LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd

[2001] NSWSC 886

CITATION:	LMI v Baulderstone [2001] NSWSC 886
CURRENT JURISDICTION:	Equity Division Commercial List
FILE NUMBER(S):	SC 50023/00
HEARING DATE(S):	13/08/01, 14/08/01, 15/08/01, 16/08/01, 17/08/01, 20/08/01, 21/08/01, 23/08/01, 27/08/01, 28/08/01, 29/08/01
JUDGMENT DATE:	12 October 2001
PARTIES :	LMI Australasia Pty Limited - First Plaintiff LMI/HHI Limited - Second Plaintiff Baulderstone Hornibrook Pty Limited - First Defendant Docklands Stadium Consortium Pty Limited - Second Defendant Baulderstone Hornibrook International Pty Limited - Third Defendant
JUDGMENT OF:	Barrett J

COUNSEL :	Mr A.J. Sullivan QC/Mr R.J. Weber - Plaintiffs Mr J.C. Campbell QC/Mr P. Santamaria - Defendants
SOLICITORS:	Moray & Agnew - Plaintiffs Gadens - Defendants
CATCHWORDS:	CONTRACT - Whether "heads of agreement" contractually binding - whether elements left to be agreed or otherwise uncertain rendered whole unenforceable - coherent and cohesive contract remained when such elements excluded - whether contemplation of future replacement agreement precludes finding of immediate contractual effect - construction of condition precedent - whether condition satisfied - CONTRACT - need for construction consonant with business reality - CONTRACT - implied terms - good faith, reasonableness, ensuring contracted benefit to other party, desisting from conduct hindering fulfilment - implied terms cannot rise above express terms - TORT - inducing breach of contract - requirements as to tortfeasor's knowledge - imputation of knowledge through common directors in wholly owned corporate group - whether one wholly owned subsidiary of parent induces or procures conduct of another wholly owned subsidiary of parent where both operate within authority framework created by that parent - CONTRACT - whether oral contract formed - ESTOPPEL - conventional estoppel
CASES CITED:	Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61 Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 5 BPR 9315 Masters v Cameron (1954) 91 CLR 353 Sinclair Scott & Co Ltd v Naughton (1929) 43 CLR 310 Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1 Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429 Pagnan SpA v Feed Products Ltd [1987] 2 Lloyds Rep 601 Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600 Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 353 Whitlock v Brew (1968) 118 CLR 445 David Jones Ltd v Lunn (1969) 91 WN (NSW) 468 Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Pan Foods Company Importers & Distributors Pty Ltd v Australia and New Zealand Banking Group Ltd (2000) 74 ALJR 791 McCann v Switzerland Insurance Australia Ltd (2000) 75 ALJR 325 Burger King Corporation v Hungry Jack's Pty Ltd [2001] NSWCA 187 Peters (WA) Ltd v Petersville Ltd [2001] HCA 45 Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 Shepherd v Felt & Textiles Australia Ltd (1931) 45 CLR 359 Metropolitan Life Insurance Co v RJR Nabisco Inc 716 F.Supp. 1504 (1989) Australian Development Corporation Pty Ltd v White Constructions Ltd [2001] NSWCA 9 Said v Butt [1920] 3 KB 497 O'Brien v Dawson (1941) 41 SR (NSW) 295 - on appeal (1942) 66 CLR 18 Tsaprazis v Goldcrest Properties Pty Ltd (2000) 18 ACLC 285 Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 328 Kuwait Asia Bank EC v National Mutual Life Nominees Ltd [1991] 1 AC 187 Dairy Containers Ltd v Auditor-General [1995] 2 NZLR 30 New Zealand Guardian Trust Co Ltd v Brooks [1995] 1 WLR 96 CSR Ltd v Wren (1998) 44 NSWLR 463 Short v City Bank of Sydney (1912) 15 CLR 148 Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473 Permanent Building Society v Wheeler (1994) 11 WAR 187 South Australia v Clark (1996) 66 SASR 199 Fitzsimmons v R (1997) 23 ACSR 355 Harkness v Commonwealth Bank of Australia (1993) 32 NSWLR 543 Belmont Finance Corporation Ltd v Williams Furniture Ltd (No 2) [1980] 1 All ER 393 Beach Petroleum NL v Johnson (1993) 43 FCR 1 Re Hampshire Land Company [1896] 2 Ch 743 J.C. Houghton & Co v Nothard Lowe & Wills Ltd [1928] AC 1 Sargent v ASL Developments Ltd (1974) 131 CLR 634 Walker v Wimborne (1975) 137 CLR 1 Industrial Equity Ltd v Blackburn (1977) 137 CLR 567 John Shaw & Sons (Salford) Ltd v Shaw [1935] 2 KB 113 Hogg v Cramphorn Ltd [1967] Ch 254 Bamford v Bamford [1968] 3 WLR 317 Winthrop Investments Ltd v Winns Ltd [1975] 2 NSWLR 666 Kinsela v Russell Kinsela Pty Ltd (1986) 4 NSWLR 722 Pascoe Ltd v Lucas (1999) 75 SASR 737 Rutherford v Poole [1953] VLR 130 Meehan v Jones (1982) 147 CLR 571 Con-Stan Industries Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 Banque Financiere de la Cite v Parc (Battersea) Ltd [1999] 1 AC 221 Pavey & Matthews Pty Ltd v Paul (1986) 162 CLR 221
DECISION:	See paragraphs 118 and 119

67

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

BARRETT J

FRIDAY, 12 OCTOBER 2001

50023/00 - LMI AUSTRALASIA PTY LIMITED & ANOR v BAULDERSTONE HORNIBROOK PTY LIMITED & ORS

JUDGMENT

HIS HONOUR:

Parties and background

1    These proceedings concern the management rights to what is now known as the Colonial Stadium, one of Melbourne’s major sporting and entertainment venues which opened in March 2000. At all times material to the events the subject of the proceedings, the first defendant, Baulderstone Hornibrook Pty Limited (“Baulderstone”) was a wholly owned subsidiary of A.W. Baulderstone Holdings Pty Limited, as was the third defendant, Baulderstone Hornibrook International Pty Limited (“International”). The second defendant, Docklands Stadium Consortium Pty Limited (“DSC”) was, in turn, a wholly owned subsidiary of International. Another company relevant but not party to the proceedings, Stadium Operations Limited (“SOL”), was a wholly owned subsidiary of Baulderstone. Baulderstone is a construction company. A.W. Baulderstone Holdings Pty Limited is wholly owned by a German company and is the ultimate holding company of the Baulderstone Group in Australia.

2    It is appropriate, at the outset, to trace the broad chronology of events out of which the present disputes have arisen.

3    During the first half of 1997, Baulderstone was engaged in attempts to form a consortium to bid for the contract to construct and operate the stadium. In the course of doing so and in order to enhance the management (or operation) aspects of its proposed bid, Baulderstone had discussions with the second plaintiff, LMI/HHI Ltd (“LMI”), a Texas limited partnership with which Mr Mike McGee was associated. LMI had established particular expertise in stadium management in the pre-bid, construction and post-opening stages in the United States. LMI had been introduced to Baulderstone by Mr Graeme Watson, the principal of International Sports Facilities Management Pty Limited (“ISFM”), a Sydney based company.

4    In June 1997, the first plaintiff, LMI Australasia Pty Limited (“LMIA”) was identified by Baulderstone as the potential manager of the stadium should a Baulderstone bid be successful. LMIA was a joint venture company owned 50/50 by LMI and ISFM. It was formed for the purposes of the project. At the same time, DSC (also a specially formed company) was introduced by Baulderstone as the vehicle through which the proposed bid for the stadium construction and management contract would be progressed.

5    On or about 27 June 1997, written heads of agreement were entered into between DSC and LMIA. Without wishing, at this stage, to express any conclusions as to the legal status and effect of that document, I shall merely describe it as defining the basis on which LMIA (referred to in the document itself as “LMI”) would take on the task of managing the stadium if DSC’s bid was successful. There are substantial disputes between the parties in relation to the heads of agreement. Of central importance is clause 2.1:

“If any of the bids are successful, the Developer agrees that it shall appoint LMI as Manager of the Facility.”

Clause 2.2 fixed the start of the appointment as the date 24 months before the scheduled “Operations Start Date”. Its initial term was to expire on the twentieth anniversary of the “Operations Start Date”.

6    On 30 June 1997, DSC submitted two bids to the Docklands Authority (“the Authority”), a Victorian statutory body charged with responsibility for bringing the stadium project to fruition as part of a more broadly based redevelopment of the Melbourne docklands. One was a conforming bid and the other a non-conforming (or “preferred”) bid. DSC submitted the bids on behalf of a consortium consisting of itself, KPMG Corporate Finance (Vic) Pty Ltd, ISFM (Mr Watson’s company and a 50% shareholder in LMIA) and Clifton Project Management & Associates Pty Limited. In each bid (that is, the conforming bid and the preferred bid), DSC included a section headed “Consortium Structure”. This outlined in brief terms the contractual arrangements in place among the named consortium members. It contained the following paragraph:

“In addition, the bid company has entered into a Heads of Agreement with LMI Australasia Pty Ltd regarding its role as operator of the stadium. This agreement and a draft of the Facility Management Agreement for the stadium are contained in Part E of the bid document.”

7    On 8 July 1997, DSC made a presentation to the Authority. Mr Simmons of LMI came from the United States for this. Over the following two weeks or so, dialogue continued between the Authority and DSC which, for the purpose, was represented mainly by Baulderstone personnel - principally Mr Steven Wise. No one from LMI or LMIA had direct contact with the Authority after the meeting of 8 July 1997. In the course of that period of two weeks or so, the Authority made it clear that it had reservations about DSC’s bid, mainly because of an inadequate equity content which would leave the Victorian government exposed to financial risk. That concern prompted an approach to Seven Network Limited (“Channel 7”) which agreed to support the DSC consortium by way of a substantial equity contribution to the project, at the same time negotiating a position for itself in relation to television coverage of events at the stadium.

8    On 27 July 1997, DSC lodged with the Authority a bid addendum for both its conforming and preferred bids, together with a covering letter which read in part as follows:

“At our presentation in early July you challenged our Consortium to remove the risk to the Government. We have risen to that challenge. We have delivered a bid that is significantly enhanced which now offers a premium to secure the project.”

9    By letter dated 4 August 1997, the Authority informed DSC that the DSC consortium was one of two short listed bidders, the other being the Melbourne Sports Stadium Consortium led by Transfield and Grocon. Also dated 4 August 1997 was a document from the Authority headed “Unsatisfactory Parts of Your Bid as at 4 August 1997”. One of the items in that document was the following:

“Your management team of LMI/ISFM has no direct Australian Stadium management experience.”

10    On or about 5 August 1997, representatives of DSC informed the plaintiffs, through Mr Watson, of the concern raised by the Authority as to the lack of direct Australian stadium management experience. The following day, 6 August 1997, Mr Watson faxed to Mr Wise of Baulderstone a letter which read in part as follows:

“In order to satisfy the Dockland Authority’s concern regarding the operations of LMI/ISFM (no present operation within Australia) we will enter into discussions with Spotless immediately to consider their potential amalgamation in the overall operation of the facility.”

11    Spotless, it should be noted, was and is an established company the activities of which include the provision of catering and related facilities at various locations, including sporting and entertainment venues. Spotless was soon afterwards approached by Mr Watson with a view to gauging its interest in playing an appropriate role in support of the DSC bid. Spotless was, at that stage, unable to commit itself because of a pre-existing involvement in the Transfield/Grocon bid. Spotless nevertheless made it clear that it would be interested in playing a role in relation to the DSC bid should it become free from its commitments to Transfield/Grocon. Mr Watson informed Mr Wise of the Spotless position.

12    As a separate measure, steps were taken to bolster the local experience base of LMIA by recruiting Mr Spangler who was at the time the chief executive of the organisation which operated the Melbourne Tennis Centre, site of the Australian Open, one of the Grand Slam tennis tournaments.

13    On or soon after 22 August 1997, DSC received from the Authority, in preparation for a meeting scheduled for 25 August 1997, a document headed “Outstanding Key Stadium Issues as at 22 August 1997”. One item on the list was “Superior management proposal” against which, in an “Action” column, appeared “DSC”.

14    On 1 September 1997, the Authority announced that DSC was the successful bidder. Four days previously, on 28 August 1997, SOL was formed. It was, as I have said, a wholly owned subsidiary of Baulderstone. On 3 September 1997, an agreement entitled Stadium Development Agreement was executed, the parties to it being the Authority, a company in the A.W. Baulderstone Group called Stadium Management Limited, National Mutual Trustees Limited and SOL. The second and third were respectively the manager and the trustee of a unit trust established for the purposes of the transaction. They, together with SOL, were designated “Developer”. Clause 1.11 provides that the obligations and duties of the Developer may be performed or discharged “by any one or more of the entities comprising the Developer”. Clause 15 of the agreement is headed “Project Co-ordination and Stadium Management”. Included in that clause is the following clause 15.6:

“The Developer must execute a Stadium Management Agreement with the appointed Stadium Manager by no later than 30 days before the date for Practical Completion and must perform and observe all obligations imposed upon it by the Stadium Management Agreement.
Before appointing a Stadium Manager and executing a Stadium Management Agreement, the Developer will consult in good faith with the Authority and, so far as the Authority reasonably requires, the AFL, with a view to ensuring that the management arrangements to be contained in the Stadium Management Agreement reflect commercial arm’s length arrangements equivalent to the arrangements that it would be reasonable to expect the Developer could have negotiated were the appointment of the Stadium Manager to have been conducted by way of a competitive tender open to Australian and international operators and managers of stadia equivalent to the Stadium.”

15    “AFL” is a reference to the Australian Football League. The term “Stadium Manager” is not defined, but the definition of “Stadium Management Agreement” is as follows:

“Stadium Management Agreement means an agreement generally in the form contained in Schedule 12.”

Schedule 12 contains a form of agreement between SOL and LMIA. More will be said in due course about that form of agreement and the genesis of clause 15.6.

16    On 10 August 1998, the agreement contemplated by clause 15.6 of the Stadium Development Agreement was made. But the appointed manager was not LMIA. It was Nationwide Venue Management Pty Limited, a wholly owned subsidiary of Spotless. LMI Melbourne Pty Limited (a wholly owned subsidiary of LMIA) was appointed a consultant to Nationwide Venue Management and agreed to provide defined services in support of that company’s activities as manager of the stadium. When LMI Melbourne accepted this appointment, LMIA expressly reserved its rights under the heads of agreement. The appointment was, in June 2000, terminated in accordance with the agreement when Nationwide Venue Management ceased to be manager of the stadium.

The plaintiffs’ claims

17    Arising out of these circumstances, LMI and LMIA have made several claims against the defendants. The first is a claim for breach by DSC of a contract said to be constituted by the heads of agreement of June 1997, the breach consisting of failure by DSC to ensure that LMIA was appointed manager of the stadium in accordance with clause 2. Second, there is a claim against Baulderstone and International for inducing this breach of the contract constituted by the heads of agreement.

18    The third claim is a claim for payment or reimbursement of certain expenses incurred by LMI and LMIA for services and assistance provided during the pre-award stage. This claim is advanced in a threefold way: first, under a contract, second, on the basis of conventional estoppel and, third, on the basis of restitutionary principles.

19    The core issues arising in relation to the first claim are, first, whether the heads of agreement were a contract, second, as to the operation and effect of that contract (including any implied terms) and, third, whether any contract is void for uncertainty. The second claim raises additional issues, including issues as to the knowledge that should be attributed to certain bodies corporate. I shall deal with the various elements of the first and second claims before turning to the claim for reimbursement of expenses.

Contractual effect of the heads of agreement

20    In arguing that the heads of agreement constitute a contract, the plaintiffs point immediately to recital E:

“If any of the Bids are successful the parties intend to enter into a formal Facility Management Agreement, but, in the meantime, intend this Heads of Agreement to be legally binding.”

21    It is not disputed that both DSC and LMIA subscribed to the document and thus to the apparent statement of mutual intention that it be legally binding. The statement is, as the plaintiffs point out, reinforced by the way in which DSC later described and presented the heads of agreement. In the bids it submitted to the Authority, the following statement appeared:

“In addition, the bid company has entered into a Heads of Agreement with LMI Australia Pty Ltd regarding its role as operator of the stadium. This agreement, and a draft of the Facility Management Agreement for the stadium are contained in Part E of the bid document.”

22 This description of the heads of agreement as “This agreement” in a sentence also referring to a “draft” of some other agreement may be taken to demonstrate DSC’s acceptance of their contractual nature. The subsequent statement is admissible on the question whether a contract was formed: see Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61 at [25] per Heydon JA. Furthermore, Mr Wise, the Baulderstone officer principally involved in the affairs of DSC, admitted in cross-examination that, in his mind, the heads of agreement were a legally binding contract.

23 It is to be noted, however, that the document itself is entitled “heads of agreement” and, to that extent, may be taken to indicate that it is of a preliminary nature only. Speaking of the words “in principle” included in the parties’ description of their compact in Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 5 BPR 9315, McHugh JA said that “they cannot prevail against the conclusion to be drawn from the words ‘a legally binding agreement’”. Here, the qualifying expression is “heads of agreement” rather than “agreement in principle”. That, to my mind, does not detract from the force of the statement in the recital that, pending the making of a formal facility management agreement, the parties intend the document to be legally binding. What it does do, however, is focus attention on the aspect of the recital showing that the heads of agreement do not represent the parties’ contractual last word.

24 Recital E makes it clear that the parties contemplated a subsequent binding contract. That raises a question of classification of the heads of agreement according to the four classes identified in Masters v Cameron (1954) 91 CLR 353 as supplemented by McLelland J at first instance in Baulkham Hills Private Hospital by reference to Sinclair Scott & Co Ltd v Naughton (1929) 43 CLR 310:

Class 1: Where the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect.

Class 2: Where the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document.

Class 3: Where the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.

Class 4: Where the parties are content to be bound immediately and exclusively by the terms which they have agreed upon whilst expecting to make a further contract in substitution for the first contract containing, by consent, additional terms.

25    A decision as to where the heads of agreement fit within this scheme will be assisted by an examination of features in addition to the two obvious ones to which I have already referred (being the description “heads of agreement” and the statement of intention in recital E). Beyond that, there were several aspects which served to emphasise the preliminary and, to an extent, incomplete nature of the arrangement recorded. Mr Campbell QC, senior counsel for the defendants, pointed to a number of such matters. I refer to them not in any order of significance or importance.

26    Clause 3.1 makes it the responsibility of LMIA to “provide the Management Services”, that is, “the services to be provided by LMI [that is, LMIA] in managing the Facility” including in particular those listed in schedules 1 and 2. Those schedules do not sit happily with the body of the document. It is clear from the evidence that they were simply lifted from an earlier draft agreement prepared by LMI’s lawyers in the United States. They contain one blank space (for a number of days), one section in square brackets which appear to make it provisional or draft in nature, a reference to an undefined “Consortium” and six cross references, by number, to provisions which either do not exist or do not relate to the subject matter at hand.

27    A number of matters are left for subsequent agreement. There is provision for the initial term of 20 years to be extended if LMIA “is satisfactorily achieving agreed performance and operational standards”. There is also provision for the parties to agree budgets before the start of each year. Moneys collected by LMIA are to be deposited into an account “in an agreed Bank” out of which certain designated payments are to be made as well as “other payments agreed with” DSC, with the balance being remitted to DSC “at regular intervals as agreed from time to time”. There is provision for the payment to LMIA of “a Performance Compensation Fee based on the net profit of the Facility” and the parties “agree to confer and co-operate in good faith to agree upon an appropriate formula for calculation of such a fee”. LMIA’s right to reimbursement of pre-appointment expenses extends to those “agreed with the Developer”. There are provisions under which the parties “shall agree upon” capital improvement budgets, “appropriate insurances” and a standard form of contract for concessions (although the last is qualified by the words “as far as practicable”). In none of these instances is there any machinery to fill the relevant gap if the parties do not agree.

28    Next, there are several core provisions dealing with “Operating Expenses” and “Operating Revenues”. Part of LMIA’s responsibility is to perform its functions so as to minimise Operating Expenses and maximise Operating Revenues in the best interests of DSC. The provisions concerning budgets contemplate that such budgets will list “all projected Operating Revenues and Operating Expenses”. The bank account provisions refer to collection and deposit of Operating Expenses, as do the provisions about reporting by LMIA. Despite the fact that these terms start with capital letters, there are no definitions of “Operating Revenues” and “Operating Expenses”. The document makes it clear that definitions were at one stage intended but were deleted.

29    Finally, there is a provision in which LMIA acknowledges its awareness of the terms of three other agreements and agrees that, in providing the management services, it will comply with the terms of each “and the provisions of this agreement shall be read down accordingly”. The three agreements mentioned are “the AFL User Agreement” (which is defined as a particular agreement dated 1 April 1997 between the Authority and the Australian Football League), “the Stadium Usage Agreement” (which is defined as the agreement referred to in schedule 4 to the AFL User Agreement and which therefore may be taken to have existed at the time) and “the Lease”. The last is defined as the lease “to be entered into” between DSC and the Authority for a term of not less than 40 years but otherwise with no indication as to its terms or content.

30    The capacity for matters of these kinds (particularly lacunae with no specified means of being filled) to deny legal force to a compact otherwise apparently intended to have such force is illustrated by the decision of the Court of Appeal in Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1. That case, like this, involved a document termed “heads of agreement”. That document was, by its terms, to be superseded by a detailed agreement to be negotiated but so that the negotiation “shall not in the meantime in any way prejudice the full and binding effect of what is now agreed”. Kirby P, in whose judgment Waddell AJA concurred, went through the heads of agreement clause by clause, identifying features tending for and against a conclusion of present contractual force despite the clear contemplation of a future and superseding contract.

31 When the same exercise is undertaken here, it seems to me clear that the indications in favour of present contractual force prevail, despite a number of uncertainties and gaps; also that those uncertainties and gaps are not, individually or together, sufficient to deprive the whole of coherent contractual meaning. The schedules 1 and 2, with their one blank space and inappropriate cross-referencing, are easy enough to understand. The period of days which has been left blank should be construed as a reasonable period and the subject matter of the cross-referencing makes it reasonably clear which substantive provision is intended. The provisions dealing with “Operating Expenses” and “Operating Revenues” in the absence of definitions of those terms are quite intelligible, given that the two expressions may be regarded as having readily discernible ordinary meanings in the context of management and operation of something such as a stadium. This is in accord with the approach taken by the High Court to the undefined term “supplier’s costs” in a commercial agreement in Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429. The clause by which LMIA acknowledges its awareness of and agrees to comply with nominated agreements are likewise intelligible and meaningful in relation to the two agreements which existed when the heads of agreement were signed.

32    Two aspects require closer analysis. The first is the provision by which LMIA acknowledges its awareness of and agrees to comply with an agreement not in existence, being “the Lease”. That provision also causes the heads of agreement to be read down to the extent necessary to allow full and unqualified operation to the provisions of the non-existent “Lease”. The provision thus operates not only to require certain conduct on the part of LMIA but also to modify the effect of the heads of agreement. The latter aspect must be seen as operating in the future in relation to “the Lease”. The provision ensures that, to the extent of any inconsistency which emerges when the lease comes into existence, the terms of the heads of agreement will then yield. The provision thus has a cogent and meaningful operation despite the non-existence of “the Lease”.

33 The other aspect which requires particular attention is the collection of provisions which contemplate future agreement on particular matters. The guiding principle in such cases was stated by Lloyd LJ (with whom the other members of the Court of Appeal agreed) in Pagnan SpA v Feed Products Ltd [1987] 2 Lloyds Rep 601:

“But there is no legal obstacle which stands in the way of the parties agreeing to be bound now while deferring important matters to be agreed later. It happens every day when parties enter into so-called ‘heads of agreement’.”

34 It is thus clear that the presence of elements amounting to “agreement to agree” is not fatal to the existence of a contract. I do not lose sight of the observation of Gibbs CJ, Murphy and Wilson JJ in Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600:

“It is established by authority, both ancient and modern, that the courts will not lend their aid to the enforcement of an incomplete agreement, being no more than an agreement of the parties to agree at some time in the future. Consequently, if the lease provided for a renewal ‘at a rental to be agreed’ there would clearly be no enforceable agreement.”

35 Such lack of definition and consensus will be fatal to the existence of a contract only if it is pervasive. The matter was put thus by Gleeson CJ in Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 353:

“[I]n the ordinary case, as a matter of fact and common sense, other things being equal, the more numerous and significant the areas in respect of which the parties have failed to reach agreement, the slower a court will be to conclude that they had the requisite contractual intention.”

There is, in other words, a point beyond which “agreement to agree” elements (of themselves unenforceable) cause the totality to fail. The central question, it seems to me, is whether the elements not affected by that problem of unenforceability are sufficiently cohesive and coherent to stand as a contract in their own right. This is probably another way of addressing the question whether elements so affected may be severed in accordance with principles discussed in cases such as Whitlock v Brew (1968) 118 CLR 445 and David Jones Ltd v Lunn (1969) 91 WN (NSW) 468.

36    The items left for future agreement by the heads of agreement are such that, if no agreement emerges on any of them, there will be no means of implementing any extension beyond the initial 20 years, there will be uncertainty about the bank at which the bank account is to be maintained, there will be no definition of payments to be made out of that account beyond the specifically designated payments and there will be no basis for the calculation of any performance compensation fee. I have passed over here the provisions envisaging agreement as to budgets, insurances and a form of contract for concessions. I have done so because I regard those elements as of a different kind, in that the subject matter is of its nature changeable so that it is not meaningful to think of a single and definitive prescription at the commencement of a 20 year term. The parties are really flagging, in these areas, matters upon which they will need to consult and agree periodically in the light of changing circumstances as the term progresses.

37    Having regard to and allowing for the “agreement to agree” elements not of the periodic nature to which I have just referred, it is clear that the remaining elements of the heads of agreement are sufficiently cohesive and coherent to stand as a contract in their own right. The functions and responsibilities of LMIA as manager are defined, as is the term (at least to the extent of the initial period of 20 years). The other central feature, being the fee payable to LMIA as manager is stated clearly: it is $23,000 per month until the “Operations Start Date” and $500,000 per year thereafter, with the annual fee being adjusted upwards annually in line with any increase in the consumer price index. There are also meaningful and complete provisions on record keeping and reporting. The heads of agreement, unlike those considered in Coal Cliff Collieries (above), do not present a need to supply elements dependent upon guesses or predictions about how “executives, attending to the interests of their corporation and its shareholders might act in negotiating such a transaction ….”. The basic transaction in this case was not of great complexity and was, in many ways, conceptually akin to a contract of employment or contract for services where the central terms are often so straightforward as to require little by way of writing.

38    My conclusion, therefore, is that the heads of agreement acquired contractual force when executed and that this was so despite the contrary indications to which I have referred. In terms of the Masters v Cameron classes, the heads of agreement fall into either the first or the fourth. For present purposes, I do not consider it necessary to be more precise than this.

The condition precedent in clause 2.1

39    DSC’s obligation under clause 2.1 of the heads of agreement is an obligation to appoint LMI as manager of the stadium. Mr Campbell QC conceded that this includes an obligation on the part of DSC to ensure that any associated company acquiring the power to appoint should exercise that power by appointing LMIA. But DSC’s obligation is conditioned by the opening words of clause 2.1: “If any of the Bids are successful”. These same words introduce recital E which records the intention of DSC and LMIA to enter into a formal facility management agreement. They are also used in recital C which refers to the parties’ agreement that LMIA will be appointed manager of the facility.

40    The meaning to be attributed to “If any of the Bids are successful” must be gathered from the circumstances which existed when the heads of agreement were concluded. The question whether the condition was satisfied requires examination of the facts concerning the bidding process and its outcome.

41    The meaning of “the Bids” is elaborated by the definition in clause 1.1:

“ ‘Bid’ or ‘Bids’ means the conforming bid and the non-conforming bid or bids to be made by the Developer (or by Baulderstone on behalf of the Developer) to the Docklands Authority for the purposes of the Developer being selected to fund, develop, own and operate the Facility.”

42    Colour is added by recitals A and B:

“A. The Developer is presently developing the Bids (in competition with two other consortia) for the Facility.
B. The Bids are to be submitted to the Docklands Authority on or before 30 June 1997.”

43    The system under which bids were developed and submitted is detailed in the Authority’s document of April 1997 entitled “Melbourne Docklands Stadium Form of the Bid Proposal”. This system envisaged both conforming and non-conforming bids. In either case, however, the bid was not seen as an offer capable of acceptance. Rather, it

“… will form part of the basis on which preferred developers will be selected by the Authority”.

44    The Authority’s objective was stated thus:

“The Authority may choose to negotiate with a developer any combination of conforming and non-conforming bid options in a Development Agreement.”

45    The categories of evaluation of bids were stated as follows:

“

· Design and amenity;

· Integration;

· Financial/Risk;

· Viability;

· Proposed quality of design and construction and programme for the construction and commissioning;

· Proposed quality of management, operations, market attractiveness, competitiveness, and maintenance and capital upgrade programmes; and

· Other.”

46    The Authority’s expectations concerning treatment of stadium management in a bid should be quoted in full:

“PART E – MANAGEMENT AND OPERATIONS PLAN
This section must provide a clear and detailed description of the proposed Stadium Manager/Operator, including its experience, approach and business plan. The scope and quality of the services to be provided should be described in detail. This detailed plan for managing the Stadium and its customers is to demonstrate how the manager will achieve world’s best practice in all areas of Stadium management and operations.
This section will also detail how the Stadium manager will consider the needs of spectators, media and users.
Developers will need to ensure that contractual documentation with their proposed manager reflects the contractual obligations of the successful developer, as reflected in the Stadium Development Agreement Documentation , AFL User Agreement and other user agreements as determined. This will include ensuring pourage rights, sponsorship rights and signage rights are consistent with the user agreements for each of the major sporting bodies. The Stadium Manager will be required to provide a minimum standard of services to users in accordance with the Stadium Development Agreement Documentation and AFL User Agreement and other user agreements as determined.
Developers are to provide draft contractual documentation with their proposed manager for approval by the Authority.”

47    The part to be played by the contract to be entered into with a manager identified in the bid was the subject of particular comment in the documents made available by the Authority to prospective bidders. One such document (Exhibit 7 to the witness statement of Mr Mitchell) listed several criteria against which bids would be assessed. Under a heading concerned with management and operation of the stadium after construction, four criteria were identified:

“

· the developer’s team;

· the relevant experience of the proposed Manager/Operator;

· the Management and Operations Plan to be provided as part of a developer’s Bid Proposal; and

· the Maintenance and Capital Upgrade programme to be provided as part of a developer’s Bid Proposal.”

48    Further insight into the Authority’s thinking on how the management issue would be handled after bids had been received is provided by the executive summary extracted as Exhibit 8 to Mr Mitchell’s witness statement. The concluding assumption in that extract is particularly significant. The extract is as follows:

“The Development Agreement makes provision for a form of Stadium Management Agreement to be entered into by the selected developer and a suitable manager, but the form of this agreement is not presently prescribed and it is assumed that management arrangements will form an important part of the negotiations with the short-listed bidders.”

49 The Authority thus created a framework in which interested parties were invited to submit proposals which the Authority would then examine and evaluate with a view to selecting one or more parties to engage in a process of negotiation. While the Authority no doubt assumed certain legally enforceable duties regarding its conduct of the process (cf Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151), that process was obviously of such a nature that a bid could not be a simple “take it or leave it” matter. A bid could not be “successful” through its simple acceptance. Some more complex meaning of “successful” must have been contemplated by clause 2.1 of the heads of agreement.

50    The evidence makes it clear that the process of post-bid negotiation with short listed candidates envisaged by the Authority’s framework was undertaken in relation to the bids submitted by DSC. It was that process which brought about the execution of the Stadium Development Agreement. Whereas DSC had lodged the original bids, it was SOL (together with two other entities) which, as “Developer”, entered into the Stadium Development Agreement. That was a by-product of the financial structuring eventually adopted. Recital C to the Stadium Development Agreement says that DSC submitted its bids “on behalf of” the three corporations making up “the Developer”. The same is said in its definition of “Bid Proposal”. This is a fiction, given that one of the three (SOL) did not exist when DSC’s bids were submitted and that the other two did not at that time have a connection with the project. The fiction was designed to suggest continuity between the bids in fact submitted by DSC and the outcome in favour of SOL and the two other corporations making up “the Developer” as eventually constituted.

51    The Stadium Development Agreement also demonstrates a very distinct shift in the area of stadium management. DSC’s bids were on the footing that the manager would be LMIA with which DSC had entered into the heads of agreement. A clear cut management arrangement was represented as being in place and was adopted by DSC’s bids. The Stadium Management Agreement did not incorporate or embrace that arrangement. Clause 15.6 is set out above. It imposes two substantive obligations on SOL and the two other parties constituting “the Developer”. First, there is an obligation to enter into “a Stadium Management Agreement with the appointed Stadium Manager” within a certain time. Second, there is an obligation to consult in good faith with the Authority on certain matters before “appointing a Stadium Manager and executing a Stadium Management Agreement”.

52    Both these aspects draw upon the definition of “Stadium Management Agreement” which is also set out above and directs attention to schedule 12 where there appears a form of agreement between SOL and LMIA. The content of that form of agreement (which, as stated, is an integral part of the Stadium Development Agreement) throws further light on the connection between the bids centred on DSC and the outcome centred on SOL and the other two corporations. There is again, in recital A, a reference to the fiction that DSC submitted a bid “on behalf of” someone else, although on this occasion it is only SOL which is mentioned as the principal. It is then recited in bald terms, “The Bid has been successful”. A subsequent recital states that “DSC and LMI [ie, LMIA] entered the Heads of Agreement on the # day of June 1997 in relation to the management of the Facility”. There then follow recitals H and I:

“H. Now that the Bid has been successful the parties wish to enter into a formal Agreement, which supersedes the Heads of Agreement, to record the terms upon which LMI shall manage the Facility for and on behalf of SOL.
I. The Docklands Authority has approved the terms of this Agreement as required by Clause 3.1 of the Lease.”

53    It is significant that this form of agreement is part of the Stadium Development Agreement and that the whole of the content of the form of agreement – in particular, the recitals to which I have referred – is the subject of promises taken by the Authority from the Developer (SOL and the other two corporations) in clause 15.6 of the Stadium Development Agreement. By causing the form of agreement to which LMIA was party to be part of their Stadium Development Agreement and giving and receiving contractual promises by reference to it, the Authority and SOL (together with the two other constituents of the Developer) re-affirmed, as among themselves, the fiction that the bids in fact lodged by DSC had been lodged by it on behalf of the Developer and subscribed to the simple statement in the recitals to the form of agreement that a bid lodged by DSC had “been successful”.

54    In truth, however, there were substantial differences between the basis set out in the DSC bids and the basis eventually reflected in the Stadium Development Agreement. This was particularly so in the area of financing and in relation to the operator or manager. The Authority saw shortcomings in the DSC bids in relation to these matters. Those bids left the Government with a significant financial risk on the funding side. In relation to management, they involved an unequivocal commitment to LMIA (as a joint venture between LMI and ISFM). From the earliest discussions after DSC had become one of the two short listed parties with which negotiations were to proceed, the Authority made it clear that those two aspects of the DSC proposal were not satisfactory to it. The concern about the first caused a restructuring of the consortium and its financial arrangements so that equity and debt providers were introduced. In fact, those parties (particularly Channel 7) then came, not unnaturally perhaps, to play a significant role in negotiations with the Authority at the expense of the influence enjoyed to that point by Baulderstone.

55    The Authority’s concern about management centred upon the lack of relevant Australian experience by LMIA (or, more specifically, LMI and ISFM). The commitment to LMIA proposed by DSC was unacceptable to the Authority. Once that concern became known, LMIA or its principals took steps to bolster the Australian experience base of LMIA by recruiting Mr Spangler. Coincidentally, LMI/ISFM won at that time the management rights in respect of the multi-use arena which was in the course of construction as part of the Sydney Olympic Park, venue of the Olympic Games to be held in 2000. But neither of these developments allayed the Authority’s concerns. Mr Spangler’s experience was regarded as lying in an essentially different field involving a much smaller venue divorced from Australian football which would be the staple of the stadium. The Sydney appointment was seen as neutral or perhaps marginally negative: it presented the potential for the LMIA effort and effectiveness to be dissipated and, in any event, involved a role in which LMIA still had to prove itself.

56    The main effort on attempts at resolving the Authority’s twofold concerns (equity and management) was devoted to the equity side. This effort eventually resulted in a major restructuring of the financial arrangements. The management issue kept coming up as an agenda item at meetings through which the negotiation consequent upon the lodgment of the DSC bids was conducted. But it was not until the final days of that process, when time constraints were pressing because it had been announced that the result would be disclosed on 1 September 1997, that a solution based on clause 15.6 of the Stadium Development Agreement was devised.

57    That solution involved a departure from the Authority’s original expectation that the issue of management would be resolved in the negotiation arising from a submitted bid, even to the extent of examining and settling the form of draft management agreement a bidder was required to include in the bid. The departure was necessary because of the Authority’s continuing and unresolved worry about the LMI/ISFM management proposal and the practical impossibility of working out anything else in the short time still available. Mr Wise’s explanation in examination in chief of the way in which clause 15.6 came about was as follows (referring to a meeting with Authority representatives on 25 or 26 August 1997):

“CAMPBELL: Q. We are asking for what was said at the meeting?
A. Mr Tabart told us that the operating solution remained an unsatisfactory part of our bid and that they required a solution that meant the bid brief of both local capacity and international experience. We talked about – sorry, Mr Tabart suggested that a tender process after the preferred bidder status was a way of dealing with it in a way that was satisfactory to the Docklands Authority.
Q. Did he say anything about what was involved in this tender process?
A. Mr Tabart required a clause to be agreed that gave him comfort that the operating solution was the best available to the stadium to deliver, the stadium, after the preferred bidder stage.”

58    Mr Tabart was at the time and still is the chief executive of the Authority. Mr Tabart gave evidence. He agreed that the clause 15.6 approach was decided “right at the end of the process when a lot of things were being tidied up in all areas”. His account of the origins of clause 15.6 was as follows:

“Q. Picking up what you have said to his Honour then, what are you able to say on the topic that you mentioned of how to provide a better management solution?
A. Because their proposal in this area was unsatisfactory to us, Australian experience, on the ground in operating stadia similar to what this was going to become, we sought for them to improve their proposal in whatever way they could. We sought for them to eventually describe a process within which we would be consulted on how they might appoint a manager or an operator after winning the bid, if they won the bid. That was agreed to, clause work was agreed. It was put into the agreement which they then executed, and subsequently they did win the bid.
Q. So far as the discussions that you have referred to about a clause which provided for the appointment of a manager after winning the bid, what are you able to tell his Honour about the substance of that sort of discussion?
A. It was a clause that referred to the qualities of the stadium operator that would be appointed, and a process by which it would happen, a process which I think words like “arms length” were there to ensure that it was not just a subsidiary of the winning bid group, and it was truly an arms length agreement. It was negotiated with players in a circumstance that might be similar to that that would come out, would result from a competitive process for calling bids for a stadium manager and operator. It was all designed to give us the comfort that the consortium, with a lot of equity in this project, would be seeking a suitable manager and skilled operator anyway. This was the way in which we felt that put the pressure on them after the event, and we would be consulted.”

59    In the course of cross-examination, Mr Tabart said:

“Q. You understood that the proposal up to this change was that LMI would be the operator, did you not, the proposal had been put forward?
A. Yes.
Q. There had been a change, wasn’t there, round about late August as far as you were concerned, because your understanding of this clause was that the question of the operator was to be deferred?
A. I wouldn’t use those words. What I would say is there was an agreement to allow an operator to be selected after the bid, if they won the bid and there was a process by which that would happen, whether LMI were involved in that or not was up to what happened afterwards.”

60    Clause 15.6 was drafted by Mr Stewart, a partner of Arthur Robinson & Hedderwicks, the firm which was retained in late July 1997 to act for the bidding group. Mr Stewart gave evidence. He said that the instructions to draft clause 15.6 were given to him by Mr Wise. His account of the origins of the clause was as follows:

“Q. Is it fair for his Honour to assume however that whatever the precise nature of the concerns articulated by the Docklands Authority at that meeting, you believed that your drafting of clause 15.6 would meet those concerns?
A. I – we approached clause 15.6 and the issue it raised perhaps in a slightly different way to the Docklands Authority’s preference, in the sense that it raised issues which we believed could be dealt with at a later stage in the process, insofar as it dealt with substantive issues about the contractual arrangements for the operation and management of the stadium, and therefore --
Q. Did I cut you off?
A. I was just going to say and therefore we sought to convince the Docklands Authority that it was appropriate for the finalisation of the operation and management arrangements to be done after the awarding of the bid.”

He later said:

“CAMPBELL: Q. You said, ‘We approached clause 15.6 and the issues it raised in a different way to the Docklands Authority’s preference’. What did you mean by that answer, in a different way to the Docklands Authority’s preference?
A. What I meant was that the Docklands Authority had issued drafts of the stadium development agreement, which contemplated that an operating and management agreement would be finalised at the time the stadium development agreement was executed. We sought to convince them that that was unnecessary on the timetable that the bid was being run to, and that it would – the operation and maintenance arrangements could best be dealt with post the award of the bid.”

61    It is thus clear that, in the minds of Mr Wise, Mr Tabart and Mr Stewart, the DSC bids were not satisfactory to the Authority while the LMIA management role remained an integral part of them. It is also clear that, as those three witnesses saw things, the approach based on clause 15.6 was necessary to overcome this and that that approach left not only the terms of a management agreement but also the selection of the manager for future decision. Although clause 15.6, on its face, does not necessarily seem to work that way (based, as it is, on the schedule 12 form in which LMIA is actually named), closer analysis shows that it does. This is despite the fact that clause 15.6 operates by reference to the schedule 12 form and that that form is an agreement between SOL and LMIA containing recitals referring to the relationship between DSC and LMIA created by the heads of agreement and, with the aid of the agency fiction which I have mentioned, seeking to provide a link of continuity between the heads of agreement relationship and the execution of the final agreement in the schedule 12 form.

62    The first obligation imposed by clause 15.6 is an obligation to “execute a Stadium Management Agreement with the appointed Stadium Manager”. There is thus an indication that some form of appointment of a stadium manager will have occurred before the agreement is executed. It seems, therefore, that “appointed” really means “selected”. That meaning is reinforced by the second paragraph of clause 15.6 which imposes a requirement which must be observed or performed before “a Stadium Manager” is appointed and “a Stadium Management Agreement” is executed. The execution of the agreement is thus not seen as the means by which the appointment is effected. There are clear indications that there is to be a selection process of a kind inconsistent with the notion (emerging from schedule 12) that LMIA will be appointed come what may.

63 To the extent that there is any ambiguity on this in the words themselves, evidence of surrounding circumstances existing at the time of its formation may be taken into account in construing the Stadium Development Agreement: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 and see Heydon JA’s first principle in Brambles Holdings v Bathurst City Council (above). There is here ample evidence that the Authority had declined to accept LMIA as manager and that the promoters of the bid had, with its concurrence, set about documenting a way of deferring the choice of manager until after the Stadium Development Agreement had been executed.

64    Another point to be noted is that, whilst clause 15.6 operates by reference to “a Stadium Management Agreement”, it does not compel exact adherence to the schedule 12 form. “Stadium Management Agreement” is defined as meaning an agreement “generally in the form contained in Schedule 12”. The word “generally” shows that there may be departures and that the schedule 12 form, while more than guidance, is not definitive. This is another basis on which the references to LMIA as a party and to the recitals may be relegated to a non-essential position.

65    A third point indicating that the schedule 12 form is by no means definitive is the substantive effect of clause 15.6 itself. The pre-condition to the obligation to appoint a Stadium Manager and to execute a Stadium Management Agreement is consultation with a view to ensuring that “the arrangements to be contained in” the agreement are of the relevant arm’s length description. There is a clear expectation here that, if that consultation produces a consensus that the schedule 12 terms are not of the contemplated arm’s length quality, they will be modified.

66    In the end, clause 15.6, coupled with schedule 12, cannot be seen as ensuring or requiring the appointment of LMIA as manager. Its true effect is to require SOL and its two co-parties to select and contract with a suitable party once the consultation required by the clause has been completed. That party need not be LMIA.

The condition precedent was not satisfied

67    I return now to the central question whether, in the events which happened, it can properly be said that either of the bids submitted by DSC “was successful”. I have concluded that neither such bid was successful. This is so because of two important departures which caused the arrangements eventually reflected in the Stadium Development Agreement to differ in a material way from the arrangements proposed in the bids.

68    The first such departure is in relation to funding and financial structure. It is summed up in the following statement of Mr Wise in cross-examination:

“But the heads of agreement was for a bid placed on 27 or 30 June, which was $150 million short of underwriting and required the Victorian Government to provide that. The bid on 1 September was fully and absolutely underwritten by private equity. The bid had changed.”

The change involved the introduction of new parties committed to providing the finance that original consortium members would not or could not provide. The balance of influence within the bidding group shifted to the equity providers.

69    The second departure - of more immediate relevance, in the present context – was in relation to management of the stadium. The bids of June proposed LMIA as manager. The arrangements embodied in the Stadium Development Agreement did not adopt that proposal and left the choice of manager for future decision. The feature of the bids involving appointment of LMIA as manager thus did not find a place in the concluded arrangement arising from those bids.

70    Related companies of DSC were “successful” in becoming two of the three companies which together became “the Developer” under the Stadium Management Agreement. That “successful” outcome would not have been achieved but for DSC’s having submitted its two bids to the Authority. But neither of those bids was “successful” because neither was in substance translated from proposal to contract. Intervening events and negotiations brought about substantial differences and departures in relation to parties, in relation to funding and financing and in relation to management and identity of the manager.

71 It follows from this that the condition to be satisfied before DSC was obliged by the heads of agreement to bring about the appointment of LMIA as manager of the stadium on the basis stated in the heads of agreement was never satisfied. It also follows that, according to the correct construction of the heads of agreement, no breach of its express terms occurred through non-appointment of LMIA as such manager. In saying this, I do not resort to any strict or literal approach at the expense of an approach consonant with business reality. Mr Sullivan QC, senior counsel for the plaintiffs, pointed to recent emphasis in the High Court in Pan Foods Company Importers & Distributors Pty Ltd v Australia and New Zealand Banking Group Ltd (2000) 74 ALJR 791 and McCann v Switzerland Insurance Australia Ltd (2000) 75 ALJR 325 on the need for a commercial approach to commercial contracts. In the former case, Callinan J said:

116    Mr Sullivan’s response was twofold: first, that no cogent reason had been expressed as to why the relevant items were not fairly and squarely within the relevant concept, given that they would not have been incurred but for the project; and, second, that there was never any assertion by the Baulderstone Group to this effect in the period of almost four years after the 20 October 1997 claim was submitted until the matter came to court.

117    In my judgment, the plaintiffs have sufficiently made out their quantification case in respect of expenses by reference to the invoice submitted with the letter of 20 October 1997, being expenses incurred by LMI.

Conclusions

118 It follows from the findings I have made that the plaintiffs are entitled to order 1 in the Amended Summons, that is, an order that the first and second defendants pay the plaintiffs the sum of US$81,902.28. The plaintiffs are also entitled to interest on that sum at the rate applicable under Schedule J to the Supreme Court Rules until judgment. I shall entertain submissions as to the date from which interest should be computed but, given that 60 days is a reasonable time for the payment of an invoice, I am disposed to think that it should be computed from the day which is 60 days after 20 October 1997.

119    In other respects, the plaintiffs have not made out an entitlement to the relief they seek.

120    I will also hear the parties on costs. The matter will be listed for mention before me at 9.30 am on a day I shall now fix with counsel.

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Last Modified: 10/22/2001