Makeig v Batterham - [2009] NSWSC 344

No judgment structure available for this case.

CITATION: Makeig v Batterham [2009] NSWSC 344

HEARING DATE(S): 24, 25, 26, 27 February; 2, 3, 4, 5 March and 23 April 2009

JUDGMENT DATE :
1 May 2009

JURISDICTION: Equity Division

JUDGMENT OF: Ward J

CATCHWORDS: CONTRACTS – general contractual principles – offer and acceptance – whether signed document constituted binding contract – whether consideration illusory – whether parties evinced intention immediately to be bound – whether terms sufficiently certain to be enforceable – held that there was a binding and enforceable contract – held, further, that defendants estopped from denying binding contract. - CONTRACTS – general contractual principles – construction and interpretation of contracts – whether on proper construction of the contract obligation to pay “Consultants costs and costs ancillary to consultant’s services” [sic] extended to Council lodgement fees – held that it did not. - CONTRACTS – general contractual principles – discharge, breach and defences to action for breach – whether plaintiff breached obligation to pay consultants’ costs “in a timely manner” – whether plaintiff repudiated of the contract – whether defendants’ purported termination of contract itself amounted to repudiation – held that plaintiff had breached obligation to pay consultants’ fees in a timely manner – held that this breach did not give rise to a right for the defendants to terminate – held no repudiation by plaintiff – held that the defendants repudiated contract by purporting to terminate contract. - MISLEADING OR DECEPTIVE CONDUCT – whether plaintiff engaged in conduct that was misleading or deceptive – whether representation to third party amounted to representation to first defendant – whether first defendant entered contract by reason of the plaintiff’s misleading or deceptive conduct – held that plaintiff did engage in conduct that was misleading or deceptive – held that conduct did not cause first defendant to enter into contract – first defendant did not suffer loss or damage by reason of plaintiff’s conduct. - EQUITY - general principles - fiduciary obligations – whether parties engaged in joint venture – whether defendants owed fiduciary duties to first plaintiff – whether parties were partners – held that parties both joint venturers and partners – held that defendants owed fiduciary duties to plaintiff– held that, on termination of joint venture/partnership, defendants could not arrogate whole benefit of joint venture/partnership to themselves – benefits of joint venture/partnership held on constructive trust on terms of former partnership.

LEGISLATION CITED: Fair Trading Act 1987
Partnership Act 1892

CATEGORY: Principal judgment

CASES CITED: AB v R [2001] NSWCCA 496
Abigroup Contractors Pty Limited v Sydney Catchment Authority (No 3) (2005) 67 NSWLR 341
Azzi and Ors v Volvo Car Australia Pty Limited [2007] NSWSC 319
B Seppelt & Sons Limited v Commissioner for Main Roads (1975) 1 BPR 9,147
Badeley v Consolidated Bank (1888) 34 Ch D 238
Banque Brussels Lambert SA v Australian National Industries (1989) 21 NSWLR 502
Barrier Wharfs Limited v W Scott Feat 668, 669, 672
Bective Station Pty Limited v AWB (Australia) Limited [2006] FCA 1596
Birtchnell v Equity Trustees, Executors and Agency Co Limited (1929) 42 CLR 384
BP Refinery (Westernport) Pty Limited v Shire of Hastings (1977) 180 CLR 266
Brambles Holdings Limited v Bathurst City Council (2001) 53 NSWLR 153
Branir Pty Ltd v Owston Nominees (No 2) Pty Limited (2001) 117 FCR 424
Brisbane City Council v Group Projects Pty Limited (1979) 145 CLR 143
Burger King Corporation v Hungry Jacks Pty Limited (2001) 69 NSWLR 558
Byrne v Australian Airlines Limited (1995) 185 CLR 410
Cadorange Pty Ltd (in liq) v Tanga Holdings Pty Ltd (1990) 20 NSWLR 26
Chan v Zacharia (1984) 154 CLR 178
Clancy v Salentia Pty Limited [2000] NSWCA 248
Commercial Banking Company of Sydney Limited v R H Brown & Co (1972) 126 CLR 337
Commonwealth v Amann Aviation Pty Limited (1991) 174 CLR 64
D F Lyons v Commonwealth Bank of Australia (1991) 28 FCR 597
Davies v Littlejohn (1923) 34 CLR 174
DTR Nominees Pty Limited v Mona Homes Pty Limited & anor (1977) 138 CLR 423
Edwards v Skyways [1964] 1 All ER 494
Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95
Film Bars Pty Limited v Pacific Film Laboratories Pty Limited (1979) 1 BPR 9,251
Gate Gourmet Australia Pty Ltd (In Liq) v Gate Gourmet Holding AG [2004] NSWSC 149
Gould v Vaggelas (1985) 157 CLR 225
Helmos Enterprises Pty Limited v Jaylor Pty Limited [2005] NSWCA 235
Hewett v Court (1983) 149 CLR 639
Hill v Rose [1990] VR 129
Howard Smith & Co Limited v Varawa (1907) 5 CLR 68
In re Young: Ex parte Jones [1896] 2 QB 484
Jacara Pty Limited v Perpetual Trustees W A Limited (2000) 106 FCR 3
Jainran Pty Limited v Boyana Pty Limited [2008] NSWSC 468
Koompahtoo Local Aboriginal Land Council v Sandpine Pty Limited (2007) 233 CLR 115
Langridge v Levy (1837) 2 M & w 519; 150 ER 863
Lombok Pty Limited v Supetina Pty Limited (1987) 14 FCR 226
Mackay v Dick (1881) 6 App Cas 257
Malec v J C Hutton Pty Limited (1990) 169 CLR 638
March v E & M H Stramore (1991) 171 CLR 506
McDonald v Dennys Lascelles Limited (1933) 48 CLR 457
Milner v Delita Pty Limited (1985) 61 ALR 557
Morris v Morris [1982] 1 NSWLR 61
O’Keefe v Taylor Estates Co Limited [1916] SR Qd 301
Overlook Management BV v Foxtel Management Pty Limited [2002] NSWSC 17
Park v Brothers (2005) 222 ALR 421
Parkdale Custom Built Furniture Pty Limited v Puxu Pty Limited (1982) 149 CLR 191
Peek v Gurney (1873) LR 6 HL 377
Pirt Biotechnologies Pty Limited v Pirtferm Limited [2001] WASCA 96
Progressive Mailing House v Tabali Pty Limited (1985) 157 CLR 17
Redglove Projects Pty Limited v Ngunnawal Local Aboriginal Land Council & Anor (1005) 12 BPR 23,381
Redgrave v Hurd (1881) 20 Ch D 1
Ricochet Pty Limited v Equity Trustees Executor & Agency Co Limited (1993) 41 FCR 229
Schindler Lifts Australia Pty Limited v Debelak (1989) 89 ALR 275
Secured Income Real Estate (Australia) Limited v St Martins Investments Pty Limited (1979) 144 CLR 596
Sellars v Adelaide Petroleum NL (1994) 179 CLR 332
Shevill v The Builders Licensing Board (1982) 149 CLR 620
Smith v Kay (1859) 7 HLC 750; 11 ER 299
Stephenson Nominees Pty Limited v Official Receiver (1987) 16 FCR 536
Sutton v A J Thompson Pty Limited (1987) 73 CLR 233
United Dominions Corporation Limited v Brian Pty Limited (1985) 157 CLR 1
Upper Hunter County District Council v Australian Chilling and Freezing Co Limited (1968) 118 CLR 429
Waltons Stores (International) Limited v Maher (1988) 164 CLR 387
Westralian Farmers Limited v Commonwealth Agricultural Service Engineers Limited (1936) 54 CLR 361
Woodar Investment Development Limited v Wimpey Construction UK Limited [1980] 1 All ER 571
Zhang v VP302 SPV Pty Limited [2009] NSWSC 73

TEXTS CITED: Burns, Fiona "The Equitable Lien Rediscovered, A Carter on Contracts
Fisher & Lightwood Law of Mortgage 2nd Australian Edition
Halsbury’s Laws of Australia
Heydon, Trade Practices Law 11.590
Lindley and Banks on Partnership para 5-25
Sykes, The Law of Securities, 5th ed
Remedy for the 21st Century”, [2002] UNSWLJ 1

PARTIES: Peter John Makeig (Plaintiff)
Brian Batterham (First Defendant)
Batterham's Bus Lines Pty Limited (Second Defendant)

FILE NUMBER(S): SC 4373 of 2007

COUNSEL: Mr G A Sirtes SC with him Ms J Chambers (Plaintiff)
Mr F Lever SC with him Mr G Graham (Defendants)

SOLICITORS: Somerville & Co (Plaintiff)
Emery Partners (Defendants)

- 156 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WARD J

FRIDAY 1 MAY 2009.

4373/07 PETER JOHN MAKEIG V BRIAN BATTERHAM & ANOR

JUDGMENT

1 In these proceedings the plaintiff, Mr Peter Makeig, seeks declaratory and other relief in relation to a project concerning the development of two parcels of land in Kitchener, those being a parcel of land (the “Batterham Land”) which is owned by the first defendant, Mr Brian Batterham, and an adjacent parcel of land (the “Vowles Land”) which was (at the time the project commenced) owned by a Mr and Mrs Vowles, who are not involved in these proceedings.

Introduction

2 Mr Makeig alleges that in March 2005 he and the defendants (Mr Batterham and a company associated with him, Batterham’s Bus Lines Pty Limited (“BBL”), together, “the Batterhams”) entered into an unincorporated joint venture in relation to the two parcels of land, the express terms of which are to be found in a document signed on 25 March 2005. I propose for convenience to refer to that document signed on 25 March 2005 in these reasons as the “Kitchener Project Agreement”, by reference to its main heading.

3 Mr Makeig alleges that by their conduct the Batterhams have breached fiduciary obligations owed to him and have invalidly purported to terminate the agreement constituting the said joint venture thereby repudiating that agreement.

4 On 9 January 2007, lawyers acting for the Batterhams (Emery Partners) wrote to Mr Makeig notifying him that Mr Batterham considered the Kitchener Project Agreement to be terminated and withdrawing all authority for Mr Makeig to act on Mr Batterham’s behalf as “Project Consultant” or in any other capacity. That position appears to have been predicated on the assertion that Mr Makeig’s “continued breaches” of the Kitchener Project Agreement constituted a repudiation by him of the agreement.

5 Subsequently, BBL nominated a third party (JPG 58 Pty Limited (“JPG”)) as the grantee of the option then held by BBL to acquire the Vowles Land. (According to Mr Makeig, this option had been held by BBL on behalf of, or for the common benefit of, the Batterhams and Mr Makeig.) The option was exercised, and the Vowles Land acquired, by JPG in June 2007.

6 In March 2007, as part of the arrangement pursuant to which BBL had agreed to nominate JPG as grantee of the Vowles Land option, the Batterhams entered into a Deed of Call Option with JPG (“March Deed of Call Option”) giving JPG an option to call for the transfer of the Batterham Land. That Deed was superseded in November 2007 by a Deed of Put and Call Option entered into between the same parties (“JPG Deed”), for the first time giving to Mr Batterham a put option (exercisable if JPG does not exercise its call option) to require JPG to purchase the Batterham Land.

7 If the call option is exercised by JPG within the Call Option Exercise Period (which expires on 14 November 2012) or the put option is exercised by Mr Batterham within the Put Option Exercise Period (15 November 2012 – 14 February 2013), then a contract for the sale to JPG of the Batterham Land will come into effect for a purchase price of $7,616,500 plus GST.

8 Over the period from 12 March 2007 to 15 April 2009, Mr Batterham has received sums totalling almost $900,000 by way of call option fees (comprised of $100,000 under the March 2007 Deed and $500,000 under the JPG Deed, a loan of $200,000 (acknowledged as part of the Previous Call Option Fee as defined in the JPG Deed) and part payments of the first annual instalment of the Further Call Option Fee, as defined in the JPG Deed as varied in November 2008), together with an amount referable to GST on part or all of those amounts. Mr Batterham is entitled to further annual instalments (each of $200,000) of the Further Call Option Fee for the three years from 15 November 2009 up to November 2011 (assuming the call option is not exercised before then) with the prospect that up to a total of $1.7 million will have been paid to Mr Batterham as at the expiry of the Call Option Exercise period.

9 Those payments are to be treated as pre-payment of the purchase price and/or deposit, respectively, under any contract for sale coming into existence on the exercise of either option. If neither option is exercised those amounts (including the $200,000 originally described as a loan) will become the absolute property of Mr Batterham. The contract for sale is not conditional on the rezoning of the Batterham/Vowles Lands or grant of any development approval in relation thereto.

10 Mr Makeig, who it is not disputed has expended a sum of $122,335.60 in relation to the project (and, though the extent of this is disputed, his time in connection with the project), has received nothing. (As a further or alternative claim to his claim for damages in contract or in equity, Mr Makeig seeks recovery of this amount on a quantum meruit basis.)

11 By their letter dated 9 January 2007 in which they notified in effect of the termination of the Kitchener Project Agreement, Emery Partners conveyed an offer of reimbursement, should the project proceed to “fruition”, of Mr Makeig’s out-of-pocket expenses and “reasonable” costs for acting on Mr Batterham’s behalf. It would seem, from the submissions made in these proceedings for the Batterhams (and from Mr Batterham’s explanation at T 565), that “fruition” is contended to mean completion of the sale of both the Batterham/Vowles Lands at a combined price in excess of at least $1.5 million, which has not yet occurred (and which Mr Lever has impressed upon me, in the context of his submission that any benefits obtained to date by Mr Batterham under the alleged agreement are illusory, may not in fact occur at all). That offer has not been accepted.

Defence

12 The Batterhams deny that the Kitchener Project Agreement (which Mr Batterham accepts he signed) is of force or effect in law and say that it was not intended to create any binding legal relationship.

13 Alternatively, the Batterhams say that, to the extent that the Kitchener Project Agreement is of any legal effect, its execution by Mr Batterham was procured by misrepresentations (and/or fraudulent misrepresentations) made by Mr Makeig to Mr Batterham on and prior to 25 March 2005.

14 While it was further alleged that the Kitchener Project Agreement did not reflect the true nature of a previous oral agreement conceded by the Batterhams to have been made between the parties (to the effect that Mr Makeig was engaged as a project consultant to assist with a rezoning application to Cessnock City Council (“the Council”) in respect of the Batterham Land), no application has been made to rectify the Kitchener Project Agreement. To the extent that any submissions were made in relation to this allegation, I understood them to be to the effect that, while Mr Batterham did not deny there to be some arrangement in place, it was not to be found in the document upon which he was being sued (T 637). Such a stance is, of course, inconsistent with the assertions contained in the open letter of 9 January 2007 from Emery Partners.

15 In answer to the whole of the statement of claim, the Batterhams allege that if the Kitchener Project Agreement is found to constitute a binding agreement between the parties, then Mr Makeig breached a fundamental provision of the agreement by failing to pay certain specified amounts to the Council and to various consultants in a timely manner or at all and/or failed to pay option fees due in respect of the Vowles Land and that (together with other alleged repudiatory conduct) these breaches evinced an intention by Mr Makeig not to be bound by the Kitchener Project Agreement, he thereby repudiating it. Those allegations of breach also form part of the basis of the cross-claim brought against Mr Makeig (by Mr Batterham alone, not the Batterhams jointly) for loss and damage.

16 It was previously alleged, in answer to the whole of the statement of claim, that it was not maintainable by reason of the fact that an agreement had been made following a mediation of the parties’ disputes which was in full and final settlement of all outstanding disputes between the parties. This allegation was struck out by consent on 24 February 2009 at the commencement of the hearing and no reliance was placed in the submissions on any document prepared for the purpose of that mediation.

Cross-claim

17 By way of cross-claim, Mr Batterham alleges that, in breach of both s 42 and s 44 of the Fair Trading Act 1987, in or about December 2003 Mr Makeig made a number of false and misleading representations to Mr Batterham as to Mr Makeig’s professional or project development experience and competence, including his training, experience and capacity (financial or otherwise) to act as a project development consultant (or, in the case of the claim in respect of s 44, as to the standard, quality, grade or characteristics of the services he was offering and his professional status or affiliation as an architect).

18 It is alleged that in reliance upon each of the representations Mr Batterham agreed to engage Mr Makeig as a project consultant for the purposes of assisting with a rezoning application for Batterham Land and signed the Kitchener Project Agreement.

19 The loss and damages allegedly suffered as a result by Mr Batterham as a result of this conduct are said to be any liability (to Mr Makeig) arising because of his entry into the Kitchener Project Agreement. When the hearing commenced, the cross-claim was amended by leave to seek, by way of principal relief, an order pursuant to s 72 of the Fair Trading Act that the Kitchener Project Agreement be declared void and/or varied insofar as it requires Mr Batterham to make any payments to Mr Makeig or to hold any property or any money on trust for Mr Makeig.

20 A claim is made for damages in respect of the failure by Mr Makeig to pay the amounts allegedly due under clause 4 (para 9B and 10 of the Amended Cross-Claim and Cross-Summons). A claim for loss and damage is brought, further and in the alternative, on the basis of the allegation that Mr Makeig’s purported performance of his work as a development consultant was “so unprofessional and incompetent that the progress of the rezoning application was impaired”. As these claims are for breach of contract, they will not be maintainable if the Kitchener Project Agreement is either of no legal force (as the Batterhams contend) or declared void ab initio (as they ask the court to do).

Issues

21 The issues in dispute between the parties may broadly be summarized as follows:

(i) Whether the Kitchener Project Agreement is binding;

(ii) Alternatively, whether the Batterhams are estopped from denying the existence of a binding agreement on the terms of the Kitchener Project Agreement or otherwise from denying an obligation to account to Mr Makeig for part of any net profits realized from the on-sale of the project;

(iii) Assuming the Kitchener Project Agreement is binding (or the Batterhams are estopped from denying that it is), whether either Mr Makeig or Mr Batterham has breached or repudiated the Kitchener Project Agreement; and, if so, the consequences of that breach/repudiation;

(iv) Whether the Batterhams owe to Mr Makeig fiduciary obligations pursuant to an unincorporated joint venture arising from the Kitchener Project Agreement or by reason of the relationship (partnership or otherwise) between the parties;

(v) Whether the Kitchener Project Agreement was entered into by Mr Batterham in reliance on any false or misleading representations by Mr Makeig;

(vi) What relief, if any, is appropriate in all the circumstances.

Summary of findings

22 For the reasons set out below, my findings on each of the above issues are as follows:

(i) there was a binding and enforceable agreement on the terms of the Kitchener Project Agreement; it included an implied term to co-operate in the achievement of the object of the parties’ undertaking (ie the on-sale of the project lands whether before or after obtaining development approval for residential development of the two parcels of land);

(ii) had the Kitchener Project Agreement not been binding, the Batterhams would nevertheless be estopped from denying such an agreement or an obligation to account to Mr Makeig for 7/18ths of any net profit realised (after deduction of the sum of $1.5 million) from the on-sale of the said parcels of land;

(iii) Mr Makeig breached the Kitchener Project Agreement in one instance, (failure to pay an invoice from Harper Somers O’Sullivan in a timely manner) causing no loss to Mr Batterham, but did not thereby repudiate (in the sense of renounce) the Kitchener Project Agreement; conversely, by letter of 9 January 2007 Mr Batterham wrongfully repudiated the Kitchener Project Agreement giving rise to a claim against him for damages for loss of bargain;

(iv) there was a joint venture/partnership between Messrs Batterham and Makeig, under which Mr Batterham owed fiduciary obligations to Mr Makeig, including a duty not to arrogate to himself the whole of the net profits of the project following its termination;

(v) Mr Makeig impliedly represented to Mr Batterham (and thereby engaged in misleading and deceptive conduct) in early 2004 that he was a semi-retired architect but no loss was occasioned by reason of that representation; and, in particular, the Kitchener Project Agreement was not entered into in reliance on that or any false or misleading representation by Mr Makeig;

23 Mr Makeig may therefore elect between:

· An order for damages calculated by reference to the loss of opportunity to participate in the benefits likely to flow from the JPG Deed, which I assess at $2,081,309 (being 7/18ths of $6,116,500 – that figure representing $7,616,500 less $1.5 million, discounted by 12.5%, and rounded down to the nearest dollar); or

· A declaration that Mr Batterham holds on constructive trust for Mr Makeig 7/18ths (after deduction of the sum of $1.5 million) of the benefits and/or proceeds of the JPG Deed or any moneys received pursuant to the JPG Deed.

Facts

· Commencement of the Project

24 Mr Makeig describes himself (and the Kitchener Project Agreement carries a footer to that effect) as a project development consultant.

25 Mr Makeig first met Mr Batterham in late December 2003. The meeting came about after Mr Batterham’s son (Mr David Batterham) had carried out certain renovation work at Mr Makeig’s property in Cessnock and seems to have been facilitated by or at the suggestion of Mr David Batterham. There is a dispute (as to which I say more later) as to whether Mr Makeig told Mr David Batterham (during the course of discussions between them while Mr David Batterham was carrying out work on the Makeig property) that Mr Makeig was an architect. What is not disputed, however, is that Mr Makeig told Mr David Batterham that he had had a lot of involvement with property development with great success in the past.

26 At that time, Mr Batterham was interested in pursuing an idea for the residential development of the Batterham Land, which he had previously attempted unsuccessfully to progress. While Mr Batterham resisted the suggestion put to him in cross-examination that his earlier property development attempt had been unsuccessful, and asserted that substantial progress had been made in that regard prior to any involvement by Mr Makeig in the project, as at December 2003 it seems no steps were actively being taken by Mr Batterham to rezone or develop the Batterham Land.

27 At their first meeting on 30 December 2003, Mr Makeig and Mr Batterham discussed the proposed making by Mr Batterham of a development application for the purpose of having the Batterham Land rezoned from 1(a) Rural “A” zoning to a zoning which would permit the subdivision and development of the Batterham Land for residential use. They discussed a proposal that Mr Makeig would project manage that development application. Mr Batterham alleges that it was in this conversation that he asked Mr Makeig if he was an architect and that Mr Makeig responded that he was “semi-retired”. Mr Makeig adamantly denies this but admits that there was a discussion as to his previous work experience on property development matters.

28 Mr Makeig gave evidence that an oral agreement was reached with Mr Batterham in late December 2003 (presumably, therefore, at this first meeting with Mr Batterham) pursuant to which Mr Makeig would project manage the proposed development application on a success fee basis and would pay all of the expenses of the project in return for 30% of the improved value of the land.

29 A further meeting took place between Mr Makeig and Mr Batterham on the site of the Batterham Land on 2 January 2004, during which Mr Makeig says that Mr Batterham asked whether he was an architect and to which Mr Makeig says that he responded to the effect that he was not a registered architect (and gave some detail as to an earlier dispute he had had with the Architects Board in Queensland). Mr Batterham, in turn, adamantly denies that Mr Makeig told him at this stage that he was not a registered architect or about his earlier difficulties with the Architects Board.

30 Mr Batterham says he was told that Mr Makeig was not really a qualified architect for the first time in May 2005, two months after the Kitchener Project Agreement was signed; the run-in with the Architects Board being disclosed, on Mr Batterham’s account, in a separate conversation in October 2005.

31 An arrangement of some kind was clearly reached between the two at or about that time, pursuant to which Mr Makeig was to play a role in seeking rezoning and/or development approval for the Batterham Land, since on 7 January 2004 Mr Batterham sent a letter to a number of authorities, including the Council (Ex H p 1), authorizing Mr Makeig to act on his behalf in respect of “any matter relating to property development” at the Batterham Land. Thereafter, Mr Makeig took various steps to progress the making of a rezoning application, including obtaining information from the Council, seeking to arrange a Development Panel Conference with the Council, seeking quotations from various consultants and preparing notes for a critique of the basis on which the property was then zoned.

32 On 7 June 2004, Mr Makeig wrote to Mr Batterham and his son David Batterham, referring to an agreement the week before “to prepare a suitable working agreement which will be the basis for taking the project to completion”. Senior Counsel for the Batterhams, Mr Lever SC, places considerable weight on this letter as setting out what Mr Makeig understood to be the substance of the arrangement recorded in the later signed document.

33 It would seem from this letter that Mr Makeig accepted that there was no concluded agreement at that stage as to the basis on which Mr Makeig was assisting Mr Batterham in the project, unless the letter was referring to a working agreement which was to supersede the alleged oral agreement of late December 2003. However, ultimately, nothing turns on this.

34 The letter set out two possibilities in relation to the project – namely to onsell with the benefit of a development approval “without a single sod being turned” or to remain with the project to completion (ie subdivision). It also explained the various alternative bases on which Mr Makeig said he had worked “professionally over the last decade or two” (including on a “do and charge” or “fixed fee” basis). Relevantly, it outlined the basis on which Mr Makeig said he had offered his services to clients being “a form of Joint Venture” under which Mr Makeig provided certain services and undertook to pay “authority fees and Land and Environment Court fees when that becomes necessary” and no cost burden fell upon the proprietor other than a “known Success Fee” payable “only if and when” the “required outcome” was obtained.

35 It is to be noted from this letter that Mr Makeig, at least, did not apparently consider charging on a success fee basis as something incompatible with entry into a joint venture. Nor need that be so. Mr Batterham, on the other hand, in giving evidence in the witness box seems to have regarded the two as mutually exclusive.

36 It is also to be noted from this correspondence that the kind of “success fee” joint venture there referred to did not contemplate the joint venturers sharing any necessary fees to local authorities or to the Land and Environment Court, fees of this kind in the past being said to have been borne by Mr Makeig and not the proprietor.

37 The status of this letter is open to debate. Mr Lever submits, in effect, that it was Mr Makeig’s offer as to the basis on which he would provide services to Mr Batterham. However, the letter should in my view be read (consistently with its terms) as a self-promotional explanation of the way in which Mr Makeig was suggesting their relationship could proceed, without being an offer in its terms capable of acceptance so as to give rise to a binding contract. Again, nothing seems to turn on this, as there is nothing to suggest Mr Batterham accepted the success fee arrangement referred to in his letter (indeed his accountant advised him as to various matters which the parties should address in any joint venture). It may, however, be relevant in considering what, if any, continuing force as at March 2005 any earlier representation (as to Mr Makeig being an architect or otherwise) would have had. Further, insofar as it contemplated the possibility of the parties’ project proceeding to completion, it makes Mr Batterham’s later protestations as to the financial folly of such a course somewhat hollow.

38 In July 2004, Mr Batterham consulted his accountant, Mr David Williamson, about a possible joint venture arrangement in relation to the development of the Batterham Land. Mr Williamson (who curiously maintained the view in the witness box that an agreement was only binding if drafted by a solicitor) gave evidence that the proposed joint venture discussed on that occasion was one relating not just to the rezoning of the land but also to its subsequent development, subdivision and sale. Mr Williamson’s notes of this meeting indicate that he, at least, contemplated that the proposed joint venturers would be in partnership with each other. By letter dated 8 July 2004 to Mr Batterham, Mr Williamson recommended the establishment of a separate joint venture entity for this purpose and made various suggestions as to the terms of an appropriate agreement. In so doing he used the terminology of partnership. It does not appear that the parties acted on those suggestions (although Mr Makeig later suggested that his December 2004 draft document had addressed them).

39 It appears that no further steps were taken to document the basis on which Mr Makeig and Mr Batterham were proceeding with the project until late December 2004, notwithstanding that further steps were taken in relation to the retention of consultants and progress of the project in the interim. (While it might seem surprising that Mr Makeig would have been continuing to provide services in relation to the project without a clear agreement as to the basis on which he would be rewarded or recompensed for his efforts, this seems to be consistent with his later willingness to rely on oral assurances from Council – as to reimbursement out of s 94 contributions – without pressing for this immediately to be recorded in writing.)

40 A draft document was prepared by Mr Makeig, headed “Kitchener Project Financial Arrangements between the Partners” and forwarded to Mr Batterham on or about 29 December 2004. That draft was not signed and it is not suggested that it was, or ever became, binding on the parties.

41 The preparation of this document appears to have been precipitated by a decision taken about this time by Mr Makeig and Mr Batterham “to incorporate” the Vowles Land into the “Kitchener project”. That said, the parties did not address (at least in any written document) in any detail the mechanics by which that land was to be “incorporated” into the project. This is the subject of much criticism by Mr Lever in considering whether the Kitchener Project Agreement was binding.

42 It appears that when the idea of incorporating the Vowles Land as part of any residential development of the Batterham Land was first considered, Mr and Mrs Vowles may have been approached to join in the joint venture. Mr Makeig prepared some documents, for discussion with Mr Batterham, as to potential profit sharing for the Vowles development which suggest that participation by the Vowles was a possibility. (By reference to those documents it would seem that Mr Batterham had an early opportunity to familiarize himself with Mr Makeig’s ideas as to the way in which project profit-sharing of this kind might take place.) The Vowles did not join in any such joint venture, but were in due course willing to sell their land. Evidence was given by Mr Kyle Davis, a real estate agent with Jurd’s Real Estate, acting for the Vowles on the proposed sale. Mr Makeig was involved in the negotiations (according to him, on both his and Mr Batterham’s behalf) with Mr Davis in respect of the proposed purchase of the Vowles Land and negotiated a reduction in the sale price sought by the Vowles for their land.

43 On 24 December 2004, BBL entered into an option agreement with Mr and Mrs Vowles (annexure D to the affidavit of Mr Batterham affirmed 11 June 2008) under which BBL was granted a call option to purchase the Vowles land for the sum of $1.35 million. There is a dispute between the parties as to the circumstances in which the option agreement for the Vowles Land came to be entered into solely in the name of BBL. Mr Makeig says that he agreed to Mr Batterham’s request that, for tax reasons, the option be acquired solely in the name of BBL. Mrs Makeig gave evidence to the same effect. There was no evidence as to the tax purpose which may have been served by such a device. For the reasons set out later it is not necessary to determine the factual disputes as to why the option was granted to BBL.

44 Mr Makeig says (which is denied) that the Batterhams (or, more precisely, BBL) held the Vowles option on behalf of him and the Batterhams jointly. Mr Batterham seems to accept that the Vowles Land (or the option held in respect of the Vowles Land) was to form part of the overall project, and was to be held for the common benefit of he and Mr Makeig, at least insofar as they were to share in any increased value derived therefrom (T 424.46), although the mechanics of how that was to be effected were unclear. What Mr Batterham adamantly denies is that the benefit of the option (or the rights under the Vowles option agreement) was to be held by BBL on trust as to 50% for Mr Makeig.

45 Under the Vowles option agreement, payment of a “Call Option Fee” of $13,500 was required for the initial call exercise period of 18 months. BBL had the ability to extend the option exercise period for a further six months to December 2006, on payment of a further $5,000, described as an “Additional Call Option Fee”.

46 When writing to Mr Batterham some time later (on 7 March 2006 – Ex A p 151) Mr Makeig said (in a letter to which Mr Batterham did not respond):

We entered the [Vowles] Option-Contract in December 2004, written up in your name alone. You were to hold the property for our common benefit.

We agreed jointly to promote the development of the property and that the proceeds were to be shared equally between us.

47 Mr Batterham contends that this was not the case but did not respond to Mr Makeig’s letter. In cross-examination, Mr Batterham said of his failure to correct the misapprehension by Mr Makeig in this regard:

You respond to people’s presumptions, you start an argument. Lots of things you [by which I assume he means he] just let go through to the keeper. It was – he had a 50/50 share of any increased value over $1.35 million (T 423).

48 Like the suggestion in March 2006 that they might together develop the property, Mr Batterham seems to have thought there was no point arguing with Mr Makeig and simply let this “roll over” (T 426). Significantly, Mr Batterham said:

I hoped that the property [Vowles Land] would eventually sell and he [Makeig] would get his share and that would be the end of it (T426).

49 Mr Makeig’s 7 March 2006 letter to Mr Batterham went on to say:

We paid an option fee of $13,500. You paid 50% and I paid 50%.

50 In fact, however, Mr Makeig had paid the whole of the initial Vowles Call Option Fee (of $13,500) in two instalments on 8 November 2004 and 24 December 2004, respectively, but Mr Batterham subsequently (on about 9 June 2005) repaid to Mr Makeig (at the latter’s request), half of the amount of $13,500 which had been paid by Mr Makeig in respect of the initial option fee. Mr Makeig says that, in paying the whole option fee up front, he was “staking” Mr Batterham’s half share until Mr Batterham could afford it (T 298.29). Mr Batterham asserts that Mr Makeig was liable for the full share but that he agreed to Mr Makeig’s request to reimburse half of the option fee because it would help out Mr Makeig financially; and that this was to be adjusted later (T 577.1; 578.35). This factual dispute becomes relevant only insofar as the stance adopted by Mr Makeig in relation to the option fees is relied upon as repudiatory conduct by the Batterhams.

51 In Mr Lever’s written submissions (though not pleaded in the Second Amended Defence or Amended Cross-Claim), it is contended that s 54A of the Conveyancing Act 1919 (NSW) defeats any claim by Mr Makeig that BBL held an interest (ie in the option) over the Vowles Land for his benefit.

52 Even apart from the fact that this was not pleaded by way of defence to Mr Makeig’s claim, no claim to an interest in the Vowles Land has been made by Mr Makeig. Rather, what he asserts (as made clear in the submissions in reply made by Senior Counsel for Mr Makeig, Mr Sirtes SC) is that BBL was obliged under the Kitchener Project Agreement to contribute or make available (for the purpose of the joint venture or “project”) to him and Mr Batterham, jointly, the benefit of the Vowles option, so as to facilitate the on-sale of the “project”. This seems to accord with Mr Batterham’s understanding of the position (T 429), namely that the Vowles option was to have been for their common benefit “in the sense that if we made a profit or increased value of land he [Mr Makeig] would share in it”. (And I refer also to T 433 where Mr Batterham accepts that the common benefit in which they were to share was as to an on-sale of the Vowles Land above $1.35 million.)

53 Going back to the December draft document, while Mr Lever submitted that neither the December draft document nor the covering letter with which it was sent made mention of a “partnership” or “joint venture” arrangement, the header to the draft document itself suggests that what Mr Makeig was putting forward was a document to govern the financial arrangements between the two gentlemen as “partners”.

54 Mr Lever points out that this was a rather one-sided document (in Mr Lever’s words, “not a bad deal if you can get away with it”) in that it allocated no value to either the Batterham or Vowles Lands and provided no obligation on the part of Mr Makeig to perform any services or provide any funds; but, on the other hand, provided for Mr Makeig to receive one third of the value of the Batterham Land above $1.5 million and half of the value of the Vowles Land (without Mr Makeig having any express obligation to contribute to the purchase price of the Vowles Land). It was suggested by Mr Lever that the letter, under cover of which this document was sent, was in many respects intentionally misleading insofar as it suggested that it had addressed and covered the issues which had been raised by Mr Williamson.

55 A number of things may be said about the submissions made by Mr Lever in this regard.

56 First, insofar as the ultimate profit share for the Batterham Land was calculated on any net profit or value above $1.5 million, there does seem to have been an implicit acknowledgement in this document (and allocation to Mr Batterham) of the value of the provision by Mr Batterham of his own land to the project.

57 Secondly, even though the allocation of value for the Vowles Land (or the question of any contribution of Mr Makeig’s services or funds to the purchase of the Vowles Land) is not directly addressed in the 29 December 2004 draft agreement, the proposed appointment of profit share in respect of the value derived from the respective parcels of land (one third for the Batterham Land above the $1.5 million floor and 50/50 for the Vowles Land) indicates that it was anticipated that there be a different basis for the arrangement relating to the Vowles Land from that applicable in respect of the Batterham Land (and one which appears broadly consistent with the parties making an equal contribution in relation to the former).

58 Thirdly, and more to the point, the parties did not enter into an agreement on the basis of this 29 December 2004 document. However one-sided its terms may have been, this seems to me to be irrelevant to the issues at hand, save perhaps to note that there may be some (albeit unlikely to be great) significance in the fact that the document which the parties did ultimately sign was differently headed (this time described as an “Agreement”, ie not simply as a “financial arrangements” document) but at the same time omitted reference to them as “partners”.

59 Finally, in relation to the submission that Mr Makeig had engaged in intentionally misleading or deceptive conduct in suggesting to Mr Batterham that he had incorporated the recommendations of Mr Williamson into the draft agreement (a matter not put to Mr Makeig in cross-examination and not pleaded in the Second Amended Defence or Amended Cross-Claim), what Mr Makeig’s letter in fact asserts is that the “relevant contents” of Mr Williamson’s letter of 8 July 2004 are “fully addressed and covered”. That appears to import an assessment of relevance on Mr Makeig’s part. If he genuinely thought that one or more of the issues identified in Mr Williamson’s letter were not relevant (in light of the discussions between the parties or otherwise), and so did not address them, then I have difficulty seeing how this letter would be misleading in saying that it had fully addressed “relevant” contents. Moreover, at the conclusion of the draft document it appears to incorporate by reference the arrangements set out in Mr Williamson’s correspondence at least insofar as they are not consistent with the draft. In any event, other than perhaps as to credit, this criticism of Mr Makeig’s conduct does not seem to go to any issue before me.

60 On 28 February 2005, Mr Makeig wrote to Mr Batterham attaching another draft agreement, in which he said he had incorporated certain enumerated suggestions of Mr Williamson. That letter states:

Distribution of net profit has been referred to and reference has been made to what costs of the project are to be accounted for. We should however bear in mind that if some new, unexpected costs turn up outside those already dealt with, then payment for such should be subject to discussion between us.

61 On 1 March 2005, Mr Batterham wrote a letter to Mr Makeig in response to the 28 February letter in which, among other things, he said that if in the worst case scenario “our project” does not get up, he (Mr Batterham) would be forced in due course to sell his property and would not wish to see Mr Makeig out of pocket. He wrote that:

[I] give you my word that upon sale I would reimburse you for whatever expenses you incurred (less your own time) in the project …

62 The letter also noted the possibility (which Mr Batterham in the witness box says he only accepted was the case because he was relying on what he was (incorrectly) told by Mr Makeig) that the Council:

… may charge a large application fee and I suggested and agreed that due to lack of funds on my behalf you may have to pay the fee, but I have no problem with this cost being a charge against the project and being reimbursed in full to you.

63 While Mr Batterham asserts that this understanding was incorrect, it does seem to be what was foreshadowed in the Council’s own correspondence (Ex A pp 8-12) namely that there would be four phases of “Category C” rezoning fees as well as, possibly, a separate LES fee.

64 Relevantly, the 1 March letter also suggested that the parties might in due course consider the possibility of developing the property themselves (something later criticized by Mr Batterham as financial folly or fantasy on Mr Makeig’s part) and, even more to the point, the letter was said by Mr Batterham to be written “in the spirit of clarification and certainty between partners”.

65 Subsequently, a revised draft agreement dated 5 March 2005 was prepared by Mr Makeig. That document, signed on 25 March 2005, is the document I have defined as the Kitchener Project Agreement.

66 Before turning to the terms of the Kitchener Project Agreement, I should note that the first obstacle encountered in relation to the proposed rezoning lay in the fact that the Batterham Land was within what was referred to as the “Kitchener Precinct” and this precinct had not been included (due to the Rural Fire Service’s bushfire concerns) in a City Wide Settlement Strategy (“CWSS”) approved by the Council on 10 December 2003. This, it was accepted, precluded any individual (or “spot”) rezoning for (and hence any residential development of) the Batterham Land.

67 In other words, any individual or “spot” rezoning of the Batterham (or Vowles) Land would not be possible while the Kitchener Precinct remained outside the CWSS. That this was the case was confirmed by a letter dated 16 September 2004 (Ex A p 34) in which the Department of Infrastructure Planning and Natural Resources (“DIPNR”) advised the Council’s General Manager that there was not sufficient justification to allow for consideration of individual rezonings of land around the Kitchener village and hence that for any individual rezoning to occur a strategic assessment of the entire Kitchener village and environs would need to be carried out to assess the various development scenarios which might be possible around the village, including consideration of strategic issues such as bushfire protection. It was DIPNR’s stated view that as the strategic assessment would be carried out over the entire village and surrounds it would be most appropriate for Council to resource and manage the project.

68 It is not clear to me precisely when Mr Makeig and Mr Batterham became aware of this obstacle to the rezoning contemplated by the project. However, Mr Makeig certainly had a copy of the DIPNR letter within a month of its issue (since he forwarded it to a town planning consultant, Mr Ian Glendinning, in October 2004). That is consistent with Mr Makeig’s recollection that he and Mr Batterham learnt about this obstacle about eight months into the project (that being his explanation for the relatively small initial estimate he gave as to the costs and time likely to be incurred to achieve a rezoning).

69 Mr Makeig accepts that he was aware, prior to the entry into the Kitchener Project Agreement in 2005, that unless that whole Kitchener Precinct was rezoned it would not be possible to procure the rezoning of the Batterham/Vowles Land (T 206.30; 206.36; 356.12) and he gave evidence as to the extent of the work he understood would be required to achieve this (T 206.21). Mr Lever submits that the obligation undertaken by Mr Makeig to pay “all consultants’” costs must be construed in this context as including Council’s costs of resourcing and managing the project.

· Kitchener Project Agreement

70 The Kitchener Project Agreement (drafted by Mr Makeig without the benefit of any legal advice and, significantly in my view, headed “Kitchener Project Agreement” “Financial Arrangements between the Parties”) in its terms sets out the agreement between the parties to certain “Propositions” in the context of an “Undertaking” (or joint venture) between them, the purpose of that undertaking being to do all things necessary to achieve “Development Approval” for this “project”.

71 There is nothing in the Kitchener Project Agreement (or in the earlier correspondence between the parties to which I was taken) which suggests that Mr Makeig is an architect or was agreeing to provide services of the kind for which professional qualification as an architect would be necessary.

72 Clause 1 of the Kitchener Project Agreement identified the parties. The “Project Site” (clause 3) was defined as comprising both the Batterham Land and the Vowles Land.

73 Clause 2 of the Kitchener Project Agreement was as follows:

74 On the face of the document, it would seem that clauses 2 and 3 have the function normally performed by the recitals to a deed or an agreement, since they record or acknowledge matters relating to the understanding or intention of the parties on the basis of which their agreement is to proceed and, relevantly, the balance of the clauses (4 to 12) are preceded by the words, in bold type face, “The Following Propositions are Agreed …”. The juxtaposition of these clauses, it seems to me, is relevant in construing the document as a whole.

75 Mr Lever submits that the court cannot enforce an “intention” and that the document leaves uncertain or incomplete a number of essential terms. I consider the question of certainty below. However, if the Kitchener Project Agreement is read, not as a document purporting to govern all the terms on which the parties were to carry out their underlying joint venture, but rather (as on its face it seems to be) as a document setting out the parties’ agreement to the way in which the financial arrangements between them were to operate, then much of Mr Lever’s criticism of the document in this regard seems to fall away.

76 Clause 4 of the Kitchener Project Agreement provided:

All professional work required to achieve the above results will be carried out by [Mr Makeig] in a timely manner.

77 Clause 4, significantly, is the only clause which in its terms imposes any obligation on either party in relation to what is to be done to carry out their joint undertaking. Clauses 5 to 12 all deal with how the “net profit” or “net project profit” is to be calculated and distributed or apportioned between the parties. It seems to me to be clear on the face of the agreement that it is intended to detail the financial arrangements between the parties and that the precise way in which the joint venture was to be progressed was a matter to be dealt with between them, outside the scope of the Kitchener Project Agreement. In other words, the parties had between them an understanding as to their intention to achieve the rezoning/development of the project lands and all this agreement was purporting to do was to set out how, if an “on-sale” of the project was achieved (before or after any development approval was obtained), they would share the net profits thereby realized from the project. (This is consistent with Mr Batterham’s recognition in his 1 March letter that it was necessary for the parties to draw a “line in the sand”, ie a price below which they would not sell, although ultimately they did not do so.)

78 Clause 6 of the Kitchener Project Agreement provided that:

6). COSTS … the following project cost commitments are agreed for respective allocation, prior to the distribution of the net profit to the parties …

Value [Batterham Land] $1,500,000

existing land value will be credited to BB [Mr Batterham].

79 As I understand it, in the calculation (and prior to the distribution) of any “net profit”, Mr Batterham was to be paid or credited the sum of $1.5 million on account of his contribution of the Batterham Land to the project. The “net profit” of the project was defined in clause 10 as the remainder of the project sale price after deduction of the $1.5 million contribution in respect of the Batterham Land. The net profit was to be distributed in the proportion 11/18ths to Mr Batterham and 7/18ths to Mr Makeig (clause 12). The evidence from Mr Makeig (reinforced by a number of the clauses in the agreement) was that those fractions were calculated on the basis of an amalgamation of a 50% share as between himself and Mr Batterham of the net profit in relation to the Vowles Land (the Vowles Land itself being treated as representing one third of the overall project) and a lesser share (the equivalent of one-third) for himself in relation to the net profit in respect of the Batterham Land (which was treated as the other two thirds of the overall project). Although the profit share formula was described as “convoluted” by Mr Lever, it seems to me to have its own internal logic or consistency (half of a third plus a third of two thirds equalling seven eighteenths).

80 The term “Development Approval”, as used in clause 2 (and to which I understand the initials “D.A.” to refer in clause 4), is not defined in the Kitchener Project Agreement. There is an issue between the parties as to what is comprised by that term.

81 In Mr Lever’s submission, “development approval” includes rezoning, subdivision of the lands and subsequent development approval (since he contends that all those events, plus sale of the project lands, are pre-conditions under the agreement to the realization of any net profit). (This is notwithstanding his primary submission that the Kitchener Project Agreement itself is not binding and that what was agreed between the parties was simply that Mr Makeig project manage the “rezoning” application in return for a success fee.)

82 Mr Sirtes, on the other hand, contends that, having regard to the whole of the Kitchener Project Agreement and its commercial context, by the words “Development Approval” the parties simply meant the rezoning of the lands.

83 I do not accept that the concept of achieving “Development Approval” for the project was restricted to achieving the rezoning of the relevant lands (even though that was clearly the first step for any residential development of the properties). Insofar as Mr Makeig seems to have contemplated that a profit could be made by selling the project with the benefit of a development approval, in the ordinary course that surely would encompass more than a mere change to the zoning of land (namely, approval to some form of sub-division or development of the land). What the parties were exploring during 2004-2006 was a means by which the properties could be sold for the purpose of a residential development. In that context I would construe “development approval” as extending beyond mere rezoning.

84 However, it does not necessarily follow, from that, that successful fruition or completion of the project would occur only after each of rezoning, subdivision, development approval and sale had taken place. The parties clearly contemplated (and Mr Batterham accepted in the witness box - T 565) that the project could be on-sold prior to subdivision or physical re-development of the lands. On such a sale, the project would clearly have come to fruition (whether successful or otherwise presumably being in each party’s view dependent on the price so realised).

· The Project

85 There is a dispute between Mr Makeig and Mr Batterham as to whether or not considerable effort was expended (as Mr Makeig says it was) by Mr Makeig in managing the project from late 2003. However, there is no dispute that Mr Makeig expended at least some time and effort (and $122,335.60 of his own funds) on the project. Mr Batterham, in his evidence in the witness box, asserted on more than one occasion that Mr Makeig should in fact have paid a lot more than that (T 461.14, T 566, T 574).

86 Mr Batterham said that any amounts paid by Mr Makeig were “sunk costs” (T 565.6-25) in the sense that Mr Makeig would be entitled to recoup his investment in the project only if there was an on-sale of the project land at a sufficient price. If the project did not proceed to that stage, for whatever reason, then in Mr Batterham’s words, Mr Makeig would have “done his money” (T 565).

87 While the exact time at which Mr Makeig accrued rights in relation to a share in any future profits in the project is a matter of dispute between the parties, it was no doubt for the very reason that Mr Makeig had an interest in recovering his own cost outlay for the project that the Kitchener Project Agreement provided for the “Sales Price” of the lands to be the subject of consultation and agreement between the parties.

88 As noted, the first step necessary to achieve rezoning of the Batterham (and, for that matter, the Vowles) Land was the re-incorporation of the “Kitchener Precinct” (which included both the Batterham and Vowles Lands) into the CWSS. There is no doubt that Mr Makeig took steps to achieve this (including his attendance at a Council meeting on 17 March 2004 at which he pressed Mr Batterham’s case and argued for the reconsideration of the Rural Fire Service report which had raised concerns leading to the exclusion of the precinct from the CWSS). Mr Makeig commissioned (and paid) a number of consultants for the purpose of preparing the necessary submissions or application to the Council, including Marshall Scott Surveyors, Glendinning Minto & Associates, Building Code and Bushfire Hazard Solutions, Ecotone Ecological Consultants Pty Limited and Douglas Partners.

89 On 17 November 2004 a resolution was passed by the Council’s Strategic and Community Services Committee (Ex H p 259A) adopting a report in relation to the CWSS which noted that “For Council to further consider [sic] land rezoning around Kitchener” a strategic and comprehensive assessment of planning issues in the totality of the 1(a) Rural ‘A’ zone surrounding the village needs to occur.

90 The Committee’s resolution, consistent with the said report, was that any planning assessment undertaken for the Kitchener Precinct outlined in that report should be the subject of “full cost recovery” to Council. Mr Makeig’s understanding, at the time, of what was comprised by the concept of “full cost recovery to Council” appears to be set out in his letter dated 3 December 2004 to Ian Glendinning, of Glendinning Minto, town planners, namely “that the costs we shoulder beyond the costs for our own site, shall be subject to discounting against Section 94 Contributions”. (Relevantly, and contrary to Mr Sirtes’ argument as to the meaning of “Development Approval”, I note that this letter was headed “Rezoning/Subdivision”.)

91 In April 2005 the Kitchener Strategic Assessment Report (Ex L) was lodged with the Council. The report was prepared by Glendinning Minto on the instructions of Mr Makeig who had retained Glendinning Minto for that purpose. Mr Glendinning was called to give evidence by Mr Batterham during the hearing. I found his evidence to be balanced and helpful, among other things in explaining the processes involved in relation to the levies for s 94 contributions on a residential development project of the kind contemplated on the rezoning of the Kitchener Precinct from rural to residential.

92 On 4 May 2005, the Council resolved to amend the CWSS to include the Kitchener Precinct. Mr Makeig was informed of this by letter dated 9 May 2005 (Ex A 126-127; 128).

93 A Master Plan was then required by Council to be prepared for the whole of the Kitchener Precinct. For that purpose Mr Makeig re-engaged most of the consultants who had been involved in the preparation of the Kitchener Strategic Assessment Report, including Glendinning Minto.

94 On 13 May 2005, a senior Council officer, Mr Bo Moshage, wrote to Mr Makeig as to the various studies which the Council required and as to the Council fees that would be payable (in the sum of about $90,000 – consistent with the advice earlier given by Ms Julie Wells, a Land Use Planning Director/Manager with the Council – Ex A page 8). Mr Moshage indicated that the cost of preparation of the studies might be able to be recouped out of development contributions received by Council in due course. (Mr Makeig’s desire to have this documented in a written agreement subsequently provoked much dissension in the relationship between him and Mr Batterham.)

95 In December 2005, the Kitchener Master Plan (prepared by Glendinning Minto) was lodged with the Council. At or about that time Mr Makeig paid to the Council the sum of $31,250 (this amount being included within his total outlay of around $122,000 referred to above). Mr Makeig says he did so on account of the rezoning application and lodgement fees in connection with the Kitchener Master Plan. Certainly, this payment would appear to represent the first tranche of the fees foreshadowed in Mr Moshage’s letter, although, as I discuss below, Mr Lever contends otherwise.

96 In about January 2006, Mr Batterham met with Mr Moshage who advised that the Department of Planning (formerly DIPNR) required a Local Environment Study (“LES”) to be prepared under the direct control of the Council and therefore that it would not be necessary for Mr Makeig and Mr Batterham to do so. (Up until then, it would seem that the costs of preparation for the rezoning in terms of consultants’ fees were still being borne by Mr Makeig/Mr Batterham and not the Council - notwithstanding DIPNR’s earlier advice that the Council should resource and manage the project.)

97 In effect, this means that as at January 2006 the Council was taking over the work required to complete the Kitchener Precinct rezoning. Mr Batterham conceded as much in cross-examination (T 449.15-21), accepting that thereafter Mr Makeig did not have to appoint consultants, and did not have much else to do in terms of the management of the LES at that stage, as that was being done by Council and there was nothing else Mr Makeig should then have been doing: saying, “It had been taken out of his hands”. Indeed, Mr Batterham said he was at a loss to know what else Mr Makeig would have been doing at this stage (T 449).

98 Notwithstanding this concession, Mr Batterham appears as at late 2006/early 2007 (and again when he was cross-examined) to have taken issue with what he saw as the period of “hiatus” from about April 2006 in which he said (contrary to the acknowledgement as to the effect of the Council’s actions in taking over the project) that Mr Makeig had not been doing anything to engage consultants (T 436; T 438).

99 Mr Batterham suggested at one stage in the witness box that there were a number of things which Mr Makeig should have been doing during 2006 to be ready to proceed when (and if) the Kitchener Master Plan was accepted (T 450). Mr Batterham said that from mid 2005 Mr Makeig had not arranged various surveys or reports – traffic, water retention, hydrology, anthropology, additional flora and fauna reports (T 451). Yet he had accepted (T 451.40) that this work was the very work which had been taken over by the Council. This was not a matter of which he complained to Mr Makeig, nor a basis on which he sought to terminate the agreement, nor was this the subject of any criticism by Mr Glendinning or any suggestion that it gave rise to delay in completion of the rezoning. Mr Batterham’s complaint in this regard is further contradicted by his stated concern in December 2006 that Mr Makeig not continue to incur expenditure (without his approval) for the project as a rezoning was imminent.

100 On 2 March 2006, Mr Makeig wrote to Mr Batterham regarding the likely need to extend the time period for exercise of the option provided under the Vowles’ Option Agreement. The Vowles’ call option was duly extended by six months to December 2006 and the $5,000 extension fee (or “Additional Call Option Fee” as provided for under the Vowles Option Agreement) was paid as to 50% by Mr Batterham and as to 50% by Mr Makeig. Mr Batterham made no complaint as to the 50/50 payment split of the additional option fees at that time.

101 It is apparent from the correspondence from Mr Batterham to each of Mr and Mrs Makeig, respectively, (in particular I refer to the letters dated 28 November 2006 and 2 December 2006, being Annexures G & H to Mr Batterham’s 11 June 2008 affidavit) that by late 2006 there was a considerable degree of tension in the relationship between Mr Makeig and Mr Batterham. While Mr Sirtes invites me to conclude that this was a “concoction”, being contradicted by Mr Batterham’s acknowledgement that Mr Makeig was the “main driving force” behind the project and his exhortations to Mr Makeig to get back on board with the project, I do not believe such a conclusion should be drawn, even though this correspondence coincided with a recognition on Mr Batterham’s part that by December 2006 considerable value had been added (notionally at least) to the lands and there was something now of value to purchasers.

102 Further fees were payable to the Council in relation to the rezoning application in or around late 2006. An amount of $36,500 was paid by Mr Batterham on 28 November 2006 as well as an amount of $16,000 on 8 December 2006. These are amounts which Mr Lever characterises not as Category C rezoning fees but rather as consultants’ fees and which Mr Batterham claims Mr Makeig was obliged, and refused, to pay under the Kitchener Project Agreement. Mr Makeig denies he was obliged to pay these amounts under the terms of that agreement but also denies that he refused to pay them. While Mr Makeig admitted in the witness box that he was, in effect, holding off from paying these fees until (or in the hope that) the Council entered into an agreement confirming what had earlier been promised in respect of cost reimbursement out of funds generated in due course from s 94 contributions in respect of the development of land within the Kitchener Precinct (T 393), he also said that he “probably” would have paid them had his bluff been called and he asserted that Mr Batterham had paid these fees before they were in fact due.

103 Contributing to (and I consider causing most of) the tension between Mr Batterham and Mr Makeig in late 2006 was the suggestion (which Mr and Mrs Makeig say, but Mr Batterham denies, was relayed to Mr Makeig in about September 2006 by Mr Batterham) to the effect that Mr Makeig and Mr Batterham might be able to claim from the Council an amount referable to their own personal time and services in achieving the rezoning of the Kitchener Precinct (on the basis that the rezoning would be of benefit to other land owners in the precinct and might generate significant revenue for the Council).

104 According to Mr Makeig, Mr Batterham said that this had been suggested to him by a retired female solicitor friend. Mrs Makeig supports this version of events (though I hesitate to place much weight on this because it would seem that Mrs Makeig may not directly have been a party to that conversation, though being, she says, in the “area” where she could hear the general “discussion” that took place (T 132; T 165), and therefore her understanding of these events might well have been influenced by what was presumably relayed to her by her husband).

105 Mr Batterham denies this and, indeed, denies knowing any retired female solicitor friend (T 398). He says he considered the suggestion to be bizarre. He did, however, refer in the witness box to a suggestion which he said had been made to him by a friend who was a developer working on a vintage resort development at Cessnock (in the context of a discussion as to the extension of a water pipeline to the resort from Cessnock), to the effect that if physical things like infrastructure were put into the project (such as sewer extensions) it would be possible to seek to recoup those costs from the Council (T 399; T 536). Mr Batterham’s understanding of what his friend had said was to the effect “so if you invest money in that you would claim every cent of it”. Significantly, Mr Batterham thought he may have spoken about this in general terms to Mr Makeig (T 536).

106 This seems to me to be the likeliest source of the not dissimilar proposal being pressed by Mr Makeig in late 2006 (albeit that proposal not relating to reimbursement for the cost of any physical infrastructure). Mr Makeig readily accepted that he had never heard of a situation in which such an arrangement had been reached before (T 375) and I suspect that if it had been Mr Makeig’s idea he would have raised it at a much earlier time (since he was clearly keen to obtain whatever reimbursement he could from the Council). I therefore think it likely, even though nothing turns on this, that the genesis of the idea which caused so much dissension between the two gentlemen was something said in the first place by Mr Batterham.

107 Whether or not he had initially raised the suggestion, Mr Batterham certainly reacted very negatively in late December 2006 to the prospect of Mr Makeig pursuing any such course of action. Mrs Makeig described a very emotional discussion with him in late November 2006 in relation to this issue (T 146). At the same time, there is no doubt that, for his part, Mr Makeig was very keen to pursue such an arrangement if one could be struck with the Council.

108 It was submitted by Mr Sirtes that I should see the concerns expressed by Mr Batterham as illusory and concocted, particularly as there was no reference to any such concern in that Emery Partners’ letter of 9 January 2007 and since, during December 2006, Mr Batterham was pressing for Mr Makeig to continue to provide services for the project.

109 On 2 December 2006 Mr Batterham wrote to Mr Makeig asking him “please keep your side of the agreement” and confirming his own intention to do so.

110 By late 2006, steps were being taken by Mr Batterham to ascertain interest from potential purchasers of the project lands. In early December 2006, a meeting took place with Mr David Mingay, a representative of a company named Daracon. Mr Batterham saw this meeting as important and “required” Mr Makeig to be there (letter dated 2 December 2006). Mr Batterham was apparently still keen to involve Mr Makeig in the project, notwithstanding that he says by about this time he had lost faith and trust in Mr Makeig (and, indeed, he accepted in the witness box that by then he considered Mr Makeig to be a conman, antagonistic, arrogant, aggressive, incompetent and “a loose cannon” (T 545)).

111 Mr Batterham said that he made the decision after a meeting on 13 December 2006 that he could no longer work with Mr Makeig (T 544). However, he did not communicate that to Mr Makeig at this time (on the contrary, urging Mr Makeig to continue to provide assistance for the project).

112 Mr Batterham requested Mr Makeig’s attendance at a Council meeting in December 2006 (though there was some confusion as to whether this was the one at which the Kitchener Precinct LES was handed over – that being, in Mr Batterham’s view, the most wonderful day for which he now says he falsely flattered Mr Makeig as being the “main driving force” - or a subsequent meeting).

113 On 18 December 2006 there was a meeting between Mr Makeig, Mr Batterham and a property developer (Mr Keith Johnson) in respect of the potential sale to JPG, or a company in Mr Johnson’s group of companies, of the Batterham Land and the Vowles Land.

114 On 24 December 2006, Mr Batterham and the Makeigs shared a Christmas lunch together.

115 While the conduct of Mr Batterham over this period was demonstrably inconsistent, I place some weight on the fact that Mr Batterham (who exhibited an unwillingness to confront Mr Makeig on other issues during the project) was writing in very agitated (and emotional) terms and making very serious allegations (of fraud) against Mr Makeig. He became quite heated in the witness box when he explained how it was that he perceived such a fraud to have been suggested. I accept that this concern was genuine, albeit that his perception that Mr Makeig was intending to perpetrate a fraud may well have been unfounded. I also accept that Mr and Mrs Makeig did not understand the basis for Mr Batterham’s concern in this regard and regarded his conduct in late 2006 when he raised this issue as very strange (T 153/154).

116 I accept as a matter of fact that by late 2006 Mr Batterham was very concerned that the way in which Mr Makeig was proposing that this suggestion be taken up would involve fraudulent or dishonest conduct on the part of one or both of them and that he was anxious that nothing should happen (including the pursuit of this proposal) at that stage to derail the project. It follows that I do not accept Mr Sirtes’ submission that the expression of this concern by Mr Batterham was a concoction.

· Termination of the Kitchener Project Agreement

117 By January 2007, Mrs Makeig considered that Mr Batterham had taken some very strange action: she says he had refused to meet or speak with them and they had been unable to make communication with him (T 154). Mr Makeig sent to Mr Batterham an agenda on 2 January 2007 for a proposed meeting on 9 January 2007 to discuss various matters in relation to the project. Mr Lever describes this as an “aggressive” agenda and says its very issue amounted to repudiatory conduct. Mr Batterham refused to attend the meeting.

118 On 9 January 2007, Mr Makeig was accused of various breaches of the Kitchener Project Agreement and was notified that Mr Batterham considered it to be at an end. The Emery Partners’ letter included the following (which was said to be an open offer still on the table during the hearing):

reasonable

119 The alleged breaches of the agreement comprised the following:

(i) failure by Mr Makeig to pay the two amounts paid by Mr Batterham in late 2006 to Cessnock City Council (totalling $52,500);

(ii) failure to pay an amount of $1,500 invoiced by Marshall Scott Surveyors (external consultants appointed, as it turns out, by Mr Batterham); and no longer asserted by Mr Batterham to be a breach by Mr Makeig;

(iii) failure to pay the full amounts due in respect of the Vowles Option and Additional Option fees (rather than a half share of those fees) (a shortfall in total of $7,000);

(iv) failure to pay Harper Somers O’Sullivan Engineers “fully” for their services; and

120 It was said that these “continued breaches” constituted a repudiation of the agreement which (by inference, if not expressly) the Batterhams by this letter accepted as bringing the agreement to an end. Insofar as the termination of the agreement resulted from an acceptance by Mr Batterham of what is said to be the alleged repudiation by Mr Makeig, it would seem that the sense in which repudiation is here used is that of “renunciation”, as also in paragraphs 9E, 9F, 9I and 9J of the Second Amended Defence. However, insofar as 9B of the Second Amended Defence pleads clause 4 as a “fundamental provision” it may be that the Batterhams are also relying on repudiation in the alternative sense referred to in Koompahtoo Local Aboriginal Land Council v Sandpine Pty Limited (2007) 233 CLR 115 as termination for breach of an essential term (or intermediate term the breach of which goes to the root of the contract).

121 The motivation for Mr Batterham’s termination of the Kitchener Project Agreement was put in issue (as going both to his credit and to the alleged breach of fiduciary duty). It was said that Mr Batterham, having by then appreciated (as he accepts he did) that there was then an increased value of the lands, sought to terminate the agreement and take for himself the benefit of that increased value to the exclusion of Mr Makeig.

122 Mr Batterham, whose evidence was generally given in a quiet low key manner became quite heated on this issue. He said, “It was a gathering storm. He painted me into a corner. I had no option … My mind was travelling towards that point with no return, despite every effort” (T 495), saying “it was a momentous decision that I had been forced into” (T 494) and one which he says he delayed “as humanly as possible” (T 494).

123 Mr Batterham concedes it was an upsetting time, and he says that he had grown weary of the project (and I would infer weary of dealing with Mr Makeig). He considered that he had exhibited the patience of Job with Mr Makeig. However, no one forced Mr Batterham to the decision to terminate the relationship and no prior notice of his intention do so was given to Mr Makeig. Much of the “gathering storm” seems to have been in Mr Batterham’s mind, ie in his own perception of events.

124 The heart of the reason given by Mr Batterham for Mr Batterham’s termination, as I see it, comes in his explanation (not expressed in the 9 January letter) as to why he did not attend the 9 January meeting. “You have got to understand this. The project was mine. For Mr Makeig to receive that money I would have to say to the Council I have paid this man $450,000 as a bona fide consultant … the project was mine. I would have to suggest I paid him the money” (T 498). Significantly, in the course of that rather emotional response Mr Batterham twice conceded that there was an agreement between him and Mr Makeig: “They [the $450,000 fees] were at the heart of our agreement … It [the agenda] was aggressive and denied almost everything in our agreement” (my emphasis) (T 498).

458 On balance, I am satisfied that such an implied representation was made. In reaching that conclusion I think it is also relevant that Mr Makeig first denied that the conversation deposed to by Mr Batterham in October 2005 took place at all, justifying that denial on the basis that the discussion took place on a different occasion and on somewhat different terms (T 259), yet not putting forward that other version until Mr Makeig’s subsequent affidavit. In circumstances where a conversation of the kind outlined must have taken place at some time (since otherwise it is highly unlikely Mr Batterham would have known of Mr Makeig’s run-in with the Architects Board), the contradictory response by Mr Makeig to this is something to take into account in weighing the two versions.

459 What flows from that? Mr Batterham says he relied on this January 2004 representation when (some 14 months later) he signed the Kitchener Project Agreement.

460 Mr Sirtes invites me to conclude that this could not have been the case – in effect because any such representation would have lost “traction” by then, having been superseded or overtaken by the letter of 7 June 2004 which set out details of Mr Makeig’s professional background and which contained not one whit of a reference to him being an architect.

461 I note that where a representation is one by its nature calculated to induce someone to enter into a contract then there is authority that an inference that the representation induced entry into the contract can be drawn (see Carter on Contract paragraphs 20-200 and see Redgrave v Hurd (1881) 20 Ch D 1 at 22). However it seems that such a presumption will be stronger in cases of fraud (Smith v Kay (1859) 7 HLC 750; 11 ER 299) and that the drawing of such an inference is by no means automatic. The onus remains on the party alleging inducement to show reliance upon the representation as a matter of fact.

462 Mr Lever relied upon Sutton v A J Thompson Pty Limited (1987) 73 CLR 233 at 240 and Gould v Vaggelas (1985) 157 CLR 225 at 236 for the proposition (summarised in Heydon, Trade Practices Law 11.590) that if a material misrepresentation is made which is calculated to induce the representee to enter a contract and that person in fact does so, then there arises a fair inference that he or she was induced to do so by the representation and that the representation need not be the sole inducement; it is enough if it plays some part. Mr Lever relies on the acceptance by Mr Makeig that this was a “wise” and sensible question for Mr Batterham to ask, as showing that the representation was one calculated to induce entry into the agreement.

463 In Ricochet Pty Limited v Equity Trustees Executor & Agency Co Limited (1993) 41 FCR 229, of Lockhart, Gummow and French JJ considered a proposition which had been put to them that the trial judge was bound to infer, in the absence of contrary evidence, that the appellants had been induced by the representations to enter into the lease. Their Honours said (at 233-234):

Gould v Vaggelas

… common sense would demand the conclusion that the false representations played at least some part in inducing the plaintiff to enter into the contract.

The statement provides a practical guide to the way in which inferences can and should be drawn in such cases. It remains for the tribunal of fact, as his Honour pointed out, to determine, when all the evidence has concluded, whether the misrepresentation in question contributed to the decision to enter the contract. The unremarkable logic of these propositions is more likely to be obscured than illuminated by reference to notions of presumptions of fact or the incidence of the evidentiary onus.

464 I do not accept that Mr Batterham has established reliance as a matter for fact on the representation that Mr Makeig was an architect.

465 First, because there is nothing to indicate in the period from January 2004 to March 2005 that Mr Batterham was looking for the provision of the services of an architect – rather, he seems to accept that what he was looking for was someone with experience in dealing with Councils. Mr Batterham said he accepted that he did not need an architect, he needed “someone familiar with interactions of Council over many decades” (T 489). That seems to me the substance of what Mr Batterham relied upon when entering into the agreement with Mr Mackeig.

466 Secondly, I accept Mr Sirtes’ submission that, whatever was impliedly represented in January 2004 as to Mr Makeig’s status as a semi-retired architect, the operative force of that representation is likely to have been spent by March 2005 by which time Mr Makeig had more fully described his experience and had made it clear that he was a project development consultant.

467 Thirdly, and significantly, in my view, the assertion that Mr Batterham entered into the agreement in reliance on the implied representation that Mr Makeig was an architect can be tested against what Mr Batterham in fact did when he found out (on his version in May 2005) that Mr Makeig was not an architect.

468 There was no complaint made to Mr Makeig after May 2005 as to Mr Makeig’s lack of qualifications. This was not a ground on which Mr Batterham sought to terminate the Kitchener Project Agreement. From May 2005, Mr Batterham continued to accept the provision of services (and payment of moneys to consultants) by Mr Makeig. Even as late as December 2006, when relations were very tense between the parties, Mr Batterham was imploring Mr Makeig to get back on board with the project. Mr Batterham concedes that this was not a matter where he needed the services of an architect; that he left Mr Makeig on the project and allowed him to continue to spend money (asserting that he should have spent a lot, lot more money) after he knew he was not an architect (T 461, 491, 524).

469 During closing oral submissions, after the hearing itself had concluded and after written submissions in reply had been served by both parties, and indeed during the course of Mr Sirtes’ final (brief) oral submissions in reply, Mr Lever sought to revisit an evidentiary ruling I had made at the commencement of the hearing; namely to admit paragraphs in the affidavit evidence from Mr David Batterham as to his father’s reaction when he learnt that Mr Makeig was not an architect. That evidence was inadmissible in form and was rejected by me. Both Mr David Batterham and Mr Batterham were cross-examined by Mr Sirtes and, had this evidence been read, it no doubt would have been the subject of questioning by him. It was evidence which, had it been thought relevant, might have been sought to be adduced from Mr Batterham himself.

470 I rejected the application as being far too late and prejudicial (due to the lateness of the application) to Mr Makeig. In any event, whatever Mr Batterham’s thought processes as to what he should or could do back in May 2005 when he says he discovered Mr Makeig was not an architect, this does not alter the fact that he did not do was to raise this as a cause of complaint with Mr Makeig at any stage until after the contract was terminated. From May 2005 until at least December 2006 he continued, by his conduct and words, to represent to Mr Makeig that if Mr Makeig continued to provide services for the project he would be entitled to a share of profits on the on-sale of the project

471 Finally, in his affidavit of 5 February 2009, Mr Batterham claimed he relied upon Mr Makeig’s statement as to his extensive experience dealing with rezoning matters with Councils “together” with his professional qualifications, when he engaged Mr Makeig’s services. Again, it seems to me that this highlights what Mr Batterham really relied upon – the fact that in some form of professional role Mr Makeig had had a lot of experience in dealing with Councils. The only matter Mr Batterham could point to, viz a viz the desirability of Mr Makeig being an architect, was that an architect might have better “PR” dealing with Councils (T 491) – a potentially moot point.

472 I am therefore not satisfied that Mr Batterham has established reliance on this representation.

473 If I had been satisfied that this was a matter on which Mr Batterham had relied in signing the Kitchener Project Agreement, what would have been the loss or damage caused as a result? Mr Sirtes points to the fact that. Mr Batterham has, at least partly as a result of Mr Makeig’s contributions, achieved a position where his land is likely shortly to be rezoned and he has arrangements now in place under which he stands to make a considerable profit on the land.

474 Issues of causation of loss were considered in the context of s 82 Trade Practices claim by the Court of Appeal in Abigroup Contractors Pty Limited v Sydney Catchment Authority (No 3) (2005) 67 NSWLR 341. There, Beazley JA confirmed that the test of causation requiring the application of the “common law practical or common-sense concept of causation” referred to in March v E & M H Stramore (1991) 171 CLR 506.

475 Even if it could be said that the loss or damage is measured by reference to any amounts for which Mr Batterham might be liable to pay to Mr Makeig, it seems to me that in the exercise of my discretion I should refuse any relief having the effect of setting aside the agreement, unless Mr Batterham could in some way account for the considerable benefits he has obtained as a result. While Mr Lever submits these are illusory, the fact is that Mr Batterham now has the opportunity to realise a substantial profit on his land – the value of that opportunity (or the increased value represented by the land once rezoning occurs) is something which was achieved by reference at least in part to Mr Makeig’s contribution to the project. Mr Batterham conceded that, but for Mr Makeig’s money, and his efforts, the project would not have got off the ground. Mr Makeig cannot be put back in the position he was in 2004 simply by reimbursement of out of pocket expenses; nor would a quantum meruit valuation be easily carried out at this stage.

476 Insofar as relief is sought to avoid the Kitchener Project Agreement ab initio it is difficult to see why, if such an order were to be made, Mr Batterham should not have to account for the benefits obtained under that Agreement by making available to Mr Makeig the profit share in the expectation of which Mr Makeig became involved in the project, rather than simply repayment of the moneys expended by Mr Makeig.

· Representations (iv) (v) and (vi) - training, experience, capacity.

477 The representations alleged in sub-paragraphs (d), (e) and (f) are all denied on the basis that they are devoid of context, ill defined, imprecise and vague. In particular it is said that insofar as they refer to the role of a development consultant or engineer in a “development” this begs the question what was necessary for such a role. While I accept the force of that submission, I consider that by entering into the Kitchener Project Agreement, Mr Makeig must have at least impliedly represented that he had the ability and capacity to undertake what he was promising to do in connection with the joint venture or undertaking the subject of that agreement. In his discussions with Mr Batterham in December 2003/January 2004 and in his correspondence (7 January 2004 letter), he was clearly representing that he had the experience to assist Mr Batterham as a development consultant, and by inference, when he agreed to pay consultants’ fees, Mr Makeig must have been representing that he had the financial capacity to do so in connection with the project at least as it was then envisaged.

478 The evidence in my view establishes the truth of any such representations.

479 As to training, Mr Makeig admits he had no formal training but what training is required to be a project development consultant. All that is suggested by the representation alleged is that his experience fitted him for the role. Mr Glendinning’s evidence corroborates this. What Mr Makeig was representing was that he had experience in dealing with Councils on project development matters. He did have such experience. The fact that it was not weighted towards the rezoning of rural land does not render a representation of the kind alleged untrue.

480 As to Mr Makeig’s experience, I have dealt with that above.

481 As to capacity, there was much debate about what was meant by “capacity” – whether that be in the sense of having time available to work on the project or having the ability or competence successfully to complete the project.

482 I think “capacity” should be read in this context as no more than availability and ability – both of which I am satisfied Mr Makeig’s evidence demonstrated that he had. The fact that during the lifetime of this project Mr Makeig was working on other projects is irrelevant. There was nothing to suggest that he represented he would devote himself exclusively to this project. Insofar as Mr Batterham complained of a “hiatus” in which Mr Makeig did nothing, it is not suggested that this was due to lack of time as a result of his commitments to other projects.

483 As to ability, the evidence of Mr Makeig’s project management experience shows that he was able or capable of performing services under the agreement. Whether he performed them well, (and whether he was pleasant of difficult to deal with), is quite another matter.

484 As Mr Sirtes submits, a representation that a barrister has the training, experience and capacity to act in litigation proceedings says nothing as to his or her measure of success in such proceedings. It was as a result of debate of this kind during the course of the hearing that an application was made further to amend the Amended Cross-Claim to add a new allegation of misrepresentation – namely “(g) that he [Mr Makeig] had had a lot of involvement with property development with great success in the past”.

485 It was put to me that this merely ensured that the particulars of the claim accord with the evidence (that being the unchallenged conversation deposed to by Mr David Batterham in which a statement to that effect was contained). I refused leave to amend on the basis that this conversation was not between Mr Batterham himself and Mr Makeig, so there was an issue as to whether any representation was made to Mr Batterham (as opposed to his son); and in view of the prejudice which was likely to be occasioned to Mr Makeig, who no doubt would have been entitled to adduce evidence as to his past successes had such a pleading been made in the first place. Moreover, the vagueness of such an allegation was a matter of concern. (I also note that any representation of the kind then sought to be introduced into the pleadings would seem to me likely to be seen as within the realms of puffery.)

486 White J in Zhang v VP302 SPV Pty Limited [2009] NSWSC 73 said that:

It is sometimes said that puffery falls outside the reach of s 52 of the Trade Practices Act ( Pappas v Soulac Pty Limited (1983) 50 ALR 231 at 234–235; Eighth SRJ Pty Limited v Merity (1997) 7 BPR 15,189 at 205–206), although it is more usual to infer that the plaintiff did not rely on an obvious puff (eg Petty v Penfold Wines Pty Limited (1994) 49 FCR 282).

487 His Honour referred to the comments in Jainran Pty Limited v Boyana Pty Limited [2008] NSWSC 468, of Bryson AJ as to the meaning of “puffery”:

Pappas v Soulac

488 In Zhang, White J was of the view that rather than considering whether the advertisements were puffery, regard should then be had to reasonable members of the class of readers who might be expected to act on the advertisement (citing Parkdale Custom Built Furniture Pty Limited v Puxu Pty Limited (1982) 149 CLR 191 at 199).

489 As to the representation of financial capacity, it was submitted to me that I should infer that the lack of financial means was what underlay Mr Makeig’s refusal to pay Council’s fees in late 2006 or the disputed consultants. However, the evidence before me was that Mr Makeig had the benefit of, and was living on a day-to-day basis from, an overdraft facility the undrawn component of which would seem to have been sufficient to meet those amounts.

490 In any event, the truth of any representation as to financial capacity to engage in the project must surely be tested by reference to what it was anticipated at the time would be involved in the project. By March 2005, it would seem that what was apparently contemplated (see 1 March 2005 letter) was the ability to pay consultants fees of some $200,000. There is nothing to suggest Mr Makeig did not have the financial resources to do so (and in fact he has already paid a fair proportion of that amount).

491 Much was made of Mr Makeig’s inaccurate estimate of the costs and time likely to be involved in the project when he first discussed it with Mr Batterham ($15,000 and a few months). However, at that stage Mr Makeig was assuming a spot rezoning and that Council’s approval was a foregone conclusion (as Mr Batterham said the Councillors were sympathetic to him). I do not think that anything can be made of the fact that, as it turned out, the project became much more substantial in scope and cost much more (nor that, as Ms Grant said, such a spot rezoning was never likely to have been possible).

492 Insofar as Mr Makeig represented that he had extensive experience in development work and in dealings with councils, I am of the view that however difficult he may have been in those dealings and however unsuccessful he may have been in that work, on the evidence he was shown to have had extensive experience. As to his competence, it was suggested that this implied an ability to carry out the work successfully. I do not agree.

493 As to the alleged representations in relation to capacity – these was put on the basis of Mr Makeig’s time to do the work, his ability to do the work and his financial capability of so doing. As to the first, the fact that he was acting for three other clients at the same time as Mr Batterham does not seem to me to establish that Mr Makeig had no capacity from a time point of view to carry out the work. The Kitchener Project Agreement did not, in its terms, purport to be an exclusive retainer. It is not suggested that Mr Makeig had insufficient time to devote to the project (although it was said that for a period of time there was an hiatus and he did not do anything). Mr Makeig does appear, in the initial phases of the project, to have played a significant role in arranging the consultants, liaising with them and pushing Council in relation to the issue as to whether the Rural Fire Service submissions had correctly raised issues in relation to the exclusion of Kitchener from CWSS. Whatever other clients he had at the time, they do not appear to have impeded this work.

494 As to the notion that ability equates to or encompasses a notice of success, it does not seem to me that a person who has the qualifications necessary to carry out a particular task can be said not to have had that ability simply because they might carry that task out poorly. It is not suggested that there were any particular qualifications needed to deal with Council or to carry out the project management required for this kind of project (although Mr Batterham suggested that if Mr Makeig had, in fact been an architect, then he might have had a better manner when dealing with Council). However, Mr Makeig made it clear to Mr Batterham at the outset that he regarded what was described by Mr Sirtes as a “crash through or crash” approach as the appropriate way to deal with Council and there was no complaint by Mr Batterham at that stage in relation thereto.

495 As to his financial ability there was evidence of Mr Makeig’s overdraft (T 337) from which I would infer that he was capable of meeting at least those financial obligations incurred or likely to be incurred in relation to the project up to the time his involvement was terminated by Mr Batterham. Furthermore, Mr Makeig asserted that insofar as the project has added significant value to the lands, it is likely he could have raised money from conventional sources (just as JPG in fact seems to have done) on the strength of the project (T 339). While it was suggested that the reason for Mr Makeig’s failure to meet his alleged obligation to make payments towards the end of December 2002 was financial difficulties on his part, I do not think such an inference should be drawn in circumstances where Mr Makeig at the time was either disputing his obligation to pay the debts (Council fees) or had disputed the charges in question (Harper Somers/Ecotone).

Cross-Claims for damages for breach of contract by Mr Makeig

496 The cross-claims for loss and damage arising out of the breach of contract relate to the amounts paid by Mr Batterham to the Council and to consultants allegedly because of Mr Makeig’s failure or refusal to do so (with which I have dealt with above) and as to alleged incompetence in performance impeding progress of the rezoning application).

497 Insofar as I have found any breach at all (by reason of the failure in a timely manner to pay the Harper Somers O’Sullivan account) it is apparent that Mr Batterham suffered no loss or damage as a result.

498 As to the alleged impediment to the progress of the rezoning application, I am not satisfied that the evidence establishes that Mr Makeig impeded the progress of the rezoning in any way. The evidence is that he was instrumental in urging the Council to revisit its position relation to the exclusion of the Kitchener Precinct from the CWSS; that as at August 2005, Mr Batterham was happy with the progress of the rezoning; that after January 2006 there was nothing much for Mr Makeig to do until the Council had completed the work require for the LES; that after this happened in December 2006, at most Mr Makeig failed to attend any Council meeting before Mr Batterham terminated the agreement.

(vi) Relief sought by Mr Makeig

499 The relief sought by Mr Makeig primarily is an order for damages for Mr Batterham’s wrongful repudiation of the Kitchener Project Agreement; a loss of opportunity claim of the kind considered in Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 and Commonwealth v Amann Aviation Pty Limited (1991) 174 CLR 64. It is said that that opportunity should be valued either by reference to the JPG “deal” or by reference to the value of the lands as assessed in early 2007 (on the basis that the evidence shows that Mr Batterham was keen to sell in January 2007 and I can infer from the alacrity with which he proceeded to do so (and the ease with which a purchaser was found for the lands) that a sale would have been affected for approximately $7 million at that time.

500 Alternatively, Mr Makeig seeks an order that the Batterhams account to him for 39% of all proceeds from the sale or other disposition of any interest in the Batterham and/or Vowles Lands, after deduction of the sum of $1.5 million (representing the value attributed by the parties to the Batterham Land); and/or declarations that they hold (as constructive trustee on behalf of Mr Makeig) a 39% interest in the benefit and/or proceeds of the JPG Deed as well as of any proceeds received by Mr Batterham to date pursuant to the JPG Deed or otherwise in connection with either the Batterham Land or the Vowles Land.

501 Claims were made in the alternative for declarations that a partnership exists in unequal shares between Mr Makeig (as to 39%) and the defendants (as to 61%) as to the net proceeds of the Mr Batterham and the Vowles Land; and/or that the Batterham Land and the interest of BBL in the JPG Deed are partnership property of the said partnership within the meaning of the Partnership Act, and an order that the Batterhams account to Mr Makeig for moneys already received by them under the JPG Deed. Claims are put in the alternative for equitable damages and for recovery of the amounts expended by Mr Makeig on a quantum meruit basis.

502 Finally, a claim was made further or in the alternative for an equitable lien (or; in the alternative, an equitable charge over the Batterham Land.

503 The primary relief sought was, nevertheless, for damages by reference to the loss of bargain arising from the Batterhams’ repudiation of the Kitchener Project Agreement.

504 Mr Lever submits that there has been no sale; that the fundamental purposes of the agreement have not yet been realised; that all that has happened is that Mr Batterham has entered the JPG Deed for the sale and purchase of the Batterham Land with an option exercise period ending on 15 November 2012; and he says that the reality is that if JPG does not want the deal to go ahead then it will not.

505 However, the Vowles Land has already been sold (for $1.35 million) and not only does Mr Batterham have a contractual entitlement to exercise his put option to require JPG to purchase the Batterham Land, the performance of this obligation is guaranteed personally by Mr Johnson (said by his CEO Mr Mutton to be in effect, an experienced property developer with an eye for a bargain).

506 I turn to the main heads of relief claimed.

· Contractual damages

507 At what point would Mr Makeig be entitled to be paid under the Kitchener Project Agreement had it remained on foot? Clearly not until the net project price could be calculated and the proceeds of sale obtained. However, what Mr Makeig has been deprived of is the opportunity to obtain a benefit under the Kitchener Project Agreement. The value of that lost opportunity can be quantified by reference to the benefits Mr Batterham has obtained and is potentially able to obtain.

508 Damages for repudiation are determined by reference to the loss of the benefit of the contract. Where, as here, what is lost is the opportunity to receive a portion of the net profit under the contract, then damages are awarded by reference to the value of the opportunity which has been lost. Reliance was placed on the approach articulated by the High Court in Malec v J C Hutton Pty Limited (1990) 169 CLR 638 that the court must assess the degree of probability that an event would have occurred or might occur and then adjust the award of damages to reflect the degree of probability.

509 Mr Makeig’s loss has been calculated at $2,378,638.90 that being 7/18ths of $6,116,500 (which is $7,616,500 less $1.5 million). Alternatively, it is said that the damages could be calculated by reference to the value of the land as at the time of termination (that being $7,000,000 as per a BankWest valuation obtained in January 2007 by JPG), said to represent a conservative valuation of market price on an “as is” basis (although valued in two lots, together with the Vowles Land, as at 12 April 2007). On that alternative basis, the damages claimed amount to $2,145,000 exclusive of GST.

510 In my view, the best evidence of the opportunity of which Mr Makeig has been deprived is to be found in what has in fact happened Mr Batterham has already on-sold the project by entry into the JPG Deed. (I think it is more reliable than proceeding on the basis that a purchaser might have been found in about January 2007 at the price according with the valuation carried out for JPG – there is a big difference between purchasers expressing interest and reaching a concluded agreement for sale.)

511 Under the JPG Deed, Mr Batterham has received, to date, some $900,000 (which, with any other annual instalments of the Further Call Option Fees, will be retained by him if the option is not exercised or will be credited, on the exercise either by JPG of the call option or Mr Batterham of the put option, towards the purchase price) plus GST. If the option is exercised Mr Batterham will receive the balance of the purchase price payable, after taking into account instalments received by him under the JPG arrangements.

512 What Mr Makeig has lost is the opportunity in due course to share in the profits if either the put or call option is exercised (or the opportunities to agree with Mr Batterham for the project to be on-sold to someone else for a perhaps greater benefit) and any opportunity to participate in the advance payments (though this is less clear at least until those payments reach the $1.5 million threshold).

513 There is no certainty that the option will be exercised before 2012 or at all. Mr Mutton, the Chief Executive Officer of JPG, gave evidence that the decision as to whether (and when) the option would be exercised by JPG is a matter which Mr Johnson would make in his absolute discretion. Mr Mutton agreed that JPG had bought the Vowles Land for almost half its value (T 530.4-43) and seemed to accept that the overall transaction had been one which Mr Johnson considered a good deal. He conceded that Mr Johnson, as an experienced property developer, thought this was a good deal, but nevertheless Mr Mutton thought it unlikely as at the date he gave his evidence that the option would be exercised. It would seem that opinion is based on unstated perceptions of the property market and/or the company’s performance. Mr Johnson gave no evidence in the proceedings. Mr Mutton’s opinion as to whether it is likely that over the next three years Mr Johnson might decide to exercise the option is at best speculative.

514 It seems to me, nevertheless, that the likelihood of JPG exercising the option is really a red herring since, if it did not, it would then be open to Mr Batterham to exercise his corresponding put option. It is submitted by Mr Sirtes that the only conceivable explanation for Mr Batterham deciding not to exercise the Put Option would be if he were to be offered a better price than that achievable under the JPG Deed. It is said that no discount should be placed for that possibility.

515 Of course, another reason Mr Batterham might choose not to exercise the option might be if it would be futile (if, say, in the interim JPG had suffered financial difficulties and was unable or unlikely to be unable to satisfy its obligations under the agreement). The evidence from Mr Mutton was that JPG is a $1 company but presently in no financial difficulties. However, in that regard, it is significant that the obligations of JPG are guaranteed by Mr Johnson. While there was no evidence as to his financial circumstances, Mr Johnson, as an experienced property developer may be unlikely willingly to contemplate the consequences of an unsatisfied call on his guarantee. This makes it less likely in my view that JPG would default in its obligations if the put option were exercised. I think the discount which should be placed on non-exercise of both options (or non-completion of a sale following exercise of either option) should be very low and in that regard I would adopt 10%.

516 Another factor to take into consideration is that Mr Batterham seems to have had an opportunity to elect to sell the lands immediately to JPG, albeit perhaps for a lesser return, or to pursue negotiations with other purchasers. Had Mr Batterham consulted with Mr Makeig in January 2007 as to which option was preferable it may be that they would have agreed to an immediate sale (although it may then have been contingent upon the rezoning.) Mr Batterham arrogated to himself the decision as to how and to whom the project was sold. I think it difficult for Mr Batterham now to say I should not regard that as the opportunity Mr Makeig has lost.

517 I raised the question with Counsel as to whether any award of damages if Mr Makeig if elected to pursue his claim for damages for repudiation should be discounted to represent the net present value of a 7/18ths share (of the purchase price payable by JPG for the Batterham Land ($7.6165 million) less the contribution of $1.5 million in respect of the Batterham Land ($6.1165 million)) as at, say 2013. There was no evidence as to any appropriate discount rate. Moreover, Mr Sirtes pointed to the benefit Mr Batterham has already obtained by receipt of the advance payments from JPG.

518 I have also considered whether a deduction ought be made for any amounts paid after January 2007 to the Council by way of lodgement fees by Mr Batterham to effect the rezoning of the Batterham Land (there being a fourth tranche of Category C rezoning payments due at some stage after termination of the project), although the balance of those fees were only of the order of about $10,000.

519 In the end I place some weight on the fact that Mr Batterham has had the benefit of the advance payments and that a further small discount (to the 10% which reflects the fairly remote (in my view) possibility that the sale might not be completed) of say an additional 2.5% would be sufficient to address any other form of discount or offset required to compensate for factors of the above kind.

520 I would therefore quantify the damages for loss of opportunity at $2,378,638.90, being 7/18ths of $6.1165 million, discounted by a factor of 12.5% (ie discounted to $2,081,309) for the possibility that the options under the JPG Deed might not ultimately be exercised (or, if exercised, may nevertheless not result in the actual payment of the balance of the purchase price) and to reflect any benefit obtained by realising that amount in advance of completion of the sale or for other amounts paid by the Batterhams in connection with the rezoning. I will hear submissions as to any GST payable on or referable to that amount.

· Equitable damages

521 The claim for equitable damages would arise (on the findings I have made) only for breach of a fiduciary obligation on Mr Batterham’s part (after termination of the agreement/joint venture/partnership) not to arrogate to himself the whole of the value represented by the project. While equitable damages are not limited or influenced by matters such as affect the award of damages at common law, and there is greater flexibility in their award (per Tadgell J in Hill v Rose [1990] VR 129), they are essentially compensatory in nature. In this case I would assess them on the same basis as the contractual damages above.

· Partnership account

522 Alternatively, if Mr Makeig wishes to elect for an account of the partnership property I consider that relief would most appropriately lie in a declaration that Mr Batterham holds the benefit and/or proceeds of the JPG Deed, or any funds received pursuant to the JPG Deed, (above the amount of $1.5 million), on constructive trust for Mr Makeig as to a 7/18ths share.

· Equitable lien or charge

523 I do not consider it appropriate to impose an equitable lien or charge over the Batterham Land to secure any obligation in relation to the proceeds of on-sale (that being the only partnership property identified) in circumstances where I would be prepared to make a declaration as to a constructive trust.

Further steps

524 It is a matter for Mr Makeig now to elect which relief he seeks.

525 I will list the matter for directions as to the form of relief Mr Makeig elects and, if necessary, hear any submissions from the parties on costs.

**********

Actions

Download as PDF Download as Word Document

Citations

Makeig v Batterham [2009] NSWSC 344

Most Recent Citation

Perpetual Nominees Limited v Rytelle Pty Ltd (No. 4) [2013] VSC 9

Cases Citing This Decision

3

Batterham v Makeig [2010] NSWCA 86

Batterham v Makeig (No 2) [2009] NSWCA 314

Perpetual Nominees Limited v Rytelle Pty Ltd (No. 4) [2013] VSC 9

Cases Cited

53

Statutory Material Cited

2

Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70

Smith v Kay [2000] WADC 257

CITATION:	Makeig v Batterham [2009] NSWSC 344
HEARING DATE(S):	24, 25, 26, 27 February; 2, 3, 4, 5 March and 23 April 2009
JUDGMENT DATE :	1 May 2009
JURISDICTION:	Equity Division
JUDGMENT OF:	Ward J
CATCHWORDS:	CONTRACTS – general contractual principles – offer and acceptance – whether signed document constituted binding contract – whether consideration illusory – whether parties evinced intention immediately to be bound – whether terms sufficiently certain to be enforceable – held that there was a binding and enforceable contract – held, further, that defendants estopped from denying binding contract. - CONTRACTS – general contractual principles – construction and interpretation of contracts – whether on proper construction of the contract obligation to pay “Consultants costs and costs ancillary to consultant’s services” [sic] extended to Council lodgement fees – held that it did not. - CONTRACTS – general contractual principles – discharge, breach and defences to action for breach – whether plaintiff breached obligation to pay consultants’ costs “in a timely manner” – whether plaintiff repudiated of the contract – whether defendants’ purported termination of contract itself amounted to repudiation – held that plaintiff had breached obligation to pay consultants’ fees in a timely manner – held that this breach did not give rise to a right for the defendants to terminate – held no repudiation by plaintiff – held that the defendants repudiated contract by purporting to terminate contract. - MISLEADING OR DECEPTIVE CONDUCT – whether plaintiff engaged in conduct that was misleading or deceptive – whether representation to third party amounted to representation to first defendant – whether first defendant entered contract by reason of the plaintiff’s misleading or deceptive conduct – held that plaintiff did engage in conduct that was misleading or deceptive – held that conduct did not cause first defendant to enter into contract – first defendant did not suffer loss or damage by reason of plaintiff’s conduct. - EQUITY - general principles - fiduciary obligations – whether parties engaged in joint venture – whether defendants owed fiduciary duties to first plaintiff – whether parties were partners – held that parties both joint venturers and partners – held that defendants owed fiduciary duties to plaintiff– held that, on termination of joint venture/partnership, defendants could not arrogate whole benefit of joint venture/partnership to themselves – benefits of joint venture/partnership held on constructive trust on terms of former partnership.
LEGISLATION CITED:	Fair Trading Act 1987 Partnership Act 1892
CATEGORY:	Principal judgment
CASES CITED:	AB v R [2001] NSWCCA 496 Abigroup Contractors Pty Limited v Sydney Catchment Authority (No 3) (2005) 67 NSWLR 341 Azzi and Ors v Volvo Car Australia Pty Limited [2007] NSWSC 319 B Seppelt & Sons Limited v Commissioner for Main Roads (1975) 1 BPR 9,147 Badeley v Consolidated Bank (1888) 34 Ch D 238 Banque Brussels Lambert SA v Australian National Industries (1989) 21 NSWLR 502 Barrier Wharfs Limited v W Scott Feat 668, 669, 672 Bective Station Pty Limited v AWB (Australia) Limited [2006] FCA 1596 Birtchnell v Equity Trustees, Executors and Agency Co Limited (1929) 42 CLR 384 BP Refinery (Westernport) Pty Limited v Shire of Hastings (1977) 180 CLR 266 Brambles Holdings Limited v Bathurst City Council (2001) 53 NSWLR 153 Branir Pty Ltd v Owston Nominees (No 2) Pty Limited (2001) 117 FCR 424 Brisbane City Council v Group Projects Pty Limited (1979) 145 CLR 143 Burger King Corporation v Hungry Jacks Pty Limited (2001) 69 NSWLR 558 Byrne v Australian Airlines Limited (1995) 185 CLR 410 Cadorange Pty Ltd (in liq) v Tanga Holdings Pty Ltd (1990) 20 NSWLR 26 Chan v Zacharia (1984) 154 CLR 178 Clancy v Salentia Pty Limited [2000] NSWCA 248 Commercial Banking Company of Sydney Limited v R H Brown & Co (1972) 126 CLR 337 Commonwealth v Amann Aviation Pty Limited (1991) 174 CLR 64 D F Lyons v Commonwealth Bank of Australia (1991) 28 FCR 597 Davies v Littlejohn (1923) 34 CLR 174 DTR Nominees Pty Limited v Mona Homes Pty Limited & anor (1977) 138 CLR 423 Edwards v Skyways [1964] 1 All ER 494 Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 Film Bars Pty Limited v Pacific Film Laboratories Pty Limited (1979) 1 BPR 9,251 Gate Gourmet Australia Pty Ltd (In Liq) v Gate Gourmet Holding AG [2004] NSWSC 149 Gould v Vaggelas (1985) 157 CLR 225 Helmos Enterprises Pty Limited v Jaylor Pty Limited [2005] NSWCA 235 Hewett v Court (1983) 149 CLR 639 Hill v Rose [1990] VR 129 Howard Smith & Co Limited v Varawa (1907) 5 CLR 68 In re Young: Ex parte Jones [1896] 2 QB 484 Jacara Pty Limited v Perpetual Trustees W A Limited (2000) 106 FCR 3 Jainran Pty Limited v Boyana Pty Limited [2008] NSWSC 468 Koompahtoo Local Aboriginal Land Council v Sandpine Pty Limited (2007) 233 CLR 115 Langridge v Levy (1837) 2 M & w 519; 150 ER 863 Lombok Pty Limited v Supetina Pty Limited (1987) 14 FCR 226 Mackay v Dick (1881) 6 App Cas 257 Malec v J C Hutton Pty Limited (1990) 169 CLR 638 March v E & M H Stramore (1991) 171 CLR 506 McDonald v Dennys Lascelles Limited (1933) 48 CLR 457 Milner v Delita Pty Limited (1985) 61 ALR 557 Morris v Morris [1982] 1 NSWLR 61 O’Keefe v Taylor Estates Co Limited [1916] SR Qd 301 Overlook Management BV v Foxtel Management Pty Limited [2002] NSWSC 17 Park v Brothers (2005) 222 ALR 421 Parkdale Custom Built Furniture Pty Limited v Puxu Pty Limited (1982) 149 CLR 191 Peek v Gurney (1873) LR 6 HL 377 Pirt Biotechnologies Pty Limited v Pirtferm Limited [2001] WASCA 96 Progressive Mailing House v Tabali Pty Limited (1985) 157 CLR 17 Redglove Projects Pty Limited v Ngunnawal Local Aboriginal Land Council & Anor (1005) 12 BPR 23,381 Redgrave v Hurd (1881) 20 Ch D 1 Ricochet Pty Limited v Equity Trustees Executor & Agency Co Limited (1993) 41 FCR 229 Schindler Lifts Australia Pty Limited v Debelak (1989) 89 ALR 275 Secured Income Real Estate (Australia) Limited v St Martins Investments Pty Limited (1979) 144 CLR 596 Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 Shevill v The Builders Licensing Board (1982) 149 CLR 620 Smith v Kay (1859) 7 HLC 750; 11 ER 299 Stephenson Nominees Pty Limited v Official Receiver (1987) 16 FCR 536 Sutton v A J Thompson Pty Limited (1987) 73 CLR 233 United Dominions Corporation Limited v Brian Pty Limited (1985) 157 CLR 1 Upper Hunter County District Council v Australian Chilling and Freezing Co Limited (1968) 118 CLR 429 Waltons Stores (International) Limited v Maher (1988) 164 CLR 387 Westralian Farmers Limited v Commonwealth Agricultural Service Engineers Limited (1936) 54 CLR 361 Woodar Investment Development Limited v Wimpey Construction UK Limited [1980] 1 All ER 571 Zhang v VP302 SPV Pty Limited [2009] NSWSC 73
TEXTS CITED:	Burns, Fiona "The Equitable Lien Rediscovered, A Carter on Contracts Fisher & Lightwood Law of Mortgage 2nd Australian Edition Halsbury’s Laws of Australia Heydon, Trade Practices Law 11.590 Lindley and Banks on Partnership para 5-25 Sykes, The Law of Securities, 5th ed Remedy for the 21st Century”, [2002] UNSWLJ 1
PARTIES:	Peter John Makeig (Plaintiff) Brian Batterham (First Defendant) Batterham's Bus Lines Pty Limited (Second Defendant)
FILE NUMBER(S):	SC 4373 of 2007
COUNSEL:	Mr G A Sirtes SC with him Ms J Chambers (Plaintiff) Mr F Lever SC with him Mr G Graham (Defendants)
SOLICITORS:	Somerville & Co (Plaintiff) Emery Partners (Defendants)