Koompahtoo Local Aboriginal Land Council & Anor v Sanpine Pty Limited & Anor

[2007] HCATrans 465

[2007] HCATrans 465

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S221 of 2007

B e t w e e n -

KOOMPAHTOO LOCAL ABORIGINAL LAND COUNCIL

First Appellant

TERRY LAWLER

Second Appellant

and

SANPINE PTY LIMITED

First Respondent

KLALC PROPERTY & INVESTMENT PTY LIMITED

Second Respondent

GLEESON CJ
GUMMOW J
KIRBY J
HEYDON J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 29 AUGUST 2007, AT 10.23 AM

(Continued from 28/8/07)

Copyright in the High Court of Australia

__________________

GLEESON CJ:   Yes, Mr Hale.

MR HALE:   Your Honours, we would wish to deal in detail in writing, as leave has been given in that regard, concerning the evidence about the financial reporting in the accounts, but could I perhaps orally address in a more general way with reference to some of the documents, some of the issues and some of the evidence to identify what in fact happened and perhaps correct some misapprehensions?

Firstly - and this is revealed in the appeal book volume 1 at 206 – between July 1997 and February 1998 – at the top of the page – Sanpine was seeking to obtain project funding and approached in excess of 50 lenders.  Now, as I will come to shortly, what in fact occurred during that period of time in the absence of formal funding was some loans, certain loans, were made by individuals to Sanpine to enable certain expenses to be met, and those expenses were refunded out of the drawdown in February 1999.

On 14 July 1997, as the Court knows, the joint venture agreement was entered into.  In November 1999 a loan agreement was entered into to borrow certain funds, and your Honours will see that in appeal book volume 4 at 1604.  The loan agreement begins at 1604, but what the Court will see in particular at 1610 is the fact that the borrower was Sanpine for $780,000 and limited guarantees were given by directors of Sanpine which totalled $600,000.

In addition to that the directors and Sanpine assumed some additional liabilities to Koompahtoo, which are in volume 1, 383, which is an agreement dated November 1998 consequent upon the entry into the loan agreement, and what your Honours will see ‑ ‑ ‑

KIRBY J:   What is the point you are making now?

MR HALE:   The point I am making is this, ultimately leading to the point is, firstly, it cannot be said that Sanpine did not put its own resources and liabilities on the line.  What in fact occurred is it personally guaranteed, as did its directors, initially, the funds, entered into the arrangements, which the Court sees at 383, under which it assumed certain obligations to take all necessary steps to pay out the debts if the need arose.  Then I wish to come to explain why the accounts were not, in fact, prepared in the way that the joint venture agreement required.

So, having taken the Court to what is at 383, the assuming of the particular obligations, certain bank accounts were then opened in February 1999 which are summarised in Justice Giles’ judgment at paragraph 74 at 2246.      There were two bank accounts.  There was a Sanpine as trustee, the Sanpine Unit Trust, and then there was the Koompahtoo Business Management Account.

As Justice Campbell identified, on 16 February 1999 the funds which Sanpine had borrowed were, in fact, paid into the Sanpine Unit Trust account and that is referred to in the judgment at paragraphs 262 and 267 of Justice Campbell’s judgment at page 2140.  It is also set out in the Sanpine accounts to which I think my learned friend took the Court yesterday at volume 1 at 424. 

Immediately after the expenditure, or at least the repayment of certain of those sums and after the drawdown, there was a management committee meeting in February 1999 which Justice Campbell refers to at paragraph 283 on page 2145 where his Honour reluctantly, it seems, and with some hesitation accepts the evidence of Mr Steer that there were cash flows presented in February 1999 which were discussed at the meetings of the management committee and referring to, it would seem, the expenditure that had then taken place.

KIRBY J:   How do you contend that these factual fragments are inconsistent with the criticism of the notion of repudiation?

MR HALE:   I am not dealing with the question of repudiation.  Our proposition so far as repudiation was concerned was to accept the findings of fact of Justice Campbell and advance the propositions that I advanced yesterday.  What I am specifically dealing with here are some of the factual matters which were raised yesterday which appear to go to the issue of the entitlement to terminate the breach, either of an essential term or a serious breach of an intermediate term and, in that context, wishing to answer some of the criticisms of what Sanpine did by reference to some of the factual circumstances, which will be developed in greater detail in the additional written document.

GLEESON CJ:   Did you find out the name of the auditor?

MR HALE:   There was not an auditor.

GLEESON CJ:   Thank you.

MR HALE:   That is what I am about to come to now.  There was a resolution of the management committee on 9 June 1999 which is at volume 1 of the appeal book 386 to 387, particularly at page 387.  There was then reference to the issue of the upcoming audit and the cost of the joint venture.  Your Honours can read that.  It says:

The chairman advised that…he believed that if the expenses were not incurred until the rezoning then the audit of the Joint Venture could be deferred.  He confirmed that Sanpine has no requirement for an audit.  After much discussion it was agreed by all members of the committee that because of the expense of the audit and the fact that at present the expenses of the JV are being incurred by Sanpine ‑

they having been the borrower –

on behalf of the Joint Venture, that the audit of these expenses could be deferred until the rezoning.  The meeting resolved to defer the appointment of an auditor of the Joint Venture until the rezoning.

What then occurred is that the bank account which had been opened for the joint venture – that is to say Sanpine and also Koompahtoo – was subsequently closed.  No money thereafter went through the bank account, obviously.  Everything then – all of the expenses – were recorded in the accounts of Sanpine itself, the idea being that at some later stage there would be an accounting for the purposes of the joint venture.

In the meantime, there was the recognition that the expenses were in fact expenses of Sanpine, and as a consequence of that there were only draft accounts prepared for the year ended June 1999 and no further accounts in fact were prepared for the joint venture as such because there was no financial activity involved in the joint venture.

That was the focus of certainly one of Justice Campbell’s complaints, and the – that Sanpine unsuccessfully contended, unsuccessfully contended before the trial judge, that Koompahtoo was estopped from contending there were breaches insofar as those breaches arose from the resolution to which I have just taken the Court.  We, nonetheless, submit on the issue of repudiation that to the extent that they were breaches, those breaches came about as a result of – some of those breaches came about as a result of the resolution in June 1999.

GLEESON CJ:   But I thought that the purpose of this, as I called it yesterday, off balance sheet financial activity, was to keep from Koompahtoo and in particular from some dissidents in Koompahtoo the information.

MR HALE:   Probably partly but more specifically to avoid in the case of money going through the bank account as distinct from reporting, financial reporting, on a monthly basis.  It was more concerned with the avoiding of the formal audits that would follow under the Aboriginal Land Rights Act if the money actually went through accounts of the Land Council.

GLEESON CJ:   Well, it was partly concerned with avoiding unpleasantness, was it not?

MR HALE:   Partly – I do not know that that is the case.  I do not know that that explains the absence of the bank account.  It certainly explains why the written reports that were provided at monthly meetings were then recovered and were not left with any of the representatives, but judging on the basis of that, of the resolution to which I have taken the Court, the main concern was the formal audit procedure which might follow under the Aboriginal Land Rights Act if the money went through accounts of the Aboriginal Land Council.

Now, so far as the provision of information to Mr Lawler, and my learned friend touched upon this yesterday, in substance what occurred was that information was sought – and I will take the Court to the references – by Mr Lawler.  Ultimately there was an inspection of all the accounts or all the material on 6 August 2003 at the offices of Mr Steer.  Thereafter there was no further complaint about the provisional lack of provision of any information of a financial nature, and no contention on the part of Mr Lawler that he was unable to understand what had gone before based upon the accounts.  As I will come to, once the inspection had taken place, the administrator’s tactics, as it were, or approach, took a different turn.

He then switched his attack to the issue of the delay in the rezoning and there was nothing further from him about the financial reporting side.  Your Honours will see Mr Lawler’s affidavit in volume 4 begins at 1488 and at 1492 there is a heading “Obtaining Information about the Performance of the Joint Venture”.  If your Honours go over the page to 1493, and I do not need to take the Court to the various documents, but at paragraph 32 there is a reference to having arranged for “Andrew Weekes . . . to attend the offices of Spencer Steer on 6 August 2003 and to inspect further documentation”.  As your Honours then see at paragraph 33 there is a change of tack which deals with the delay in certain of the rezoning procedures.

GLEESON CJ:   When you say “change of tack”, could I draw your attention to paragraph 29 on the bottom of 1492.

MR HALE:   Yes, and then we go to paragraph 32 when there is the inspection of further documents.  Then from paragraph 33 there is the reference to the concerns about the lack of diligence in proceeding with the rezoning.  Your Honours will not see in the affidavit, unless I have overlooked something, any statement on the part of Mr Lawler that he was unable to determine what had occurred in the past so far as financial reporting was concerned.

GUMMOW J:   You have to begin with paragraph 5, do you not, on 1488?

MR HALE:   Yes, I understand that, but I was confining myself really to whether there was an inability to assess what had happened in terms of the past financial accounting.  Thereafter, from page 1670, there were the requests to Mr Lawler, or the invitation to Mr Lawler, to attend management committee meetings and again his failure to do so at 1671 and at 1675 there is a further management committee meeting.

Now, what we wish to identify in our written documents is to identify more fully the extent to which there was in fact compliance with the requirements of the joint venture agreement.  There is some difficulty we have in that regard, to which I shall draw the Court’s attention, which is identified in the judgment of Justice Giles at page 2285.  As is recorded at paragraph 157 at 2285 the appellant after the close of argument sought leave to rely upon a notice of contention raising the issue of a breach of an essential term.  As your Honours see, as is recorded in our submissions at the time, which obviously enough are in writing, is that we had conducted the appeal on the basis that the only issue was the issue of repudiation ‑ ‑ ‑

KIRBY J:   Yes, but this is just a matter of legal classification, is it not?  Is there any factual material that would have been altered if you had had this earlier?

MR HALE:   That is the point we raise, that we took a decision, and your Honours see that in the third and fourth dot points, because of the narrow scope of the appeal, not to challenge any of the primary findings of fact by the trial judge but to accept them.

GLEESON CJ:   You mean you never had an opportunity to present argument on the two issues which Justice Giles decided, that is to say, the issues of breach of an essential term and the issue of serious breach of an intermediate term?  Are you saying the Court of Appeal went ahead and decided those issues without hearing argument on them?

MR HALE:   In substance, so far as the essential term they did, as your Honours will see in paragraph 158 of the judgment, that:

Sanpine submitted that the Court should in these circumstances refuse leave.  It said that if leave were granted it would wish to make detailed submissions, which it had not yet done.

So in substance your Honour is correct. 

GLEESON CJ:   There was no question of any leave needed in relation to serious breach of intermediate terms, was there?

MR HALE:   There was no leave needed but, as I have sought to demonstrate yesterday and it is again perhaps apparent again this morning, the argument was not an argument as certainly Justice Giles recorded.  The argument of a serious breach of an intermediate term was not an argument advanced by the appellant in the Court of Appeal.

GLEESON CJ:   But we have a judgment of Justice Giles dealing with the topic of serious breach of an intermediate term.  We also have a judgment of Justice Giles dealing with the topic of breach of essential term.

MR HALE:   Yes.

GLEESON CJ:   Is it part of your submission that those questions were decided in the Court of Appeal without hearing full argument or proper argument from your side?

MR HALE:   On the essential terms, yes.

GLEESON CJ:   What about on the serious breach of an intermediate term?

MR HALE:   On the serious breach of an intermediate term we raised the issue in anticipation in our written submissions prior to – we raised the issue ourselves ‑ ‑ ‑

KIRBY J:   So the answer is no to that question?

MR HALE:   That was the extent of it, yes.  So there was no real debate on that issue before the Court ‑ ‑ ‑

GLEESON CJ:   Are you submitting we should remit the matter to the Court of Appeal to hear further argument on that point?

MR HALE:   Either that or permit us in our written submissions to challenge where necessary any findings of fact of the trial judge because that is the difficulty we face and, as is recorded at paragraph 157, we did not challenge any of the findings of fact because of the way in which the case was to proceed.

GLEESON CJ:   But I think we indicated to you yesterday that in your written submissions on that you can say whatever you want to say.

MR HALE:   I understand that, your Honour, and I was simply flagging that would be one of the matters which we would be dealing with, namely, whether there should be any challenges to Justice Campbell’s findings of fact.

KIRBY J:   You could deal with that adequately on written submissions in this Court?  I rather took you to be saying to the Court of Appeal that they should not open this matter because of the way in which the matter had been tried and that the trial might have taken a different course.

MR HALE:   Absolutely, and I make that submission now, but I do accept that if I am permitted to put everything I wish to on that issue, I would not be disadvantaged except to the extent of not being able to advance it orally, but I still make the same submission as ‑ ‑ ‑

KIRBY J:   A party that has a matter dealt with for the first time on factual issues is disadvantaged because they do not get an entitlement to have an appeal against any ‑ ‑ ‑

GLEESON CJ:   What do you mean in that context by the expression “this matter”?  Are you referring to the issue of whether there was a breach of an essential term?

MR HALE:   Yes.

GLEESON CJ:   You are not referring to the issue of whether there was a serious breach of an intermediate term?

MR HALE:   I am in fact referring to both but I am primarily referring to the issue of the essential term.

GLEESON CJ:   May I point out to you that there was no need for any leave to be sought in relation to any notice of contention in the Court of Appeal in relation to the issue of serious breach of an intermediate term.

MR HALE:   I accept that.  It is simply the fact, as is recorded in Justice Giles’ judgment, no argument was advanced in that respect except to the extent that we identified it as a potential issue.

GLEESON CJ:   You will be able to tell us in your written submissions what you say are the arguments you would have wished to advance if you had been given further opportunity?

MR HALE:   Of course I could, yes.

GLEESON CJ:   Thank you.

MR HALE:   Your Honours, that is in substance what I really needed to advance today, although it may very well be, as Justice Kirby identified, if what is to be done is to make submissions about the primary findings of fact, it may be more appropriate to remit that issue, if it is the issue that is likely to be determinative, to the Court of Appeal.

KIRBY J:   It sounds a horrible prospect that we might have to go looking, rummaging through the first five volumes of the appeal book.

MR HALE:   Just by way of example, your Honours will see that there were certain findings of fact that Justice Giles expressed some doubt about, for example, at paragraph 52 on page 2239 of the judgment.

GLEESON CJ:   You are not under any doubt, are you, that one of the matters that you need to address in your written submissions is what was said by Justice Campbell in paragraphs 371 and 372 of his reasons?

MR HALE:   Yes, I understand that.

GLEESON CJ:   Thank you, Mr Hale.  Yes, Mr Coles.

MR COLES:   May it please the Court.  Your Honours, a couple of matters only.  Firstly, inasmuch as our learned friend towards the commencement of his address yesterday was tending to suggest to your Honours that repudiation should be understood as directed to a consideration of matters concerning future performance, it is our respectful submission that at least the authorities to date do not confine repudiation to purely anticipatory breach and, if your Honours are to entertain that submission, of course your Honours would need to reconsider the first category of the trifold classification in Shevill’s Case because, as I have respectfully put to your Honours yesterday, that first category seems to admit of a subdivision between purely anticipatory breach and breach - in the sense of repudiation constituted by the breach of the contract, that is to say, completed breaches which found the relevant basis for the inference of repudiatory intent.  That is all I wanted to say about that.

The second matter, your Honours, is a factual matter concerning the suggestion somewhat repeated by the respondent in submissions yesterday that the breaches upon which the appellant relied in terminating the contract had accrued or all of them had occurred by April 2002.  It will be recalled, of course, that the administrator to Koompahtoo was appointed early in February 2003.  It is not correct, in our respectful submission, that April 2002 is some sort of cut‑off date.

Can I just give your Honours a reference to the finding of fact at page 2091.  It is true to say in a sense that the joint venture in effect ran out of steam and no more work was done by Sanpine in connection with the efforts towards rezoning.  They simply downed tools for various reasons described in the evidence.  At page 2091, volume 6 in paragraph 147 of Justice Campbell’s judgment your Honours will see that:

NPWS’s letter of 3 April was passed on to Mr Smith in mid‑April 2002.  At the beginning of April 2002 there was a little over $114,000 standing in the credit of the Sanpine Unit Trust bank account.

So they had not run out of money –

However, nothing more was done, ever –

and his Honour means ever from 2002 to this very day –

to produce reports which would enable the rezoning process to continue.

It may be said, your Honours, nothing else was done either in relation to the production of or the fulfilment by Sanpine of its other obligations in relation to the preparation and maintenance of books and records and the like.  So those breaches plainly continued and were still subsisting and were still being repeated right up to the appointment of Mr Lawler and, if it mattered which otherwise it does not, they doubtless – or the similar conduct occurred thereafter.

GLEESON CJ:   You referred us yesterday to a handwritten set of minutes of a meeting of the management committee.

MR COLES:   No, I am sorry, that was not the management committee, with respect, your Honour.  Importantly, that was the Koompahtoo Land Council.  That was the members.

GLEESON CJ:   Koompahtoo Land Council which appeared to reflect a belief on the part of the Land Council that a sum of $700,000‑odd was standing to the credit of some bank account.

MR COLES:   It was in the bank waiting to be spent on development expenses.

GLEESON CJ:   What was the date of that meeting?

MR COLES:   That was 29 March 1999.  Less than six weeks after the $690,000 had come into the Sanpine’s account and immediately $450,000 of it was expended within a day largely by expenditure in favour of interests themselves associated with Sanpine, that is to say, Erolvase and Amabowl, companies associated respectively with Mr Perkins and Mr Steer who were themselves, of course, the Sanpine end of the joint venture, not the Koompahtoo end of the joint venture.  None of that was revealed to Koompahtoo itself.

GLEESON CJ:   I may have misunderstood some of the figures, but I thought we were told yesterday by you or your opponent that by the time Mr Lawler was appointed something like $2 million was secured on this land.

MR COLES:   Yes. 

GLEESON CJ:   How did the figure of $600,000 or $700,000 get to $2 million?

MR COLES:   Your Honours will be able to work that out – well, this with respect, your Honour, is problematical, but can I just give your Honours the references.  Page 1460 is the document produced really in the course of the trial, or for the purposes of the trial, by employees of Mr Steer.  The other document commenced at page 423 in volume 1 and is the cashbook entry starting on 16 February 1999 recording the circumstances attending the initial advance from the company called Inteq of $780,000 and recording the dispositions out of that $780,000 sum between16 and 17 February 1999.

To summarise what I said yesterday, the first five items total about $110,000 and they were the mortgagee’s expenses.  The next five items or so are the payments to the Amabowl, Mr Steer’s company, Erolvase, Mr Adam Perkins’ company, and other interests associated with the Steer and Perkins side of things, including Mrs Perkins $183,000 described by the judge as a misapplication.

GLEESON CJ:   I am not asking you to take us now to the detail of it, was Mr Steer cross-examined about the detail of this document?

MR COLES:   Yes, he was, your Honour.

GLEESON CJ:   Could you just give us the page reference?

MR COLES:   We will turn that up just in a moment.  I have a little more, perhaps I can complete the short observations I wanted to make, your Honour.  Your Honours asked yesterday about the audit and my learned friend took you appropriately to the document at page 387 and your Honour the Chief Justice inquired about the state of activity in the Land Council at the time.  If your Honours would just note what appears on the first page of the same minutes of the management committee, you were taken to page 387, where “Billy and Bob then raised the issue of the upcoming Audit”.

If one goes to the earlier page, we would respectfully suggest that there is no doubt a connection between the observations in relation to the audit and the matter appearing under the sub-heading “Project Manager’s Report” on page 386 which records that:

Bob Scott tabled the Project Managers Report . . . Bob outlined the problems that the Joint Venture had encountered as a result of a handful of KLALC members who are dissidents.  This culminated in the attendance by Bob and Adam –

that is Mr Perkins –

at the Extraordinary meeting of KLALC and Bob expressed his concerns as to the effect on both the Joint Venture and Sanpine.

There is an available inference that the project manager’s report and the subsequent discussion agreeing, notwithstanding the joint venture agreement that there should be no auditor, are related or not distinct or disparate.

Your Honours, commencing at page 116 of volume 1 there is oral evidence.  It is 116 through to 118, line 20.  I am afraid I will have to supply your Honours with a note.  There is other evidence, we recall, dealing with particular items referred to – I will give your Honour a few more page references in a moment.  I am sorry . 

CRENNAN J:   Can I ask this, Mr Coles.  Were repayments made for a period or not?  I notice the interest bill was very high.

MR COLES:   It was an accruing interest mortgage, your Honour.  There were no interest payments actually – I am sorry.  Interest was being paid, I think.  Indeed, that was something I meant to say in response to the Chief Justice’s question about how we ended up with 2.4.  The 2.4 figure is the bottom right-hand figure on page 1461.

GLEESON CJ:   Yes, but of the 2.4, $925,000 is interest. 

MR COLES:   Exactly.  That is right.

GLEESON CJ:   Were interest payments made or was interest simply accrued?

MR COLES:   No, the payments were made, your Honour.  That document appears to record they must have been.

GLEESON CJ:   I do not think it does.  It is important to notice that the document does not go from left to right, it goes from right to left.

MR COLES:   Exactly. 

GLEESON CJ:   So the most recent figures are in the left-hand column.

MR COLES:   That is right. 

GLEESON CJ:   You will find that, for example, for the year 2003 an interest charge of $248,000 was made. 

MR COLES:   That is right.

GLEESON CJ:   Was that paid or was it simply incurred?

MR COLES:   It is described as expense, your Honour, which perhaps suggests an answer.  I just cannot tell your Honour from recollection whether the evidence dealt with the – in fact, my recollection is ‑ ‑ ‑

MR HALE:   I think it was a combination of prepaid interest, because there was a second drawdown, and also accrued interest.

GLEESON CJ:   Who paid it? 

MR COLES:   I think the idea was, because the joint venture of course derived no income, that the interest was to be capitalised

GLEESON CJ:   That is my point.  This never had any income.  Was the interest being actually paid and, if so, who was paying it?

MR COLES:   I think it has been withheld by the mortgagee from later advances.  The trial judge recorded that there were four separate advances by the mortgagee.

GLEESON CJ:   So it was being paid in the sense that they borrowed more from the mortgagee and the mortgagee applied part of the borrowing ‑ ‑ ‑

MR COLES:   He appropriated some of it.

GLEESON CJ:   ‑ ‑ ‑ to the reduction of the existing debt to the mortgagee.

MR COLES:   That is exactly right, your Honour. 

GLEESON CJ:   That is the sense in which it was paid.

MR COLES:   That is the sense in which it was paid, yes.  I am sorry, I should have put that a little more clearly.  Your Honour the Chief Justice inquired yesterday – not included in the appeal books, if your Honours please, are exhibit 5, which were the draft 1999 accounts which never progressed beyond that condition and documents which became exhibit 4 which are documents described as Sanpine Unit Trust and KLALC Property Trust Joint Venture accounts, being profit and loss statement, balance sheet and notes for the respective years 2000 to 2004.  I would seek to supply those to your Honour, if that is convenient, and just give your Honour some references in the transcript to those documents.

GLEESON CJ:   Thank you.

MR COLES:   Could I draw your Honour’s attention firstly to exhibit 4.  Exhibit 4, originally MFI 1, was called for in the trial. That is at page 107 of volume 1 and was marked as such at page 121.  At page 122 in volume 1 there was reference to its production and evidence was given at page 122, line 30 to the effect that it had not been previously supplied to Mr Lawler in substance.  At page 123 at about line 35 Mr Steer, in effect, confirmed that financial accounts were not prepared and that, in effect, the only financial reports were those that appear in exhibit 4.  He said at the foot of page 123 that “They were never tabled at a joint venture management meeting”. 

If your Honours look at them, if your Honours have exhibit 4, the suggestion put to the witness at about line 46 on page 123 that these were simply a derisory set of accounts so far as supplying any useful information about the financial affairs of the joint venture, in our respectful submission, there is made out, although it is fair to say Mr Steer certainly would not agree – and the documents speak for themselves, your Honours, and whether or not they were laid before the members of the management committee, has ‑ ‑ ‑

GUMMOW J:   At the bottom of 123 it is said not.

MR COLES:   Yes, they would not, in our respectful submission, have been particularly informative and, indeed, they show largely nil activity throughout the relevant period.  The document which constitutes the one set of accounts that, I suppose, approached perhaps what the agreement required, that is to say, accounts prepared on generally accepted accounting principles, exhibit 5, is of course – I am sorry, it is really of the same ilk, your Honours.  It seems to have contained some detail on the very last page as to expenditure.

GUMMOW J:   Where was it tendered?

MR COLES:   Page 131 and there is cross‑examination about it on the following page.  In effect, the witness confirmed the 1999 accounts never advanced beyond the draft condition in which what became exhibit 5 was produced.

GLEESON CJ:   Mr Steer was a chartered accountant, was he?

MR COLES:   Yes, he was.  If your Honours would just note some evidence given at 133 when the witness was cross‑examined about the figure which recurs in these accounting documents, commencing at about line 25:

Q.       According to the draft, that is to say draft balance sheet, the total current liabilities are put at no more than $36,875?
A.       Correct.

Q.       And there do not seem to be any other sort of liabilities?
A.       Correct.

Q.       And, on any view, that is – all right.  Now, presumably $36,000 odd was the total of the current liability – of all of the liabilities as at 30 June 1999?
A.       Correct.

Q.       That, of course, tells one nothing about the liabilities that had been previously incurred but had been apparently discharged in February 1999, does it?
A.       Correct.

So he has really conceded that these accounts are utterly uninformative in terms of explaining what happened to $450,000‑odd of the moneys borrowed on 16 February 1999 which were disbursed in the way the document ‑ ‑ ‑

GLEESON CJ:   Just a minute.  By 30 June 2004, according to the document on pages 1460 to 1461, there was an amount of $2.4 million secured on the land owned by the Aboriginal Land Trust.

MR COLES:   This is right, your Honour.

GLEESON CJ:   The financial report for the year ended 30 June 2004 shows the total liabilities as $36,000.

MR COLES:   That is right, yes.

GLEESON CJ:   What is it, if anything, that explains the difference between $36,000 and $2.4 million?

MR COLES:   Nothing explains that difference, your Honour, in our respectful submission.  It is unexplained by any accounting documents ever produced by Sanpine save what one makes of the not wholly informative document itself appearing at 1460.

GLEESON CJ:   What attempt was made in the proceedings before Justice Campbell to explain or to explore that difference?  Perhaps that is a matter you and Mr Hale can deal with in your written documents.

MR COLES:   We will need to make references, your Honour.  I do not know, your Honour, that the question was formulated with the precision that your Honour’s inquiry suggests, but there will be evidence touching on that state of affairs.  So, in our respectful submission, the state of available accounting information to repel the inference of disregard of at least those obligations was fairly compelling.

The last matter I should deal with, your Honours, is, some submissions were put by my learned friend as to the relevance of the absence of complaints or protests.  That was, I think, at about page 89 of yesterday’s transcript.  We would say the matter should be viewed in this way.  One, if there is an apparent breach of a contract the question may arise – and this is dealing with the repudiation side of the case just for the moment which is the only respect in which the acquiescence or absence of complaint issue arises – but if one firstly starts with an apparent breach, the question arises, is it repudiatory?  Then a call or a protest is made requiring performance.  That call or protest is ignored or resisted, then there may arise an inference of persistence and repudiatory intent and that inference arises because, in effect, the error having been pointed out or the call having been made, there is persistence in the wrong‑headed, wrongful and therefore repudiatory state of affairs that evidences the repudiation.

Equally, we would respectfully say, if one has one breach which may or may not be repudiatory followed by another breach, followed by another breach, followed by serial repeated persistent and, as his Honour said, gross and serious breaches, you can just as much draw the inference from the grossness, the seriousness, the repetition and the persistence in all of those breaches equally as you can from the renunciation that you provoke by making calls for performance.  The two are not necessarily related but they are simply ways by which one may draw the inference of the promisor’s intention.

GLEESON CJ:   Now, just putting psychoanalysis to one side and concentrating on serious breaches of intermediate terms, insofar as it may appear that breaches of the contractual obligations in relation to keeping accounts were breaches in which Koompahtoo’s representatives on the management committee were complicit, what is the legal significance of that other than waiver or estoppel?

MR COLES:   Absent waiver and estoppel, none.  His Honour was right in his analysis as to the absence of waiver or estoppel.  With respect, the majority of the Court of Appeal were erroneous in attributing to the Land Council itself actual knowledge of matters that the judge perhaps, indeed even erroneously, inferred were even known to the representatives on the management committee.  But assuming for the purposes of the argument, all of these matters, the detail of the breaches, the internal record keeping of Sanpine, contrary to probability, was actually known and understood by the Land Council representatives on the management committee, that was not shown to be the knowledge that could be ascribed to the Land Council itself.

The Land Council was a somewhat differently constituted organisation to, for example, a corporation under the Corporations Act and in any event it would be obviously inappropriate to ascribe to a Land Council knowledge of matters which the evidence revealed were being concealed in fact from the Land Council by its own representatives, but the representatives were there on the management committee to give effect to the joint venture agreement for the benefit of Koompahtoo.  They were not on the management committee to procure breaches of it to the disadvantage of Koompahtoo.

Those events, your Honour, if one were to look at it in the classical sense of attribution of knowledge by an officer to a corporation, would have been sufficient to negate that imputation, but in any event the description statutorily and regulationally of the functions of officers, which are set out in the statutory and regulation material annexed to our first written submissions, indicates that the organic authority of the relevant officers concerned is rather less than one would suppose would be necessary to constitute than, in effect, the conduits of knowledge for all purposes in relation to affairs of the Land Council.  That is a matter of impression from the model rules and the like and I do not stay to ask your Honours to look at it now, but that is our submission in broad terms on that aspect.

KIRBY J:   That argument strikes at the factual conclusion of acquiescence, but for my own part I can imagine that there may be in some factual contexts the circumstance that acquiescence where in the ordinary course of human conduct you would expect the response could amount to a waiver.

MR COLES:   It does, very often.  Had the judge not negated that, then we would be dealing with a different case.  Day to day in many commercial transactions it generates a waiver and depending on the circumstances very frequently can be recognised as an estoppel, the two not necessarily being different in any particular effect or ‑ ‑ ‑

KIRBY J:   Estoppel requires something extra though, whereas waiver is within the camp of the ‑ ‑ ‑

MR COLES:   Estoppel perhaps requires a recognition of the injustice of departing from the convention that has been established by the course of conduct.  Waiver would simply be a waiving on, as it were, of the particular breach.  I have put that rather unscientifically, but that is the ‑ ‑ ‑

KIRBY J:   Waiver is a common law notion, is it not, and estoppel an equitable notion and they just grew up differently probably to try to deal with the same ‑ ‑ ‑

MR COLES:   Yes, well, the sort of estoppel that is the common estoppel that arises from a mutually agreed departure from the strict terms of the contract in the course of its performance is perhaps a common law estoppel.  It is an estoppel of the conventional or kind rather than the promissory or equitable kind, but that may be a controversial matter and I simply put that observation, if your Honours please.  Subject to any other respects in which we can be of assistance, your Honour, those are the appellant’s submissions.

GLEESON CJ:   We will reserve our decision in this matter.  We will note that the respondent will let us have further written submissions within 14 days and the appellant will let us have its further written submissions within seven days after that and we will adjourn for a short time to reconstitute.

AT 11.17 AM THE MATTER WAS ADJOURNED