Rebenta Pty Ltd v Wise

[2009] NSWCA 212

New South Wales

Court of Appeal

CITATION:	REBENTA PTY LTD v WISE [2009] NSWCA 212
HEARING DATE(S):	26 and 27 March 2009
JUDGMENT DATE:	24 July 2009
JUDGMENT OF:	Ipp JA at 1; Basten JA at 2; Sackville AJA at 102
DECISION:	Appeal dismissed with costs
CATCHWORDS:	CONTRACTS – general contractual principles – construction and interpretation of agreement – text, structure and context of agreement – whether written notification required for satisfaction - CONTRACTS – rectification of contract – evidence of common intention not embodied within written agreement – whether claim for rectification would have succeeded – whether loss incurred through foregone right to terminate - ESTOPPEL – estoppel by convention – distinction from promissory estoppel – variation of contractual condition – basis for estoppel – whether common understanding or arrangement between parties - PROCEDURE – decision and judgment – whether necessary to resolve issues not determinative of case – appropriate considerations – allocation of judicial resources – distinction between trial and appellate court – distinction between questions of fact and law – likelihood and possibility of successful appeal or grant of special leave - WORDS AND PHRASES – "development consent" – "building consent" – "estoppel by convention" – "rectification of contract" – "loss of opportunity"
LEGISLATION CITED:	Environmental Planning and Assessment Act 1979 (NSW), ss 92, 93
CATEGORY:	Principal judgment
CASES CITED:	Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd [1986] HCA 14; 160 CLR 226 Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298 Health World Ltd v Shin-Sun Australia Pty Ltd [2009] FCAFC 14; 174 FCR 218 The “Indian Grace” (No 2) [1998] AC 878 Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [2008] NSWCA 206 Kuru v State of New South Wales [2008] HCA 26; 236 CLR 1 Lindholdt v Hyer [2008] NSWCA 264; 251 ALR 514 Maralinga Pty Ltd v Major Enterprises Pty Ltd [1973] HCA 23; 128 CLR 336 Moratic Pty Ltd v Gordon [2007] NSWSC 5; (2007) NSW ConvR 56-172; ANZ Conv R 198; Aust Contract Reports 90-255 Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; 69 NSWLR 603 Tarabay Pty Ltd v Leite [2008] NSWCA 259 Wade v Burns [1966] HCA 35; 115 CLR 537
PARTIES:	Rebenta Pty Ltd (Appellant) Peter Wise (Respondent)
FILE NUMBER(S):	CA 40864/07
COUNSEL:	J C Kelly SC/T D Anderson (Appellant) I M Jackman SC/D R Pritchard SC (Respondent)
SOLICITORS:	Cohen & Krass (Appellant) Mallesons Stephen Jaques (Respondent)
LOWER COURT JURISDICTION:	Supreme Court
LOWER COURT FILE NUMBER(S):	SC 20349/1998
LOWER COURT JUDICIAL OFFICER:	James J
LOWER COURT DATE OF DECISION:	30 November 2007
LOWER COURT MEDIUM NEUTRAL CITATION:	Rebenta Pty Ltd v Wise [2007] NSWSC 1332

CA 40864/07
SC 20349/98

IPP JA
BASTEN JA
SACKVILLE AJA

24 July 2009

REBENTA PTY LTD v Peter WISE

Headnote

In late 1995 Rebenta Pty Ltd ("Rebenta"), in order to maximise its return on the sale of a property known as the Bronte Inn, located at MacPherson St, Bronte, took steps to develop the property and sell the resulting units as part of a strata plan. Rebenta entered into an agreement with Ocean View Apartments Pty Ltd ("Ocean View") on 18 December 1995 as part of a joint venture arrangement to undertake the development, however, the principal of Rebenta, Mrs Millicent Phillips, soon lost enthusiasm for the project and searched for an opportunity to terminate it.

The agreement provided that Ocean View was to obtain development and building consents in writing by 28 February 1996. Whilst development consent was granted on 27 February, the Council had not notified the applicant in writing of its decision at that date, nor had building consent either been sought or approved. In April 1996 Mrs Phillips instructed Rebenta's solicitor, Mr Peter Wise, to give notice terminating the agreement. However Mr Wise sent a letter requiring Ocean View to rectify its default within 21 days, thereby affirming the contract. Ocean View complied with this requirement, and Rebenta accordingly lost the opportunity to terminate the joint venture.

Rebenta brought proceedings for damages against Mr Wise in the Common Law Division of the Supreme Court, where James J gave judgment for Mr Wise. His Honour held that despite the failure by Mr Wise to take reasonable care in pursuit of his client's interests, Rebenta in any event had no right to terminate the joint venture between it and Ocean View. As a result it did not suffer any loss. Rebenta appealed to the Court of Appeal under s 101 of the Supreme Court Act 1970 (NSW).

The issues for determination on appeal were:

(i) whether, in the absence of written notification of the decision, the grant of development consent by the Council prior to 28 February 1996 satisfied the contractual condition;

(ii) whether Rebenta was estopped from relying upon Ocean View's non-compliance with the condition that building consent be obtained by 28 February 1996 as a basis for asserting a right to terminate, and

(iii) whether Ocean View would have been able to obtain rectification of the agreement to remove the condition relating to the grant of building consent by 28 February.

The Court held, dismissing the appeal:

(per Basten JA, Ipp JA and Sackville AJA agreeing)

1. The proper construction of the condition was that the word "from" was used to identify the source of consent, rather than to impose a requirement of notification. The condition was satisfied by the grant of development consent on 27 February 1996 despite the absence of written notification: [46] – [48], [57].

(per Basten JA, Ipp JA and Sackville AJA agreeing)

2. It was open to the respondent to argue an estoppel by convention as between Rebenta and Ocean View on the basis of a consensus between the parties: [67]–[68].

Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd [1986] HCA 14; 160 CLR 226; Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; 69 NSWLR 603; The "Indian Grace" (No 2) [1998] AC 878; Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298; Moratic Pty Ltd v Gordon [2007] NSWSC 5; ConvR 56-172; ANZ Conv R 198; Aust Contract Reports 90-255, applied.

3. No adequate foundation was demonstrated for disturbing findings made by the trial judge on the basis of available inferences drawn appropriately from the body of evidence. Rebenta was estopped from asserting a right to terminate on the basis of non-compliance with the condition: [75].

(per Basten JA, Ipp JA and Sackville AJA agreeing)

4. The evidence accepted by the trial judge led to an inevitable conclusion that at the time of execution of the agreement, a common intention had been established that was not embodied within the written agreement as executed: [97]–[98].

5. In such circumstances, Ocean View might have obtained rectification had Rebenta sought to enforce the agreement on its written terms. Rebenta could thus not establish any loss flowing from a right to terminate: [98].

Maralinga Pty Ltd v Major Enterprises Pty ltd [1973] HCA 23; 128 CLR 336, referred to.

(per Basten JA, Ipp JA and Sackville AJA agreeing)

6. In circumstances where a case can be determined by reference only to some of the issues, whether it is necessary to address the remaining depends to a significant extent on whether the Court is conducting a trial or is an intermediate appellate court: [8]–[9].

Kuru v State of New South Wales [2008] HCA 26; 236 CLR 1, considered.

7. It is often desirable for a trial judge to determine factual questions arising from the evidence, even if they are not necessary due to conclusions reached on other issues. The savings in judicial time accruing from a failure to do so will rarely justify the costs likely to be incurred in the event of a successful appeal requiring rehearing: [9].

8. It will usually be open to an intermediate appellate court to operate on the basis that a successful appeal is, in a run-of-the-mill case, a possibility, but not a probability: [10].

Health World Ltd v Shin-Sun Australia Pty Ltd [2009] FCAFC 14; 174 FCR 218, referred to.

9. It is appropriate for an intermediate appellate court to consider the limits of its resources, its workload, the interests of other litigants and the risk that a court will more readily err whilst dealing with an issue known to not arise in the circumstances of the case: [11]–[12].

Wade v Burns [1966] HCA 35; 115 CLR 537; Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [2008] NSWCA 206; Tarabay Pty Ltd v Leite [2008] NSWCA 259 at [27]-[28]; Lindholdt v Hyer [2008] NSWCA 264; 251 ALR 514, considered.

CA 40864/07
SC 20349/98

IPP JA
BASTEN JA
SACKVILLE AJA

24 July 2009

REBENTA PTY LTD v Peter WISE

Judgment

1 IPP JA: I agree with Basten JA.

2 BASTEN JA: In late 1995 Rebenta Pty Ltd (“Rebenta”) was the owner of land at Macpherson Street, Bronte and premises thereon, known as the Bronte Inn. Rebenta was one of a group of companies and trusts, the principal of which was Mrs Millicent Phillips. She had been under pressure from her bankers in 1994 to reduce the overall indebtedness of the group, and had made attempts to sell the Bronte Inn. In late 1995, she was seeking to maximise the capital return on the property by undertaking a redevelopment and selling units under a strata plan.

3 On 18 December 1995 Rebenta entered into an agreement with a company which was known for the purposes of the proceedings as Ocean View Apartments Pty Ltd (“Ocean View”). Under the agreement, known as the Project Management Agreement, Ocean View would redesign, renovate and sell the building as strata units. The agreement was part of a joint venture arrangement pursuant to which any profit from the development was to be divided equally between the joint venture parties, including a trust in which Mrs Phillips had an interest, in equal one-third shares.

4 Soon after entering in to the various contractual arrangements, Mrs Phillips became disenchanted with the project. She looked for an opportunity to terminate it. According to the agreement between Rebenta and Ocean View, Ocean View was required to obtain both development consent and building consent by 28 February 1996. Although the local government consent authority, being Waverley Council, had granted consent to a development application on 27 February 1996, no building approval had been granted, or even sought, at that time. Mrs Phillips instructed Rebenta’s solicitor, Mr Peter Wise (the respondent in this Court and the defendant below), to give notice terminating the agreement. Instead of taking that course, Mr Wise sent a letter requiring Ocean View to rectify its default within 28 days. The effect of the letter was to affirm, rather than terminate, the contract and Ocean View complied with the requirement. Accordingly, Rebenta argued it had lost the opportunity to terminate the agreement. It commenced proceedings against the respondent, seeking damages for his negligence.

5 That Mr Wise was negligent in the advice he gave and the course he took is no longer in dispute: the question, rather, is whether Rebenta suffered loss and, if so, in what amount.

6 At trial, Bruce James J held that, although Mr Wise failed to take reasonable care in his client’s interests, Rebenta suffered no loss. Accordingly, he gave judgment in favour of Mr Wise: Rebenta Pty Ltd v Wise [2007] NSWSC 1332.

Issues requiring determination

7 There are five separate matters raised by the notice of appeal, several of which involve sub-issues, together with four other matters raised on a notice of contention by the respondent.

8 The trial in the Common Law Division took 22 days. A number of the issues litigated there are no longer in dispute. Nevertheless, the issues raised in this Court have the potential to require reference to a large volume of documentary material and transcript. As will appear, the appeal can be dismissed by reference to three issues which, taken together, are sufficient to confirm the judgment below. (Indeed, the first taken alone would be sufficient.)

9 In these circumstances, it is not necessary or appropriate to address the remaining issues, unless the efficient administration of justice renders that course desirable: see Kuru v State of New South Wales [2008] HCA 26; 236 CLR 1 at [12]. When such a course is appropriate will depend to a significant extent on whether the Court is conducting a trial or is an intermediate court of appeal. It is often desirable in the case of a trial judge, who has heard evidence on a matter, to determine factual questions arising from the evidence, even if they are not necessary on conclusions which have been reached on other issues. That is because some account must always be taken of the possibility of a successful appeal, requiring the further evidence to be assessed, or in all likelihood repeated on a rehearing. The costs which are likely to flow to the parties in such an event will rarely be justified by the savings in judicial time. Further, such an event is more likely where there is a full appeal by way of rehearing, than where there is a more limited right of appeal.

10 With respect to an intermediate court of appeal, there is no further right of appeal, absent a grant of special leave to appeal to the High Court. While it seems undesirable in many cases to assess the likelihood of a grant of special leave and if granted, the likelihood of success on an appeal, in some cases such consideration may be appropriate: cf Health World Ltd v Shin-Sun Australia Pty Ltd [2009] FCAFC 14; 174 FCR 218 at [47] (Perram J, Emmett and Besanko JJ agreeing). Nevertheless, it will usually be open to the intermediate appellate court to work on the basis that a successful appeal is, in a run-of-the-mill case, a possibility, but not a probability.

11 There is also a principle of parsimony which applies in terms of the allocation of judicial resources. Parties in civil litigation do not have the right to demand that a court provide resources greater than those necessary to determine the dispute before it. An intermediate court of appeal is entitled to take into account the limits of its resources, its workload and the interests of other litigants: see Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [2008] NSWCA 206 at [824]-[833] (Ipp JA, Giles JA and Hodgson JA agreeing).

12 It is also appropriate to take into account the risk that a court will more readily fall into error in dealing with an issue which it knows does not arise in the circumstances of the case: cf Wade v Burns [1966] HCA 35; 115 CLR 537. In some cases, such a risk will be warranted; in other cases it will not be in the interests of the best administration of justice: see Tarabay Pty Ltd v Leite [2008] NSWCA 259 at [27]-[28]; Lindholdt v Hyer [2008] NSWCA 264; 251 ALR 514 at [184]-[185].

Contractual arrangements

13 In August 1995 proposals for the redevelopment of the Bronte Inn were being discussed by Mrs Phillips, Mr Robin Wise (the principal of Ocean View, then known as Dramwren Pty Ltd and no relation of the respondent in these proceedings) and Mr Tibor Balog. The proposal which was agreed upon involved Rebenta (at the instigation of Mrs Phillips) making the property available for redevelopment on the basis that it would receive the first $7 million generated by the sale of the units. The proceeds were to be used by Rebenta to repay to the HongkongBank of Australia Ltd (“HKBA”) a loan which was due to mature on 30 June 1996. However, interests associated with Mrs Phillips were not limited to the recovery of $7 million from the proceeds of the development; Mrs Phillips was also to have a one-third share in the profits of the development through a vehicle known as the Charlotte Trust, established in December 1995, with her son, Mr Robert Phillips as trustee. Mr Robert Phillips was also at that time the day-to-day manager of Rebenta.

14 The legal basis of the arrangements crystallized on 18 December 1995 with the execution of a number of interlocking agreements. Because one limb of the present dispute arose from a claim for rectification of one of the agreements, it will be necessary in due course to consider aspects of the negotiations which resulted in the formal documentation. For present purposes, it is sufficient to identify those parts of the agreement which underpinned the appellant’s claim in negligence against its former solicitor, the respondent.

15 It is convenient to refer first to the “Deed of Joint Venture” which identified the joint venturers as Simjack Pty Ltd (a corporate vehicle controlled by Mr Robin Wise), Progress & Securities Management Pty Ltd (an entity controlled by Mr Balog) and the Charlotte Trust. The deed was also executed by Ocean View, which was described as the “project manager” but was not a joint venturer. The recitals to the deed read as follows:

“A. The Joint Venturers have or will acquire the right to renovate, strata and sell the Land known as the Bronte Inn (the ‘Property’).
B. The Project Manager is to proceed with the development of the property on behalf of the Joint Venturers in accordance with Waverley Council Building and Development Approvals and Strata and sell the Lots which comprise the Property on behalf of the Joint Venturers (‘the Project’) and to pay all the profits of the Project to the Joint Venturers.
C. The parties wish to proceed with the Project upon the terms and conditions of this Deed.”

16 The joint venture deed was to terminate in the event that the project management agreement (referred to below) was “validly terminated”: cl 2.1.3. The deed could also be terminated by the Charlotte Trust giving written notice to the project manager (Ocean View), either within 60 days of the date of the deed, or “7 days from the date of hand delivery of written notice by the project manager to Charlotte of the development consent” whichever were the later date. Because, as will be seen below, the development consent was anticipated in late February 1996, the unilateral right of the Charlotte Trust to terminate was likely to expire on or about 7 March 1996. If not terminated earlier, the joint venture was expected to continue until all of the lots in the project had been sold and the profits or losses distributed or paid by the joint venturers. Of present significance is the provision that the joint venture would terminate if the project management agreement were validly terminated.

17 Before moving to the project management agreement, it is convenient to note the terms of a “tripartite deed” entered into between HKBA, Rebenta and Ocean View. The tripartite deed did not refer to the joint venture deed but did refer to the project management agreement. As the holder of security over the property to be developed, the tripartite deed provided the consent of the HKBA to the project management agreement. It also provided an undertaking by HKBA not to withhold its consent to a development application and to deal with a request in that regard as quickly as practicable: cl 3.1.2. The deed secured to HKBA the sum of $7 million plus interest and costs and required that neither Rebenta nor Ocean View “shall terminate, rescind or vary the Agreement by agreement with each other without the prior written consent of Hongkong Bank”: cl 2.1.5. To the extent of any inconsistency between the tripartite deed and the project management agreement, the deed was to prevail: cl 7.

18 For present purposes, the critical document was the project management agreement entered into between Rebenta (described as the Owner) and Ocean View (described as the project manager). HKBA was identified in the agreement as the mortgagee, but was not a party to the agreement. In consideration of Rebenta entering into the agreement, the project manager agreed to pay $70,000, which was to be paid forthwith to HKBA: cl 2.1. The fee was to be “non-refundable” unless the transaction contemplated by the agreement did not proceed due to fault on the part of Rebenta: cl 2.2.

19 The first steps required of Ocean View involved a development application, building application and strata plan. Clause 5.1 provided:

“The Project Manager will on behalf of the Owner but at the Project Manager’s own expense:-
5.1.1 prepare the Development Application, draft Strata Plan and Building Application, and
5.1.2 submit the Development Application, draft Strata Plan and Building Application to the Council, which Building Application must be lodged with the Council as soon as practicable but not later than six (6) weeks after the Council’s approval of the Development Application.”

20 Clause 5.2 provided:

“Forthwith upon receipt by the Project Manager of Development Consent and Building Consent or any written refusal from the Council in relation to the Development Application or Building Application the Project Manager will submit a copy thereof to the Owner.”

21 Various terms used in these subclauses were defined terms, but for present purposes it is sufficient to identify two in the definitions contained in cl 1.1, namely:

“(b) “Building Application” means the building application to be lodged by the Project Manager with the Council pursuant to the Development Consent.
(c) “Building Consent” means written consent from the Council to the Building Application.
…
(h) “Development Consent” means written consent from the Council to the Development Application (whether or not subject to terms and conditions).”

22 On the basis of the provisions set out above, two matters of significance might be inferred, namely:

(a) the development application and the building application would be lodged sequentially, with the building application expected to be lodged after and, indeed, “pursuant to” the development consent, and

(b) although time for the lodgement of the building application was to run from “Council’s approval” of the development application, the requirement for Ocean View to notify Rebenta of Council’s decisions was upon receipt of the relevant consents which, according to the respective definitions, were to mean “written consent from the Council”.

23 The next critical provision in the agreement was cl 5.4, which read as follows:

“In the event that Council refuses to grant Development Consent or has not granted Development Consent and Building Consent by 28 ^th February, 1996 either party may by notice in writing to the other terminate this Agreement and neither party shall have any right of action or claim for damages or specific performance against the other.”

24 The agreements entered into on 18 December 1995 recognised that the anticipated development application had yet to be lodged and dealt with by Council. The next meeting of Council was known to be in late February 1996. The timetable envisaged by cl 5.1.2 for lodging the building application required such lodgement by 9 April 1996. There was disconformity between that obligation and the apparent requirement of cl 5.4 that building consent be obtained by 28 February 1996.

25 Clause 5.5 addressed the circumstances in which a development consent subject to onerous conditions might be treated as a deemed refusal permitting either party to rescind the agreement. Clause 5.6 required that the building application be submitted to HKBA for its consent prior to lodgement. Clause 5.7 provided:

“In the event that the Project Manager has not obtained the Development Consent approval by 28 ^th February, 1996 (and in this regard time shall be of the essence) the Owner shall have the right to terminate this Agreement without any claim against it by the Project Manager for any costs, charges or expenses incurred by the Project Manager whatsoever.”

Negligence of respondent

26 Although the negligence of the respondent is no longer disputed, it is necessary to understand the basis on which negligence was found in order to address the correctness of his Honour’s conclusion that no loss was suffered by the appellant.

27 The development application submitted by Ocean View was in fact approved by the Council at a meeting on the evening of 27 February 1996. However, written notice of the approval was not provided to the architect (on behalf of Ocean View) until 11 March 1996. No building application had been lodged at that time and, inevitably, no building consent had been obtained by 28 February 1996. Accordingly, on a literal reading of the project management agreement, cl 5.4 had not been complied with because:

(a) if the definition of “Development Consent” in the agreement required written notification to Ocean View of the Council’s decision, that had not been received by 28 February 1996, and

(b) no building consent had been obtained by that date.

On the basis of either of those failures to comply with cl 5.4, Rebenta had a right by notice in writing to terminate the agreement, pursuant to that clause.

28 A similar right may have arisen in relation to the development consent pursuant to cl 5.7, although that might have depended upon default on the part of Ocean View. The agreement separately provided that in the case of a breach by one party of any of the covenants or conditions in the agreement the other party was entitled to serve written notice of such default, requiring the defaulting party to remedy the default within 21 days: cll 20.1 and 28.4. A breach of cl 5.7 by the project manager entitled Rebenta to terminate the agreement forthwith: cl 21.1.

29 As noted above, cl 5.1.2 required that the building application be lodged with Council no later than 9 April 1996. With Rebenta’s consent, the building application was lodged on that date.

30 Until 5 April 1996 the affairs of Rebenta had been conducted by Mr Robert Phillips, but he became seriously ill on that day and took no further part in the management of the company. Thereafter Mrs Phillips was effectively in sole control of Rebenta.

31 On 10 April 1996 the respondent wrote to Mrs Phillips stating:

“I refer to our recent telephone conversation and advise that pursuant to clause 5.4 of the Project Management Agreement either party may terminate the Agreement if Development Consent and Building consent have not been granted by 28 ^th February, 1996.
I understand that development consent was granted before 28 ^th February, 1996 but that building consent has not yet been granted.
I point out, however, that although Rebenta is entitled to terminate the Agreement pursuant to clause 5.4, Robyn Wise may consider that Rebenta has waived its rights under that clause by its actions since 28 ^th February, 1996. Nevertheless, I stress that Rebenta is 100% entitled to terminate the Agreement.”

32 By letter dated 22 April 1996 the respondent raised a number of issues in relation to the project management agreement, qualifying the advice in relation to cl 5.4 by stating that the right of either party to terminate was “subject, however, to clauses 20.1 and 28.4 requiring 21 days notice”. No reference was made to the tripartite deed with HKBA.

33 In accordance with instructions from Mrs Phillips, the respondent sent a letter on the same day to Ocean View in the following terms:

“We refer to the Project Management Agreement between Rebenta Pty Limited as Owner and your Company as Project Manager dated 18 ^th December, 1995.
You have failed to obtain Building Consent from Waverley Council by the date stipulated in clause 5.4 of the Agreement, namely 28 ^th February, 1996. Accordingly, you are in breach of the Project Management Agreement.
Pursuant to clause 28.4 of the Project Management Agreement Rebenta Pty Limited [sic] you are hereby given twenty-one (21) days notice, time being of the essence, to remedy the breach by obtaining Building Consent from Waverley Council, failing which our client will exercise its right to terminate the Project Management Agreement.”

34 On 10 May 1996, within the specified period, the Council consented to the building application.

35 The particulars of negligence which were pressed at trial and upheld by his Honour were identified in the judgment as follows:

“281 Sub-paragraph (g) of par 23 was in the following terms:
‘incorrectly advised the plaintiff that the right of either party to terminate under clause 5.4 was subject to compliance with clauses 20.1 and 28.4 and required 21 days notice, when no such notice was required for the purpose of termination under clause 5.4.’
282 Sub-paragraph (a) of par 23, which … was closely related to, and indeed the obverse of sub-par (a), was in the following terms:
‘The Defendant failed to advise that the agreement provided that the Defendant [sic] was entitled to terminate the agreement forthwith in the event that Oceanview failed to obtain Development Consent and Building Consent by 28 February 1996.’”

36 The trial judge held that the advice given by the respondent was not merely incorrect, but negligent: at [287] and [293]. His Honour summarised his finding at [300] in the following terms:

“I have found that the defendant was negligent in advising the plaintiff that the right to terminate under cl 5.4 of the Project Management Agreement was subject to compliance with cls 20.1 and 28.4 of the Agreement and required the giving of a 21 day notice (statement of claim par 23(g)) and in issuing to Ocean View the notice of 22 April 1996, without explaining to the plaintiff that its legal effect was to make an election to affirm the Project Management Agreement and to cause any right which might have existed to terminate the Agreement under cl 5.4 to be lost.”

Consequences of negligence

37 This conclusion was of no utility to Rebenta unless, at the time of the negligent advice or act, it had an available right to terminate the agreement forthwith either because no development consent in writing, or no building consent, had been obtained by 28 February 1996: at [301]. His Honour made findings adverse to Rebenta on both grounds, each of which is the subject of challenge in these proceedings. However, his Honour proceeded to consider whether the respondent’s negligence had caused Rebenta loss, on the assumption that it did have a right to terminate the contract forthwith, as at 22 April 1996.

38 There were a number of factors which suggested that Mrs Phillips might not have exercised a right to terminate, had she understood that it was available to her. For example, she had been given advice which offered such an opportunity on 10 April 1996 – see [31] above – on which she had not acted. Further, it was arguable that she required the consent of HKBA, which might not have been forthcoming. Nevertheless, after weighing up the various considerations, his Honour held that if properly advised (presumably on 22 April 1996) she would have exercised the right to terminate: at [344].

39 That finding gave rise to a further question as to the likely response of Ocean View, had Rebenta sought to terminate the project management agreement in April 1996. His Honour thought it “highly improbable that Robin Wise would have meekly acquiesced in a purported termination”: at [347]. His Honour further concluded at [351]:

“In all of these circumstances, Mr Robin Wise had only to stand fast for a short period to force Mrs Phillips into negotiating with him. The likely result of such negotiations would have been a resumption of the status quo, that is a resumption of the joint venture arrangements, on the original terms or close to the original terms.”

40 This finding, which was not separately challenged by the appellant, provided an obstacle to success on the appeal. It was not sufficient for the appellant to succeed in demonstrating that the trial judge was in error in concluding that Rebenta had no immediate right to terminate the contract on 22 April 1996; his Honour’s conclusion that the exercise of such a right would not have achieved a different result meant that the respondent’s negligence caused the appellant no loss.

41 The primary response to this obstacle on the part of counsel for the appellant was to say that his Honour’s errors in failing to uphold the claimed right to terminate, coloured his Honour’s conclusions as to the consequences of the exercise of the right. However, at [348] his Honour had approached the matter on a different basis. Having made a finding that, if faced with purported termination by Rebenta, Ocean View would have obtained legal advice and commenced proceedings to challenge the termination, his Honour continued at [349]:

“I have found that there were grounds on which such proceedings would have succeeded. Even if I am wrong in my conclusions that such grounds would have succeeded, they were fairly arguable grounds of such a nature that they would not have been liable to being summarily disposed of.”

42 Thus, his Honour’s conclusion that the status quo would have prevailed did not depend upon Ocean View succeeding in its proceedings, but only upon it having a sufficiently arguable case to force Rebenta into negotiations. His Honour’s assessment of the outcome of the negotiations depended on weaknesses in Rebenta’s position, known to Ocean View, including the fact that Mrs Phillips had “entered into the joint venture because she had been unable to finance the development herself” in circumstances where the banks were “breathing down her neck” and in a manner which concealed from the banks her interest in the joint venture (through the Charlotte Trust): at [350]. The appellant faced the additional difficulty that the assessment of the consequence of an attempted termination depended upon his Honour’s assessment of the main parties to the agreement, namely Mrs Phillips and Mr Robin Wise, each of whom had given evidence before him. Mrs Phillips had stated on 2 May 1996 to the respondent “of course, you know my bankers would be astounded to learn that I was involved in the development”: at [336]. His Honour also referred to Mrs Phillips’ assessment of Mr Robin Wise as being “ruthless in his business dealings”: at [347]. Those dealings, relevant to his likely response to an attempted termination, involved the expenditure of several hundred thousand dollars in pursuing the development: at [347]. There was, in any event, no direct attack upon his Honour’s assessment of the responses of Rebenta and Ocean View through their respective principals.

43 In these circumstances, Rebenta was driven to accept that it needed to establish not merely that his Honour had erred in failing to find that Rebenta had two bases upon which to terminate the agreement forthwith, but that the contrary view was “completely hopeless”: Tcpt, 26/03/09, p 3(5). Senior counsel for the appellant contended:

“The proper approach is to assume that the response of Ocean View would have been [that] it would get correct advice and that it wouldn’t litigate a hopeless cause.”

Loss of an opportunity

44 The loss identified at trial, as noted by his Honour in several passages, was a loss to Rebenta “of the opportunity to develop the property itself and make a profit from such development”: at [353], [354] and [355]. In the course of argument, counsel contended that, at least as an initial step, Rebenta had lost the opportunity to negotiate a better deal with Ocean View: Tcpt, p 7(20). However, he conceded that that was not the lost opportunity which was to be valued for the purposes of assessing damages.

45 The joint venture went ahead in accordance with the agreements, with the result that Rebenta received $7 million as payment for the land and the Charlotte Trust received a share in the actual profit of a little over $446,000. Rebenta conceded that credit should be allowed for that amount: at [355]. Although his Honour did not reach a final figure, it appears that Rebenta failed to prove that it suffered any loss, in any event. That assessment was challenged by the appellant.

46 In the circumstances identified above, it is convenient to deal with the matter by considering whether Rebenta made good its assertion that it had a right to terminate the agreement forthwith because cl 5.4 of the agreement had not been satisfied. This in turn gives rise to the following questions:

(a) With respect to the development consent:

(i) was the condition satisfied by the grant of consent by the Council prior to 28 February 1996, or
(ii) was the condition only satisfied by written notification of the decision of the Council to grant the consent, which concededly did not occur before 28 February 1996?


(b) If question (a)(ii) is answered in the affirmative, would Rebenta have been estopped from relying upon non-compliance with that provision as against Ocean View?

(c) In relation to the building consent:

(i) would Ocean View have been able to obtain rectification of the agreement to remove that requirement from cl 5.4?
(ii) had Rebenta waived any breach prior to 22 April 1996?

Requirement for development consent: construction of cl 5.4

47 The terms of cl 5.4, set out at [23] above, required that Council grant development consent by 28 February, 1996. There would have been non-compliance if Council had either refused to grant the consent or had simply not granted it, because it had made no final decision. In its terms, taken alone, the clause was complied with because development consent was granted on 27 February 1996. Rebenta’s argument in favour of non-compliance depended upon reading into the terms of cl 5.4 the definition of development consent in cl 1.1, namely “written consent from the Council to the Development Application …”. Further, it was necessary to understand the preposition “from” as indicating movement, namely a written document emanating from the Council and passing (presumably) to the project manager, Ocean View (or the architect as its agent).

48 A natural reading of the definition is that the development application is the subject matter to which consent must be given (that being the relevant action) by the Council (being the consent authority). A further requirement is that the consent be reduced to writing. The element of notification is absent from this reading. It involves reading “from” as identifying the source of the consent, namely the Council, not as creating a further action, namely notification. Accordingly, the fact that Ocean View was sent no written notification of the outcome of the Council meeting until 11 March was irrelevant to compliance with cl 5.4.

49 That construction should be accepted. Once that construction is adopted, it was sufficient for the trial judge to find, on the basis of evidence of “usual procedure of the Council”, that a handwritten minute of the resolution passed by the Council would have been made at the time, which would then have been transformed into a typewritten minute on the following day: at [132]. However, his Honour concluded at [133]:

“The handwritten and typed minutes of the passing of the resolution granting Development Consent, which were prepared for the purposes of the Council’s own records, would not, in my opinion, amount to written consent ‘from’ the Council to the development application.”

50 By his notice of contention, the respondent challenged this conclusion. That contention should be upheld.

51 Apart from the fact that the definition of “Development Consent” does not readily bear the construction sought to be placed upon it, there are other aspects of the agreement which are consistent with the construction preferred above. For example, cl 5.2 obliged Ocean View, “forthwith upon receipt … of the Development Consent … from the Council” to submit a copy thereof to Rebenta. If cl 5.4 had been intended to require receipt of a written document prior to 28 February, one might have expected it to adopt similar language to cl 5.2, whereas the language was markedly different.

52 Clause 5.4 envisaged the possibility that the Council had refused or not granted consent by the specified date. This language is consistent with the Council making a relevant determination, rather than providing written notification of its determination. The appellant’s argument required that the clause would not be satisfied if the Council had in fact granted consent and prepared a written minute of its determination but had failed to send either a statutory notice or some other form of written notification to the applicant. That construction adds significantly to, and indeed contorts, the ordinary meaning of the clause, even taking account of the definition of development consent.

53 Without dwelling on the details of the provisions, each of cll 5.5 and 5.7 suggested that the parties were concerned with the substance of the Council’s decision (granting or refusing approval for the application, and the conditions on which any grant might be made) rather than the content of the notification. These provisions may be thought neutral at best for the appellant.

54 The trial judge accepted a submission made by Rebenta that some support for its reading could be obtained from ss 92 and 93 of the Environmental Planning and Assessment Act 1979 (NSW), as then in force. Pursuant to s 92, the consent authority was required to give notice of the determination of a development application in a prescribed form and manner; the date of the determination and the date from which it operated were required to be endorsed on the notice: s 92(1) and (2). The consent was “effective” and would “operate from the date of consent that is endorsed upon the notice”: s 93(1)(a). Except in the case of a consent given subject to fulfilment of a condition, those provisions appeared to require that the consent operate from the date of determination: s 92(2).

55 The fact that the consent authority was required to give notice of its determination and that such a notice served a clear statutory purpose are matters which do not obviously affect the construction of the agreement. There might have been some sense in requiring that notice be received from the Council by a certain date, but that was not the form of cl 5.4, nor the definition of “Development Consent”. Indeed, reference to ss 92 and 93 suggests that the language of the agreement would have been quite different if the parties had intended that statutory notification was to be required by the prescribed date.

56 The appellant sought to obtain some further support for its submissions from evidence of a Council officer who accepted that the Council would have been willing to expedite provision of the statutory notice, had an applicant requested it in order to comply with a contractual deadline. That evidence may be accepted in its entirety: nevertheless, it has little or no bearing on the construction of the agreement. Accepting that the parties knew at the date of the agreement that the likely Council meeting to consider the development application was to be held in late February 1996, such evidence would remove any inference that a tight timetable was inconsistent with an intention to require notification, or at least might have been deployed for that purpose if it had also been shown that both parties were aware of it at the time they entered into the agreement. In any event, it provided no positive support for Rebenta’s construction argument.

57 It follows that the notice of contention should be accepted and the construction requiring that written notice be provided to Ocean View (or its architect) by 28 February 1996 should be rejected. Accordingly, there was no failure to comply with any requirement of cl 5.4 with respect to the development consent.

Estoppel

58 On this basis, it is unnecessary to consider the correctness of his Honour’s conclusion that failure to obtain notice of the development consent by 28 February 1996 did not confer on Rebenta a right to terminate the agreement because an estoppel ran against the company. However, it is convenient to deal with the appellant’s challenge to his Honour’s finding, which was related to the construction issue.

59 The relevant pleading raising an estoppel by convention was as follows (defence to fourth further amended statement of claim, par 27PP (a)):

“after entering into the agreements on 18 December 2005, the parties to the agreements conducted themselves on the basis of common understanding that there would be adequate compliance with the terms of the agreement if Council approval to the development application was obtained on or prior to 28 February 1996 so that, had the plaintiff attempted to terminate the agreement and the joint venture arrangements on the ground that no consent in writing to the Development Application had been obtained by 28 February 1996 in circumstances where Development Approval had been granted by the Council on 27 February 1996, the plaintiff would have been guilty of unconscionable and inequitable behaviour and would have been estopped from so contending ….”

60 His Honour noted that the pleading was restricted to the consent to the development application and did not extend to the building consent: at [221].

61 His Honour accepted that an estoppel by convention might arise in the circumstances identified by the High Court in Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd [1986] HCA 14; 160 CLR 226 at 244, in the following terms:

“Estoppel by convention is a form of estoppel founded not on a representation of fact made by a representor and acted on by a representee to his detriment, but on the conduct of relations between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying.”

62 His Honour also referred to the statement of this Court in Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; 69 NSWLR 603, in which Tobias JA (with the agreement of Mason P and Campbell JA) held at [194], “estoppel by convention is a form of estoppel founded upon an assumed state of affairs by the parties whether as to a matter of fact or a matter of legal effect which both will be estopped from denying”. Although the reference in support of that proposition was to Con-Stan Industries, there was support for the reference to an assumption as to legal effect in the statement of principles by Lord Steyn in The “Indian Grace” (No 2) [1998] AC 878 at 913 in a passage cited at [198] in Ryledar, to the following effect:

“… an estoppel by convention may arise where parties to a transaction act on an assumed state of facts or law, the assumption being either shared … or made by one and acquiesced in by the other. The effect of an estoppel by convention is to preclude a party from denying the assumed facts or law if it would be unjust to allow him to go back on the assumption.”

63 After reviewing the evidence, his Honour concluded at [250]:

“I find, as alleged by the defendant, that after entering into the Project Management Agreement on 18 December 2005 the parties to the Agreement conducted themselves on the basis of a common assumption that there would be adequate compliance with the terms of the Agreement if Council approval to the development application was obtained by 28 February 1996, so that, had the plaintiff sought to contend that it had a right to terminate the Agreement on the ground that no consent in writing had been obtained by 28 February 1996, in circumstances where development approval had been granted by the Council on 27 February 1996, the plaintiff would have been estopped from so contending.”

64 The challenge to his Honour’s conclusion in this respect appeared to be twofold. The first element was that the allegation as pleaded was incoherent because cl 5.4 did not require the parties to take steps in order to comply with it. Rather, the term operated in the events which occurred, so as to confer an automatic right of termination on Rebenta. To avoid this result, the appellant argued that the respondent needed to establish a promissory estoppel precluding Rebenta from exercising its strict legal rights. This, it was submitted, required a representation by one party and reliance by the other.

65 The distinction between the two forms of estoppel was conveniently stated by Brereton J in Moratic Pty Ltd v Gordon [2007] NSWSC 5; (2007) NSW ConvR 56-172; ANZ Conv R 198; Aust Contract Reports 90-255, at [33]:

“The similarities between the two doctrines should not be allowed to mask their differences, which reflect the disparate origins of promissory estoppel and conventional estoppel. Promissory estoppel, a creature of equity, is, typically, focussed on the conscience of the defendant: it operates when the defendant has induced or acquiesced in the adoption by the plaintiff of an assumption that the defendant will not assert its strict legal rights, so to prevent unconscionable (or unconscientious) insistence by the defendant on its strict legal rights. On the other hand, conventional estoppel, a creature of the common law, is focussed on the consensual basis of the parties’ relationship: it operates when both parties have adopted the same assumption as the basis of their relationship, often without appreciating that any departure from the strict legal position is involved, so as to hold both parties to their common understanding.”

66 Although, in the course of oral submissions, counsel for Rebenta insisted that this was not a mere pleading point, but one of substance, the gravamen of the challenge remains obscure. It was not suggested that an estoppel by convention was not available at law, nor that the statements of principle identified above were incorrect in law. In the course of oral argument, Sackville AJA put to counsel the following proposition (Tcpt, 26/03/09 at p 43(10)):

“What if the parties had got together and one of them said, ‘Look, there is an issue as to what this clause means …. Let's not have a fight about this, why don't we operate on the basis that the clause means that as long as council gives its consent - whether or not communicated - by 28 February, then neither of us will have the right to terminate.’ What if that were said, what sort of estoppel would that create, if anything?”

67 Counsel’s response was that such an exchange could give rise to a consensus or bargain limiting the operation of the clause. However, that was not an adequate answer to the question as to why such an arrangement could not be pleaded and proved as a conventional estoppel. As explained by Handley JA in Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298 at 308:

“Promissory estoppels and estoppels by representation lack this element of mutuality…. Estoppels by convention on the other hand are mutual.”

68 The short answer to the challenge is that subject to some infelicitous drafting which had no practical consequence in the circumstances of the trial, it was open to the respondent to run a case based on estoppel by convention if he could make good the relevant factual basis.

69 The factual basis is separately challenged, but before turning to that question it is necessary to consider a separate issue raised by the appellant in relation to the parties to any such estoppel. This argument required reference to the tripartite deed between Rebenta, Ocean View and HKBA. Pursuant to that deed Rebenta covenanted with HKBA that it would not “waive any of its rights against [Ocean View] under the Agreement … without the prior written consent of HongkongBank”: cl 2.3.2. Further, Rebenta and Ocean View had covenanted with HKBA that they would not “terminate, rescind or vary the Agreement by agreement with each other without the prior written consent of HongkongBank”: cl 2.1.5. The appellant argued that any consensus needed to include an understanding on the part of HKBA: written submissions, par 71.

70 The real interest of HKBA, as expressed in the tripartite deed, was to ensure the project management agreement went ahead expeditiously, and was not terminated or varied without its consent. The proposed estoppel by convention promoted that object, whereas strict reliance upon the terms of the agreement undermined it. In any event, the respondent said that no objection to the pleading of a conventional estoppel limited to a consensus between Rebenta and Ocean View, had been taken at trial: Appeal Tcpt, p 92 (5)-(10). That submission was not contradicted by the appellant and it is not necessary to consider the appellant’s argument on this point further.

71 The appellant also challenged the factual basis for the conclusion of the trial judge. The findings themselves were not challenged, but rather the inference which was sought to be drawn from them.

72 The substance of the appellant’s challenge was that discussions between the parties concerning the development application referred to the need to obtain consent, but made no reference to the question of notification. There are two answers to this challenge. First, the absence of reference to an additional requirement was significant and, secondly, the evidence went a little further than the appellant suggested. Thus, Mr Wise gave evidence by affidavit to the following effect:

“Shortly prior to 27 February 1996, I had a conversation with Mr [Robert] Phillips to the following effect:
He said:
‘I hope that Robin gets the DA through Council at its meeting on the 27 ^th February. Because if they don’t, Millie will rescind the agreement. That will be disastrous.’
At about this time Mr Phillips also said to me words to the effect of:-
‘Millie’s not happy with the deal. Under the deal she gets hundreds of thousands more than she could have [got] or was ever offered before. On top of that she doesn’t have to pay any agent’s commission and she stands to gain up to $2 million from the joint venture. And she’s still complaining. This is not good.’”

73 The affidavit evidence continued:

“On the morning of 28 February 1996 Mr Phillips informed me that Council had approved the DA the night before. Later that day I had a conversation with Mrs Phillips to the following effect:
Mrs Phillips said:
‘They got the DA through last night. There’s not much I can do about that now is there?’
I said:
‘No.’”

74 Mr Robert Phillips agreed with the evidence given by Mr Wise as to his conversation prior to the Council meeting: Tcpt, p 1055. His Honour accepted the evidence as to Mrs Phillips’ conversation with the respondent: at [231]. He also noted evidence subsequent to 28 February 1996 which was consistent with Mr Robert Phillips and Mrs Phillips accepting that Ocean View had obtained that which was required pursuant to cl 5.4.

75 In these circumstances, his Honour concluded that, whatever the proper construction of the agreement might be, the parties had acted on the basis that consent by Council to the development application, reduced to writing no later than 28 February 1996, was sufficient compliance with cl 5.4. That conclusion should be accepted, in the event that the construction of cl 5.4 to the same effect is held to be erroneous.

Timing of building consent

76 Clause 5.1.2 of the agreement required Ocean View to lodge with Council a building application “as soon as practicable but not later than six (6) weeks after the Council’s approval of the Development Application”. In practical terms that timing was understandable. Somewhat inconsistently, cl 5.4 required that both development consent and building consent be obtained by 28 February 1996. His Honour accepted that, if Rebenta had attempted to terminate the project management agreement in April 1996 on the basis that building consent had not been obtained by 28 February, Ocean View would have sought rectification by the deletion of the words “and Building Consent” from cl 5.4: at [214]-[215].

77 His Honour recounted the history of the project management agreement in some detail, from 25 September 1995 until its execution on 18 December 1995 at [151]-[192].

78 Certain steps in the process were clear. The first reference to the building application was introduced following the submission of a draft agreement to the solicitors for HKBA on 25 September 1995. HKBA sought to impose an obligation on Ocean View to lodge the building application and obtain approval from Council. It also sought to include a requirement that it be permitted to review and consent to the building application before it was lodged: at [152].

79 On 13 October 1995, the respondent wrote to HKBA’s solicitors suggesting that the right to terminate be made conditional upon development approval not being obtained by 28 February 1996 and building approval not being obtained by 30 April 1996. HKBA’s solicitors responded on 17 October requiring that both approvals be obtained by 31 December 1995: at [156].

80 On 18 October 1995 the respondent wrote to HKBA’s solicitors asking them to obtain further instructions “as our client believes that the Bank will now approve 28th February 1996”. The concession was made by letter dated 19 October 1995.

81 Significantly, in the light of later events, on 26 October the respondent’s paralegal, Ms Margaret Rowley, wrote to the solicitor for Ocean View, Mr George Newhouse, following a conversation with Mr Robert Phillips, in the following terms:

“Robert stated that you felt that where we have 31 ^st December, 1995 somewhere in the document, it should read 28 ^th February, 1996. The only 31 ^st December we can find is in clause 6.4 and that is the correct date.”

82 Clause 6.4 was the predecessor to cl 5.4 in the final agreement: it is clear that as at 26 October, Ms Rowley was not aware that the date had been changed. A copy of the project management agreement bearing a footer with the date 25 October still contained in cl 6.4 the date 31^st December 1995. It was on that document that the solicitors for HKBA inserted in handwriting reference to the building consent also being required by that date. Those handwritten amendments were sent to the respondent by facsimile on 31 October.

83 On 2 November 1995 the respondent wrote to HKBA’s solicitors noting that references to building consent in certain clauses were acceptable, but not in the predecessor to cl 5.4. Various other changes to the draft were sought at that time. A diary note prepared by HKBA’s solicitors on 7 November 1995 noted that Rebenta might also have a problem with the reference to building consent in cl 6.7. Their letter of the same date accepted the objection to the inclusion of building consent in cl 5.4 and to the date in that clause being changed to 28 February 1996. They sought, in addition, the inclusion of the date 31 December 1995 for lodgement of both applications with Council, pursuant to the predecessor to cl 5.1.2.

84 On 10 November 1995 HKBA’s solicitors noted a conversation with their client agreeing with a proposal that the project manager lodge the building application and strata plan with Council “asap but not more than six weeks after Council approves the DA”: at [172]. On the same day, the solicitors conveyed that agreement to the respondent.

85 At this stage, the respondent left the conduct of the matter to Ms Rowley. Clause 5.4 was not amended in either of the two versions which she then sent to the solicitors for HKBA.

86 A diary note prepared by HKBA’s solicitors on 10 November 1995, following receipt of a further marked-up draft of the project management agreement, noted that there was “still need to incorporate our latest amendments”. That Mr Robert Phillips was also conscious of the problem in relation to the building application appeared from a contemporaneous note prepared by HKBA’s solicitors on 10 November, after a conversation with him, in the following terms:

“Simply can’t lodge BA until DA has been approved. And there’s not enough time … now to 31/12 for the DA to be approved & for the BA & SP to be lodged. (‘That’s basic construction stuff which the Bank should know.’ Can’t understand why the Bank doesn’t realise this. I told him that the Bank was merely concerned to ensure that the development gets underway asap - & indeed, that’s in everyone’s best interests. …
What about asap. Agreed to asap but not later than six weeks after DA is approved by Council … will lodge BA & SP for consent/approval.”

87 When that proposal was put to the respondent, he replied on 10 November:

“Agreed except as regards the strata plan. The strata plan cannot be finalised until the building is almost completed as each Lot must be physically measured by the surveyor before he is able to complete such details as the area of each unit and garage/carspace, etc. The strata plan must be in registrable form before it is lodged for approval with the Council.”

88 On 14 November Ms Rowley sent a copy of the revised draft to Mr Robert Phillips for approval. However, the reference to building consent was not removed from cl 5.4 before the parties executed the project management agreement on 18 November 1995. It should be noted that the documentary evidence demonstrated that the respondent had been meticulous of sending copies of all his correspondence with HKBA’s solicitors to the solicitor for Ocean View, Mr Newhouse. There was, however, no evidence that Mr Newhouse took any part in the negotiations with HKBA’s solicitors, nor that the respondent or anyone else at Rebenta ever invited him to do so.

89 His Honour concluded that the retention of the words “and Building Consent” in cl 5.4 was “not deliberate but a mistake”: at [205]. He continued at [206]:

“There would be no rational reason for the defendant or his employee deliberately including the words in the drafts. The reason suggested by counsel for the plaintiff, that there was at this stage an impasse between [the solicitors for HKBA] and the defendant, which the defendant sought to overcome by shifting the burden of dealing with it to Robin Wise and his solicitor, simply did not exist.”

90 Support for the suggestion of such a deliberate tactic came from the oral evidence given by Mr Robert Phillips. The evidence had been identified and assessed by the trial judge at [198]-[202], but the argument rejected at [209]-[211]. The substance of the appellant’s argument was that it was wrong to treat the words “and Building Consent” as having been mistakenly left in the agreement despite a prior understanding that they would be removed. The appellant said that the draft bearing a footer of 10 November was the first occasion on which they were inserted and had thus been deliberately included on that date.

91 Mr Robert Phillips was expressly asked whether his belief that the inclusion of those words had been deliberate so as to pass the burden of negotiating with respect to them to Ocean View had arisen on 10 November 1995. His response had been (Tcpt, p 1080):

“Could well be right. I don’t know. There were, I don’t know, dozens of drafts. I don’t which drafts are which. I don’t have a file. I don’t know.”

92 This provided an unpromising basis for the submission. There was other evidence, noted above, which demonstrated with some clarity that HKBA had agreed to remove that requirement from cl 5.4 prior to 10 November. Further, the explanation for their inclusion in the draft sent by the respondent’s employee on 10 November was that she was working from a marked-up draft dated 25 October, where they had been inserted in handwriting by HKBA’s solicitors. The argument that an impasse had arisen on 9 November 1995 was not only inaccurate, but unhelpful. It was inaccurate because negotiations continued thereafter; it was unhelpful, because matters which had then been in dispute were later resolved. The best that the appellant could do to demonstrate such an impasse was to note that there was no response to the respondent’s letter of 10 November 1995 concerning the strata plan. Yet on 14 November, HKBA’s solicitors inserted the words which had been proposed in cl 5.1.2, with respect to lodgement of the building application, without reference to the strata plan. The clear inference is that their client accepted that reference to the strata plan in that timeframe would have been inappropriate, thus accepting the respondent’s objection on 10 November. No error has been demonstrated in his Honour’s rejection of this submission.

93 In the abstract, there might have been sense in having the developer (Ocean view) explain to HKBA how, in practical terms, the steps of development application, development consent, building application, building consent, construction and lodgement of strata plans should follow sequentially. That possibility may have been discussed between the respondent and Mr Robert Phillips. However, there was no suggestion in the evidence that anyone spoke to Mr Robin Wise, or Mr Newhouse, suggesting that course. For the impasse theory to have any grounding in fact, there should have been a note of a conversation, or else a memorandum, explaining to Mr Newhouse that it was up to Ocean View to negotiate a change with respect to the building consent. To the contrary, it was apparent that it was Mr Robert Phillips who explained “basic construction stuff” to HKBA’s solicitors. His protest was clearly successful, because they recorded their agreement on the same day. The documentary record supported no other construction of events than that accepted by his Honour.

94 A subsidiary submission related to the failure of the respondent to give further evidence following the revelation by Mr Robert Phillips in the witness box that the words “and Building Consent” had been added to pass the burden of resolving the impasse to Ocean View. However, once it is accepted that there was no impasse and that Mr Phillips was unclear as to precisely when that approach had been proposed, there was little need for the respondent to give further evidence himself. The trial judge concluded that Mr Phillips’ evidence could not sustain “the effect and the weight” sought to be placed on it by the appellant, a conclusion which was fully explained and sustainable on the objective evidence. The failure of the respondent to re-enter the witness box became inconsequential.

95 A further submission placed reliance upon the fact that, in April 1996, the respondent had advised Mrs Phillips that Rebenta had a right to terminate under cl 5.4, based on the absence of building consent by 28 February, without then adverting to the recent events which should have alerted him to the fact that, consistently with evidence he gave at trial, this had happened by way of a mistake in his office. His Honour treated that submission as lacking weight in the following terms at [208]:

“… I am prepared to accept that the defendant made these assertions on the basis of looking, some months afterwards, at the written terms of the Project Management Agreement as executed, not recollecting that a consensus had been reached that the words in question were not to be included in the Agreement.”

96 In challenging this finding in this Court, no reference was made to any cross-examination of the respondent which might have supported a rejection of this conclusion. Furthermore, there was the evidence referred to above of a conversation with Mrs Phillips on 28 February in which she had confirmed that because the development consent had been given the previous night, there was no basis for termination.

97 This analysis of the evidence, accepted by his Honour, led to the inevitable conclusion that, at the date the project management agreement was executed, both Rebenta and Ocean View believed, through their respective agents, that there was no requirement to obtain building consent by 28 February 1996, whilst the only party which had pressed such an obligation, namely HKBA, had agreed in writing to remove that obligation from cl 5.4. The result was to achieve consistency with cl 5.1.2, requiring the building consent no later than six weeks after the Council consented to the development application.

98 Once a common intention had been established which was not embodied in the written agreement as executed, it was not in dispute that Ocean View might have obtained rectification had Rebenta sought to enforce the written agreement according to its terms: see, eg, Maralinga Pty Ltd v Major Enterprises Pty Ltd [1973] HCA 23; 128 CLR 336 at 350 (Mason J, Menzies J agreeing). Indeed, given the appellant’s concession that it could only succeed in establishing loss flowing from a right to terminate on the basis of an absence of a building consent by 28 February 1996, if the rectification case were clearly hopeless, this ground of appeal must fail. As his Honour found, far from being hopeless, a claim for rectification would probably have succeeded.

99 In these circumstances, there is no need to deal with the final question identified at [46] above, namely waiver.

100 His Honour’s conclusion that, had Rebenta sought to terminate the agreement in April 1996 on the basis that the building consent had not been obtained by 28 February, Ocean View would have successfully sought rectification of the agreement to delete the words “and Building Consent”, should be upheld.

Conclusions

101 The appellant having failed in its challenge to critical aspects of the decision of the trial judge, the appeal must be dismissed with costs.

102 SACKVILLE AJA: I agree with the orders proposed by Basten JA and with his Honour’s reasons

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