconsistent” being read as “consistent”.

Courts cannot simply rewrite contracts which parties have entered into. Especially is this the case when the words are unambiguous. The court should give effect to the terms even if the result appears unreasonable or less businesslike, unless it leads to an absurd result. To omit or correct words in a contract, two conditions must be satisfied. First, the literal meaning of the words in the contract must be absurd. Secondly, the parties’ objective intention is to be self-evident.

I consider that, in the circumstances, Curran has not satisfied clause 20(c) of the June 2011 lease.

1. With respect to paragraph (d) of the compensation clause, the judge rejected a submission for Curran that AIL had not been permitted to give a notice in 2011 because the whole of CA2 had already been required for development work by notice given on 27 March 2007.[34]  The gist of that submission was that land could only be required for development works once, that it had been so required in 2007, and that large works had then been carried out on all the usable land.

   [34]Reasons [103].

1. His Honour noted the countervailing argument advanced by AIL with respect to surplus land, in which reliance was placed upon one or more of Ms Overall’s emails to Curran of 19 August 2011; Mr Overall’s letter to Curran dated 31 August 2011; and an email from Nicholas Tkalcevic of AIL to Curran dated 23 February 2012.[35]

   [35]Reasons [104].

1. The judge concluded that AIL had served a valid Surplus Land Notice on Curran on two occasions — Ms Overall’s email to Curran and Mr Overall’s letter to Curran.  He said:[36]

The documents made clear that AIL had no use for the balance of CA2 for almond growing or an almond project in the 2012 financial year and that Curran was free to use the land for its own purposes. At the time the June 2011 lease was entered into, the parties were each well aware that there was an original Option Deed, that original Option Deed was amended in 2010, and that AIL had conducted some development work on CA2 in the first half of 2007. Both Curran and AIL knew that AIL had conducted development work on the land the subject of the most recent lease. Thus, the parties should be taken to have intended that a surplus land notice could be given under the June 2011 lease notwithstanding some development work had already been performed on the land the subject of the lease. Thus, Curran did not satisfy clause 20(d).

Did AIL engage in misleading and deceptive conduct in breach of s 18 of the Australian Consumer Law?

[36]Reasons [109].

1. The judge noted that Curran relied upon a representation made by Johns to Curran in April 2010 (‘the Johns representation’), and upon Ms Overall’s email to Curran dated 30 April 2010 (‘the AIL representation’).  His Honour noted that Curran claimed that he had entered into the 2010 variation of the option and the 2011 lease in reliance upon those representations.[37]

   [37]Reasons [111].

1. The judge observed that these allegations were made in a context where Curran had also given evidence of his discussion with Johns in late 2007.  His Honour did not address why it was that the plaintiff attached significance to that discussion and to the fact that from 2007 to 2011 AIL annually paid the plaintiff $60 per acre compensation in respect of the entirety of the unused land.

1. The judge stated that AIL had offered no direct evidence on the conversations because Johns was dead, but that it contended that his Honour should not be satisfied that the claim had any substance.[38]  AIL had cited authority in which it was said that where the impugned conduct was the speaking of words, it was necessary that the words spoken be proved with a degree of precision sufficient to enable a court to be reasonably satisfied that they were in fact misleading in the proved circumstances.[39]

   [38]Reasons [113].

   [39]Citing Watson v Foxman (1995) 49 NSWLR 315, 318-9 (McLelland CJ in Eq).

1. The judge noted that AIL further submitted that:

(1)       neither Curran nor Johns was a lawyer and as such, whatever discussions they might have had, there was no binding agreement until the parties’ respective lawyers signed off and formalised the contractual arrangements between them.  So, it was said, it was not reasonable for Curran to rely upon any comments which Johns might have made[40]

[40]Reasons [115].

(2)       the written representation constituted by Ms Overall’s email was not clear.  Objectively, the parties must be taken to have considered that the existing crop compensation arrangement was included within the existing terms of the written documents signed by them;[41] and

(3)       in circumstances where Curran was aware that the plaintiff was under no legal obligation to agree to an extension of the option period, he could have insisted upon some new term in the agreement if he had wanted to formalise the crop compensation payments.  But he had chosen not to do so.[42]

[41]Reasons [116].

[42]Reasons [117].

1. Curran had not relied upon his alleged discussion with Johns at an early stage.  If he had, his Honour

should have expected to see evidence of conversations and correspondence later, where Curran complained about being misled by Johns and AIL and being duped into granting an extension for no consideration and then having AIL renege on the arrangement made.[43]

[43]Reasons [118].

1. His Honour concluded:

On balance, I am not satisfied that Johns made a representation to Frank to the effect that, if Curran extended the option until 2015, then AIL would make annual crop compensation payments until then as it had in the previous four years.[44]

[44]Reasons [120].

1. The reasons which the judge gave included that Curran’s evidence regarding his conversation with Johns was not impressive.[45]  He had not given a detailed account of what was said.  Necessary precision was lacking.  His Honour said: [46]

For a conversation which lasted about a quarter of an hour, Frank gave no more than a brief summary. While I accept that the conversation in 2010 was some years ago, Frank highlighted parts he recalled and not the rest of the conversation. It is not possible from the limited evidence he gave to obtain a fuller picture of the context and atmosphere in which the discussion occurred.

[45]Reasons [122].

[46]Reasons [125].

1. The judge also said:[47]

The need for clarity in connection with allegations of oral misrepresentation is heightened where the court can hear from only one of the two participants in the conversation. The death of Johns in 2014 has made the situation more difficult because the court has no opportunity to hear directly from him.

The only evidence available from Johns is an email by him to Ms Overall dated 30 August 2011. In that email, he refers to correspondence between AIL and Curran and says that Frank’s responses about Curran planting a crop on CA2 are no different from other times when he tried raising the issue with him. In relation to the conversation between him and Frank in April 2010, Johns says that all he recalls saying was that there would be no change to the existing agreement between the parties save for the five year extension.

To a degree therefore, there is a conflict between Johns and Curran because Johns does not agree that he gave a commitment or assurance that AIL would continue to make annual crop compensation payments to Curran until 2015.

Another item of evidence, albeit indirect, is the email dated 30 April 2010 from Ms Overall to Frank in which she said that AIL would like to extend the call option for five years “on the existing terms (including the existing crop compensation arrangements as requested by yourself)”. I consider that this indirectly reflects Johns’ view because Ms Overall agreed that the only AIL representative in discussion with Frank in April 2010 about the extension was Johns.

The email was consistent with Ms Overall’s oral evidence that Johns told her that the existing crop compensation clauses in the existing agreement were to remain, that Mr Curran was adamant he wanted those existing crop compensation clauses to remain and he had requested that they should remain in the amending deed. The email supports Johns’ comment that the extension would be on the existing terms between the parties. It further supports the view that Curran asked that the crop compensation arrangements set out in the lease and Amended Option Deed not be changed.

[47]Reasons, [126]-[130].

1. The judge gave other reasons why he was not satisfied that the Johns representation as alleged had been made.  There was, he said, an absence of other contemporaneous documentation or corroborative evidence.[48]  He had reservations about Curran’s reliability as a witness.  Though he was not dishonest, he struck the judge:[49]

as a person who, subconsciously or unconsciously, has convinced himself of the correctness of the position and has fashioned his recollection of events in a manner most advantageous to his company’s interests.  To this extent, he was not as impressive as Ms Overall.

[48]Reasons [132].

[49]Reasons [133].

1. On the other hand, Ms Overall’s evidence, as the judge observed, ‘was in a general sense of limited utility’.[50]

   [50]Reasons [133].

1. The judge also relied upon what he said was Curran’s failure to respond in the manner which he would have expected when it became clear that AIL was not making annual compensation payments.  There was nothing subsequent to the complaint which he made in August 2011.

1. The judge further referred to the letter from the plaintiff’s solicitors of 15 February 2012.[51]  There, no complaint was made about Johns’ conduct in giving Curran assurances about compensation.

   [51]Reasons [139]. His Honour erroneously referred to the letter as being dated ’15 February 2017’.

1. Finally, his Honour called in aid the fact that the claim based upon misleading and deceptive conduct had only been the subject of a late raised amendment to the statement of claim.  If it was as important as was now asserted, the judge asked rhetorically, ‘Why was it not a prominent feature of [the plaintiff’s] claim from the commencement of the proceeding?’[52]

   [52]Reasons [140].

1. With respect to the plaintiff’s reliance upon Ms Overall’s email of 30 April 2010, the judge expressed this conclusion:

In my view, the email itself was not misleading or deceptive. Rather, the problem was caused by the parties’ mistaken beliefs about the legal relationship between them and the nature of their obligations and entitlements under that relationship. Curran believed it was entitled to annual compensation payments and thought it had a contractual entitlement to invoice for them. AIL believed it was obliged each time it surrendered a lease to pay crop compensation to Curran.[53]

[53]Reasons [144].

Negligent misrepresentation?

1. The claim for negligent misrepresentation was also founded upon Curran’s conversation with Johns in April 2010 and Ms Overall’s email of 30 April 2010.  Because the judge was not satisfied that Johns had made the representation attributed to him or that the representation made in the email was false, the claim based on negligent misrepresentation failed.

Loss and damage?

1. Assuming, contrary to his conclusions, that AIL had engaged in conduct which was misleading or deceptive, or likely to mislead or deceive, the judge dealt with the issue of loss and damage. He cited and relied upon a summary of applicable legal principles (in the context of the predecessor s 52 of the Trade Practices Act 1974 (Cth)) in BHP Billiton Olympic Dam Corporation Pty Ltd v Steuler Services GmbH & Co KG.[54]  The judge noted the plaintiff’s claim that it had acted to its detriment because AIL had given it a surplus land notice; because AIL had denied and refused its claims for crop compensation; and because AIL had mounted a counterclaim.

   [54][2014] VSCA 338, [540].

1. The judge observed that these allegations did not itemise or spell out the detail of how any claim was calculated and made up.[55]

   [55]Reasons [152].

1. The judge then noted that the plaintiff claimed that it was entitled to crop compensation, interest and charges in the total amount of $186,052.27 or, alternatively, profits it would have made from the land had it still been suitable for use as normal dry cropping land.  But no evidence had been adduced as to potential lost profits.[56]

   [56]Reasons [153].

1. His Honour then stated:

Another matter about which Curran did not adduce evidence was what it would have done, and how it would have acted, if it had not relied upon the allegedly false representations made to it by AIL to extend the call option.[57]

[57]Reasons [154].

1. Whilst Curran had said that the plaintiff would not have extended the call option,

this left open precisely what Curran would have done and what situation would have resulted if the representations had not been made.[58]

[58]Reasons, [154].

1. The judge summarised what he said were different possible scenarios had the plaintiff refused to extend the option period: (1) AIL could have exercised the existing option; (2) AIL could have let the option lapse and then Curran could have used its best endeavours to sell the land; or (3) AIL could have let the option lapse and the plaintiff either decided to keep the land or attempted, but unsuccessfully, to sell it.[59]

   [59]Reasons [155]-[157].

1. Each of those scenarios involved, or may have involved, AIL making a payment to the plaintiff.  His Honour then stated that,

It could not be assumed that AIL would necessarily have been able to pay the moneys due.  Around this time AIL was in some financial difficulty.[60]

[60]Reasons [159].

1. We pause to observe that AIL’s financial difficulty, recognised by the judge, effectively eliminated the first of the three scenarios which the judge had identified.

1. Having noted that ‘damage is the gist of the action for claims in tort and misleading and deceptive conduct’,[61] and that the plaintiff must show that it was worse off by relying upon the alleged misrepresentation, the judge observed that the plaintiff had not led evidence of what it would have done had AIL let the option lapse in 2010. So:

…where the Court is unable to say what [the plaintiff’s] position would have been if [the plaintiff] had not been induced to extend the call option, it cannot find that [the plaintiff] is necessarily worse off as a result of AIL’s allegedly misleading conduct.[62]

[61]Reasons [160].

[62]Reasons [161].

1. In the event, the judge found that the plaintiff had not proved any loss flowing from the alleged misleading and deceptive conduct.  The same conclusion flowed in the claim based upon negligent misrepresentation.

Entitlement to relief by reason of equitable estoppel?

1. The plaintiff, particularly relying upon the analysis of principle by Brennan J in Waltons Stores (Interstate) Ltd v Maher,[63] submitted that each element of promissory estoppel was satisfied in circumstances where the plaintiff:[64]

   [63](1988) 164 CLR 387, 428-9 (‘Waltons Stores’).

   [64]Reasons [167].

(a)assumed that the existing crop compensation arrangements would continue to apply during any extension of the Amended Option Deed, and the assumption was encouraged by:

(i)the discussions with Johns towards the end of 2007;

(ii)the payment of crop compensation for the years 2007 to 2011 inclusive, and

(iii)the Johns representation and the email representation by Ms Overall;

(b)relied on the above assumption when extending the Amended Option Deed and entering the new agreement; and

(c)would be put in a position of significant disadvantage by a departure from the assumption because Curran:

(i)extended the call option for five years for no consideration when it should have received $1,100 per acre in 2010;

(ii)was not paid crop compensation for the years 2012 to 2015 inclusive in the sum of about $148,488 plus interest; and

(iii)now faces a counterclaim for about $241,000 seeking the repayment of the crop compensation already paid by AIL for the years 2007 to 2011 inclusive.

1. The judge noted next the plaintiff’s submission that:[65]

…the minimum equity in the circumstances consisted of giving effect to [the plaintiff’s] assumption that it would be entitled to crop compensation for the years 2012 to 2015 inclusive.

[65]Reasons [170].

1. Next, the judge noted that AIL had submitted that the claim based upon promissory estoppel could not succeed because:

(1)       the plaintiff had not identified with precision the assumption which formed the basis of the equitable estoppel;

(2)       the present case could be distinguished from Waltons Stores because there no formal documentation was ever entered into.  Similarly, in Austotel Pty Ltd v Franklins Self-Serve Pty Ltd,[66] the parties never concluded an agreement.  But in the present case, a contract was concluded and the assistance of lawyers had been sought; and

(3)       it was unclear how exactly the estoppel was intended to ‘run alongside the contract’.[67]

[66](1989) 18 NSWLR 582.

[67]Reasons [175].

1. Citing passages in Estoppel by Conduct and Election,[68] the judge said this:[69]

The above commentary suggests that claims of promissory estoppel tend to be framed in the negative, in other words, precluding a defendant from departing from any representation that his or her strict contractual rights would not be enforced. Framed in this way, the estoppel claim in the present case would preclude AIL from departing from any representation that it would not rely on the strict words of the lease and thus avoid paying crop compensation. According to this interpretation, the right AIL allegedly promised it would forgo would be the right under the June 2011 lease to refuse to pay crop compensation to Curran in the relevant circumstances.

[68]Handley, (Sweet and Maxwell, 2^nd ed, 2006) [13-001] and [13-007].

[69]Reasons [178].

1. His Honour observed:

Because AIL did not seek legal advice regarding the situation until August 2011 at the earliest, I consider that AIL did not know that it had the right to refuse annual compensation payments (irrespective of surrenders) at the time the call option was extended in April 2010.  Rather, at the time the call option was extended, both parties appeared to accept that AIL would continue to pay crop compensation to Curran because it was contractually bound to do so — not because it chose to forego its legal right not to pay compensation in order to secure the extension’.[70]

[70]Reasons [180].

1. This, said the judge, raised the question whether AIL’s knowledge of its rights at the time the promise was made was relevant to deciding whether a promissory estoppel had been established.

1. The judge concluded that, on the facts, AIL did not induce or acquiesce in the plaintiff’s adoption of an assumption that AIL would not assert its strict legal rights regarding payment of compensation.  His Honour said this:[71]

…  To the extent that Curran had an assumption about its entitlements under the legal agreements with AIL, AIL did not influence or acquiesce in Curran’s adoption of any assumption. AIL itself had a different assumption.

I am satisfied that AIL, as reflected in the views of Johns, Overall and Ms Overall, did not properly understand the company’s rights and obligations under its legal relationship with Curran. Until AIL got advice about compensation provisions, which was probably in 2011 but certainly in 2015, AIL assumed that when it surrendered a lease, it was obliged to pay compensation to Curran for its inability to use a large part of CA2. The legal advice to AIL was that the compensation provision operated only when AIL exercised its rights under the call option and, as a result, Curran wasted expenditure it had incurred in preparing to sow a crop for harvesting on CA2. AIL believed that in making compensation payments to Curran, it was complying with its legal obligations. Before it got the legal advice, AIL did not know that its understanding of the documentation was incorrect. Nor did AIL represent to Curran that it did not intend to rely upon its legal rights.

1. The question whether oral evidence of pre-contractual negotiations may be given in support of an alleged estoppel by convention has been considered, directly or obliquely, in a number of cases in the last three decades.

1. The approach of McLelland J in Johnson Matthey[129] was followed and applied by Bryson J in Co-operative Foods Ltd v Norco Co-operative Ltd.[130]  In so concluding, Bryson J declined[131] to follow the contrary decision of Rolfe J in Wittet v State Bank of New South Wales.[132]

   [129](1990) 23 NSWLR 190.

   [130](1999) 46 NSWLR 267.

   [131]Ibid 279 [52].

   [132](1991) 24 NSWLR 146.

1. Sackar J left the issue open in Craig v Silverbrook.[133]  His Honour did the same thing in King v Adams,[134] resolving the matter at a factual level.  In Franklins Pty Ltd v Metcash Trading Ltd,[135] Palmer J accepted[136] the correctness of the analysis in Johnson Matthey,[137] but fitted the circumstances of the case into the remedy of rectification.[138]  In ACN 151 368 124 v Pro-Pac Packaging (Aust) Pty Limited,[139] McDougall J referred to the conflict in the authorities.[140]  That was another case, however, where the conflict did not require resolution because of factual findings.[141]

   [133][2013] NSWSC 1687, [117]-[118].

   [134][2016] NSWSC 1798, [74], [377].

   [135][2007] NSWSC 242.

   [136]Ibid [94]-[97].

   [137](1990) 23 NSWLR 190, 195.

   [138]Franklins Pty Ltd v Metcash Trading Ltd [2007] NSWSC 242, [177]-[178].

   [139][2017] NSWSC 913.

   [140]Ibid [88]-[89].

   [141]Ibid [97].

1. In Brambles Holdings Ltd v Bathurst City Council,[142] Heydon JA referred fleetingly to the issue of parole evidence, saying that in the construction of a contract,[143]

[t]he subjective beliefs of the parties are generally irrelevant in the absence of any argument that a decree of rectification should be ordered or an estoppel by convention found.

[142](2001) 53 NSWLR 153.

[143]Ibid 164 [27].

1. In the Federal Court, in Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd,[144] Allsop J, with whom Drummond and Mansfield JJ agreed, reviewed conflicting Australian authorities.  His Honour observed:[145]

Though not specifically directed to equitable estoppel arising out of pre-contractual communications, McPherson JA in MacDonald v Shinko Australia Pty Ltd [[1999] 2 QdR 152] at 154-156 in dealing with the equitable remedy of rectification arising from pre-contractual communications saw little merit in the argument that the parol evidence rule or an entire agreement clause impeded that remedy in the face of material calling it in aid to remedy a mistake. If that be correct, as I think it plainly is, it is difficult to see why another remedy of equity based on unconscionability and equally arising out of pre-contractual communications should be defeated by a common law rule about the construction of documents.

[144](2001) 117 FCR 424.

[145]Ibid 543-4 [446].

1. That was another case, however, in which the court did not have to resolve the question.[146]

   [146]Ibid 544 [447].

1. The High Court did not squarely deal with the issue in Equuscorp Pty Ltd v Glengallan Investments Pty Ltd.[147]  But there the Court only mentioned non est factum and rectification as exceptions to the parole evidence rule.[148]

   [147](2004) 218 CLR 471, 483 [33]-[35].

   [148]Ibid 483 [33].

1. All in all, whilst some authorities plainly stand in favour of a rule excluding receipt of parole evidence with respect to pre-contractual discussions, and other authorities are either non-committal or express a contrary view, at a conceptual level the matter is not clear cut.

1. Whatever be the correct position, in our opinion this is another case in which the issue does not have to be finally decided.  That is because, although the assurance sought from Johns by Curran in 2010 and the assurance given by the former anticipated extension of the option period, it was at the same time a step in a continuum which began in late 2007 in response to conduct of the defendant which made the land, in a practical sense, unworkable.  The discussion between Curran and Johns which took place in late 2007, at which time contractual relations were in place, followed by a course of conduct on the part of both the plaintiff and the defendant, established the conventional basis upon which the parties thereafter proceeded for a number of years.  The assurance sought and given in April 2010 simply confirmed that the conventional basis was to continue so long as the parties were in a legal relationship.  In our opinion, to characterise the assurance sought and given in April 2010 on a standalone basis as a pre-contractual representation by Johns is unrealistic, ignoring as it would do the lengthy period of conduct of the parties up to that time, and the continuance of the circumstances which had led to that arrangement.

1. Further, given the discussion which took place in late 2007 and the parties’ course of conduct thereafter, we think that there was a sound basis for concluding that the existing arrangement would continue for so long as the parties continued in their overall relationship — that is, regardless of the assurance given by Johns in April 2010.

1. The next question is whether the matters necessary to establish an estoppel by convention were in fact established.  In our opinion, the answer to that question is yes.

1. The assumption adopted by the plaintiff, from the time of the late 2007 discussion between Curran and Johns, was that, in the circumstances which existed by reason of AIL rendering the land for practical purposes unworkable, AIL would pay the plaintiff $60 per acre per year for all of the unused land in the period of their relationship.

1. In our opinion, the defendant adopted the same assumption.  It was submitted for the defendant, however, that two passages in the judge’s reasons demonstrated that there was no mutual assumption, but rather that different positions were adopted by the parties.  In particular, the defendant relied upon this passage in the reasons:[149]

AIL’s payments between 2007 and 2010 were consistent with both AIL paying pursuant to the annual leases, as well as Curran’s assertion of a separate annual entitlement. Equally, Ms Overall’s statement that AIL intended to continue with the “existing crop compensation arrangements” did not specify what the existing arrangements were.

[149]Reasons [220].

1. We cannot accept that his Honour was correct to conclude that the payments between 2007 and 2010 by AIL were consistent with it paying pursuant to the annual leases.  It is plain that the payments did not coincide with AIL’s contractual obligations.  Johns gave Ms Overall, according to her evidence, the methodology for assessing the compensation which was in fact paid.  But that was simply saying how compensation was to be calculated, not the legal basis for the calculation.  The argument later developed by the defendant, that the payments were a mistake, nowhere appeared from contemporaneous documentation.  Johns’ email to Ms Overall of 30 August 2011, apparently relied upon by his Honour, did not support the idea that payment had been made on a mistaken basis.

1. Curran agreed in cross-examination that it was his ‘understanding of the contract’ that the existing contract included crop compensation for undeveloped parts of CA2, that being included in the then-current agreement.  In our opinion, the defendant gained little from this evidence.  The idea that Curran would understand the difference between a strict contractual entitlement and an entitlement flowing from a common assumption which was acted upon is quite unrealistic.  The judge, we note, said nothing about that particular cross-examination in his reasons.

1. Contrary to the submissions noted at [213(3)] and [232], and to the judge’s finding noted at [232], defendant’s counsel orally advanced an alternative submission.  It was that the parties did form and then act upon a common assumption in the period between late 2007 and April 2010.  The assumption was that the plaintiff was contractually entitled to be paid crop compensation of $60 per acre per year for the unused land.  That assumption, dependent upon the 2006 option (and presumably — this was not addressed by counsel — the 2008 amendment) ended when the 2006 option was varied in 2010.  In those circumstances, the submission continued, (1) any discussion between Curran and Johns before the variation was effectuated was the more strongly pre-contractual; and (2), if the assumption was to apply to the option as varied, then there had to be some relevant conversation after the option as varied commenced — and there was none.

1. It will be apparent from the conclusions which we have already expressed that we reject that submission.  We have already set out the various conversations and documents upon which the defendant relied to establish the factual basis for the submission; and we have already expressed our conclusions, adverse to the defendant’s submission, as to what is to be made of those conversations and documents.

1. The parties having adopted, then, the common assumption noted at [230]- [231] above, conducted their relationship on the basis of that mutual assumption in the period 2007 to 2010, each of them intending that it should do so. It is not critical that no evidence was led of detriment occasioned to the plaintiff in that period.

1. The continuum, informed so far as it need be by the assurance given by Johns in April 2010 and by Ms Overall’s email of 30 April 2010, travelled into the period of the extended option.

1. There is no doubt in our minds that Curran, for the plaintiff, only agreed to extend the option period on the footing that the assumed state of affairs with respect to payment of compensation would continue.  It is inconceivable that he would have agreed that the plaintiff would extend the option for a period of up to five years had there been anything said by Johns or Ms Overall to the effect that there was no arrangement in place between the parties for the annual payment of crop compensation; and if, in consequence, it was at least possible, and more likely probable, that the plaintiff might have no entitlement to receive any money in that period, either as income replacement or payments in consequence of allotment subleases.

1. The defendant, having obtained the benefit of the option extension in consequence of the common assumption, then departed from the assumption to the plaintiff’s detriment.  It should not be permitted to do so.  Its departure from the assumption meant that, contrary to the convention, the plaintiff received no crop compensation in the period 2012-2015 in respect of land which, for practical purposes, remained unworkable.

1. Moreover, if the defendant were permitted to depart from the assumption, and to rely upon the terms of the 2006 option and the leases entered into between 2007 and 2011, then assuming[150] that the payments made by it were the consequence of a mistake on its part, the defendant would be prima facie entitled to recover moneys paid from the plaintiff — as the judge, in fact, determined.

   [150]Contrary to the conclusions which we have expressed.

1. The defendant relied in this Court, as we have said, upon the entire understanding clause in the 2011 lease.  The judge decided that the particular clause was an additional reason standing in the way of acceptance of an estoppel by convention.

1. Such a clause does not stand in the way of claims of various kinds, including claims founded on misleading or deceptive conduct, negligent misrepresentation, and breach of collateral warranty.  The same may be said of a proceeding in which rectification is sought.  A fortiori, it may well be that such a clause should not stand in the way of an equitable remedy.  But in any event, the clause was found in a lease which was only operative for a period of about a month.  It had nothing to say with respect to the period between July 2011 and June 2015.

1. What we have thus far concluded means that the defendant should not be permitted to resile from the common assumption of the parties.  That has two consequences.

1. First, the plaintiff should succeed in its claim for crop compensation for the period 2012-2015 as the minimum equity to redress the defendant’s departure from the common assumption. There is no basis for discounting that amount. The land remained unworkable for practical purposes, and was not worked. We add that the judge’s reasoning about loss and damage noted at [122]-[131] above was directed to proof of damage in claims founded on misleading or deceptive conduct and negligent misrepresentation. That reasoning is not in point in the present connection.

1. Second, the plaintiff is able to successfully rely upon the assumption in defending the counterclaim.

1. For completeness, we should say a little more about the defendant’s submission noted at [234] above. If it was factually sound, it would have impacted upon the plaintiff’s claim in respect of the period 2012-2015, so far as that claim rested in estoppel by convention. But it would have been fatal, so far as we can see, to the counterclaim.

   Equitable estoppel:  Grounds 14 – 16

1. These grounds were addressed in writing by both parties.

Plaintiff’s submissions

1. It was submitted that:

(1)       the judge erred in holding that the representations relied upon by the plaintiff could not form the basis of equitable estoppel because AIL was unaware of its rights.  The judge’s conclusion in that connection was unsupported by Australian authority, whilst Australian texts supported the contrary.  Again, the proposition was not part of the Australian common law.  Finally, AIL could have readily ascertained its rights;

(2)       it was not open to the judge to find that —

(a)       AIL did not induce or acquiesce in the plaintiff’s adoption of an assumption that AIL would not assert its strict legal rights;

(b)      there was no evidence that AIL knew or intended the plaintiff to act on an assumption of entitlement; and

(c)       AIL’s conduct was not unconscionable.

1. The broad thrust of the plaintiff’s submissions was that –

(1)       the plaintiff was encouraged in an assumption that the existing crop compensation arrangements as requested by it would continue to apply during any extension of the option;

(2)       the plaintiff relied upon that assumption in entering into the option extending the term and in entering into the 2011 lease; and

(3)       departure from the assumption was certainly unconscionable and put the plaintiff in a position of significant disadvantage.

Defendant’s submissions

1. The defendant submitted that:

(1)there was no clear and unequivocal representation found by the judge that could give rise to an estoppel;

(2)it is trite that reliance upon a representation must be reasonable in the circumstances.  Where the plaintiff insisted that it required its lawyer to approve any documentation, it cannot have been reasonable for the plaintiff later to claim that it had relied upon any preliminary oral statement, nor to suggest that AIL knowingly took advantage of any reliance;

(3)the requirement of unconscionability (knowingly taking advantage) could not be satisfied in circumstances where it was found by the judge as a matter of fact that AIL did not know of its legal rights until 2011.  As a matter of logic, it was not possible for AIL to intentionally represent and induce an assumption that it would not rely upon legal rights of which it was factually unaware.  The judge did not consider AIL’s conduct to be unconscionable.

Grounds 14 – 16: Analysis

1. The traditional formulation of promissory estoppel, emanating from Lord Denning’s judgment in Central London Property Trust Ltd v High Trees House Ltd,[151] addressed representations as to the exercise of rights arising, or to arise, from presently subsisting contractual relations between the parties.[152]  When it applied, it precluded a holder of a contractual right from exercising that right after inducing the other party to expect that the right would not be exercised against him or her.  In Australia the applicable principles have developed from that traditional formulation.

   [151][1947] KB 130.

   [152]Heydon et al, Meagher, Gummow & Lehane’s Equity Doctrines and Remedies (LexisNexis Butterworths Australia, 5^th ed, 2015) [17–175] (‘Meagher Gummow & Lehane’s Equity’).

1. In Waltons Stores[153] Mason CJ and Wilson J referred to that development in the following passage:[154]

Promissory estoppel certainly extends to representations (or promises) as to future conduct.  So far the doctrine has been mainly confined to precluding departure from a representation by a person in a pre-existing contractual relationship that he will not enforce his contractual rights, whether they be pre-existing or rights to be acquired as a result of the representation.  But Denning J in Central London Property Trust Ltd v High Trees House Ltd, treated it as a wide-ranging doctrine operating outside the pre-existing contractual relationship.  In principle there is certainly no reason why the doctrine should not apply so as to preclude departure by a person from a representation that he will not enforce a non-contractual right.

There has been for many years a reluctance to allow promissory estoppel to become the vehicle for the positive enforcement of a representation by a party that he would do something in the future.  Promissory estoppel, it has been said, is a defensive equity and the traditional notion has been that estoppel could only be relied upon defensively as a shield and not as a sword.  High Treesitself is an instance of the defensive use of promissory estoppel.  But this does not mean that a plaintiff cannot rely on an estoppel.  Even according to traditional orthodoxy, a plaintiff may rely on an estoppel if he has an independent cause of action, where in the words of Denning LJ in Combe v Combe, the estoppel ‘may be part of a cause of action, but not a cause of action in itself’.

[153](1988) 164 CLR 387.

[154]Ibid399–400 (citations omitted).

1. Brennan J’s formulation of the elements of promissory estoppel in Waltons Stores is accepted as encapsulating the current state of the law in Australia.[155]  Brennan J said:[156]

   [155]Meagher Gummow & Lehane’s Equity, above n 152, [17–260].

   [156]Waltons Stores (1988) 164 CLR 387, 428–9 (for ease of reference we have altered the formatting).

In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that

(1)the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship;

(2)the defendant has induced the plaintiff to adopt that assumption or expectation;

(3)the plaintiff acts or abstains from acting in reliance on the assumption or expectation;

(4)       the defendant knew or intended him to do so;

(5)the plaintiff’s action or inaction will occasion detriment if the assumption or expectation is not fulfilled;  and

(6)the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.

1. Addressing Brennan J’s formulation in Waltons Stores, in the light of the conclusions we have already reached concerning the relevant discussions and dealings between the parties in 2007 and 2010, the plaintiff would contend that the position is as follows:

(1)The plaintiff assumed and expected that a legal relationship existed, and would continue to exist throughout the extended option period, between the plaintiff and the defendant whereby the defendant would be liable to pay to the plaintiff $60 per acre per year compensation for unused land, and that the defendant would not be free to withdraw from that legal relationship.

(2)The defendant induced the plaintiff to adopt that assumption or expectation by reason of the discussions between Curran and Johns in 2007 and in 2010 and by reason of Ms Overall’s email of 30 April 2010.  The representations made were clear and unequivocal.

(3)Acting in reliance on the assumption and expectation, the plaintiff agreed to the extension of the option period in 2010.  That reliance was reasonable in the circumstances.

(4)The defendant made representations confirming the existence of the assumption in 2010, knowing that it would induce the plaintiff to agree to the extension of the option period, and intending that it should do so.

(5)The plaintiff will suffer detriment if the assumption or expectation is not fulfilled.  It agreed to a five year extension to the option period for no consideration, relying upon the representations.

(6)The defendant has failed to act to avoid that detriment.  It obtained the benefit of the five year extension, and then resiled from its representations by refusing to pay $60 per acre per year for the years 2012–2015 and by seeking to recover payments previously made.

1. Notwithstanding the apparent breadth of Brennan J’s formulation, there is authority which supports the maintenance of aspects of the traditional formulation.

1. In Saleh v Romanous[157] Handley AJA (with whom Giles JA and Sackville AJA agreed) addressed a position where a pre-contractual promise had been made during negotiations for a land purchase, in reliance upon which the purchaser had entered into a contract for the sale of the land, a contract which did not contain the promise made and which did contain an entire agreement clause.  Amongst the contentions put on behalf of the vendor, in resisting a conclusion that a promissory estoppel had arisen, was a submission that permitting promissory estoppel in such circumstances would contravene the parole evidence rule, and would be inconsistent with the contract into which the parties had entered.  Reliance was placed on Hoyt’s Pty Ltd v Spencer.[158]  The New South Wales Court of Appeal rejected those contentions.  It did so because:  ‘a promissory estoppel is not enforced as a contract, but as an equitable restraint on the exercise or enforcement of the promisor’s rights’.[159]  The Court emphasised in this context that promissory estoppel is not the equivalent of a contract.  Handley AJA (with whom Giles JA and Sackville AJA agreed) said:[160]

Such an estoppel is not the equitable equivalent of a contract, and cannot give the purchasers positive rights to rescind and recover their deposit that they would have had if the pre-contractual promise had contractual effect.  A pre-contractual promissory estoppel which conferred positive rights of that nature would be contrary to Hoyt’s case.

A promissory estoppel is a restraint on the enforcement of rights, and thus, unlike proprietary estoppel, it must be negative in substance.

[157](2010) 79 NSWLR 453 (‘Saleh’).

[158](1919) 27 CLR 133.

[159]Saleh (2010) 79 NSWLR 453, 460 [62].

[160]Saleh (2010) 79 NSWLR 453, 462 [73]–[74].

1. In DHJPM Pty Ltd v Blackthorn Resources[161] Meagher JA (with whom Macfarlan JA agreed) addressed Brennan J’s formulation of the applicable principles and Saleh in the following passage:[162]

The primary judge sought to apply Brennan J’s formulation of what is necessary to establish an equitable estoppel.  Of particular importance to this appeal are propositions (1), (2) and (3) and whether any expectation induced by AIM was as to something AIM was ‘bound’ to do.  Two things should be noted about Brennan J’s formulation.  The first is that any general formulation of the relevant principles must necessarily, in its application in particular circumstances, be subject to qualification and refinement reflecting or giving effect to the broad equitable principles which underlie its application. Some of those qualifications may be found in the judgments in Waltons Stores v Maher and S&E Promotions Pty Ltd v Tobin Bros Pty Ltd at 653-654.  The second is that it does not describe the characteristics of the different species of equitable estoppel and, in particular, promissory and proprietary estoppel. This is because Brennan J considered there was a difficulty in limiting the principle of equitable estoppel, in so far as it operated in relation to promises, to those which suspended or extinguished existing rights, or to those which created or conferred proprietary as distinct from non-proprietary interests:  at 425-426.  In this context I note that this Court said in Saleh v Romanous [2010] NSWCA 274; (2010) 79 NSWLR 453, especially at [55], [62], [74], that a promissory estoppel operates as an equitable restraint on the exercise or enforcement of contractual and other rights and is negative in substance.

[161](2011) 83 NSWLR 728 (‘DHJPM’).

[162]Ibid 740 [47].

1. Handley AJA, in a separate judgment, referred to his earlier judgment in Saleh in the following passage:[163]

The appellant relied on an equitable, that is a proprietary, estoppel, particularly an estoppel by encouragement. Its arguments strayed at times into promissory estoppel but, as this Court unanimously held in Saleh v Romanous [2010] NSWCA 274 (special leave refused [2011] HCATrans 101), a promissory estoppel must be negative in substance.  It is an equitable restraint on the enforcement of the promisor’s rights.

[163]Ibid 750 [93].

1. The learned authors of Meagher, Gummow and Lehane’s Equity[164] postulate that Handley AJA’s analysis in Saleh may mean no more than that promissory estoppel has a preclusionary effect.  Thus, in Waltons Stores, the representor was precluded from denying the existence of the lease.  The authors suggest that Saleh seems merely to state that the parties’ rights arise not from the estoppel but from the ‘postulated’ contract.[165]  In relation to DHJPM, the authors suggest that that decision seems to mean no more than that the court cannot create a contract for the parties.  In DHJPM, in contrast to Waltons Stores, the terms of the ‘postulated’ contract had not been agreed.[166]

   [164]Meagher Gummow & Lehane’s Equity, above n 152.

   [165]Meagher Gummow & Lehane’s Equity, above n 152, [17–275].

   [166]Ibid [17–280].

1. As can be seen, what Mason CJ and Wilson J described as the ‘traditional notion’ that promissory estoppel is a ‘defensive equity’ retains judicial support.  That support is founded upon a concern that promissory estoppel should not become, to again use the words of Mason CJ and Wilson J, a ‘vehicle for positive enforcement of a representation by a party that he would do something in the future’, thereby undermining fundamental contractual principles.  The outcome in Waltons Stores is not inconsistent with an insistence upon promissory estoppel’s ‘defensive’ character because in that case what was sought was specific performance of the lease which had not been exchanged (or damages in lieu), and the tenant was estopped from denying exchange.

1. Edelman J, in the Federal Court, has observed:[167]

It is not yet finally resolved in Australia whether promissory estoppel can operate as a cause of action.  In New South Wales it has been said that it is not:  eg Saleh v Romanous [2010] NSWCA 274; (2010) 79 NSWLR 453, 462 [74] (Handley AJA; Giles JA and Sackville AJA agreeing). However, as Bathurst CJ said in Ashton v Pratt [2015] NSWCA 12; (2015) 318 ALR 260, 287 [138], ‘it must be acknowledged that there is significant dicta contrary to this limitation on promissory estoppel’.

[167]Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) [2015] FCA 825, [769].

1. Returning to the facts of this case, it is not easy to characterise the relevant assumption contended for here as a negative stipulation.  The plaintiff’s pleaded claim, so far as it was laid in contract, was for ‘crop compensation in accordance with’ the 2011 lease.[168]

   [168]See Amended Statement of Claim [9], [17], [19], [22], and [29(a)]).

1. In relation to the claim for payments in the years 2012–2015, the plaintiff would face significant obstacles in obtaining relief by precluding reliance on a specific provision of the 2011 lease, most obviously because that lease provided for a one-off payment, in accordance with what we have previously described as the ‘year by year relationship’ or the ‘annual cycle’ of the contractual arrangements.  There was no lease after 2011.  Thus, it is difficult to identify the ‘postulated’ contract which would be the basis of a successful claim relying upon the operation of a defensive equity (assuming for these purposes that the Handley AJA approach in Saleh[169] is correct).  It might be said that the court would have to ‘create’ a new contract for the parties which the defendant would be estopped from denying.  If there is no relevant ‘postulated’ contract which can be enforced (independently of the assumption itself), to find for the plaintiff on this basis would involve both ‘creating’ a new contractual obligation and permitting promissory estoppel to operate as a cause of action.  This would require us to reject the Handley AJA approach.

   [169](2010) 79 NSWLR 453.

1. There is a second issue which might arise in attempting to apply the principles of promissory estoppel to the position here.  This issue played a significant part in the trial judge’s rejection of the claim.

1. The authors of Meagher, Gummow & Lehane’s Equity point out that it is not settled in Australia whether a representor must have appreciated the nature and extent, or even the existence of his legal rights, before a promissory estoppel will run.[170]

   [170]J D Heydon et al, above n 177, [17–265].

1. On one view — though we have rejected it — the representations in 2010 were an assertion of a mistaken view of the effect of existing contractual provisions.

1. The New South Wales Court of Appeal has characterised promissory estoppel as an equitable restraint on the enforcement of a promisor’s rights.[171]  Could an assertion of a mistaken view of the effect of existing contractual provisions give rise to such an estoppel?  In the circumstances here, we are inclined to the view that it could because, as we have explained, we do not accept that the contractual provisions were the subject matter of the relevant discussion; the subject matter was $60 per acre per year for the unused land.  Nevertheless, if we were to decide the case on the basis of promissory estoppel, that is an issue we would need to resolve, if for no other reason than that the judge relied upon it to a significant extent.

   [171]Saleh (2010) 79 NSWLR 453, 460 [62]. See discussion at [256] above.

1. We do not consider that this is an appropriate case in which to determine the difficult issues which we have identified.  We were not referred to either Saleh or DHJPM in submissions.  The trial judge did not refer to them.  Our conclusions in relation to conventional estoppel; and in relation to the statute of limitations, which we address below, mean that it is unnecessary to determine these matters.

Mistake:  Ground 21

Plaintiff’s submissions

1. The plaintiff submitted that, contrary to the judge’s finding, there was no relevant mistake; but that if this was wrong, the mistake was reasonably discoverable from the very outset — that is, in 2007.  For that reason the counterclaim was statute-barred.

Defendant’s submissions

1. The defendant submitted that —

(1)the plaintiff did not challenge the law that mistaken payments are prima facie repayable, or the factual finding that AIL paid invoices the subject of the counterclaim labouring under a mistaken belief that they were payable;

(2)the plaintiff was asserting that s 27 of the Limitation of Actions Act 1958 applied and that the commencement of time could have been extended, but that the judge erred in concluding that AIL could have discovered, or did discover, the mistake within six years of AIL’s counterclaim.  Rather, the plaintiff was contending the judge ought to have found that the mistake was or could have been discovered earlier;

(3)the judge had concluded that AIL, with reasonable diligence, could have discovered the mistake that led to the payments in August 2011;

(4)the plaintiff’s challenge was misconceived because (a) there was an error on the part of both parties as to AIL’s obligation under the contractual documents to pay crop compensation; and (b) there was no obligation on AIL to seek legal advice about payment of all invoices.  Directors or their delegate may, unfortunately, determine that invoices are payable based on an erroneous understanding of a contract, and this is what occurred here.  Nothing brought the error to AIL’s attention until, at earliest, August 2011 when expert advice was sought.

Ground 21: Analysis

1. In our opinion, the plaintiff should succeed in its defence to the counterclaim for a number of reasons.

1. First, contrary to the judge’s finding, there was no mistake such as his Honour found.  We do not accept the defendant’s submission that the plaintiff did not challenge the judge’s finding that AIL made the payments because of a mistake as to its legal responsibility to do so.  Whilst, in terms, ground 21 does not raise that issue, central to the challenge to the judge’s conclusions with respect to representations and conventional and equitable estoppel was the contention that the parties made and implemented an arrangement which was outside the terms of the contractual documents.

1. Second, and relatedly, payments for the period 2007-2010 were made pursuant to a common assumption, and the defendant should not be permitted to resile from that assumption.[172]

   [172]See [230]-[240] above.

1. Third, even if it is assumed that the payments were made by reason of mistake — that is, that the defendant mistakenly believed that it was contractually bound to pay crop compensation as it did — then we could not accept the judge’s conclusion that the mistake was not discoverable with reasonable diligence before counsel became involved in the matter in August 2011.  At many points in argument in this Court, defendant’s counsel pressed the submission that the parties to the transaction had and acted through solicitors.  Yet when it came to discovery of the alleged mistake, a virtue was seemingly made of the defendant’s ignorance unassisted by solicitors.

1. There is no doubt that in late 2007 Curran first raised with Johns the problem which had been created by the major works undertaken by the defendant earlier that year.  Crop compensation was the issue.  Looking at the matter through the prism of the mistake alleged by the defendant, that was the obvious occasion for the defendant to seek legal advice as to its contractual obligations.  Moreover, and eschewing the benefit of hindsight, any competent business person reading clause 6.3 of the 2006 option, and the compensation clause in the draft interim Headlease and in the headleases as executed year by year, would immediately have seen, in the circumstances which obtained, that crop compensation was not payable.

Ground 22: Refusal of application to amend the statement of claim

1. Because we consider that the plaintiff should succeed in its claim, and that the counterclaim should be dismissed, this ground is of no practical relevance.  We will deal with it briefly.

1. The judge refused applications by the plaintiff, made in the course of and then at the conclusion of final addresses, to amend the statement of claim to rely upon a collateral warranty.  The judge delivered reasons for each refusal to permit amendment.[173]

   [173]See fn 4 above.

1. The refusals involved the exercise of a judicial discretion.  The orders could only be successfully challenged by demonstrating House v The King[174] error on the judge’s part.  Moreover, what was involved was a matter of practice and procedure.  In such a case, an appellate court is particularly reluctant to intervene.[175]

   [174](1936) 55 CLR 499 (‘House’).

   [175]See, for instance, Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170, 177.

1. The plaintiff apparently relied upon the residual basis described in House.  Plaintiff’s counsel submitted below (and in this Court) that the proposed amendment was only a matter of restating his client’s case under a different rubric.  Defendant’s counsel submitted that there were a number of reasons why amendment should be refused.  Counsel referred to (1) the extreme lateness of the application to amend; (2) the plaintiff’s failure to give an explanation for the delay; (3) deficiencies in the proposed amended pleading; and (4) the need, if the application was granted, for the defendant to have time to address the matter.

1. The judge was persuaded by the defendant’s submissions.  Given the nature of the discretionary rulings, we consider that leave to appeal should be refused.

Grounds not discretely addressed

1. A number of grounds of appeal contended that the judge’s reasons were inadequate.  We do not consider those grounds were reasonably arguable.  We will say nothing more about them.  Nor will we address the challenge in part raised under cover of grounds 5 – 9 to the judge’s conclusions with respect to the claims under the Australian Consumer Law and in negligent misrepresentation.  As we have already said, those claims were not the subject of active agitation on the hearing of this appeal.

Conclusion

1. We will grant leave to appeal on grounds 1 – 3, 5, 7, 9, 17 – 20 and 21 and allow the appeal on grounds 9, 17 – 20 and 21.  We will otherwise refuse leave.  We will set aside the judgment entered below and in lieu thereof enter judgment for the plaintiff, and dismiss the counterclaim.  We will hear the parties as to the appropriate form of orders.