Sanpine v Koompahtoo Local Aboriginal Land Council - [2005] NSWSC 365

No judgment structure available for this case.

CITATION:
Sanpine v Koompahtoo Local Aboriginal Land Council [2005] NSWSC 365

HEARING DATE(S): 9-11/2/05; 16/3/05; 21-23/3/05

JUDGMENT DATE :

22 April 2005

JURISDICTION:
Equity

JUDGMENT OF:
Campbell J

DECISION:
Contract validly terminated

CATCHWORDS:
EVIDENCE - burden of proof, presumptions and weight and sufficiency of evidence - principles for deciding which party to litigation has the onus of proving that a contract has been validly terminated - onus of proof when a declaration is sought in relation to a negative fact - DECLARATIONS - onus of proof when a declaration is sought as to a negative fact - CONTRACTS - construction and interpretation of contract - principles in deciding whether parties have agreed to dispense with common law rights to terminate for repudiation - ESTOPPEL - general principles - estoppel in the face of a statute - as at what date does one look to see what statutory provisions are in existence for the purpose of deciding whether there has been an estoppel in the face of a statute - ESTOPPEL - general principles - types of statutory provision concerning which there cannot be an estoppel in the face of the statute - ABORIGINALS - Aboriginal land councils - powers and functions - application of doctrine of ultra vires to such corporations - whether such corporations have power to dispense with requirements imposed by Aboriginal Land Rights Act 1983 for keeping accounts and having them audited - whether action of office bearers of such a corporation can give rise to an estoppel whereby it cannot be asserted that the corporation has dispensed with a contractual provision requiring the keeping of accounts, in substantially similar terms to the statutory requirement to keep accounts - ABORIGINALS - Aboriginal land councils - scope of authority of chairman - scope of authority of treasurer - CORPORATIONS - statutory corporations - powers - extent of - Aboriginal land councils - whether such corporations have power to dispense with requirements for keeping accounts and having them audited imposed by Aboriginal Land Rights Act 1983 - CONTRACTS - discharge - repudiation - types of conduct which can be repudiation - LEGAL REASONING - role of ostensive definition

LEGISLATION CITED:
Aboriginal Land Rights Act 1983
Aboriginal Land Rights Amendment Act 2001
Aboriginal Land Rights Regulations 1996
Corporations Act 2001 (Cth)
Environmental Planning and Assessment Act 1979
Environmental Planning & Assessment Regulation 1994
Interpretation Act 1987
Judicature Act 1873 (UK)
Land Tax Management Act 1956
Public Finance and Audit Act 1983
Real Property Act 1900
Threatened Species Conservation Act 1995

CASES CITED:
Abrath v The North Eastern Railway Company (1883) 11 QBD 440
Abrath v The North Eastern Railway Company (1886) 11 App Cas 247
Australian Broadcasting Commission v Australasian Performing Right Assn Ltd (1973) 129 CLR 99
Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66
BP Refinery (Westernport) Pty Limited v Shire of Hastings (1977) 180 CLR 266
Byrne v Australian Airlines Limited (1995) 185 CLR 410
Chapman v Wade [1939] SASR 298
Cohen & Co v Ockerby & Co Ltd (1917) 24 CLR 288
Commercial Union Assurance Co of Australia Ltd v Beard [1999] NSWCA 422; (1999) 47 NSWLR 735
Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 176 ALR 693
Crowley v Glissan (No 2) (1905) 2 CLR 744
Dorsatville v Loumbos, Bryson J, 16 March 1990, unreported
Fileman v Liddle (1974) 2 BPR 9192
Galaxidis v Galaxidis [2004] NSWCA 111
Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689
Grey v Australian Motorists & General Insurance Co Pty Ltd [1976] 1 NSWLR 669
Hume v Monro (No 2) (1943) 67 CLR 461
Hutt Valley Properties Limited v Gamages (NZ) Limited (1952) NZLR 296
Illawong Village Pty Limited v State Bank of New South Wales [2004] NSWSC 18
Industrial Equity v G and C Consolidated (1974) 2 NSWLR 456
Interpool v Kapal Pacifico (KP) (1982) 7 ACLR 243
J Kitchen & Sons Pty Ltd v Stewart's Cash and Carry Stores (1942) 66 CLR 116
Jaques v Withy and Reid (1788) 1 H Bl 65; 126 ER 40
Jones v Sutherland Shire Council (1979) 2 NSWLR 206
Kok Hoong v Leong Cheong Kweng Mines Limited [1964] AC 993
Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623
Law Society of New South Wales v Bruce (1996) 40 NSWLR 77
Lombard North Central Plc v Butterworth [1987] QB 527
Lush v Russell (1850) 5 Exch 203
Mackay v Dick (1881) 6 App Cas 251
Massoud v NRMA Insurance Ltd (1995) 8 ANZ Insurance Cases 61-257
Overmyer Industrial Brokers Pty Limited v Campbell's Cash and Carry Pty Limited [2003] NSWCA 305
Owners - Strata Plan No 51487 v Broadsand Pty Ltd [2002] NSWSC 770
Paric v John Holland (Constructions) Pty Ltd [1984] 2 NSWLR 505
Paric v John Holland (Constructions) Pty Ltd (1985) 62 ALR 85
Pollnow v Garden Mews-St Leonards (1984) 2 ACLC 511
Port of Melbourne Authority v Anshun Proprietary Limited (1981) 147 CLR 589
The Progressive Mailing House Pty Limited v Tabali Pty Limited (1985) 157 CLR 17
Ross T Smyth & Co Ltd v T D Bailey, Son & Co [1940] 3 All ER 60
Schenker & Co (Aust) Pty Ltd v Maplas Equipment and Services Pty Ltd [1990] VR 834
Shevill v Builders Licensing Board (1982) 149 CLR 620
Smart v Allen (1980) 91 WN 241
Smith v Butler [1900] 1 QB 694
Southern Foundries (1926) Limited v Shirlaw [1940] AC 701
Spiers v Hunt [1908] 1 KB 720
Stocznia Gdanska SA v Latvian Shipping Co & Others (1998) 1 WLR 574
Subdivisions Limited v Payne [1934] SASR 214
Tan Hung Nguyen & Anor v Luxury Design Homes Pty Limited & 2 Ors [2004] NSWCA 178
TCN Channel Nine Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130
Todd v Parker [1953] NZLR 39
Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
Wilson v Carnley [1908] 1 KB 729
Wongala Holdings Pty Limited v Mulinglebar Pty Limited (1994) 6 BPR 97481

PARTIES:
Sanpine Pty Ltd - Plaintiff
Koompahtoo Local Aboriginal Land Council - First Defendant
Terry Lawler - Second Defendant
Koompahtoo Local Aboriginal Land Council Property Investment Pty Ltd - Third Defendant

FILE NUMBER(S):
SC 4606/04

COUNSEL:
T S Hale SC; J White - Plaintiff
B Coles QC; G Sirtes - First & Second Defendants
No appearance - Third Defendant

SOLICITORS:
Solari Legal - Plaintiff
Bartier Perry - First & Second Defendants
No appearance - Third Defendant

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
EQUITY LIST

CAMPBELL J

22 APRIL 2005

4606/04 SANPINE PTY LIMITED v KOOMPAHTOO LOCAL ABORIGINAL LAND COUNCIL

JUDGMENT

PART A - INTRODUCTORY

Nature of the Case

1 This is the trial of a preliminary question concerning whether a Joint Venture Agreement between the plaintiff and the first defendant relating to the development of land of the first defendant remains on foot. The affairs of the first defendant came to be under the control of an administrator, the second defendant, who wrote a letter to the plaintiff on 12 December 2003 purportedly terminating the Joint Venture Agreement. The issue in the present case relates to the validity of that purported termination. The trial of the preliminary question has been granted an expedited hearing, partly because its outcome may affect other litigation which is on foot.

Events Leading to the Joint Venture Agreement

2 The first defendant (“Koompahtoo”) is a Local Aboriginal Land Council incorporated under the Aboriginal Land Rights Act 1983. As a result of claims made under that Act, various parcels of land near Morisset came to be vested in Koompahtoo. Three of those parcels are relevant to this case. The first of them is the land in folio 556/729949 (“Lot 556”). That folio was first created, showing Koompahtoo as registered proprietor, on 27 October 1997, pursuant to a Request under the Real Property Act 1900 by the State of New South Wales for a transfer by it to Koompahtoo of the land in Lot 556 to be registered. However, it was known prior to then that a grant would issue. Lot 556 has an area of approximately 850 ha. It includes the land on which the Morisset Hospital was formerly conducted, and a large area of bushland. The second relevant parcel of land is that in Aboriginal land claim 3386, which resulted in Koompahtoo being granted 23.27 ha on 5 October 1999. The third relevant parcel is the land in Aboriginal land claim 6165, which was granted to Koompahtoo on 22 March 2000, and contains 12.26 ha. The second and third parcels adjoin Lot 556, and are near the township of Morisset.

3 All the land lies in the area controlled by the Lake Macquarie City Council (“LMCC”).

4 Koompahtoo developed a plan whereby part of the land it was granted, which was not of ongoing Aboriginal cultural significance, would be developed, in conjunction with a developer, into a residential subdivision and sold. The profits of Koompahtoo from the development would be kept to provide ongoing benefits and, it was hoped, economic independence for the people whom Koompahtoo had as its members. The balance of the land was to be retained by Koompahtoo for conservation and recreational use, with the development of limited areas for the purposes of a cultural meeting place, a tourist accommodation facility and recreational activities. The development project was to be a self-funded one. It was, it seems, the first such project to be undertaken in New South Wales by a Local Aboriginal Land Council.

PART B - THE JOINT VENTURE AGREEMENT

5 On 14 July 1997 a Joint Venture Agreement was entered between the plaintiff and Koompahtoo. That Agreement identified, by a map, an area of 64 ha which was described as the Stage One Land, and a further area of 45 ha which was described as the Stage Two Land. Each of those areas lay in the northern part of Lot 556 and the other two parcels of land which have been granted to Koompahtoo. There was provision for Koompahtoo to add areas to each of the Stage One Land, and the Stage Two Land, if it chose, in its absolute discretion, to do so. The “Joint Venture Site” was defined to be the Stage One Land (as added to if Koompahtoo chose to), and the Stage Two Land (also as added to, if Koompahtoo chose to).

6 Clause 1.1 of the Joint Venture Agreement defined “Development” as meaning the rezoning of the Joint Venture Site by LMCC to permit residential development, the application for and obtaining of approvals for its subdivision, the carrying out of the subdivision works required to comply with any development consent issued by LMCC concerning the subdivision, and any other work required to prepare residential lots in the subdivision for sale, the registration of the plan of subdivision at the Land Titles Office, the marketing and sale of the lots in the subdivision, and anything incidental to these matters.

7 Other relevant definitions in Clause 1.1 included a definition of “Development Assets” as meaning:

“(a) the Joint Venture Site;

(b) all improvements constructed on, over, under or in respect of the Joint Venture Site;

(c) all design drawings, layouts, specifications, working drawings, feasibility studies, sale proposals, valuations, plans, development approvals, building approvals, subdivision approvals, rezoning certificates and any other documents in the possession or control of the Venturers relating to the Joint Venture Site or the Development;

(d) any development consent granted with respect to the Joint Venture Site;

(e) the Joint Venture Account;

(f) all plant, equipment and supplies acquired by the Venturers in connection with the Development from time to time; and

(g) all other assets of whatsoever nature relating to the Development.”

8 The Joint Venture Agreement contained the following provisions:

Establishment of Joint Venture

As from the date of this Agreement there is established an unincorporated joint venture between the Venturers to be known as the “Morisset Land Subdivision Joint Venture” with each Venturer holding a 50% Percentage Interest as at the date hereof. The Joint Venture shall continue until it is terminated in accordance with this Agreement.

Objects

The objects and extent of the Joint Venture are:

(a) to undertake the Development;

(b) to determine the scope of the Development;

(c) to carry out the design of the Development;

(d) to apply for and obtain consents, approvals and authorisations from the Council and all other relevant statutory and regulatory authorities for the Development to the extent that this has not been done prior to the date of this Agreement;

(e) to arrange funding for the Development at the most commercially advantageous terms;

(f) to engage all such architects, town planners, valuers, environmental experts, engineers, excavators, civil works contracts, builders, tradesmen, consultants, real estate agents and all other relevant persons that may be necessary to carry out the Development in the most economic, efficient, workmanlike and professional manner;

(g) to carry out the Development to the best commercial advantage of the Venturers and within the shortest practicable time;

(h) to identify and procure purchasers for the Residential Lots;

(i) to sell the Residential Lots upon commercial terms and at not less than market value (subject to clause 22) on the terms and subject to the conditions provided for in this Agreement;

(j) to do all such things as shall be incidental or conducive to the attainment of the foregoing but only as shall be determined by the Management Committee.

Achievement of Objects

The Venturers agree and acknowledge that they will take all steps and do all things necessary to achieve the objects of the Joint Venture on arms’ length terms and to the commercial advantage of the Joint Venture (subject to clause 22).

No Transfer of Joint Venture Site

Notwithstanding anything to the contrary contained in this Agreement, Koompahtoo does not by virtue of any provision in this Agreement transfer to Sanpine any legal or beneficial interest in the Joint Venture Site, other than by virtue of any mortgage that may be granted by Koompahtoo to Sanpine.

9 Clause 3.1(l) contains a representation and warranty by Koompahtoo to the plaintiff that:

“to the best of its knowledge, information and belief the rezoning of the Joint Venture Site to permit residential development will occur within a reasonable time of the date of this Agreement and that all approvals for the Development and the subdivision of the Stage One Land and the Stage Two Land may be obtained within a reasonable time.”

10 The Joint Venture Agreement was subject to a condition precedent, which included the Crown grant of the Stage One Land and the Stage Two Land to Koompahtoo. It is common ground that the conditions precedent to the Agreement had all been satisfied once the land in Aboriginal land claim 6165 was granted to Koompahtoo on 22 March 2000.

11 The Joint Venture Agreement was amended by a Supplemental Agreement made on 17 October 2000. The Supplemental Agreement arose from circumstances described in its recitals as:

“B. It was envisaged by the Agreement that the Joint Venture Site would be developed in two stages.

C. Sanpine and Koompahtoo have decided to develop the Joint Venture Site as a staged, integrated community development covering a total area of approximately 162.5 hectares. The size and timing of stages will be established by market demands as determined by Sanpine in consultation with Koompahtoo.”

12 The Supplemental Agreement made various consequential changes to the Joint Venture Agreement. It provided that any references to the “Stage One Land” or “Stage Two Land” would be deemed to be simply a reference to the Joint Venture Site. It inserted a new definition of “Joint Venture Site”, and defined it as being an area of approximately 162.5 ha, defined by a plan attached to the Supplemental Agreement, together with any other land which Koompahtoo might in its discretion choose to contribute to the Joint Venture.

13 The significant size of the land development involved in the Joint Venture can perhaps be better appreciated by some readers by pointing out that 162.5 ha is a little more than 400 acres.

14 Clause 4.2 of the Joint Venture Agreement, as varied, which was described as a condition subsequent, provided that the Agreement was conditional upon LMCC granting development consent to:

“the subdivision for an integrated community development incorporating but not limited to residential, medium density, commercial and business lots and any other form of development approved by relevant authorities on terms and conditions reasonably acceptable to Sanpine after consultation with Koompahtoo.”

15 Other relevant provisions of the Joint Venture Agreement, as varied, are as follows:

Sanpine’s Right of Waiver

The conditions precedent and subsequent contained in this clause are for the sole benefit of Sanpine alone and Sanpine may in its discretion agree to waive in writing all or any of those conditions without affecting any other condition or provision of this Agreement.

…

Termination Following Failure to Meet Condition Subsequent

Should the conditions subsequent referred to in clause 4.2 fail to be satisfied or waived by Sanpine, Sanpine may by notice served on Koompahtoo terminate this Agreement in which case the obligations of the Venturers under this Agreement shall be at an end subject to Koompahtoo repaying to Sanpine the amount of the advance referred to in clause 15.2 and neither Venturer shall have any claim against the other Venturer arising out of this Agreement or its termination.

…

5.1 Upon satisfaction of the condition precedent referred to in clause 4.1(a), Koompahtoo shall make the [Joint Venture Site] (as it exists at the date of this Agreement) available to the Joint Venture for the purposes of the Development in accordance with this Agreement.

…

Appointment as Development Manager

Each of the Venturers appoint Sanpine as the development manager for the Development.

Obligations of Sanpine

Sanpine agrees to:

(a) co-ordinate the overall Development;

(b) negotiate with, effect the appointment of, instruct and monitor the performance of all professional consultants required to provide services to the Joint Venture during the course of the Development (including any contractors or sub-contractors providing building, civil works, construction or associated services) including without limitation solicitors, architects, surveyors, real estate agents and marketing consultants;

(c) seek funding for the Development from recognised, reputable and experienced project financier including preparation of all applications, information memorandums and supporting documents required and negotiating the finance facility offered by a project financier which the Management Committee agrees to accept;

(d) arrange all necessary or desirable insurances for the Development Assets and the Development generally;

(e) engage bookkeeping and accounting services for the Joint Venture and the Development and maintain all records and documents of the Joint Venture to the extent that the Management Committee does not require the records or documents for the purposes of the Works and prepare tax returns for the Joint Venture if tax returns are required to be lodged;

(f) arrange the provision of security and patrol services for the Joint Venture Site;

(g) coordinate and instruct solicitors and surveyors concerning the proposed plans of subdivision of the [Joint Venture Site] being solicitors and surveyors carrying on business in the Newcastle or Lake Macquarie area, … ;

(h) supervise and co-ordinate marketing arrangements and exchange and completion of contracts for sale of Residential Lots forming part of the Joint Venture Site and co-ordinate discharges of mortgage in respect of the Joint Venture Site with the financiers to the Joint Venture;

(i) formulation of a Development Program showing the manner in which Sanpine expects the Development to proceed including a timetable for the completion of each of the stages of the Development and the envisaged cost to complete each of the stages of the Development;

(j) regular updating of the Development Program to take account of events or circumstances which affect the progress of completion of the Development;

(k) co-ordinate monthly meetings of the Management Committee, take minutes of those monthly meetings and distribute to the Venturers a copy of the minutes; and

(l) make recommendations concerning the Development and its progress to the Management Committee.”

16 Clause 1.1 of the Agreement had defined “Development Program” as meaning:

“… the program prepared by Sanpine setting out each of the stages of the Development and the estimated timetable and cost for each stage of the Development in accordance with clause 6.2(i) and updated from time to time in accordance with clause 6.2(j).”

17 The Agreement continued:

Development Manager’s Discretion

Except where the Management Committee otherwise is required to control a particular aspect of the Development or the determination of certain matters is reserved to the Management Committee, Sanpine shall be entitled to act without specific instruction from the Management Committee but only to the extent that Sanpine acts within the parameters of the stated objectives of the Joint Venture. Sanpine must follow all instructions of the Management Committee where instructions are issued.

…

Initial Project Manager

The Venturers agree to appoint the project manager nominated by Sanpine after the date of the Agreement as the first project manager of the Joint Venture.”

18 Clause 8 made provision for the appointment of an Aboriginal Liaison Officer for the Joint Venture from within the membership of Koompahtoo, whose task it was to explain the Development and the benefits it would bring to members of Koompahtoo, and act as a conduit for communication between members of Koompahtoo and the Management Committee.

19 The Agreement continued:

Formation of Management Committee

The Venturers shall form a Management Committee to manage the affairs of the Joint Venture and to consider and make decisions in relation to all aspects of the Development including, without limitation, financial issues and aboriginal culture and aboriginal employment issues. The Management Committee shall have the authority and power to act on behalf of the Venturers in relation to all matters with respect to the Joint Venture except as otherwise provided for in this Agreement. Without limiting the generality of the foregoing the Management Committee shall have the following functions:

(a) approval of the Approved Development Program and Approved Budget;

(b) preparation of the Annual Accounts;

(c) appointment of the Auditors;

(d) approval of financing for the Development in accordance with clause 11;

(e) approval of the Project Manager and any replacement Project Manager;

(f) approval of architects, engineers, civil works contractors, builders, consultants and advisors to the Development;

(g) approval of the marketing and sale arrangements for the Residential Lots;

(h) overall supervisory control and authority over the activities of the Project Manager; …”

20 Clause 10.2 made provision for the Management Committee to comprise four representatives of each Venturer, unless they otherwise agreed. It named the four initial representatives of each Venturer. There was provision in Clause 10 for a Venturer to remove any person as its representative and replace him, and for the appointment of alternate representatives. The quorum for any meeting of the Management Committee was four, with two representatives of each Venturer. The Management Committee was to meet every month, unless the Venturers otherwise agreed. Matters considered at meetings of the Management Committee were required to be determined by a resolution passed by a majority vote of all representatives. The Management Committee was to have joint chairmen, one appointed by each of the Venturers. There was provision that:

“… In the event of an equality of votes cast on any matter a Chairman shall only have a casting vote as follows:

(a) The Chairman appointed by Koompahtoo shall have a casting vote on matters which arise during the course of the Development and have a significant impact on aboriginal culture and environmental matters; and

(b) The Chairman appointed by Sanpine shall have a casting vote on all other matters which arise during the course of the Development including, without limitation, the financing of the Development, design and scope of the Development and the marketing of Residential Lots.”

21 Clause 10.10 provided:

“(a) The Venturers shall appoint a Secretary approved by the Management Committee who shall keep minutes and records of the following matters:

(i) all appointments and changes of representatives and alternate representatives;

(ii) the names of representatives present at all meetings of the Management Committee;

(iii) details of all resolutions made by the Management Committee;

(iv) generally all details of the proceedings and discussions of the Management Committee.

The Management Committee may at any time terminate the appointment of a Secretary previously approved by the Management Committee. …”

22 The Agreement, as varied, continued:

Management Committee to Determine Project Financier

The Management Committee shall determine from time to time the manner in which the Development is to be funded by a project financier. The funding of the whole of the Development must be on terms and subject to conditions approved by the Management Committee and shall be without recourse to any assets of the Venturers other than the Development Assets.

Use of Joint Venture Account

All funds advanced by project financiers for the purposes of the Development shall be immediately deposited in the Joint Venture Account to be used solely for the purposes of the Development, subject to any special arrangements for the advance of the funds provided by project financers and approved by the Management Committee.

DEVELOPMENT PROGRAM AND BUDGETS

Approved Programs and Budgets

As from the date of this Agreement until the termination of the Joint Venture, all activities of the Joint Venture from time to time shall be carried out pursuant to and in compliance with Approved Development Programs and Approved Budgets relating to such activities for the time being.

Approval Procedure

(a) Within 90 days of the date of this Agreement and thereafter at least 30 days prior to the last day of December and June in each year, or at such other times as the Management Committee may determine, Sanpine as development manager for the Development must prepare and submit to the Management Committee with respect to:

(i) the period to the earlier of the next following 30 June or 30 December; and

(ii) the period to the date on which the Joint Venture is expected to be completed,

a Development Program and cost and revenue budget outlining a program for the overall Development and the costs and revenues expected to be associated with the Development and their timing.

(b) Each such Development Program and cost and revenue budget shall be prepared and submitted as determined by instructions of the Management Committee.

(c) A meeting of the Management Committee shall be convened no later than 7 days after the submission of the last to be received of the Development Program and cost and revenue budget referred to in clause 12.2(a). At that meeting the Management Committee shall consider the Development Program and cost and revenue budget submitted and may approve those programs and budgets or any of them and reject others of them.

(d) Upon approval by the Management Committee of any Development Program or cost and revenue budget, those programs and budgets for the period to which they relate shall become the Approved Development Program and the Approved Budget.

Alterations to Approved Programs and Budgets

Sanpine as development manager may at any time and from time to time submit to the Management Committee any proposed alterations to an Approved Development Program or an Approved Budget which, on approval by the Management Committee, shall form part of such Approved Development Program or Approved Budget (as the case may be).

13.

EXPENDITURE REIMBURSEMENTS

Sharing of Liabilities

(a) The net amount of any Project Costs or any other expenditures, disbursements or other liabilities incurred in relation to the Development Assets or the Development shall be borne and paid by the Venturers in the proportions equal to their respective Percentage Interests, which at the date of this Agreement are:

(b) Each Venturer hereby indemnifies … the other against all damages, losses, … suffered … with respect to the obligation of the Venturer to meet and satisfy its proportionate share of expenditures, disbursements and other liabilities relating to the Development Assets or the Development, as provided for in clause 13.1(a).

(c) Notwithstanding paragraphs (a) and (b) of this clause, the liability of Koompahtoo shall be limited to recourse against the [Joint Venture Site].

Monthly Report

A monthly report shall be submitted by Sanpine to the Management Committee on or before the fifteenth day of each month showing in reasonable detail the net expenditure of the Joint Venture and progress of the Joint Venture on the Development including:

(a) total Project Costs during the preceding month;

(b) total estimated Project Costs for the current and the next month;

(c) accumulative cost to date and cost to complete reports progressively updated;

(d) a detailed account of all moneys deposited in the Joint Venture Account during the preceding month and all moneys paid out of the Joint Venture Account during the preceding month;

(e) cash flow forecasts for the Development Assets and the Development for the current and next six months including any funds to be made available under any existing project finance facility;

(f) unusual charges and credits during the preceding month (which shall be separately identified and described in detail);

(g) income and revenue derived by the Joint Venture during the preceding month;

(h) design and construction including progress to date comparison of progress with the Approved Development Program, details yet to be resolved and existing or potential problem areas;

(i) comparison of Project Costs and revenue of the Joint Venture during the preceding month with the Approved Budget and details of existing or potential problem areas; and

(j) such other matters as the Management Committee may determine from time to time or as any Venturer may reasonably request from time to time.

Obligation to Make Contributions

It is acknowledged that it is the intention of the Venturers that:

(a) Koompahtoo’s obligation to make contributions to the Joint Venture be limited to the obligation to make the Stage One Land and the Stage Two Land available to the Joint Venturer and not to make any contribution by way of cash payment to fund the Development; and

(b) Sanpine’s obligation to make contributions to the Joint Venture be limited to providing expertise as a development manager for the Development and where Sanpine considers it appropriate (in its discretion) to provide limited funding to the Joint Venture to enable certain preliminary negotiations with Council, potential project financiers, potential project managers and other persons who will be required to perform a role in the Development.

Notwithstanding the above, either of the Venturers at any time may offer to provide finance to the Joint Venture to assist the completion of the Development in the shortest practicable time. In such event the Venturer making a cash contribution required by the Joint Venture shall be entitled to have that cash contribution included in either Koompahtoo’s Contribution or Sanpine’s Contribution, as the case may be.

…

Initial Project Costs

Each Venturer agrees that to the extent there are Project Costs which have been incurred by that Venturer prior to the date of this Agreement, that Venturer will be solely responsible for and pay those Project Costs and cannot require contribution from the other Venturer for any share of those Project Costs.

23 Clause 16.1(a) provides:

The Venturers agree

24 Perhaps inconsistently, Clause 1.1 defines “Joint Venture Account” as meaning:

by Sanpine

25 There was provision for each of the Venturers to nominate a signatory to the Joint Venture Account.

26 The Agreement continued:

Deposit of Funds

Except as provided in clause 15.1, the Venturers agree that all cash and other funds received from time to time by the Venturers concerning the Development, the Development Assets or the Joint Venture will be promptly deposited in the Joint Venture Account before any disbursement or use of those funds is made for any purpose. Unless financing arrangements require an alternative treatment or the Management Committee approves otherwise, the funds to be deposited in the Joint Venture Account will include all funds advanced by third parties to the Joint Venture as contemplated by clause 11.

Withdrawal of Funds

The Venturers agree that payments will only be made from the Joint Venture Account in accordance with the Approved Development Program and Approved Budget and payment guidelines previously approved by the Management Committee.

Maintenance of Books

(a) Sanpine shall ensure that proper Books are kept so as to permit the affairs of the Joint Venture to be duly assessed. Financial records comprised in the Books shall be kept in accordance with generally accepted accounting principles and in such a manner as enables the Venturers to extract from the Books any information in relation to the affairs of the Joint Venture as that Venturer may reasonably require from time to time. …”

27 Clause 16.6 obliged the Management Committee to prepare annual accounts of the Joint Venture as at 30 June each year. Clause 16.7 required those annual accounts to be audited, and a written report provided by the auditors certifying their opinion concerning various listed matters. Clause 16.9 made the costs of the audit a Project Cost. It was the Management Committee, under Clause 17, who had the obligation to appoint the auditors, and the power to remove and replace them.

28 Clause 19 set out certain provisions which applied if there was a breach of the Agreement:

“19.1 If:

(a) a Venturer (the “Defaulting Party”) commits any material breach of this Agreement and shall decline or neglect to remedy the breach within 30 days after receipt of a written notice from the other Venturer requiring such remedy;

…

THEN the Venturer which is not the Defaulting Party (the “Non-Defaulting Party”) shall have the right, exercisable by written notice to the Defaulting Party (“Purchase Notice”), to purchase the Percentage Interest of the Defaulting Party on the following terms and conditions: …”

29 Clause 20 provided:

“20.1 The Joint Venture shall continue until the completion of the Development and the sale of all the Development Assets by the Venturers to a third party or parties or the sale by one Venturer to the other Venturer of all that first mentioned Venturer’s Percentage Interest, unless sooner terminated by mutual agreement in writing by the Venturers.

…

20.3 The Joint Venture shall terminate when all Development Assets shall have been disposed of and the net proceeds and liquid assets, after satisfaction of liabilities to all Joint Venture creditors and the setting aside of reserves determined by the Venturers, or if applicable, the Non-Defaulting Party, to be appropriate to meet unmatured contingent and/or unforeseen Joint Venture liabilities, shall have been distributed among the Venturers in accordance with this Agreement.

30 Clause 27 provided:

“27.1 The Joint Venture is based on the figures annexed as “Outline Feasibility” to the letter contained in Annexure “C” prepared by Borough & Partners and which were examined by Mr Richard South as advisor to Koompahtoo.

27.2 The parties acknowledge and agree that Sanpine gives no warranty or representation as to the accuracy or otherwise of any of the figures in Annexure “C” either as at the date of this Agreement or as at the date of preparation of the figures.

27.3 Koompahtoo acknowledges it has been independently advised by Mr Richard South as to the figures in Annexure “C”.

27.4 The figures in the “Outline Feasibility” to the letter in Annexure “C” were prepared by Borough & Partners as at January 1997 based on what it believes are reasonable estimates as at that time and have not been updated since that time and neither party has requested that they be updated.”

31 The “Outline Feasibility” was a one-page document which estimated that the total value of the profit, interest and land which Koompahtoo received from the development would be $7,250,000, while the total of the profit, interest and development profit (or fee for acting as manager) which the developer would receive would be $6,025,000. It envisaged a project extending over a period of two years.

PART C –

PRACTICAL PRELIMINARIES TO THE JOINT VENTURE WORKING

The Town Planning Status of the Land

32 At the time the Joint Venture Agreement was entered the use of land in the LMCC area was controlled by the Lake Macquarie Local Environmental Plan 1984 (as amended) (“LEP 1984”). The site proposed for development was mostly zoned rural “A”, though a small part of it was zoned “open space “A” (Public Recreation)”, and another small part was zoned to permit coal mining. In the rural A zoning, construction of residential flat buildings and shops was prohibited, and there was a minimum allotment size of 40 ha. In the open space zoning, the description of the prohibited developments was such that residential development was prohibited. Thus, achieving a rezoning, to a zoning which would permit the proposed development to go ahead, was essential.

Statutory Framework for Achieving the Rezoning

33 The Environmental Planning and Assessment Act 1979 (“EPA Act”) gives power to make environmental planning instruments of various kinds, including local environmental plans (“LEPs”). A draft LEP can be prepared as the result of a council deciding to do so (section 54(1)), or as the result of the Minister directing the council to do so (section 55(1)). If a council decides itself to prepare a draft LEP, it must inform the Director-General of its decision to do so (section 54(4)). In either case, the Council is required to prepare an environmental study of the land to which the draft LEP is intended to apply (section 57(1)), in accordance with such specifications as the Director-General notifies (section 57(2)). The draft LEP is required to have regard to that environmental study (section 61).

34 In preparing either an environmental study, or a draft LEP, the council is required to consult with various public authorities or bodies who might be affected by that draft LEP, and any other people that the council determines to consult with (section 62). State public authorities are required to provide councils with information which might be relevant to the environmental study or draft LEP (section 63).

35 Once a draft is prepared, the council submits a copy of the draft to the Director-General, together with a statement of the bodies who have been consulted under section 62 (section 64). Upon receipt of the draft LEP, the Director-General either issues a certificate permitting the draft plan to be publicly exhibited, or else returns the plan to the council giving reasons why the certificate was not issued, and directing the council to amend the draft plan, or take other action, (section 65). Once a section 65 certificate has been received, the council gives public notice of how the environmental study and draft LEP may be inspected by the public, and puts them on public exhibition (section 66(1)). The draft LEP must be publicly exhibited for a period of not less than twenty eight days (section 66(2) and Clause 12 Environmental Planning & Assessment Regulation 1994), but there is nothing to stop the council from putting the study and draft LEP on public exhibition for a longer period than the prescribed minimum. Any person may make submissions to the council about the draft LEP, within a period which the council notifies (section 66(1)(c), section 67). The council can, in certain circumstances, hold public hearings into issues raised in a submission (section 68). The council considers the various submissions, and the report of any public hearing there has been, and can make alterations to the draft LEP in consequence (section 68(3)). The council then submits to the Director-General details of all submissions, the report of any public hearing, the draft LEP and the reasons for any alterations made to the plan following its public exhibition, and certain other matters (section 68(4)). The Director-General then furnishes a report to the Minister concerning how the proposed LEP fits in with other legal controls on land use, whether the necessary procedural steps to that stage of the process for making a LEP have been complied with, and any other matters the Director-General thinks appropriate (section 69). It is then for the Minister to decide whether to make the LEP as submitted by the council, make it with alterations, require further public exhibition, or decide not to proceed with the draft LEP (section 70).

36 The procedure which I have just outlined is one for the initial making of a LEP. In the present case, at the time that the Joint Venture Agreement was entered, Lot 556, and the two other lots of land which were later added to the Joint Venture area, were already subject to planning controls under LEP 1984. What was needed, to enable the Joint Venture to proceed, was therefore not the allocation of zonings to the land by an initial LEP, but the alteration of the zoning which already applied to the land. Section 74 EPA Act provides that the procedures which I have just outlined also apply to a subsequent environmental planning instrument, with two exceptions. One of those exceptions, under section 74(2)(b) applies where the subsequent instrument is a LEP, in which case the provisions of sections 57 and 61 shall not apply, unless the Director-General directs to the contrary.

Obtaining Initial Finance for the Joint Venture

37 In the course of 1998 Mr Steer, a director of the plaintiff, and Mr Scott, a consultant assisting the plaintiff, made enquiries of forty or fifty lenders or finance brokers, seeking project funding. Many lenders refused to grant the funding, expressing concern about the proposed mortgage being a third party mortgage, and about the possibility of having to exercise a power of sale against the land of an Aboriginal Land Council. The provisions of the Joint Venture Agreement concerning finance (in particular Clauses 11.1, 13.1 and 13.3) had the effect of requiring that the project be fully funded by external finance, and also that, while Koompahtoo would make the Joint Venture Site available by way of mortgage to the developer, Koompahtoo would not be required to give a personal covenant to repay the monies borrowed. Thus, it was an inevitable part of the agreement which the parties had entered that the security for finance which would be offered to a possible lender would be a third party mortgage.

38 On 26 October 1998 a letter of offer of finance was signed by Koops Martin Financial Services Limited, relating to a loan proposed to be given by Inteq Custodian Limited (“Inteq”). It related to a loan under which the plaintiff was the only borrower, security was given by Koompahtoo over the whole of the land in Lot 556, and there were personal guarantees totalling $600,000 from various people connected with the plaintiff. The loan money was to be made available in two tranches, as follows:

“Tranche 1 - $780,000 (60% of “as is” valuation of $1.3 million) for all costs, including interest for 12 months, associated with the pre-approval development work; and

Tranche 2 – funds up to 60% of valuation of the land after development approval has been obtained from the Local Council to enable development works to be completed up to and including registration of the plan of subdivision.”

39 The loan repayment date was:

“12 months from the date of the Tranche 1 advance. The loan can be extended for further 12 month periods by agreement between the parties and subject to the Lender being satisfied as to the manner in which the obligations of the Borrower have been performed and that the security remains adequate and less than the stipulated loan to valuation ration.”

40 The four guarantors, and representatives of the plaintiff and Koompahtoo, signed the Letter of Offer on 2 November 1998, thereby accepting it. A loan agreement stating the terms with somewhat greater formality was later executed, relating only to a principal sum of $780,000, with no covenant to make the second tranche available. It is not suggested, however, that the obligation on Inteq to make the second tranche advance was thereby dispensed with.

41 Some members of Koompahtoo were concerned that Inteq required a mortgage over the whole of Lot 556, when the land to be developed under the Joint Venture was only a comparatively small part of Lot 556. However, it is hardly surprising that a lender would want a registered mortgage as security for its loan, and no subdivision of Lot 556 had at that stage occurred, so it was not possible for Inteq to acquire a registered mortgage over only that part of Lot 556 which was proposed to be developed. On 20 November 1998 the plaintiff, Koompahtoo and the four guarantors executed an agreement which said:

“1. As soon as the Stage One Land and Stage Two Land referred to in the joint venture agreement have been re-zoned to residential land then the mortgage to Inteq Custodians Limited will be discharged so that a subdivision of the land can take place so that only the Stage One Land and Stage Two Land will be subject to any mortgage.

2. Although Koompahtoo is required to give a mortgage over the whole of the land the parties are aware that if there is a default with respect to the loan agreement with the Inteq Custodians Limited that steps may be taken to sell the land being subject to the mortgage the parties do not wish this to happen and it has been further agreed that Sanpine and its Directors, in their personal capacity will take all necessary steps to repay the mortgage so that the land is not sold.

3. The Directors … agree that they will personally take all the necessary steps to pay out the debt and substitute other assets in place of the land.”

42 Mr Scott gives evidence that by February 1999 funding had been obtained “for $3,000,000”. While I accept that evidence, no loan agreement has been produced which contains any such obligation, nor has any account been given of particular conversations with a lender which amount to a contract to lend $3,000,000. I do not take Mr Scott’s evidence to mean anything more than that a lender had indicated a preparedness to lend $3,000,000, not necessarily that anyone had a binding obligation to lend $3,000,000 under any particular circumstances, beyond the obligation of Inteq to make the second tranche of loan money available.

43 On 15 February 1999 Koompahtoo executed a Real Property Act mortgage over Lot 556, in favour of Inteq. That mortgage was stamped to $780,000, and registered as dealing 5629518Y.

44 At a later time Inteq changed its name to Cardinal Financial Securities Limited.

Role of New South Wales Aboriginal Land Council

45 Section 40B(2) Aboriginal Land Rights Act 1983 (“ALR Act 1983”) enabled a Local Aboriginal Land Council to change the use of land vested in it with the approval of the New South Wales Aboriginal Land Council (“NSWALC”).

46 Section 40D ALR Act 1983 provides that a Local Aboriginal Land Council may sell or mortgage land vested in it if, amongst other things, the NSWALC has approved of the transaction. As the Joint Venture Agreement between the plaintiff and Koompahtoo had as its inevitable effect that land vested in Koompahtoo would be changed in use from being open space and bushland to the site of a residential subdivision, and provided for both the mortgaging in the first instance, and the ultimate sale, of the land the subject of the Joint Venture, there was a practical necessity to obtain the consent of the NSWALC at a very early stage.

47 On 8 December 1998 Mr Docker, a representative of the NSWALC, attended a meeting of Koompahtoo which was also attended by some representatives of the plaintiff. Mr Docker explained to the meeting that in deciding whether to give approval NSWALC looked at the risk involved, the value of the land, and whether what was being done in relation to the land involved working within the value. There was some discussion at that stage about how it was expected that borrowing of $780,000 would take the project past the rezoning stage.

48 On 19 January 1999 Mr Docker, who had responsibility for preparing a report on the transaction for the NSWALC, wrote to Koompahtoo asking numerous searching questions aimed at finding out about the history of the Joint Venture and the obtaining of finance for it, what legal obligations existed concerning those matters, and what risks were associated with the project.

49 The matter was on the agenda of NSWALC for a meeting held from 2 February 1999 to 5 February 1999. The briefing papers for members of NSWALC for that meeting included the following:

“If the rezoning application is successful it is intended that the mortgage over the whole of the land will be discharged and another mortgage taken out over the part of the land to be developed. This is feasible because once the land is zoned for residential development its value will substantially increase. Following this the plan is for the residential land to be subdivided into residential blocks, services to be connected to the blocks, and the blocks be sold in stages to maximise return.

…

Under the proposal the most risky part of the development for the LALC is the period before the LMCC decides whether or not to approve the rezoning of part of the land. In other words, there is a risk for Koompahtoo LALC that it will lose all the land if something goes wrong such as the application for rezoning is refused by LMCC or substantially delayed. Once the land is rezoned and only the part of the land zoned for residential development is under mortgage then only this land will be at risk.

It is NSWALC’s role in its approval function for the mortgage to consider the risk of Koompahtoo LALC losing its land if Cardinal (previously Inteq) are not repaid their loan in time and it decides to act on the mortgage from Koompahtoo LALC to get its money back. The risks to Koompahtoo LALC include:

1. The mortgage is for $780,000 and the valuation asked for by Inteq stated that the land is good for a mortgage for $845,000;

2. If there is a problem with the repayment of the loan, the lender, Cardinal (previously Inteq), is most likely to firstly rely on the mortgage to get its money back;

3. There is no guarantee LMCC will approve the rezoning, nor any guarantee of when it will make a decision on the application for rezoning. A refusal or delay is likely to increase the risk of the loan not being able to be repaid in time and therefore of Koompahtoo LALC’s mortgage being foreclosed;”

50 On 4 February 1999 NSWALC approved the use of Lot 556 for residential development, and approved the mortgage of the land in Lot 556 to Inteq.

51 The forecast which was provided to the members of NSWALC of the areas of risk for Koompahtoo has proved accurate, though events have not yet reached the stage where Koompahtoo has had its land sold to repay a mortgage debt. The rezoning still has not been achieved, and the town planning evidence in this case is that considerable time, work and expense will still be required to enable rezoning to be achieved, if it is ever achieved. The whole of Lot 556 remains subject to a registered mortgage (though not to Inteq), which the mortgagee claims secured a debt of at least $2.36m as at 30 June 2004. The validity of that mortgage is in contest in other proceedings, and nothing I say in this judgment should be taken as prejudging the question of the validity of that mortgage. If the mortgage is valid, the amount secured under it would inevitably have increased after 30 June 2004 by the addition of interest at a default rate, and perhaps by the addition of enforcement expenses.

PART D - CIRCUMSTANCES OF DELAY IN ACHIEVING REZONING, UP TO FEBRUARY 2001

52 One of the grounds on which the defendant seeks to justify its termination of the Joint Venture Agreement relates to the circumstances in which the rezoning of the land has been delayed. I will consider the legal basis for that complaint later (paras [213] – [222] below), and will first trace the circumstances in which the delay came about.

Sanpine Pty Limited

53 The plaintiff has never carried on any business other than entering and carrying on the Joint Venture with the defendant. There is evidence from Mr Scott that the shareholders in it are Amabowl Pty Ltd (a company which acts as the trustee of a trust for the benefit of the family of Mr Graham Steer), Erolvase Pty Ltd (a company associated with the family of the late Mr Charles Perkins AO and Mr Adam Perkins), Lesley Molony (the domestic partner of Mr Robert Scott), and three other companies who hold a very small shareholding of some ten percent between the three of them. All the assets of the plaintiff are held on the trusts of the Sanpine Unit Trust. I have some doubt, arising from Mr Steer’s evidence, about whether Mr Scott’s evidence of the shareholdings in Sanpine is really evidence of the shareholdings in the corporation, or whether it should be taken as identifying the holders of units in the unit trust, or whether the corporate structure is such that the holder of a certain number of shares in the corporation also holds that number of units in the Unit Trust. Subject to that qualification, which the evidence does not enable me to resolve, I accept Mr Scott’s evidence on this topic. At one time in 1997 Mr John Leece and Mr John Landerer CBE AM were either shareholders in Sanpine, or the holders of units in the Sanpine Unit Trust, or both.

Events Before 4 February 1999 Related to Possible Rezoning

54 The Joint Venture Agreement had a long gestation period. On 10 July 1996 a general meeting of Koompahtoo endorsed in principle a proposal to develop “Morisset 200 acres” by Joint Venture with Sanpine. A special meeting of Koompahtoo on 18 December 1996 resolved that Koompahtoo enter a Joint Venture project with Sanpine. Koompahtoo had engaged Gardner Brown, a planner, to advise it in relation to development of the land.

55 After the Joint Venture Agreement was executed on 14 July 1997, a draft written agreement came into existence between Smith & Sons Consultancy Pty Ltd on the one part, and Sanpine and Koompahtoo on the other. Smith & Sons Consultancy Pty Ltd is a company associated with Mr Bill Smith. He has at all relevant times been the Chairman of Koompahtoo. The draft agreement made provision for Smith & Sons Consultancy Pty Ltd to provide the services of Aboriginal Liaison Officer to the Joint Venture, for a period of three years from 1 September 1997, at a fee of $4,717 per month plus provision of a motor vehicle. While the agreement does not appear to have been executed by all parties, Mr Smith provided the services of Aboriginal Liaison Officer to the Joint Venture at least until a time in 2003, and his company was paid for those services.

56 Soon after the execution of the Joint Venture Agreement Mr Scott began to perform the role of Project Manager. There is no evidence of either a written agreement, or a minute, authorising his appointment at that time, and no account has been given of any oral arrangement under which he came to be appointed.

57 Notwithstanding that the Joint Venture Agreement made provision for the appointment of a Management Committee, nominated the four representatives that each of the venturers was to have on that Committee, and required the Committee to meet every month, there is no record of it having met until 29 January 1998, with its next meeting being on 16 February 1999.

58 On 13 October 1997, in response to an application for rezoning of Lot 556 that Koompahtoo had made in December 1996, LMCC passed a resolution that:

“(1) Council advise the applicant that it supports limited residential development adjacent to the existing urban area of Morisset township and including the Crown Land area currently under claim subject to supporting conclusions of a Local Environmental Study over the whole site including Crown Land to the north west;

(2) Council advise the applicant that they will be responsible for the cost of preparation of the Local Environmental Study, and further if the applicant wishes to advance processing of a rezoning application prior to the end of the Lifestyle 2020 Project they will be required to fund Council’s administrative costs in processing the application.”

59 On 6 November 1997 a planner from LMCC wrote to Koompahtoo saying that a rezoning fee of $7,500 was payable immediately, and that the cost of LMCC engaging consultants to complete the necessary studies associated with the local environmental study had not yet been fully detailed, but may well be in the order of $70,000 to $100,000. As well, an amount of the order of $50,000 would be payable to enable LMCC to employ a Project Co-ordinator who would work in house for a period of up to two years on a part-time basis to manage the overall project operation.

60 On 19 February 1998 LMCC wrote to Koompahtoo saying that, notwithstanding that Koompahtoo was eager to have a local environmental study commence, the EPA Act required the preparation of the local environmental study to be done by LMCC, not by Koompahtoo or agents employed by it. Further, LMCC could not start preparing a brief for the local environmental study until specifications for such a study were issued to it by the Director General of the Department of Urban Affairs and Planning (“DUAP”), which had not yet happened.

61 This letter led Mr Scott and Mr Bill Smith to seek and obtain a meeting with the Director General of DUAP, Ms Holliday. On 4 April 1998 she wrote to LMCC saying that (contrary to LMCC’s opinion) an environmental study over the whole of the site owned by Koompahtoo was not necessary given that large parts of it were proposed to be zoned open space. Further, the Director General saw no reason why Koompahtoo should not “directly manage preparation of the required studies in order to ensure the on time achievement of the timeframe/milestones”. To enable that to happen, the Director General directed, pursuant to section 74(2)(b) of the EPA Act, that sections 57 and 61 EPA Act would not apply. She said that Koompahtoo should now be encouraged to proceed to prepare the necessary studies in satisfaction of LMCC’s requirements.

62 One problem with the proposed development site was that there were underground coal leases under a part of it. Mr Scott had been making efforts to obtain clearance, from the lessee of that coal, and the Department of Mineral Resources, to residential development occurring above the site of the leases. On 4 April 1998 the Director General was also able to pass on to LMCC advice that the coal underlying the immediately relevant part of the land had been found to be uneconomic, in consequence of which the Department of Mineral Resources did not object to development within that area.

63 On 5 June 1998 LMCC wrote to Mr Scott confirming that a local environmental study was no longer required, and an “environmental assessment” of the rezoning proposal, prepared by Koompahtoo and/or consultants on its behalf, would be sufficient to commence the draft LEP making process. An “environmental assessment” is not necessarily a less complex thing than a local environmental study. It is just that a “local environmental study” is something was has a statutory basis, and operates within statutory parameters.

64 As well, LMCC’s letter of 5 June 1998 provided a list of consultants who might be suitable to engage. It stated that the environmental assessment should look beyond the boundaries of the area proposed to be rezoned as urban, so that that area could be assessed in its context. A map “illustrating the contextual issues which should be considered” was, it seems, provided. As well, LMCC’s letter gave a list of topics which the environmental assessment would need to provide information on. One of those topics involved how the other particular topics all related to the need to create a more sustainable town centre for Morisset. LMCC was holding a planning workshop on that topic from 29 June to 1 July 1998, the outcomes of which would need to be considered by LMCC along with the results of the environmental assessment.

65 Notwithstanding this encouragement from LMCC, the joint venturers did not immediately engage consultants to carry out the environmental assessment. Sensibly, they took the view that there was no point in doing so until both finance had been arranged for the development, and approval of the NSWALC had been obtained.

66 The National Parks and Wildlife Service (“NPWS”) had two different roles in relation to the rezoning of Koompahtoo’s land. One role concerned whether items of cultural or heritage significance (which in this context meant particularly items of Aboriginal cultural or heritage significance) would be affected by the types of development which could be permissible following a rezoning. The other role concerned the way in which the rezoning would have effects upon the flora and fauna in the area.

67 On 29 January 1999 Mr Bill Smith wrote to the appropriate officer at NPWS confirming that there were no sacred sites, middens or Aboriginal artefacts on Lot 556, and that the land had been thoroughly inspected and had nothing of Aboriginal cultural significance upon it. The letter stated that he signed it under authority of Koompahtoo, and in Mr Smith’s roles as Chairman, traditional custodian and Komilaroi elder.

68 In response, on 5 February 1999 NPWS wrote to the solicitors for Koompahtoo saying it was satisfied that no Aboriginal relics could be found on the surface of the property, but that relics may continue to exist in the subsurface soil. It proposed that this possibility be dealt with by having members of Koompahtoo invited to monitor any works which required excavation in excess of 30 cm, and that if relics were discovered during such work then the work should cease immediately and NPWS should be notified. It was implicit in this letter that NPWS would not require a survey of cultural and heritage items before the land was rezoned.

Events 4 February 1999 to 12 December 2003 Concerning Rezoning

69 Once NSWALC had given approval to the change of use and disposal of the land, on 4 February 1999, the pace of work stepped up. Work started to identify consultants for the environmental assessment, and Mr Scott began to have regular meetings with LMCC to establish what consultants were required and for what purposes. Gardner Brown ceased to be the planner engaged by Koompahtoo in February 1999, and Mr Martin Johnson was appointed as planner for the Joint Venture.

The Project Management Agreement with Bronzewing

70 On 15 February 1999 a Project Management Agreement was entered between the plaintiff and Bronzewing Property Holdings Pty Ltd (“Bronzewing”). Bronzewing is a company of Ms Molony, and was the company through whom the services of Mr Scott were provided to the Joint Venture. In that agreement the plaintiff was referred to as “the Principal”. The Project Management Agreement expressly stated that the plaintiff was entering into it on its own behalf and for the benefit of Koompahtoo pursuant to and in accordance with the provisions of the Joint Venture Agreement. A copy of the Joint Venture Agreement was initialled by the parties. The Agreement stated that Bronzewing was the project manager nominated pursuant to Clause 7.1 of the Joint Venture Agreement, and was appointed in accordance with the provisions of Clause 6.2(b) of the Joint Venture Agreement. The term of the Agreement was fifteen years, or the time taken to carry out the project, whichever was shorter. Topics on which Bronzewing was to advise and make recommendations to Sanpine included the implementation and carriage of any rezoning application to LMCC and DUAP and any other competent authority (Clause 4.9). Clause 4.11 obliged Bronzewing, as soon as reasonably practicable, to provide Sanpine with a Project Management Plan and a progressively updated Initial Works Program containing (inter alia) the following information:

“(a) rezoning schedule

(b) design and pre-construction program

(c) construction program

(d) list of equipment

(e) cost budget, cost control systems and cash-flow

(f) reporting and administration procedures

(g) quality controls”

71 The “Initial Works Program” was defined, in Clause 3.1, as being:

“the draft program of Works as annexed to this Agreement and marked “A” as updated from time to time (and in any event not less than once in every 6 month period during the Term) by the parties on the recommendation of the Project Manager to the Principal.”

72 Concerning the rezoning, Bronzewing’s duties were stated, by Clause 4.14, to be to:

“a) liaise with staff of Lake Macquarie City Council and establish clear rezoning parameters;

b) liaise with all relevant statutory authorities and government departments, in particular the Department of Minerals and Energy and the Department of Urban Affairs and Planning;

c) use best endeavours to ascertain the rules and regulations of any other relevant Authorities not previously ascertained;

d) use best endeavours to obtain approvals required by all relevant Authorities;

e) appoint Consultants and Professional Service Providers to carry out specific studies as and when required, including, but not limited to, survey, urban planning flora and fauna, flooding and drainage, noise, soil assessment, geotechnical, archaeological, transport, bush fire assessment, landscape, finance, social impact and market considerations;

f) enter into Consultancy Agreements and contracts with Consultants and Professional Service Providers as the disclosed agent for the Principal;

g) co-ordinate the work of Consultants, Contractors and Professional Service Providers in order to complete rezoning in an efficient manner and reasonable time frame;

h) advise the Principal of the progress of rezoning on a regular basis.”

73 Clause 4.18 required the plaintiff and Bronzewing to meet not less frequently than monthly (unless otherwise mutually agreed upon and noted in writing), and Bronzewing’s duties included to:

“b) arrange, conduct, keep records and issue minutes of all meetings.

d) regularly review the Initial Works Programme and the project management plan and report to the Principal on any matters affecting it.

e) as required by the Principal (but not more than once a month), furnish an updated cost report showing;

74 For those duties, Bronzewing was to be paid a monthly fee of $6,500, indexed annually by the CPI, unless otherwise agreed in writing.

The Management Committee

75 On 16 February 1999 a Management Committee meeting was held at Peppers Terrigal.

76 From the time of that meeting, the membership of the Management Committee remained constant until the death of Mr Charles Perkins in November 2000. The representatives of the plaintiff were Mr Charles Perkins, Mr Adam Perkins, Mr Steer, and Ms Molony. Mr Scott was appointed to act on behalf of Ms Molony, and invariably he attended the Management Committee meetings in that capacity, as well as on behalf of the Project Manager, and Ms Molony did not attend. The representatives of Koompahtoo were Mr Bill Smith, Mr Malcolm Smith, Mr Edward Smith, and Mr Stephen Griffen. Mr Bill Smith was at all times the Chairman of Koompahtoo. Mr Griffen was Treasurer of Koompahtoo at least from 8 January 2001. Indeed, he executed the mortgage given to Inteq on 15 February 1999 in the capacity of Treasurer, which I accept as an admission by the first defendant that he held that office at that date. I infer that Mr Griffen was Treasurer continually from February 1999 until December 2003.

Steps to Advance the Rezoning February 1999 to April 2002

77 The minutes of the meeting of the Management Committee held on 16 February 1999 record Mr Steer’s advice “that a bank account had been established at the National Australia Bank – 101 Pitt Street Sydney and that the signatories to the account were:” (three named people on behalf of the plaintiff, and three named people on behalf of Koompahtoo). The minutes continued: “Two signatories are required for this account and are to be one member from Sanpine and one from Koompahtoo”.

78 Mr Steer reported to the meeting that the Aboriginal Liaison Officer’s salary would now be paid by bank transfer, and the Aboriginal Liaison Officer’s vehicle would be replaced every three years, with the vehicle that was being replaced being retained by the Aboriginal Liaison Officer. Payments for attendance at meetings were to be brought up to date, and future meeting payments would only be paid on attendance. Those eligible for meeting payments were Messrs Malcolm and Edward Smith, and Mr Griffen. (Presumably, it was thought that when Mr Bill Smith’s activities as Aboriginal Liaison Officer were paid for, he should not be entitled to any separate payment for attendance at meetings.) Throughout succeeding years, payments to these Aboriginal representatives on the Management Committee continued to be made at the rate of $100 per meeting attended. As well:

“

79 On 9 March 1999 Mr Johnson gave a list of proposed consultants to LMCC. An understanding seems to have been reached with LMCC, at least by this time, that the way in which the Environmental Assessment would proceed would involve various consultants in particular specialisations each giving reports which related to their own area of specialisation, and those reports would be drawn upon and integrated into a single document, prepared by Mr Johnson, which dealt with the overall effects of the proposed rezoning on the environment.

80 On 18 March 1999 the Management Committee met. The minutes record that a schedule of payments for meetings had been processed, and payments made to the relevant members of the Management Committee. Mr Scott presented a list of potential consultants in the various disciplines that were relevant to the environmental study. A rezoning schedule timeline was tabled. It was a one-page document, which listed various tasks which needed to be done before a rezoning could be achieved. It did not deal with the entirety of that process, however – it only took it up to the stage of the drafting of a LEP and a Development Control Plan, and review by LMCC. It showed the LMCC review being achieved by 14 June 1999. Mr Scott also presented a written project management report, which said, concerning this schedule:

“The timetable is most ambitious – and is so for a very sound reason. This tight schedule has been prepared for the sole purpose of keeping consultants well and truly on track. On that basis I do not expect to ever be advised that I am running behind if for some reason beyond my control things do not happen exactly as per schedule.”

81 Mr Scott gives evidence, which I accept, that immediately after the schedule was put out LMCC required that studies be done over not just the proposed development site, but over some 320 to 340 ha. That change, he says, altered the time expected to be required for the various studies, and resulted in the program being revised. As will be seen, it was revised by being extended by only two weeks.

82 On 29 March 1999 there was a general meeting of Koompahtoo. It was the first occasion, so far as the evidence discloses, where dissension between members of Koompahtoo concerning the Joint Venture project was expressed. Later events showed that that dissension never completely went away, and caused significant disruption to the carrying through of the Joint Venture. Mr Scott’s evidence about the meeting, which I accept, was:

“I think I was only about a third of my way through my report to the meeting and because of a couple of dissidents who threatened uproar and the police were called and they were jumping out windows and I left the meeting. I remember that vividly. There were baseball bats put through car windows and people arrested and everything … the meeting was in an uproar from the time we got there. The handfull of dissidents brought in a few people who were, all I can say were drunk and disorderly, and the meeting broke up and there were fights going on. There were honestly people, women unfortunately, very sad, jumping out windows with about a 12 foot drop below … and I just left, got out of the place real quick.”

83 On 14 April 1999 the Management Committee met. A Project Manager’s report was tabled. Mr Scott reported on what studies had been started, and what still remained to be started, and the timeline was discussed. He reported that no archaeological and heritage study had been commissioned, as the letter from NPWS (of 5 February 1999 – para [68] above) fulfilled the requirements of LMCC in the first instance.

84 It was in May 1999 that studies for the environmental assessment began to be carried out.

85 A further Management Committee meeting on 16 May 1999 included a report from Mr Bill Smith concerning how the Joint Venture was receiving damaging adverse publicity from a minority breakaway group. Mr Scott’s written Project Management report included:

WILL

86 On 20 May 1999 LMCC had the public launch of its Lifestyle 2020 Study. This was a draft strategic land use plan relating to the whole of the area controlled by LMCC. Strategic planning involves the thinking through and adoption of policies, which have no particular statutory basis, but which articulate the objectives which the council wants to achieve through the adoption of particular planning instruments, like a LEP, which have statutory force. Mr Scott reported to the Management Committee on 9 June that:

“The highlight of the launch was the fact that the Joint Venture parcel of land is to be the only major release area within the whole Morisset – Cooranbong – Wyee precinct. The 2020 Study Report is still being printed and will not be available till Friday of this week. This has delayed the completion of some of the planning studies that we are carrying out. The studies will be completed however within a few days of the release of this document.”

87 On 27 May 1999 an extraordinary general meeting of Koompahtoo occurred. Mr Scott reported to a Management Committee meeting held on 9 June 1999 that that general meeting:

”… unfortunately turned into a complete fiasco. It is my firm belief that unless this problem within Koompahtoo is not [sic] rectified quickly then the success of the Joint Venture is being placed at enormous risk.”

88 At the meeting of the Management Committee held on 9 June 1999, the minutes record:

“Graham [Steer] advised that he was contacted by a reporter from the 60 Minutes program investigating the Joint Venture and the actions of Small [sic] dissident group associated with the KLALC. He confirmed that information was relayed to the reporter after consultation with all members of the Joint Venture. Adam Perkins then advised the meeting that Charles [Perkins], Graham and himself had meet with the reporter and the reporter confirmed that based on his research that there were only a handful of troublemakers that were not representative of the aboriginal community and the Land Council.

Billy [Smith] and Bob [Scott] then raised the issue of the upcoming Audit and in particular the cost to the Joint Venture. The chairman [Graham Steer] advised that whilst there is a requirement under the Joint Venture for an audit, he believed that if the expenses were not incurred until the rezoning then the audit of the Joint Venture could be deferred. He confirmed that Sanpine has no requirement for an audit. After much discussion it was agreed by all members of the committee that because of the expense of the audit and the fact that at present the expenses of the JV are being incurred by Sanpine Pty Limited on behalf of the Joint Venture, that the audit of these expenses could be deferred until the rezoning. The meeting resolved to defer the appointment of an auditor of the Joint Venture until the rezoning.”

89 Another meeting of the Management Committee occurred on 14 July 1999. A project manager’s report reported that significant delays had been experienced in carrying out a survey of Pourmalong Creek. That creek runs through Lot 556, and soon after leaving Lot 556 empties into Lake Macquarie. A hydrology study which LMCC required needed a cross-sectional survey of Pourmalong Creek to be carried out from its headwater to its mouth. The thickness of the vegetation along the creek, and the fact that “the site is a quagmire as a result of the incessant rain” had delayed the survey. In consequence Mr Scott’s projection of March 1999 was running about one month late.

Separate Breaches of Obligation to Keep Books?

348 The first and second defendant allege yet another type of breach of the plaintiff’s obligations concerning keeping Books. It relates to the adequacy of the documentation for expenditure of joint venture funds. Three particular groups of transactions are relied upon here. The first is the group of payments made from the Sanpine Unit Trust Account in February 1999, discussed at para [266] ff above. The documentation in relation to the payment to Mrs Perkins of $183,314.48 was not such as enabled a Venturer “to extract from the Books” information about the purpose of that payment – and information about the purpose of that payment was “information in relation to the affairs of the Joint Venture”, within the meaning of Clause 16.5(a) of the Joint Venture Agreement. Nor were the records concerning that payment “proper Books … so as to permit the affairs of the Joint Venture to be duly assessed”. The same can be said, the first and second defendants submit, concerning the payments made in February 1999 to Bronzewing, and Erolvase. Before the Bronzewing Project Management Agreement was signed in February 1999 there is no evidence of any agreement being on foot which fixed any particular rate of pay for the work which Mr Scott performed. Even though I have found that Mr Scott did work in connection with the Joint Venture before the Bronzewing Project Management Agreement was signed, the documentation does not make clear whether the payment was for work done or something else, if it was for work done, for what work Bronzewing was being paid, or by reference to what principles of calculation was the amount arrived at.

349 The second example which the first and second defendants focused upon was the vouching for some payments made to Mr Adam Perkins. These consisted of a payment of $50,000 on 21 August 2001, and $71,097.03 on 30 August 2001 (each according to the Sanpine Unit Trust general ledger). The vouching for those payments appears to be a one-page document (which became exhibit 7). It contains entries for “Bill wage”, each such narration followed by the name of a month, over a period from February 2000 to May 2001. I would infer that these were payments to Mr Bill Smith of the fee for acting as Aboriginal Liaison Officer. As well, though, there were six entries, over a period December 2000 to April 2001, entitled ‘Billy pipeline”. Four of those entries were for $6,666.66. The other two (whose narration was “Billy pipeline (part)”) were for $1,333.33, and $1,200 respectively. When Mr Steer was asked what was meant by “Billy pipeline” the following evidence was given:

“A. I would have assumed that is something to do with the Villaworld transaction, I am not sure.

COLES: Q. Where in the books and records, the financial books and records of the joint venture do we find that transaction correctly recorded and explained?
A. I think there is - any income there is $100,000 income coming into Villaworld and I am sure there is consulting fees of 100,000 going out.

Q. On which document or piece of paper or back of an envelope or whatever it may be--
A. In the Sanpine books of account.

Q. Have they been produced to the Court?
A. I think so, attached to my affidavit.

“Billy pipeline”

350 I observe that these payments to Mr Adam Perkins were a reimbursement to him of expenditure which he had made, supposedly for the purposes of the Joint Venture, during a period when the Joint Venture had run out of money borrowed from a mortgagee. Not adhering to the discipline of the Joint Venture Agreement, by having unsecured loans paid into the Joint Venture Account, and Joint Venture expenses paid from that account in a way which enabled them to be properly accounted for, has led, concerning these payments to Mr Perkins in 2001, to problems of the same type as arose concerning the payments in February 1999.

351 The third example which the first and second defendant pointed to involved a line in a listing of expenditure of the Joint Venture which Mr Steer annexed to his affidavit. That line showed an outgoing of $18,000, in each of the years 2000, 2001 and 2002, attributed to “Aboriginal management fee – Erolvase”. Concerning that entry, the following evidence was given by Mr Steer:

“Q. What is the item Erolvase Management - Aboriginal Management fees - Erolvase?
A. Initially there was an Aboriginal management fee, it was agreed to by all parties in the Management Committee to be paid to Erolvase to handle liaison not only with the Koompahtoo but all other Aboriginal departments, et cetera, for which Erolvase was receiving a fee. That was subsequently dispensed with as wasted accounting fee.

HIS HONOUR: Q. Who or what is Erolvase?
A. That is Mr Perkins’ company.

COLES: Q. Mr Adam Perkins?
A. I think it is both actually.

Q. There is no service agreement or the like with Erolvase of the same kind as we have seen, for example, in Bronzewing, is there?
A. I don't think there was. There was a letter of appointment, from memory. I haven’t seen it in a long period of time.

Q. Was there anything in the management committee meetings to suggest that it resolved to engage Erolvase?
A. I don’t think so.

Q. I am suggesting to you that that probably isn’t the case and it would be very hard for you to tell us what it was that Erolvase was drawing these funds for?
A. They were involved in assisting in the whole lot of areas associated with the Aboriginal side of things. I can’t confirm exactly what they were doing, no.

Q. Did they supply invoices?
A. They would have.

Q. Fee notes or--
A. There would have been invoices, I would have thought.

Q. They are not been provided or discovered in these proceedings; is that right?
A. I would have thought they were attached to the cash payments vouchers, but I may be wrong.

352 Neither an invoice, nor a cash payment voucher, relating to those payments totalling $54,000, to Erolvase is in evidence. Nor is any letter of appointment of Erolvase. As at 30 April 2003 Mr Steer told Mr Lawler that we was not aware of the existence of a formal agreement with Erolvase (para [290] above). I conclude that no such agreement exists.

353 I accept that these additional matters to which the defendants point are all examples of breach of Clause 16.5(a).

PART O - RETURN TO WHETHER PLAINTIFF WAS IN BREACH BY REASON OF DELAY

354 I did not finish examining whether the plaintiff was in breach of its contractual obligations by reason of delay in advancing the rezoning, because the first and second defendants’ arguments relating to the period after April 2002 required an understanding of the financial and accounting matters I have just been discussing. The final criticism those defendants make of the plaintiff’s progressing with the rezoning concerns the total lack of progress after April 2002. Even though there was an additional amount of a little more than $280,000 which had been paid into the Sanpine Unit Trust Account on 16 November 2001, as a consequence of the mortgage by Investments to LKM over Lot 556 being varied to a capital amount of $1.95 m, the amount in the account had dwindled to $114,200 at the start of April 2002. The defendants criticise the plaintiff for not having spent that money on consultants who may have satisfied the requirements of LMCC and NPWS, rather than have it eroded over the balance of the year, largely in payment of fees to Bronzewing and for fees and other benefits to Mr Smith or his company. As well, the defendants submit that, if the payment which was not properly a Joint Venture expense had not been made to Mrs Perkins in February 1999 from the Sanpine Unit Trust Account, there would have been an additional $183,000 there, to enable consultants to be retained.

355 I do not accept that last proposition. The Unit Trust Account was topped up, with monies borrowed from Inteq or LKM, on four separate occasions – see para [262] above. During 2000 various borrowed monies were also credited to the account, which were repaid from the June 2001 borrowing from LKM. Mr Koops was at all times willing to continue to cause LKM to lend money to the venture, so long as he was satisfied with the security available. If the payment to Mrs Perkins had not been made from the borrowed funds, it seems to me that there would not have been a need to borrow as much money as was borrowed from LKM in 2001. I cannot conclude that, if the payment to Mrs Perkins had not been made from the Unit Trust Account, the balance standing in that account in February 2002 would have been any greater than it in fact was.

356 The defendant has not persuaded me that failure to expend the $114,000 standing in the account in April 2002 on consultant’s fees was a breach of contract. The Joint Venture had an ongoing contractual commitment to Bronzewing, to make monthly payments, which could not simply be ignored. It likewise had ongoing commitments to Mr Smith and his company. There has been no examination of the detail of what consultancy services could have been obtained for $114,000, or how far the expenditure of $114,000 on consultancy services would have taken the project towards rezoning. The evidence of Mr Kovats and Ms Thomson that around $500,000 still needs to be spent to achieve a rezoning suggests that $114,000 would not have been nearly enough.

357 As I have earlier said, one of the limits on Sanpine’s obligation to advance the Joint Venture was whether the advancing of the Joint Venture could be done within the financing constraints which the Joint Venture Agreement itself imposed. Faced with the Registrar General’s caveat, which made the raising of additional finance for all practical purposes impossible, I do not accept that the plaintiff was in breach of contract in failing to advance the Joint Venture between April 2002 and the time of appointment of the administrator. As well, the attitude of the Management Committee, as revealed in its minutes, did not change from that summarised in the minutes of 26 March 2002 (para [145] above) – they accepted that the Joint Venture was at a standstill and would remain so until the political and legal troubles besetting Koompahtoo were sorted out. In these circumstances I am not persuaded that the plaintiff was in breach of any of its obligations to advance the rezoning between April 2002 and the time of appointment of the administrator.

358 Once the administrator was appointed, his prohibition on drawing money down without his approval coupled with his not giving any such approval, followed by his prohibition on spending any money on the Joint Venture at all, had the effect that Sanpine was not in breach of its obligations to advance the Joint Venture after the appointment of the administrator.

PART P - REPUDIATION – THE LAW

359 So far, I have examined whether there have been breaches by the plaintiff of the Joint Venture Agreement. That there have been breaches is not sufficient to establish that there has been a repudiation.

360 The term ”repudiation” is used by lawyers in various different ways: Carter: Breach of Contract, 2nd ed, para [701] – [705]. I shall use it as referring to conduct by a contracting party which, as a matter of common law, entitles the other contracting party to terminate the contract.

361 Sometimes a contract contains a provision whereby, if a certain type of breach occurs, or certain type of circumstance arises, a party has a right to terminate the contract. Such a termination is one pursuant to the contractual power thereby conferred; it is not a termination arising from repudiation. Repudiation arises in circumstances which the common law itself recognises, without any express statement by the parties, as conferring an entitlement to terminate a contract.

362 There are different classifications of the circumstances in which the common law recognises such a right. A common element in them is to recognise a right to terminate as arising when there is a breach of an essential term (sometimes called a “condition”) of a contract. Sometimes the classification recognises the right to terminate as sometimes arising when there is a breach of a term which is not an essential term of the contract (any breach of which, no matter how small, gives rise to a right to terminate) nor is it a breach of a mere warranty (a contractual promise, but one the breach of which only ever gives rise to a right to damages, not a right to terminate) but rather of an “intermediate term” (a term the breach of which in one way can give rise to a right to terminate, but the breach of which in another way gives rise only to a right to damages). Thus, Professor Carter, in Breach of Contract, 2nd ed, para [308] states that a right to terminate performance of a contract exists at common law:

“(a) for breach of condition;

(b) for a sufficiently serious breach of an intermediate term; and

(c) in respect of an absence of readiness or willingness to perform constituting a repudiation of obligation or capable of being treated as an anticipatory breach of contract.”

363 Because the second of the items in this taxonomy depends upon whether a breach is “sufficiently serious”, it does not provide a self-contained test for when a right to terminate exists. Rather, further explanation of when a breach is “sufficiently serious” is needed.

364 In contrast, Cheshire and Fifoot’s, Law of Contract” 8th Australian ed, para [21.10] classifies the circumstances where termination is justified as:

· “Repudiation. This is breach consisting of a manifestation of unwillingness or inability to perform the contract in substance or at all …

· Breach of essential term. This is breach consisting of failing to perform a term designated as essential by the contract or by the law …

· Breach causing substantial loss of benefit. This is breach consisting of a failure to perform which has the effect of depriving the injured party of the substantial benefit of the contract …”

365 In the present case, both parties gave only passing attention to the differing items in these taxonomies. Rather, they focussed attention on specific judgments of the High Court of the last twenty five years. From those judgments, I take the following propositions as being established.

366 In Shevill v Builders Licensing Board (1982) 149 CLR 620 at 625-6 Gibbs CJ said that:

“… contract may be repudiated if one party renounces his liabilities under it – if he evinces an intention no longer to be bound by the contract … or shows that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way …”

The Progressive Mailing House Pty Limited v Tabali Pty Ltd

Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd

367 A repudiation can arise either from a party showing an intention not to be bound by the entire contract, or by showing that it does not intend to be bound by a term or terms which are of sufficient importance in the contract: Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd at 634 per Mason CJ, 641-642 per Brennan J. The question of whether the party in breach has shown the sort of intention which enables termination to occur is decided not by reference to that party’s subjective intentions, but rather by reference to how its conduct would appear to a reasonable person in the position of the other contracting party: Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd at 643, 647-8 per Brennan J, 657-8 per Deane and Dawson JJ, 666 per Gaudron J. It is well established that “repudiation of a contract is a serious matter, not to be lightly found or inferred”: (per Lord Wright, Ross T Smyth & Co Ltd v T D Bailey, Son & Co [1940] 3 All ER 60 at 71, Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd at 643 per Brennan J, 657 per Deane and Dawson JJ.

PART Q – REPUDIATION – APPLICATION TO FACTS

368 I record that the first and second defendants have submitted that various of the obligations which they have found were breached were essential terms of the contract, and hence that termination of the contract was justified regardless of the seriousness of the particular breaches. I will not pause to examine that argument. Rather, I shall assume, without deciding, that all the terms which have been breached in the present case are intermediate terms.

369 To recapitulate, I have found that the following breaches have occurred:

· Delay of the order of five months in appointing Umwelt (para [231]).

· Breach of the obligation in Clause 6.2(i) to prepare a Development Program (para [236]).

· Breach of the obligation in Clause 6.2(j) to regularly update the Development Program (para [240]).

· Breach, on fourteen occasions over seven years, of the obligation under Clause 12.2 to prepare and submit a Development Program and a cost and revenue budget (para [241]).

· Breach of the obligation under Clause 13.2 to prepare a Monthly Report, containing the information listed in Clause 13.2. This breach occurred every month that the Joint Venture Agreement was on foot. Even if one regards the period from and including March 1999 to January 2003 as the more important part of that time, it involves breaches on forty six occasions (para [242]).

· Breach of its obligation under Clause 16.1(a) to open the Joint Venture Account as soon as possible following the date of the Joint Venture Agreement (para [260]), [286])

· Breach of the obligation in Clause 16.3 to pay money into the Joint Venture Account (para [261]).

· Breach of Clause 16.4, concerning manner of application of funds withdrawn from Joint Venture monies (para [263]).

· Failure to maintain proper books and records (para [301] – [309], [348] - [353].

370 No waiver or estoppel is effective to take away the significance which these breaches have. They are breaches which extend over the entire period during which the Joint Venture operated.

371 The Joint Venture Agreement was one which set out a clear and coherent set of procedures to be followed for the administration of the Joint Venture. The Agreement is one which, if carried through according to its letter, would have imposed upon the joint venturers the discipline of considering, each month, the type of information contained in the Monthly Reports, and of receiving and giving consideration at regular intervals to projections which involved the entire Development (not just part of the rezoning stage of it). It would have resulted in all the money which was raised on the security of Koompahtoo’s land or otherwise for the purposes of the Joint Venture being paid into the Joint Venture Account, and only drawn on for proper purposes, and by a procedure which checked actual expenditure against expenditure which had been predicted to be required. All the expenditure would be from the Joint Venture Account, which had representatives of both Venturers as signatories. There would be full documentary records of the expenditure of the money, and accounts kept, giving considerable detail, and in a form fit for auditing.

372 The departures from this way of running the joint venture have been gross and repeated. The total failure to adhere to the accounting obligations, ever since the Joint Venture began, is alone sufficient to amount to a repudiation. Even accepting that some information was given to the Koompahtoo representatives on the Management Committee relating to the Joint Venture (although verbally, and of a type and with a frequency which it is now not possible to ascertain) there is still an extremely serious departure from the obligations imposed by the Agreement. Even if (contrary to my view) the resolution of the Management Committee of 27 March (para [114] above) was effective to dispense, thenceforth, with any obligation on the plaintiff to provide Monthly Reports the remaining and continuing breaches were sufficient to amount to a repudiation.

373 The unexplained delay of five months in appointing Umwelt, at a time when all parties must have known that significant monthly costs continued to be running up for fees to Bronzewing and Mr Smith’s company, and Mr Smith’s vehicle, and for interest on borrowings, only makes the repudiation worse.

374 The second defendant was entitled to terminate the Joint Venture Agreement, as he did on 12 December 2003.

The text of the separate question is set out at para [186] above. I make the following orders:

1. I answer the separate question “Yes”.

2. Order the plaintiff to pay the costs of the first and second defendant of the hearing of this separate question.

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Citations

Sanpine v Koompahtoo Local Aboriginal Land Council [2005] NSWSC 365

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CITATION:	Sanpine v Koompahtoo Local Aboriginal Land Council [2005] NSWSC 365
HEARING DATE(S):	9-11/2/05; 16/3/05; 21-23/3/05
JUDGMENT DATE :	22 April 2005
JURISDICTION:	Equity
JUDGMENT OF:	Campbell J
DECISION:	Contract validly terminated

CATCHWORDS:	EVIDENCE - burden of proof, presumptions and weight and sufficiency of evidence - principles for deciding which party to litigation has the onus of proving that a contract has been validly terminated - onus of proof when a declaration is sought in relation to a negative fact - DECLARATIONS - onus of proof when a declaration is sought as to a negative fact - CONTRACTS - construction and interpretation of contract - principles in deciding whether parties have agreed to dispense with common law rights to terminate for repudiation - ESTOPPEL - general principles - estoppel in the face of a statute - as at what date does one look to see what statutory provisions are in existence for the purpose of deciding whether there has been an estoppel in the face of a statute - ESTOPPEL - general principles - types of statutory provision concerning which there cannot be an estoppel in the face of the statute - ABORIGINALS - Aboriginal land councils - powers and functions - application of doctrine of ultra vires to such corporations - whether such corporations have power to dispense with requirements imposed by Aboriginal Land Rights Act 1983 for keeping accounts and having them audited - whether action of office bearers of such a corporation can give rise to an estoppel whereby it cannot be asserted that the corporation has dispensed with a contractual provision requiring the keeping of accounts, in substantially similar terms to the statutory requirement to keep accounts - ABORIGINALS - Aboriginal land councils - scope of authority of chairman - scope of authority of treasurer - CORPORATIONS - statutory corporations - powers - extent of - Aboriginal land councils - whether such corporations have power to dispense with requirements for keeping accounts and having them audited imposed by Aboriginal Land Rights Act 1983 - CONTRACTS - discharge - repudiation - types of conduct which can be repudiation - LEGAL REASONING - role of ostensive definition
LEGISLATION CITED:	Aboriginal Land Rights Act 1983 Aboriginal Land Rights Amendment Act 2001 Aboriginal Land Rights Regulations 1996 Corporations Act 2001 (Cth) Environmental Planning and Assessment Act 1979 Environmental Planning & Assessment Regulation 1994 Interpretation Act 1987 Judicature Act 1873 (UK) Land Tax Management Act 1956 Public Finance and Audit Act 1983 Real Property Act 1900 Threatened Species Conservation Act 1995
CASES CITED:	Abrath v The North Eastern Railway Company (1883) 11 QBD 440 Abrath v The North Eastern Railway Company (1886) 11 App Cas 247 Australian Broadcasting Commission v Australasian Performing Right Assn Ltd (1973) 129 CLR 99 Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66 BP Refinery (Westernport) Pty Limited v Shire of Hastings (1977) 180 CLR 266 Byrne v Australian Airlines Limited (1995) 185 CLR 410 Chapman v Wade [1939] SASR 298 Cohen & Co v Ockerby & Co Ltd (1917) 24 CLR 288 Commercial Union Assurance Co of Australia Ltd v Beard [1999] NSWCA 422; (1999) 47 NSWLR 735 Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 176 ALR 693 Crowley v Glissan (No 2) (1905) 2 CLR 744 Dorsatville v Loumbos, Bryson J, 16 March 1990, unreported Fileman v Liddle (1974) 2 BPR 9192 Galaxidis v Galaxidis [2004] NSWCA 111 Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689 Grey v Australian Motorists & General Insurance Co Pty Ltd [1976] 1 NSWLR 669 Hume v Monro (No 2) (1943) 67 CLR 461 Hutt Valley Properties Limited v Gamages (NZ) Limited (1952) NZLR 296 Illawong Village Pty Limited v State Bank of New South Wales [2004] NSWSC 18 Industrial Equity v G and C Consolidated (1974) 2 NSWLR 456 Interpool v Kapal Pacifico (KP) (1982) 7 ACLR 243 J Kitchen & Sons Pty Ltd v Stewart's Cash and Carry Stores (1942) 66 CLR 116 Jaques v Withy and Reid (1788) 1 H Bl 65; 126 ER 40 Jones v Sutherland Shire Council (1979) 2 NSWLR 206 Kok Hoong v Leong Cheong Kweng Mines Limited [1964] AC 993 Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 Law Society of New South Wales v Bruce (1996) 40 NSWLR 77 Lombard North Central Plc v Butterworth [1987] QB 527 Lush v Russell (1850) 5 Exch 203 Mackay v Dick (1881) 6 App Cas 251 Massoud v NRMA Insurance Ltd (1995) 8 ANZ Insurance Cases 61-257 Overmyer Industrial Brokers Pty Limited v Campbell's Cash and Carry Pty Limited [2003] NSWCA 305 Owners - Strata Plan No 51487 v Broadsand Pty Ltd [2002] NSWSC 770 Paric v John Holland (Constructions) Pty Ltd [1984] 2 NSWLR 505 Paric v John Holland (Constructions) Pty Ltd (1985) 62 ALR 85 Pollnow v Garden Mews-St Leonards (1984) 2 ACLC 511 Port of Melbourne Authority v Anshun Proprietary Limited (1981) 147 CLR 589 The Progressive Mailing House Pty Limited v Tabali Pty Limited (1985) 157 CLR 17 Ross T Smyth & Co Ltd v T D Bailey, Son & Co [1940] 3 All ER 60 Schenker & Co (Aust) Pty Ltd v Maplas Equipment and Services Pty Ltd [1990] VR 834 Shevill v Builders Licensing Board (1982) 149 CLR 620 Smart v Allen (1980) 91 WN 241 Smith v Butler [1900] 1 QB 694 Southern Foundries (1926) Limited v Shirlaw [1940] AC 701 Spiers v Hunt [1908] 1 KB 720 Stocznia Gdanska SA v Latvian Shipping Co & Others (1998) 1 WLR 574 Subdivisions Limited v Payne [1934] SASR 214 Tan Hung Nguyen & Anor v Luxury Design Homes Pty Limited & 2 Ors [2004] NSWCA 178 TCN Channel Nine Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 Todd v Parker [1953] NZLR 39 Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Wilson v Carnley [1908] 1 KB 729 Wongala Holdings Pty Limited v Mulinglebar Pty Limited (1994) 6 BPR 97481
PARTIES:	Sanpine Pty Ltd - Plaintiff Koompahtoo Local Aboriginal Land Council - First Defendant Terry Lawler - Second Defendant Koompahtoo Local Aboriginal Land Council Property Investment Pty Ltd - Third Defendant
FILE NUMBER(S):	SC 4606/04
COUNSEL:	T S Hale SC; J White - Plaintiff B Coles QC; G Sirtes - First & Second Defendants No appearance - Third Defendant
SOLICITORS:	Solari Legal - Plaintiff Bartier Perry - First & Second Defendants No appearance - Third Defendant