Tipperary Developments Pty Ltd v The State of Western Australia - [2006] WASC 137

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: TIPPERARY DEVELOPMENTS PTY LTD -v- THE STATE OF WESTERN AUSTRALIA [2006] WASC 137

CORAM: MURRAY ACJ

HEARD: 18-22 JULY, 25-28 JULY, 1-5 AUGUST, 8-12 AUGUST, 18-19 AUGUST, 22-23 AUGUST 2005

DELIVERED : 13 JULY 2006

FILE NO/S: CIV 2490 of 1992
CIV 1473 of 1994
CIV 1878 of 1994

BETWEEN: TIPPERARY DEVELOPMENTS PTY LTD
Plaintiff
AND
THE STATE OF WESTERN AUSTRALIA
Defendant
(BY ORIGINAL ACTION)
THE STATE OF WESTERN AUSTRALIA
Plaintiff (By Counterclaim)
AND
TIPPERARY DEVELOPMENTS PTY LTD
Defendant (By Counterclaim)
(BY COUNTERCLAIM)

Catchwords:

Contract - Oral contract of guarantee - Enforceability - Authority of servant or agent of State to enter into contract for State - Lack of note or memorandum - Whether negligent misrepresentations established - The application of promissory estoppel

Release - Agreement for - Deed of release executed - No economic duress - Implied term of good faith not breached - Rectification of deed granted

Legislation:

Nil

Result:

Claim dismissed
Counter-claim allowed
Order for rectification of deed

Category: B

Representation:

Original Action

Counsel:

Plaintiff: Mr B C Oslington QC & Mr J C Giles
Defendant: Mr C L Zelestis QC, Mr K M Pettit SC & Mr A J Sefton

Solicitors:

Plaintiff: Solomon Brothers
Defendant: State Solicitor for the State of Western Australia

Counterclaim

Counsel:

Plaintiff (By Counterclaim) : Mr C L Zelestis QC, Mr K M Pettit SC & Mr A J Sefton
Defendant (By Counterclaim) : Mr B C Oslington QC & Mr J C Giles

Solicitors:

Plaintiff (By Counterclaim) : State Solicitor for the State of Western Australia
Defendant (By Counterclaim) : Solomon Brothers

Case(s) referred to in judgment(s):

Actionstrength Ltd v International Glass Engineering IN.GL.EN SpA [2003] 2 AC 541
Attorney‑General for Ceylon v Silva [1953] AC 461
Bell v Western Australia (2004) 28 WAR 555
Bonython v The Commonwealth (1948) 75 CLR 589
Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337
Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40
Esanda Finance Corp Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241
Jones v Dunkel (1959) 101 CLR 298
Kamleh v The Queen (2005) 79 ALJR 541
Mander Pty Ltd v Clements (2005) 30 WAR 46
Masters v Cameron (1954) 91 CLR 353
Moschi v Lep Air Services Ltd [1973] AC 331
Mutual Life & Citizens' Assurance Co Ltd v Evatt (1968) 122 CLR 556
NSW v Bardolph (1934) 52 CLR 455
Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451
San Sebastian Pty Ltd v The Minister (1986) 162 CLR 340
Shaddock & Associates Pty Ltd v Parramatta City Council [No 1] (1981) 150 CLR 225
Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245
Tepko Pty Ltd v Water Board (2001) 206 CLR 1
Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
Western Australia v Watson [1990] WAR 248

Case(s) also cited:

Australian Securities & Investments Comissions v Rich [2005] NSWCA 152
Ballarat Brewing Co Ltd v Federal Commissioner of Taxation (1951) 82 CLR 364
Bank of NSW v The Commonwealth (1948) 76 CLR 1
British Russian Gazette and Trade Outlook Ltd v Associated Newspapers Ltd [1933] 2 KB 616
Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) 41 NSWLR 329
The Commonwealth v Western Australia (1999) 196 CLR 392
Cutts v O'Neil (1998) 72 SASR 56
Dovuro Pty Ltd v Wilkins (2003) 215 CLR 317
Goodtitle d. Edwards v Bailey (1777) 2 Cowp. 597
Grundt v Great Boulder Proprietary Gold Mines Pty Ltd (1937) 59 CLR 641
Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465
Ibrahim v Pham [2005] NSWSC 246
J.J. Savage & Sons Pty Ltd v Blakney (1970) 119 CLR 435
Jones v Bartlett (2000) 205 CLR 166
Leroux v Brown (1852) 138 ER 1119
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705
Maloney v Commissioner for Railways (NSW) (1978) 18 ALR 147
Maxwell v Murphy (1957) 96 CLR 261
McDermott v Black (1940) 63 CLR 161
New South Wales v Paige [2002] NSWCA 235
Northside Developments Pty Ltd v Registrar General (1990) 170 CLR 146
Pao On v Lau Yiu Long [1980] AC 614
Powercell Pty Ltd v Cuzeno Pty Ltd [2004] NSWCA 51
Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370
Pukallus v Cameron (1982) 180 CLR 447
Rosenberg v Percival (2001) 205 CLR 434
Ross v Allis-Chalmers Australia Pty Ltd (1980) 32 ALR 561
Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 186 ALR 289
Russo-Chinese Bank v Li Yau Sam [1910] AC 174
Shire of Brookton v Water Corporation [2003] WASCA 240
Sue v Hill (1999) 199 CLR 462
Timms v Commonwealth Bank of Australia [2004] NSWSC 76
Town Investments Ltd v Department of the Environment [1978] AC 359

MURRAY ACJ: This litigation has been a long time coming to trial. It is unnecessary for present purposes to do more than note that the first of the three actions brought by the plaintiff, Tipperary Developments Pty Ltd (TD) was launched in 1992. The other actions were instituted in 1994 and all were consolidated by orders made in that year. The case concerns events which occurred between October 1987 and the end of 1988. At the time of the delivery of these reasons, those events occurred over 17 years ago.
By notice dated 28 September 1990, given under cover of a letter of that date addressed to the then Deputy Premier, the Hon Ian Taylor MLA, under the hand of Mr Warren Anderson, the Chairman of Directors of TD, the plaintiff purported to comply with s 6 of the Crown Suits Act 1947 (WA). Of course, the notice was then out of time and the action had not been commenced before the expiration of a year from the date on which the cause of action accrued as required by the section. No point need be made about that because consent to pursue the action was given under s 6(2) of the Act.
I mention the process because the causes of action relied upon were then described in the most general of terms. Reliance was placed upon representations made in March 1988 on behalf of the defendant by which TD was caused to advance the sum of $50M to a merchant banking institution, Rothwells Ltd (Rothwells). The notice alleged that representations were made on behalf of the defendant to Mr Anderson on behalf of TD "that Rothwells was financially sound, that all its financial problems had been overcome and that therefore the deposit would be safe".
The notice asserted that, relying upon and induced by those representations, TD advanced $50M in March and April of 1988 and entered into a facility agreement with Rothwells for that sum to be repaid by October 1988 and for bills of exchange granted by debtors of Rothwells to be assigned to TD as security for the payment of the advance. However, it was asserted that the representations were untrue, made in breach of s 10 of the Fair Trading Act 1987 (WA) and made negligently. Those was the causes of action then relied upon in that notice given some 2½ years after the events in question.
Later, a Royal Commission was held, entitled the "Royal Commission into the Commercial Activities of Government and Other Matters". It had wide‑ranging terms of reference. Almost all of the witnesses called before me gave evidence to that Royal Commission in late 1991 and early 1992, about 3½ years or more after the events with which this litigation is concerned. Their evidence then touched upon the factual matters relevant to this litigation, but, of course, the matters at issue before me were not the focus of the inquiry by the Royal Commission.
As is evident when regard is had to when this litigation was instituted, it has had a long and, I may say, at times painful, process to trial. But in May 2005 I made orders by way of directions for the final preparation for trial. In the usual way, those directions involved the exchange of witness statements, including statements responsive to those provided by the other party. In the ordinary way, those directions provided that, subject to proper objections, the statements so served might be ordered to stand as the evidence‑in‑chief of the witnesses in question, supplemented, by leave of the Court, by oral testimony. The statements of the witnesses who gave evidence before me and those whose evidence was adduced entirely in the form of a statement without cross‑examination were generally made in the final process of preparation for trial.
Those statements therefore were concerned with events which had occurred about 17 years earlier. The process of cross‑examination revealed that very often the statements were compiled by solicitors for the respective parties, drawing very substantially upon the evidence given by the witness before the Royal Commission.
There was nothing objectionable, per se, about that except that the statements often employed a form of legalese and were clearly not expressed in the words of the witness. For example, they very generally described statements made to the witness by asserting that the other person said "words to the effect of". There was no suggestion in the final preparation for trial that any of the witnesses should give their evidence‑in‑chief viva voce, but I make the general observation that in many respects the case turns on oral statements made about 17 years before the evidence was given.
Generally speaking, I found it difficult to draw the conclusion that the evidence of witnesses given in those circumstances was reliable. Many witnesses observed that they in fact had no present recollection of parts of the content of their statements, recording, as I have said, very often in important respects, what they said in evidence before the Royal Commission in late 1991 and early 1992 about events which occurred during 1988. I shall refer more particularly to such matters where the need arises. But I make the point at the outset that although there were masses of documents tendered in evidence, the matters upon which the case turns very substantially require decisions about oral statements and the reliability of evidence given in respect of such statements.

Introduction to the case

I commence with a broad overview of what the case is about. The story starts with a stock market crash which occurred on 22 October 1987. I have mentioned that Rothwells was a merchant bank. Primarily it operated in WA. It will be necessary later in these reasons to speak more particularly of its operations. But for present purposes it is sufficient to note that it was in the business of accepting deposits in various forms as investments from the depositors and from public and private lenders. In turn, Rothwells loaned the money deposited with it. Its financial health was therefore dependent on what are described as its receivables, the capacity of borrowers from Rothwells to service their loans by the payment of interest and to repay the capital sums when due.
Its success depended on its assessment of the financial viability of its borrowers and the worth of the security they provided for the loans made to them. Only in those circumstances would Rothwells have the capacity to meet its commitments to its depositors. In addition, it naturally needed to maintain a reputation sufficient to enable it to call upon the facilities to be provided by other financial institutions to meet any liquidity problem which arose.
It seems that Rothwells did not, in the latter part of 1987, maintain a profitable balance in its favour between its commitments in respect of its borrowing and the commitments to it due from those to whom it lent its funds. The problem was exacerbated, it would appear, because, as the saying was, it "borrowed short" and "lent long". By that I understand is meant that short‑term borrowing left Rothwells unduly vulnerable to repay depositors at short term, particularly those who deposited moneys which were, or became, repayable at call. On the other hand, Rothwells' lending was not only at comparatively favourable interest rates, and not only often unsupported by adequate security, but also was over longer terms so that capital sums could not readily be called upon to meet any short‑term liquidity problem.

The rescue weekend and its aftermath

It seems that a liquidity crisis of that kind occurred as a result of the stock market crash. 24 and 25 October 1987 were the following Saturday and Sunday. These days have come to be described as the "rescue weekend". It appears that a run being experienced by Rothwells on its funds was so severe that unless it was rescued from outside, it would have been forced to cease trading on Monday 26 October 1987. A number of depositors in Rothwells were State government instrumentalities and public institutions such as the Zoo. A number of local governments had funds on deposit with Rothwells, which also numbered among its depositors charitable institutions and private businesses.
Rothwells sought government assistance, including an immediate deposit of $5M from the Government Employees' Superannuation Board (GESB), a body corporate established under the Government Employees' Superannuation Act 1987 (WA), and of which a Mr Lloyd, an Assistant Under‑Treasurer, was Chairman. It is convenient to note that Lloyd, who was an important witness before me, was also a director of the Western Australian Development Corporation (WADC), a body corporate established under the Western Australian Development Corporation Act 1986 (WA), a Director of Western Australian Government Holdings Ltd, and a Commissioner of the State Government Insurance Commission (SGIC), a body corporate established under the State Government Insurance Commission Act 1986 (WA). Following the rescue weekend, Lloyd was, at the request of the Premier, Mr Burke, appointed to the Board of Rothwells and became its Managing Director as from 1 January 1988. He is a central player in the matters at issue in this litigation.
A Mr Connell was at this time, Managing Director of Rothwells. He also controlled various corporate entities such as Austasia Finance Ltd, Dalleagles Ltd, Hannans Gold NL, Holidays Pty Ltd, Oakhill Pty Ltd, and Vital Technology World Ltd. Mr Connell also controlled the activities of a partnership with his wife, which traded under the name L R Connell & Partners.
The evidence suggests that the partnership owned an interest in property which was described in the evidence initially as the Perth Technical School site and which ultimately became Stage 1 of Westralia Square. It was agreed that the SGIC would purchase the interest of the partnership in this property, by which transaction the SGIC acquired a 25 per cent interest in the land for the sum of $30M, which the vendor was to deposit with Rothwells.
Another important witness before me, a Mr Edwards, was involved in the decision taken by the SGIC. Not only was Edwards Deputy Chairman of the SGIC, the Chairman being a Mr Rees, but Edwards was Chief Executive of the Department of the Cabinet. He had been recruited to that post by Mr Burke and he was clearly a most influential public servant, having a close relationship with the Premier, who apparently took the view that, having regard to the public nature of many of the depositors and investors in Rothwells, its activities were important to the State and it was highly desirable that the Government should do what it could to keep Rothwells afloat in the interests of public confidence and the economy of the State.
The measures taken to inject funds into Rothwells immediately following the stock market crash were clearly regarded as being stopgaps only, and on the rescue weekend a series of meetings of people concerned to devise a plan for the rescue of Rothwells were held. Apart from various Government representatives, different ministers from time to time, Lloyd, Edwards and others, there were representatives of Rothwells, including Connell, and representatives of powerful elements of the private sector, Bond Corporation Holdings Ltd, and the Bond Group of companies generally, principally represented by a Mr Beckwith, and the merchant bank Wardleys Australia Ltd, principally represented by a Mr Yonge.
An important aspect was an oral presentation about Rothwells by Mr Yonge. He discussed Rothwells' financial circumstances, saying that the banker was basically sound, but had liquidity problems. It was therefore proposed that those problems would be addressed by those having a principal interest in Rothwells in the private sector, but Government support was sought in the form of an indemnity or guarantee to be provided to the National Australia Bank Ltd (NAB) in respect of a drawdown facility to be granted to Rothwells by that Bank in the sum of $150M.
It was put and agreed that there would be a private sector capital raising in the sum of $150M, underwritten by Wardleys, which would involve various companies being asked to subscribe for preference shares in Rothwells. Connell was to give immediate assistance by providing a $20M contribution in the form of an equity subscription, and a subordinated loan of $50M. It was put and accepted that the NAB indemnity sought from the State was perfectly safe. It would only be called on if there were more than $300M in the way of bad debts, whereas, Mr Yonge said, a currently appropriate provision for the bad and doubtful debts of Rothwells was in the order of $30M.
Nonetheless, it was said that the Government indemnity was crucial to the success of the rescue plan because it would show Government confidence in and support of Rothwells, a reassurance to the market which, it was suggested, would secure the success of the equity raising. As indeed, it seems, it did. The argument must have been a powerful one, and the representatives of the State present, led by the Premier, agreed. On the Sunday Mr Burke issued a press release, making the points to which I have referred above.
Of course, the $150M preference share capital raising could not be achieved immediately. Wardleys therefore arranged a facility of $150M to be provided by NAB, guaranteed or to be indemnified by the Hong Kong & Shanghai Bank. The facility was to be repaid out of the capital raising, and was repaid in January 1988. On 26 October 1987 the NAB provided its $150M facility to Rothwells, supported by the indemnity given by the State to NAB under the hand of the Premier on that date.
The evidence does not allow me to reach a clear conclusion about the extent to which Mr Connell actually contributed his promised $70M. But at least it is clear that shortly after the rescue weekend Rothwells was provided with the sum of $300M. Those facilities were very rapidly drawn down by Rothwells and apparently consumed by very early in November 1987, revealing that the views about Rothwells upon which those involved in the rescue weekend had acted were substantially untenable. At least its liquidity crisis was not so easily solved.
In early November 1987 the SGIC purchased various properties in the Perth CBD from Bell Resources Ltd or Bell Group Ltd for $206M. Those properties included a further part of the Perth Technical School site and adjacent properties, the Parmelia Hotel and the Forrest Centre, thereby increasing, relevantly for present purposes, the SGIC holding of the Perth Tech site. In addition, a shareholding of the Bell Group in BHP was purchased by the SGIC and a condition of these transactions was that the vendor deposit $50M into Rothwells, providing it with a further injection of liquid funds. In addition, deposits of $50M each were made by the SGIC and GESB in January 1988. So by this time, as can be seen, the State and its instrumentalities had been involved, directly or indirectly, in providing very substantial support to the financial viability of Rothwells.
In late January 1988 the first contact was made with Mr Anderson by Mr Terry Burke, the brother of the Premier. He asked whether Mr Anderson was interested in purchasing the Perth Tech site, and an inspection was arranged. In the meantime, in February, Mr Burke, the Premier, resigned, and on 25 February 1988 Mr Dowding, a lawyer who was appointed Senior Counsel in 2002, again a witness in the trial before me, became Premier. He was also Treasurer, and the Minister to whom the administration of the SGIC was committed.

Shortly before Mr Dowding became Premier he was told by Burke and others, in general terms, that Rothwells continued to require Government support if it was to survive and, shortly after he became Premier, the evidence before me suggests that a decision was made at a meeting, which may have been of the Budget Management Committee of the Cabinet at which certainly Dowding, the then Attorney‑General and Minister for Budget Management, Mr Berinson, Edwards and Rees were present. The decision taken, somewhat informally it would seem, was that the Government should continue its support for Rothwells.

A significant meeting: 16 March 1988

It will be recalled that I have mentioned the acquisition by the SGIC of land in the Perth CBD which became known as the Perth Tech site. The GESB also owned land there and it had been decided, it appears, that they should quit the properties they owned which made up that site. A process of seeking offers to purchase the site was instituted. It will be remembered that Mr Terry Burke had mentioned the matter to Mr Anderson. Three prospective purchasers made bids. The WADC, on behalf of the SGIC and GESB, engaged Rothwells to assess the bids which were attracted. Rothwells, in turn, engaged a Mr Tucker, a property consultant. One of the tenderers was a consortium of TD and Consolidated Press Holdings Pty Ltd (CPH), a company controlled by Mr Kerry Packer, who did not give evidence and whose absence from the witness box was the subject of submissions with which I will need to deal in due course. This consortium became the preferred tenderer.
It is sufficient to note that this offer was made on 4 March 1988 under cover of a letter on CPH letterhead, signed by a Mr Don Bourke. Mr Bourke was the Chief Financial Officer of CPH, directly answerable to Mr Packer. The offer, which excluded the Parmelia Hotel, was to purchase the land for $270M, payable in three annual instalments, the first by 30 June 1988. There was to be a development plan, which actually involved potentially three buildings and stages of development. Part of the proposal was that the State would agree to underwrite the occupancy of the first office block tower to the extent of 32,000 m²and involved the payment of what was described as "a commercial fee". As Mr Anderson explained, CPH and TD planned what was described as a property trust which would involve the acquisition and development of a number of properties in different capital cities in Australia.
The bid evaluation process having been concluded, the Premier, Mr Dowding, and the Minister for Budget Management, Mr Berinson, were briefed by Edwards and Rees, with Lloyd in attendance, no doubt because of the involvement of Rothwells in the evaluation process. Again, the process of decision‑making appears to have been relatively informal, but I am satisfied that the recommendation that negotiations be undertaken with TD and CPH was accepted. Mr Dowding, however, I am satisfied, thought that an advantage might be obtained for Rothwells. His idea was that a separate condition of reaching agreement with the bidders should be that they would loan to or deposit with Rothwells, the sum of $50M.
The meeting was held on 13 March, only a couple of weeks after Rothwells' liquidity problems had been brought to the Premier's attention yet again. I think it is clear that Dowding had the position of Rothwells in his mind. Indeed, one got the impression that throughout the relevant period after he became Premier, Rothwells and its financial problems were something of a running sore. As Premier, Mr Dowding found himself to be, in his words, horrendously busy. The last thing he needed was for problems with Rothwells' liquidity to be regularly before him, and he complained, from time to time, that there seemed to be, in the minds of those for whom Rothwells was a more immediate concern, an immediate reaction when there was a problem to come to the Government for money. I accept that Mr Dowding had in his mind the desirability of extricating the Government from its involvement with Rothwells, to the extent that its problems could be dealt with otherwise by the private sector.
At this time there was a more particular matter related to Rothwells with which Dowding was concerned. The substantial funds which the GESB had placed with Rothwells were, of course, strictly speaking, the property of the Board to invest for the benefit of the superannuation fund. But in a real sense, Dowding thought, the moneys might arguably be regarded as the property of those civil servants who made contributions to the fund. They might not take kindly the placement of funds at such risk, and it was therefore desirable that their money be paid out and the link of the GESB with Rothwells severed before it became necessary, at the end of the financial year, to report the deposit in the published accounts of the GESB.
Mr Dowding's idea that the successful bidder, the consortium of TD and CPH, should be required to agree to lend $50M to Rothwells was to enable that money to be applied to repay the money deposited by the GESB, not to deal with any ongoing liquidity problem in Rothwells. It was on that basis that Edwards, Rees and Lloyd were despatched to Sydney to negotiate the sale.
A meeting was arranged and was held on 16 March 1988. For the prospective purchasers, Messrs Anderson and Bourke were present. A Mr Gianotti, a solicitor who was a partner in the firm Mallesons Stephen Jaques, and who was Mr Anderson's solicitor, was also present from time to time, but not during the crucial discussion upon which so much turns in this case. Nonetheless, it is convenient to mention at this point that Mr Gianotti was a trusted legal adviser of Mr Anderson. Indeed, so close did the association become that on 15 October 1988 Gianotti became a director of TD. In fact, he worked as the in‑house solicitor for TD for a 10‑year period between 1989 and 1999. But well prior to that, it is clear on the evidence, he was TD's foremost legal adviser and Mr Anderson's background was such that he took no interest in matters legal, all of which he left for the attention of his solicitors. Also in attendance was a Mr Ray Stone, who was an employee of CPH. But again, like Mr Gianotti, he was not present during any period relevant to these proceedings.
The evidence of Rees may be put to one side. He seems to have been present throughout, but to have recalled very little. His recollection was that a satisfactory agreement was made with Anderson. He does not recall the financial position of Rothwells being discussed at all. He recalled a telephone call between Edwards in Sydney and, as he understood it, Mr Dowding, after which Edwards said it was all concluded and they were to leave, which they did. Later, he was in his hotel room when Mr Anderson came looking for Edwards. He pointed him to Edwards' room.
That leaves Anderson and Bourke, Edwards and Lloyd. The defendant makes a determined attack upon the credibility of Anderson and Edwards. Separate submissions were made, putting together all the various points made in respect of the credibility of these witnesses. I have had regard to them all, and to the arguments and submissions presented in support of credibility on behalf of the plaintiff. I do not find it useful to discuss these matters at this stage. While there are some features of the evidence of these and other witnesses which have an impact in determining what findings of fact I am prepared to make on the balance of probabilities, I am certainly unable to conclude generally, as I think the defendant's submissions invite me to infer, that Anderson's case is throughout a fabrication and that his evidence was deliberately tailored after the events in question to support his claims. Nor was I persuaded that Edwards was established to have such an association with Anderson that I should conclude that he was effectively a co‑conspirator, tailoring his evidence to suit Anderson's case. In my opinion, the evidence of these men may not be so easily disposed of.
As to the meeting on 16 March, before it occurred Anderson had been told by Packer that Packer regretted having contributed $10M to the Rothwells rescue because he did not trust Connell and thought the money would be lost. Anderson had heard rumours about Connell which had caused him to have reservations about his honesty and he knew, of course, of Connell's central association with Rothwells. Anderson says that when Terry Burke asked if he was interested in the purchase of the Westralia Square site he was not, in fact, particularly interested because he was heavily committed elsewhere. But I think the fact that Anderson caused the proposal to be evaluated, that the report he got was favourable, and that he was ultimately able to interest Packer through CPH in the project, led Anderson to seek to acquire an interest.
I accept that he thought the price of $270M was too high, but he was attracted by the Government's sweetener, conveyed by Edwards, of a guaranteed rental return in relation to the first tower, and the ability he perceived that the site had to provide good security to obtain project finance. He and Don Bourke had both inspected the site and the result was the offer to which I have referred. For Anderson, the meeting in Sydney on 16 March 1988 was clearly for the purpose of finalising an agreement to purchase. That is why he asked Gianotti to come to Sydney. Gianotti was working, for the better part of the time in question, on the terms of the proposed contract.
Anderson said that this was his first introduction to Lloyd, who, he was told, had been appointed by the Government to run Rothwells. There was lengthy discussion of the terms of the agreement, but towards the end of the afternoon the deal was closed. Whereupon Edwards said there was, however, a condition essential to the agreement which Dowding had imposed. The purchasers had to put $50M into Rothwells.
I accept that Anderson was genuinely surprised when this was said, and I accept that when asked why they had to make this contribution, Edwards explained that it was to enable the repayment of $50M loaned to Rothwells by the GESB, which was said to be a political embarrassment. That, of course, would not suggest any financial difficulty in Rothwells, but Edwards went on to explain that the deposit need only be for a short time to deal with temporary liquidity problems in Rothwells which, however, Edwards, with the support of Lloyd, said was basically sound, a point demonstrated by Lloyd producing a set of accounts for Rothwells. I accept that these were a set of half‑year, audited financial statements for Rothwells as at 31 January 1988. These were discussed with Bourke, because Anderson took very little interest in them. There was no qualification to the accounts or their reliability. They were the work of a well‑known firm of auditors.
According to Mr Anderson, Edwards described the State's support by reference to deposits made by the GESB and the SGIC. He referred to the Government indemnity provided for the advance of $150M to Rothwells by the NAB. I am satisfied that Lloyd gave backing by agreeing with the statements made by Edwards, but it is important to understand Mr Anderson's evidence as to how those statements were expressed.
Anderson's statement has it that Edwards said that, "The State backing of Rothwells means that we would be repaid and there was no risk." He said that their deposit in Rothwells would be in commercial bills of exchange accepted by Rothwells and discounted to them. The securities given by the borrowers from Rothwells would be "gilt edged". Essentially then, what is being said was that Mr Edwards made representations of continuing Government support for Rothwells, its essential financial soundness, and the quality of the securities which would be given for the advance sought.
However, Anderson and Bourke both said that TD and CPH would not make that contribution to Rothwells. Edwards then went to a telephone in the room and made a call, which it is accepted was to the Premier, Mr Dowding. Edwards told him that the prospective purchasers would not agree to deposit $50M into Rothwells. Dowding did in fact say that they should terminate the negotiations. Edwards relayed that to those at the meeting. He said they had been told they should go, and after repeating the substance of the representations made, Edwards, Lloyd and Rees did leave.
In his evidence‑in‑chief, Anderson did not purport to recall the precise words used by Edwards. But Edwards did say, as Anderson understood him, that the State backing of Rothwells would ensure repayment of the $50M which was therefore not at risk. And it is upon that assurance that TD's case is essentially based in relation to this part of the action.
Anderson elaborated upon the exchange that he and Bourke had with Edwards and the others, when he was cross‑examined. He repeated that they had been given the assurances which were described in the evidence‑in‑chief. He said that when Edwards offered those assurances, Bourke asked him whether he would give a written guarantee of repayment of the loan. He said that Edwards declined. He said he could not do that. But Anderson made it perfectly clear that he understood that what was being said by Edwards amounted to a guarantee.
Mr Anderson said that he understood that a guarantee was given when the guarantor promised that if the principal debtor did not pay then the guarantor would, or that if the person principally responsible to do something did not do it, the guarantor would see that it was done. He said he understood that a guarantee could take one of those two forms. Anderson said that Edwards "assured us that the State would repay us if Rothwells fell over." He understood that was a promise, given orally, but Edwards said he was not authorised to commit that promise to writing.
Mr Anderson was taken back to this topic much later in his cross‑examination. He repeated, in substance, what he had said before about the assurances he was given, and he added that in addition to the guarantee there was effectively a promise that the State would provide, on one way or another, sufficient money to Rothwells so that it could repay the $50M.
I turn next to the evidence of Mr Bourke, who was called by the plaintiff. He was asked some questions to establish that he was paid for his time while giving evidence. But nothing emerged which, in my opinion, cast an adverse light upon the witness's credibility. He repeated the substance of the assurances given by Edwards, that the Government would continue to "underwrite" Rothwells, which was generally sound. Lloyd supported this by reference to the company's audited accounts. Mr Bourke did not specifically refer to the provision of "gilt‑edged" securities for the $50M. Bourke was given to understand that what was sought was a short‑term loan for about six months because Rothwells had short-term funding requirements, a current short‑term liquidity problem. He also said that he was told that the Government did not have the capacity to provide additional Government backing, and that they wanted to get the GESB $50M out of Rothwells.
I understood from Bourke's evidence that because he was made aware of the reason why the $50M was sought and because he was told in general terms that there was a liquidity problem, he asked whether the Government was prepared to "guarantee" repayment of the loan. Edwards said that was not possible, but he repeated an assurance that if the $50M were provided, the Government would continue to support Rothwells. Mr Bourke said that he understood that the Government was giving a legally‑binding promise that the State would repay the money if Rothwells did not do so.
Mr Bourke told me that it was Edwards who said that the Government would continue to "underwrite" Rothwells. He said he understood by that that the Government would ensure that Rothwells would meet an obligation to repay. He said he used the word "guarantee" in asking his question. He did so deliberately, to convey the idea that he was asking would the Government repay if Rothwells didn't, or would the Government see to it that the debt was paid by Rothwells.
I pause to observe that although Mr Bourke is, by profession, an accountant and not a lawyer, he seemed to have a very fair idea of the meaning of the term "guarantee". He thought that if that could be provided by the Government or a reputable bank, that is "sort of the ultimate security that you can have". He did not, at the time, provide any explanation to Edwards, who was a lawyer, of what he meant when he used the word "guarantee", but Edwards immediately said that a written guarantee was not available and then he and Lloyd repeated the assurance that they would continue to support Rothwells.
Following that exchange I asked him:
"So did you understand at that point that what he was saying was, although it wasn't possible, for the reasons that they gave, for the Government to assure or guarantee repayment by its own efforts if Rothwells failed, nonetheless they were standing behind Rothwells and would ensure that Rothwells repaid?‑‑‑Yes."
Nonetheless, what was said orally did not impress Mr Bourke. He left the room and telephoned Packer to obtain instructions that having had the bad experience to which I have referred in relation to the earlier contribution to the rescue of Rothwells, CPH would not be involved in any additional loan to Rothwells, particularly when, as Bourke told Packer, the Government would not give a written guarantee of repayment. Mr Bourke's evidence was that when he returned to the meeting and told those present of his instructions, Edwards said he would telephone the Premier, and he made a telephone call. Bourke could hear, from the other end of the line, words spoken with some heat, although he could not tell what they were.
Dowding's evidence about this call was that when he received it he thought he was being used as a bargaining chip, so to speak, and he played along with the idea by telling Edwards that if he could not get agreement for the deposit of the $50M he should not finalise the property agreement but should come back to WA.
Bourke said that following this call, Edwards and Lloyd repeated the assurance of continued Government support for Rothwells, and Edwards said that "he could assure us" that the $50M would be repaid, with interest, within 12 months. Nonetheless, Bourke could not move from the position he was instructed to adopt, and the meeting broke up.
Edwards' evidence was to the same effect. He said that when he put the Premier's requirement that a condition of the sale was that the purchasers should deposit $50M with Rothwells, he explained that they wanted to get the GESB funds out of Rothwells and this money would replace those funds. His evidence was that the Government would be happy to put in the money to replace those funds, but could not do so through the SGIC or other instrumentalities. Nonetheless, he said, he explained that the money was there as part of the rescue package for Rothwells. There were no concerns about its financial stability, as demonstrated by the half‑yearly accounts produced and discussed by Mr Lloyd, but the money needed to be replaced and therefore the Government was prepared to "accept the obligation to repay the money".
Bourke asked if that could be put in writing, and Edwards said that although that could not be done, "You can rest assured the Government will ensure that the money is repaid." He said that he explained that the Government's commitment to Rothwells, its backing of Rothwells, continued. During the discussion Edwards said that he confirmed that although there were ongoing liquidity problems in Rothwells, fundamentally it was secure. He confirmed the tenor of his conversation on the telephone with Dowding, and the evidence to which I have referred about the manner in which the meeting broke up.

Under cross‑examination, Edwards did not resile from this version of what was said. Edwards insisted that he had been instructed at the meeting with Dowding and Berinson, to which I have referred, to require the deposit of the $50M. He said he was authorised to give the assurances because it had been accepted, not by the Cabinet, but at the meeting at the end of February, that the Government had to support Rothwells. The Government had provided support, and that support would remain and, if necessary, additional financial support for Rothwells would have to be organised by the Government. That, he said, was the "party line" which he was authorised to put to the meeting in Sydney, and he did so. As he put it, he gave them "the whole spiel" by giving them the assurances of continuing and additional Government support. That, he said, was the Premier's decision.
At T/994 the following exchange occurred:
"You didn't on behalf of the State promise Mr Anderson that the State would repay the $50 million, did you?‑‑‑No. No, not in those words. It would be that the State would ensure Rothwells was repaid.
So are you saying that you said that the State would ensure that Rothwells would repay it?‑‑‑I'm sure I would have said that.
Meaning that if Rothwells didn't repay, the State would?‑‑‑No. The State would ensure Rothwells would repay.
Yes, meaning that if Rothwells couldn't or wouldn't, the State would?‑‑‑No.
Did you not mean that?‑‑‑No, I didn't mean that. That's not what I said. I said the State would ensure that Rothwells would repay."
Those are the words of guarantee. But Edwards said that as a lawyer he understood that such a guarantee to be enforceable had to be in writing. And he said when he was asked to put it in writing he declined to do so. He gave the guarantee but not in writing, and explained that he refused to put it in writing because to have a written guarantee by the Government of repayment of a deposit "raises a spectre that it wasn't actually very sound which wasn't our view at the time".
I next turn to the evidence of Mr Lloyd, whose evidence is to be considered upon the basis that he is also a lawyer. He confirmed the evidence to which I have referred, about the meeting with Dowding and Berinson, Rees and Edwards, where it was resolved to seek $50M for Rothwells from the successful tenderer. Lloyd agrees that the sum of $50M was directly related to the amount required to repay the deposit of the GESB, although, of course, he accepts that in fact upon its receipt there was a further liquidity crisis which meant that the money was not used to retire the GESB debt. This occurred, he said, without advice to Anderson. Lloyd said, however, that he was comfortable with the proposal at the time it was made because he did not regard the GESB funds as being at risk. He thought that Rothwells had a very substantial surplus of assets over liabilities and therefore those funds were safe and so would be the funds obtained to replace those moneys.
Lloyd confirms the tenor of the discussion about the requirement to deposit $50M. He agrees that Anderson and Bourke were told about the extent of existing Government support for Rothwells. He says that he added that Rothwells had suffered a continuing outflow of deposits and withdrawal of banking lines of support after the rescue. He said he told the meeting that Rothwells was a basically sound company, as demonstrated by the audited statements which showed that it had substantial net assets. He agreed that he had these accounts with him, and he discussed them. He agreed that it was put that the reason for seeking to retire the GESB funds was a political one. His function, therefore, he says, was to assist with observations about his impression of the financial soundness of Rothwells.
In his statement, Lloyd says, "I think that Edwards said that there would be continuing Government support for Rothwells." I think this is significant evidence because Lloyd was called by the defendant. But Lloyd's evidence was that he did not say, and he did not hear Edwards say, that that support would be given "to the extent necessary to ensure that the advance was repaid". He agreed that no guarantee that the advance would be repaid, or that the Government would itself repay the advance, was expressly provided. But it must be remembered that that was no concern of Lloyd. He was there for Rothwells and, in my view, he accepted that his job was to provide the assurance that Rothwells was sound and that the money deposited would be repaid.
When Lloyd was cross‑examined he was reminded of the evidence that he gave at the Royal Commission. Importantly, it was put to him that there he had conceded that both he and Edwards gave Anderson an assurance about continuing Government support for Rothwells, whereas that was not the evidence provided by his statement. Lloyd said that he thought that the version given in his evidence before the Royal Commission was more likely to be correct. But it was clear to me that he actually had no recollection of these facts. The witness's honesty was made manifest, but so was the limitation upon the reliability of his evidence in this regard.
Lloyd denied that Edwards said the securities that would be given by Rothwells would be "gilt edged", and I note that Edwards gave no evidence that he made any such statement. Lloyd simply did not recall any discussion between Edwards and Bourke about whether the Government was prepared to guarantee repayment of the loan. He was cross‑examined about Anderson's evidence that he was told by Edwards that the securities that would be provided for the proposed loan would be "gilt edged". Lloyd said that Edwards made no such statement, and I gathered that he was saying he would have remembered such a statement because the securities to be offered were bills accepted by Rothwells, and they could hardly be described in that way.
In Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245, Mason CJ spoke with the agreement of Deane, Dawson and Toohey JJ, and without dissent by Gaudron J in separately delivered reasons, when, at 254‑7, his Honour discussed the forms which may be taken by a contract of guarantee. In doing so, his Honour referred to the decision of the House of Lords in Moschi v Lep Air Services Ltd [1973] AC 331. At 256 of Sunbird, Mason CJ summarised his view by observing that he considered there was no common rule applicable to all guarantees and by acknowledging that the parties are at liberty to make such agreements as they choose. His Honour continued:
"There are, however, two common classes of guarantee of the payment of instalments by the principal debtor. The first is an undertaking by the guarantor that if the debtor fails to pay an instalment he will pay. This is a conditional agreement. The guarantor's obligation to pay arises on the debtor's failure to pay. The second is an undertaking by the guarantor that the debtor will carry out his contract. Then a failure by the debtor to perform his contract puts the guarantor in breach of his."
I take it, therefore, that a promise by a guarantor to pay the debt owed by a debtor if that party fails to repay it, and the promise by a guarantor to be answerable for the failure by another to perform a contract will equally, in law, constitute contracts of guarantee. On the other hand, a promise given to a third party to support another by putting that person in funds so that the other person will have the capacity to perform a contractual obligation or to pay a debt would not constitute a contract of guarantee because, in that form of agreement, the promisor is not undertaking to the promisee to be answerable in any way for the debt or default of another, but is making a separate contractual agreement, with its own obligations, upon the breach of which the promisee may sue directly. For reasons to which I shall later refer, that is a distinction relied upon by the plaintiff in this case. TD asserts that on 16 March, Edwards, for the State, made an offer which Anderson, for TD, accepted, which was not an offer to guarantee the repayment of the $50M, but resulted in the formation of a contract of the latter kind discussed above.
In my opinion, however, that is not a distinction which can be maintained in this case. I do not accept that Mr Anderson misunderstood what he was told, so as to characterise the effect of it as a guarantee when that was not what was being given. Anderson's evidence, which I accept, was that Edwards merely declined to provide the guarantee in writing: not that he declined to provide the guarantee orally, but he did not want it to be available as a matter of record.
Although the witnesses were speaking of what was said in a conversation which occurred over 17 years ago, it was a crucial conversation in the context of this litigation, and it was a conversation which the witnesses had been asked about much earlier in time. What was said about the deposit of $50M and a guarantee to be provided by the Government was a surprising thing. It had no relationship to the agreement for the purchase and development of the Westralia Square site. There was a dramatic turn of events when the requirement for the $50M deposit was introduced. Further, the drama was enhanced by the telephone call to Dowding and by his angry response when told that TD and CPH would not make the contribution of $50M sought.
The preponderance of evidence which I accept, clearly supports the conclusion that Edwards, purporting to speak for the Government of the State, promised that if the prospective purchasers of the Westralia Square site deposited, in some form, $50M into Rothwells for a relatively limited period of 6 or 12 months, then the depositors could be assured that the Government would continue to support Rothwells, which was represented to be an institution which was financially sound, although suffering from temporary liquidity problems, and the Government would ensure that Rothwells would repay the loan when it became due or would undertake the obligation of repayment itself.
I am not prepared to find, on the basis of Anderson's evidence alone, that Edwards represented that the securities which would be provided for the deposit to be made would be of the highest quality, "gilt edged". It seems to me that Mr Anderson genuinely believes those words were used, but in my opinion it is more probable that in so thinking he has reconstructed a view about the tenor of the conversation which is illusory. In my view, outside of the operative terms of the assurances, in the form of oral guarantees, there is nothing independently of those promises which might itself constitute a contractual promise. What was said otherwise about the Government "standing behind" Rothwells, "being in for the long haul", "seeing it through to the end", and the like was mere puffery, uncertain of meaning, not intended to create binding contractual relations and, in short, devoid of any contractual content.

Events after the 16 March meeting

Of course, no agreement was purportedly formed at the meeting of 16 March. It broke up in disagreement. But Mr Anderson did not give up on the possibility of making a deal. He must have been keen to pursue the acquisition and development of Westralia Square, although in evidence he said he was not worried about the possible loss of the deal, and he referred to projects in which he was involved on the eastern seaboard, particularly in Melbourne.
However, following the break‑up of the meeting, Anderson says he telephoned Packer and asked him to agree to the $50M deposit, but Mr Packer refused. Later that evening, Mr Anderson went to the hotel in Sydney where Edwards, Lloyd and Rees were staying. He met with at least Edwards and Lloyd, and discussed whether further negotiations in respect of the $50M sought might be fruitful. He would have left that meeting with little cause for optimism.
Still Mr Anderson did not give up. I think it is clear that he thought there was value in the opportunity to pursue the acquisition of Westralia Square and to proceed with its development. And I think that, to Anderson's mind, the assurances he had been given at the meeting of 16 March translated into a Government promise that it would see the $50M deposit repaid with interest, or it would assume that obligation itself. His evidence establishes that he considered that the money would be safe, and if that was the price for making the property deal, the demand could be met without concern.
I think it was probably on 17 March that Anderson therefore approached Packer for the money, which Anderson did not then have. Packer maintained his refusal to have CPH directly contribute money to Rothwells, but ultimately he agreed to lend $50M to TD to put it in funds so that it could make the deposit.
Anderson then had to make the decision whether TD would borrow that money from CPH and make the deposit, which was the condition precedent to making the agreement for the acquisition and development of Westralia Square. I accept his evidence that he was concerned to get confirmation of the undertakings which he believed he had received from Edwards on Dowding's instructions. Anderson wanted to speak to Dowding.
There is a dispute in the evidence between Anderson and Edwards as to what happened next. Anderson said that on 18 March he telephoned Edwards, told him of the present state of play, that he was in a position to make the deposit sought, but said that he needed verification by Dowding of the assurances given. Anderson said that Edwards supplied him with Mr Dowding's telephone number. Edwards denies all that. In the end, I cannot say how Anderson got Dowding's number, but I think it matters not.
Anderson's evidence was that he rang Dowding on 18 March and spoke with him, telling him that he believed he could organise the deposit of $50M into Rothwells, but because the money was being lent to him by Packer, "and he is putting it squarely on my shoulders", he needed to know that his money was safe and that he could get it back. He therefore wanted Dowding's assurance that the State would continue to back Rothwells.
Anderson's statement then says:
"Dowding replied in words to the effect that 'Don't worry about that, your money is safe. The State is running Rothwells and is standing behind it and will make sure you get your money back.'"
This is another point where I find myself uncertain about the probative power of evidence given in that form, in quotes, as if the witness recollects the words used, but qualified by the phrase that "words to the effect" of those quoted were used. I cannot conclude that Anderson recalls with any precision what Dowding said to him.
Anderson repeated this evidence when cross‑examined. He said he understood that Dowding was saying to him that the Government would ensure that Rothwells repaid the advance or would do so itself if Rothwells did not.
Mr Dowding's evidence was that he did not remember whether or not Anderson telephoned him on 18 March 1988. Hardly surprising, it may be thought. But his evidence was firmly that he would not have given an oral guarantee that the Government would ensure that Rothwells repaid the deposit or that it would itself pay if Rothwells did not. As he says, he knew, of course, that it had taken a lot of work, meetings of the Cabinet Budget Sub‑Committee and endorsement by the full Cabinet, to authorise the NAB indemnity. His evidence was:
"The idea that the Premier or a public servant could orally guarantee $50M is and was then absurd to me. I am certain that I neither gave any such assurance nor endorsed any assurance said to have been given by Edwards."
He conceded in cross‑examination, that if Anderson had asked him if his money would be safe, he might have spoken about the State's indemnity provided to the NAB and that the Government had supported Rothwells. It is put to me for the plaintiff that on the balance of probabilities I should find that Dowding gave Anderson the assurances he sought. I observe about that that if he did so they were, as when Edwards spoke on 16 March, in the form of an oral guarantee.
I am unable to find that the conversation was as Mr Anderson recollects. I have no doubt that the conversation occurred on 18 March. This was the time at which Mr Anderson was making his decision. He was doing so in the context of the advance by Packer to him being put squarely upon the basis that Packer would hold him accountable. He believed that Packer would require his personal guarantee and would not hesitate to pursue whatever remedies were available to him to secure repayment of the moneys advanced by CPH to TD. It was a very large sum of money. Anderson did not have it, personally or within any corporate vehicle available to him. I think he rang Dowding to seek his reassurance.
As a result of what was said, I accept that Mr Anderson believed that he had that reassurance. But I am simply unable, on the available evidence, to determine precisely what was said. I accept that Dowding would have spoken in encouraging terms. It was Dowding's idea that the $50M deposit should be made to enable the GESB to be repaid. He was keen that that should occur. But I doubt that he would have firmly committed the Government to a guarantee of repayment. I think he would have spoken words of encouragement and I think that Mr Anderson interpreted those words as confirmation of what I have found Edwards said to him on 16 March. Anderson was, I think, willing to be persuaded that all would be well. I am not able to find that the words spoken by Dowding were, in substance, those attributed to him by Anderson.

Packer and Anderson meet with Dowding at his home

This meeting and what Mr Dowding is alleged to have said when it took place, is not relied upon by TD as the source of any particular cause of action. But it was the subject of some considerable controversy between the parties at trial. As I understand it, the argument for the plaintiff is that the meeting occurred on 23 March 1988 when Mr Anderson flew Mr Packer across to Perth for the express purpose of meeting Mr Dowding and satisfying himself of the assurances or promises made by the State in respect of the repayment of the loan which it was then proposed should be made by TD using the funds loaned by CPH.
The plaintiff submits that I should find that Mr Dowding repeated the assurances which had been made by Edwards, with the support of Lloyd, on 16 March, and by Dowding on 18 March. It was not put to me specifically in this way, but as I understand the argument, it is submitted that if I should so find, that makes it more probable than not that the evidence given for the plaintiff in relation to 16 and 18 March is accurate and reliable, and that conclusion will, of course, support a finding as to what was said on those occasions. On the other hand, the State, while agreeing that the meeting occurred, says it was not on 23 March but later in the year, probably in May, for a quite different purpose.
As I say, the matter was the subject of some controversy at trial. The evidence about this meeting was given by Anderson, Edwards and Dowding. As to Edwards, I have already touched upon the submission for the defendants that his evidence should be regarded as generally unreliable. It is suggested that he had a drinking problem, as indeed it appears he did. But I saw nothing in the evidence about this which persuaded me to the view that his recollection of events was rendered unreliable in relation to any matter as a result of his drinking, rather than, to the extent that his memory failed him, that the failure was attributable to the passage of time.
Then it is asserted that Dowding had what was effectively a loss of confidence in Edwards, causing him to be moved from his office and to resign from the Public Service in August 1988. Mr Edwards said that his employment was terminated "largely for political reasons". It was put, however, that Edwards continued an association with Anderson, being involved with him in a venture in Vietnam where, as I understand it, Edwards was employed in the 1990s. A proposed joint venture did not proceed. Mr Edwards was paid, effectively to wind it up. Some of that money was no doubt provided by Mr Anderson. For myself, I thought that these matters offered, at best, a tenuous basis upon which to take an adverse view of Edwards's honesty as a witness and of his credibility generally. Further, though it was put to me that Edwards, at a number of points, displayed a willingness to tailor his evidence to suit Anderson's case, I did not find the examples proffered to be convincing of that point of view. As I have indicated previously, I thought Edwards was a generally honest witness, doing his best with a limited recollection.

It was put to me that the absence of Mr Packer from the witness box ought to cause me to take the view that had he been called, his evidence would not have assisted the plaintiff: Jones v Dunkel (1959) 101 CLR 298, 308, 312, 320‑1. I agree that, were Mr Packer to be called, one would have expected it to be by TD. Mr Anderson was cross‑examined about this. He said he had no contact with Mr Packer for some 12 years, although he supposed that he lived in Sydney. I gathered that there had been a falling out between the two men over difficulties in respect of the repayment of the $50M loaned by CPH to TD, the advance being supported by the personal guarantee of Mr Anderson and what I understood to be the corporate vehicle housing much of his personal wealth, Owston Nominees No 2 Pty Ltd.
It matters not, I suppose, why Anderson thought that Packer would not be prepared to co‑operate with a request that he give evidence, either here or by video‑link. But I see no reason to suppose that Mr Anderson's evidence in that regard should not be accepted. The inference known as the rule in Jones v Dunkel may be drawn where the absence of the witness from the witness box is unexplained. To my mind, the explanation given by Mr Anderson is sufficient to account for the witness's absence and, in any event, although the inference may be drawn, it is not required to be drawn in the case of an insufficiently explained absence. In this case I am not prepared to draw that inference against the plaintiff.
I understood from Anderson's evidence that he flew to Perth because he knew that Packer wanted reassurance from Dowding that any deposit that TD made with Rothwells would be repaid before he was prepared to loan the money to TD. Anderson says that he therefore came to Perth and telephoned Edwards to ask him to arrange the meeting. Anderson said that he did that on 21 March. Edwards said that he recalled a telephone call from Anderson on the afternoon of the day when the meeting was held.
The flight details provided for Anderson's private aircraft, a Lear jet, show that the aircraft travelled from Sydney to his property Tipperary, in the Northern Territory, on 21 March. Mr Anderson is shown as the client for whom that flight was made. Then there is an entry which shows a flight by the aircraft on 23 March from Tipperary to Perth. Finally, there is an entry on 24 March 1988 for a flight from Perth, ultimately to Sydney. Truly this was a flying visit of obviously short duration, and it is the only occasion when that occurred before the advance by TD to Rothwells commenced to be made on 31 March. If the meeting occurred in an evening before those deposits were made, it has to be on 23 March 1988.
It does not seem to me to matter much when precisely Anderson made contact with Edwards. Edwards confirms that he did so. He said that he was told by Anderson that Packer wanted to meet with Dowding. He went to the Parmelia Hotel and met Anderson. As a result of their conversation, he telephoned Dowding at his home and asked him to receive Packer, Anderson and Edwards that evening. Packer arrived at the hotel shortly afterwards. He checked in, and Anderson and Edwards gave evidence that they drove to Dowding's home, arriving in the early evening, Edwards said at about 6.30 pm.
According to those witnesses, the meeting was relatively brief. Packer, they say, told Dowding that having already put money into Rothwells which he did not think he would recover, he wanted Dowding's assurance on behalf of the Government that any further contribution would be safe, would be repaid. According to Anderson, Dowding said that Packer should understand that the State was running Rothwells. It had itself invested hundreds of millions of dollars. It was going to see it through to the end, and would support the securities that would be given by Rothwells for the loan which was sought. He assured Packer that the money would be repaid.
Edwards, it should be said, did not purport to recall upon what date the meeting occurred. But his evidence generally supported that given by Anderson as to how the meeting was arranged and what was said. He thought the meeting was not held in late May 1988, but was earlier, shortly after the meeting which had settled the terms of the acquisition of the Westralia Square site.
As I have mentioned, Mr Dowding, on the other hand, thought the meeting was in May 1988. It was put that his evidence is unreliable because there are changes made in the account of the subject matter of the meeting in different statements made by Dowding. Different language is used, but in my opinion the changes are not significant in their substance. Dowding said that the meeting occurred at about the time that the NCSC announced an inquiry into an acquisition of shares from the Bell Group.
The SGIC had purchased shares in Bell Resources Ltd in late April 1988 as part of a process by which funds were to be injected into Rothwells. Dowding's evidence was that Anderson or Packer offered to help the Government with the Rothwells problem and it was suggested that Packer might be prepared to purchase the Bell shares from the SGIC, although Packer spoke in disparaging terms about Alan Bond and the Bond Corporation, and suggested that Bond should not be allowed to renege on his obligations with respect to Rothwells. He said Bond should be approached to fix the problem. On this version of what was said and when the meeting occurred, there is no particularly satisfactory explanation as to why Anderson and Packer should themselves initiate such a meeting at that time for the purpose of expressing a desire to be of assistance to the Government in relation to Rothwells.
As to when the meeting occurred, it was possible to test the evidence given by both Edwards and Dowding in cross‑examination by reference to contemporaneous documents.
So far as Edwards is concerned, it was put that he was on leave in Busselton. Indeed, there is an application for annual leave made out by a member of his staff and dated 4 March 1988, which sought leave initially from 18 March 1988, but was amended to 21 March 1988, a Monday, to 31 March 1988, the Thursday before Easter. The application is signed by Mr Edwards, and on 7 March 1988 he has endorsed his approval of the application as the permanent head of the relevant department.
Edwards' evidence was that when he went on leave, his leave was not interrupted. He remained on leave until he returned to work, with a side trip to Narrogin to see his parents, on probably the Tuesday after Easter, 5 April. Edwards said that the fact that he applied for leave and that his personal file recorded the leave commencing on 21 March 1988, did not necessarily mean that he actually got away and took leave as from that Monday.
Entries in Mr Edwards' diary for March 1988 were put to him. His evidence was that the diary was kept by his secretary. Edwards' evidence was that the diary was intended to record events which had been arranged in advance, rather than things which happened without pre‑arrangement. The extract from the diary was in photocopied form. There is nothing entered for 21 March. For 22 March, and indeed on later pages for subsequent days, I think there is faintly discernible a line through the date, as if to indicate that nothing was to be arranged for that date. However, on 23 March there are appointments shown, a meeting described as being that of an industrial relations committee at 8.30 am, a meeting later in the morning with Mr Parker, described as a "Funds Corp" meeting. Funds Corp was a division of the WADC and a commitment relevant to Mr Edwards' departmental responsibilities.
Further, there are two entries, one for 12.15 and one for 12.30, presumably pm in each case, against which is the entry, "decision‑makers' lunch, Sheraton, with Bernie Fraser". Mr Edwards explained that the decision‑makers' lunches were regular affairs at which senior bureaucrats in Government service and senior management personnel in private enterprise got together for an exchange of views over luncheon. In each case there would be an address on a topic of current interest by an invited speaker. Bernie Fraser was a Commonwealth Under‑Treasurer. Mr Edwards said he recalled an occasion when Fraser addressed such a luncheon meeting. There was only one such occasion, he said, when he attended.
Edwards said that he had no recollection of that occasion being on 23 March 1988, but as I have said, there was only one such occasion and if it was on 23 March then that would put him in Perth rather than Busselton at that time, and so it would be possible that he would be contacted by telephone by Anderson and that the arrangement to meet with Dowding at his home that evening might be made. Of course, there are no entries in relation to that in the diary. But I think that evidence tends to support the view that the meeting and the discussion was held in March 1988, and if that was so, then it would follow that Mr Dowding's recollection of the timing of the meeting and the subject matter discussed is at fault.
On the other hand, as to Dowding's evidence, there is the evidence of his day sheet for 23 March 1988. For the plaintiff it is put to me that I should be suspicious of the document because it was not referred to in Dowding's statement by way of evidence‑in‑chief and only emerged after Dowding had been cross‑examined, without referring to the document, when he was asked about it in re‑examination. It was brought forward late, but I need not discuss the circumstances. It seems to me that I may not overlook Dowding's evidence in relation to the content of that document.
It is a typewritten document, setting out his daily appointments. For Wednesday 23 March 1988, it is a detailed record commencing at 7 am. Dowding's evidence was that it was prepared by his staff and was made available to all those who would need to know of the Premier's movements and commitments for the day. He said if there were changes to that program, ideally those changes would be made in a document such as this and it would be redistributed. The point is that the document would be made or changed when an arrangement was made. It does not record what Dowding, as Premier, did, necessarily, but what he was supposed to do.
It shows, relevantly for present purposes, that it was planned that he would leave his office in the Capita Centre at 6.30 pm for a function at the Maylands Bowling Club which involved a trophy presentation. The recipient was to be a young person who was named, and this function was to be attended from 7 pm to 7.30 pm. The recipient of the trophy's father is referred to. Dowding's evidence was that he knew this person and he remembered the occasion.
The day sheet then shows that a vehicle was to collect Mr Dowding's wife from his home, and pick him up at the Maylands Bowling Centre at 7.30 pm to take him to His Majesty's Theatre where, at 8 pm, he was to attend, with His Excellency the Governor and Mrs Reid, a black‑tie event, a ballet by the WA Ballet Company. Dowding's evidence was again that, reminded by the day sheet, he recalled the event in question. He said he did so because he knew one of the dancers who was to perform a leading role in the ballet. That performance was to commence at 8 pm. He recalled, he said, changing into the appropriate clothes in the back seat of the car as he drove from Maylands to the theatre.
It may be, I suppose, that what Mr Dowding remembers are the plans for these events rather than the events themselves. But if Mr Anderson is right about the meeting, the date upon which it occurred, and the time at which it occurred, Dowding could not have attended either of the functions described, and he would have been prevented from doing so because Edwards had prevailed upon him to be at home to receive Messrs Packer, Anderson and Edwards, rather than to attend the functions in question. For myself, I doubt that Dowding would have been so persuaded.
In the end, I am left with a body of evidence which points quite convincingly both to the fact that the meeting did occur on 23 March 1988, and to the fact that it did not. I can find nothing in the evidence which tips the balance either way. In the end, then, I am not prepared to find that the recollection of Mr Anderson, in particular, and Mr Edwards, to a lesser extent, is more reliable so as to establish that the meeting did occur on 23 March 1988 and therefore that in all probability the purpose of the meeting and what was discussed was as Anderson and Edwards described. I am not assisted in the fact‑finding process by consideration of this matter.
Before leaving this topic, I should comment on some evidence which was led, without objection as I recall,, from Mr Bourke, upon which TD relies in support of Anderson and Edwards' version of the timing and content of the meeting at Dowding's home. As I have mentioned, Mr Bourke's evidence was that very shortly after the meeting in Sydney on 16 March 1988 he was required to travel overseas. There appears to be some uncertainty as to how long he was away, but he was certainly back by about 28 March. And he said that on the Monday or Tuesday of the first week in April 1988 he had a conversation with Mr Packer.
He had already been told, second‑hand, while he was overseas, that Mr Packer had agreed to lend Anderson $50M so that he, Anderson, could provide the funds to Rothwells. That was a change from what he understood the position to be when he went away, which was that Mr Packer said he would support a borrowing by one of Anderson's companies by the provision of a guarantee to be given by one of his companies. In any event, on either version it would seem that Mr Packer had committed himself to financial support for Anderson so as to enable the $50M to be deposited with Rothwells. It seems odd to me, in those circumstances, that he might have wanted to meet with Dowding to receive assurance from him. But that, of course, is the scenario presented by the evidence of Anderson and Edwards.
Bourke said that this was among the matters that he discussed with Packer on his return from overseas. Bourke said he told Packer that he was surprised at the change of tack from the position about which he had been advised to a position where the money to be deposited in Rothwells by TD would be provided by CPH on loan to TD. Bourke said that Packer replied:
"… that he had visited Western Australia and Premier Dowding with Warren Anderson and that he had been given assurances or, more correctly, they had been given assurances that Rothwells would continue to be supported by the Government."
As to whether there was a meeting and certainly as to what was said at the meeting, this evidence would appear to bear the character of hearsay. But I have concluded that it was admissible for a limited purpose. The recently reported decision of the High Court in Kamleh v The Queen (2005) 79 ALJR 541 appears to assist. That was a murder case, tried by Judge alone. The appellant and a co‑offender were tried separately. Neither gave evidence at the appellant's trial. An important element of the Crown case related to the time that the appellant and co‑offender had spent in each other's company in the days prior to the murders and that they had been in the unit where the victims' bodies were subsequently found. Witnesses at the trial of the appellant were permitted to give evidence of statements made to them by the co‑offender, which statements tended to prove the fact in issue, whether the co‑offender was present in the unit at the time when murders were believed to have been committed.
Used in that way, where the relevant fact was the making of the statement which revealed the presence of the co‑offender at the unit rather than relying upon what was said by the co‑offender for the truth of those statements, it was held by the High Court that the evidence was not hearsay, was properly admitted, and could be relied upon to prove the fact of the presence of the co‑offender contemporaneously with the commission of the murders. The co‑offender said that while at the unit he turned up the volume on the television set to cover sounds of conflict. When the bodies of the victims were discovered in the unit, the television was operating at full volume.
So the fact that was sought to be proved was that the co‑offender was there, and because there was independent evidence that, when at the unit, he was in the company of the appellant, that evidence was available to prove that the appellant was there at the time when murders were committed. The evidence was not used to prove that the appellant turned up the volume of the television. (To so direct a jury would appear to present something of a challenge to a trial judge.)
The point is a fine one, in my respectful opinion, but it has a relevance to the evidence of Bourke presently under discussion. The point of principle was clearly stated by Gleeson CJ in Kamleh at 544[12]:
"Whether evidence of a statement made out of court by a person who is not called as a witness at a trial is hearsay depends upon the use that is sought to be made of that evidence. If what is relevant is the fact that the statement was made, rather than the truth of what was said, so that the statement is not relied upon to prove the facts narrated in the statement, then what is involved is not hearsay."
In this case then, it seems to me that Bourke's evidence was admissible as evidence of the fact that at some time during the period between about 18 March and the first week of April 1988, Mr Packer and Mr Anderson, together, met with Dowding in some circumstance. That is the fact which the making of Packer's statement to Bourke tends to establish. The evidence may not, in my opinion, be used to establish that at that meeting the discussion was as Mr Packer related to Bourke, and that Mr Dowding gave the assurance related. To use it in that way is to rely upon the evidence in its hearsay character.
Having regard to the limited character of the admissible evidence, it seems to me that it does not carry the matter sufficiently far to take me beyond the point of an incapacity to find the material facts that the meeting took place on the evening of 23 March at Dowding's home and that at that meeting Dowding made statements in terms broadly related by Anderson and Edwards.

The $50M is deposited and more is learned about Rothwells

I have mentioned briefly the manner in which TD obtained the $50M which was ultimately deposited in Rothwells. I need not describe with particular precision how that process of deposit was accomplished. Suffice it to say that the facility made available by CPH was drawn periodically and deposited in Rothwells by a process whereby TD purchased bills of exchange accepted by Rothwells by a bill discount process, whereby a reduced rate of interest applicable for the period until maturity of the security was payable upon the endorsement of the bills in favour of TD. The securities endorsed in favour of TD were short‑term and therefore would need to be "rolled over" for further periods to comply with the agreement for the provision of funds.
But on their maturity, at any time that occurred, they could in fact be presented and payment by Rothwells of the amount of the bills would be required. It will be evident from that description that the securities were constituted by bills accepted by Rothwells from borrowers from it. Such bills then become a security in the hands of Rothwells, supporting its borrowing from TD. But, of course, the value of the security is not enhanced by that process, but may indeed be adversely affected by events occurring since the security was first provided. The discounting process provided TD with the interest component of the return on its investment in Rothwells.

I accept that the State would owe TD a duty of care in the circumstances pleaded, because it would be apparent that in holding his hand and entering into the deed of variation, Anderson, for TD, was relying upon this as being TD's best opportunity to be repaid.
The difficulty for TD in relation to this head of claim is basically my incapacity to find that Dowding said that the Government was committed to ensuring that the payments required by the deed of variation would be made by Rothwells. I am simply unable to find that any such representation was made, nor is there any reason to suppose that Dowding might not reasonably have thought that sufficient funds could be made available out of the PICL deal by Rothwells to enable the terms of the deed of variation to be met, particularly as the $30.5M was not to be repaid until 31 March 1989, with Rothwells being supposed to have the advantage of trading in the meantime. This cause of action is, in my opinion, not made out.
Before leaving it, I should say that, in any event, it seems to me that on the basis of the evidence which I have discussed, having regard to the events which occurred after the middle of October 1988, it is not at all clear to me that had TD not proceeded with the deed of variation, but had it, in October 1988, forced the liquidation of Rothwells, and pursued its claim in that context, it would have recovered more from Rothwells than was eventually recovered in the course of the liquidation which ultimately occurred. In that event, it is not clear to me what loss the plaintiff might establish in relation to the representations of October 1988 upon which it relies.
Finally, I note also that in relation to the claim based upon the representations allegedly made in October 1988, the defendant pleads that they are not actionable having regard to s 6 of the Statute of Frauds Amendments Act 1828 (Imp). I should say that, having regard to the reasons previously given in relation to that contention made in respect of the representations made in March 1988, I would be inclined to hold that the section is not applicable to the representations pleaded, because, even if of the kind described in s 6, the representations relied upon were not made for the purpose of the State obtaining (even in a wide sense) credit or money.

Estoppel

The plaintiff advances, separately, claims in estoppel based on the representations allegedly made in March, and September and October 1988. I need not further consider this claim so far as it is based on the representations alleged for September and October of 1988 because, as I have discussed above, I have been unpersuaded on the balance of probabilities that the representations were made. However, I have found that in March it was promised on behalf of the State that if TD deposited $50M for a period of six or twelve months into Rothwells, the Government would provide financial support to Rothwells so as to ensure that Rothwells would repay the loan when it became due, or the State would undertake the repayment of the loan itself. I have found that a contract was orally made in those terms, a contract of guarantee, unenforceable against the State because of the operation of s 4 of the Statute of Frauds 1677 (Imp) and the lack of a note or memorandum recording the terms of the contract.
At this point, TD asserts that those representations having been made, and that TD having relied upon them in making the deposit of $50M from 31 March 1988 to 13 April 1988 inclusive, to its detriment in that the assurances were not fulfilled, causing TD to suffer financial loss, the State is estopped from denying the obligations represented by the assurances it gave to ensure that Rothwells had the capacity to repay TD or to undertake that task itself.
I think, in relation to promissory estoppel, Australian law has not progressed beyond what I think is the classic statement of the content of the cause of action in the judgment of Brennan J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, at 428 ‑ 9, where his Honour said:
"In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs."
At first blush, that sounds like this case. TD, in the person of Anderson, was led by those acting for the State to assume that the State, in one form or the other, would guarantee the discharge of the debt to Rothwells upon the deposit of the $50M. That was represented to be the position of the State, and TD made its deposit in reliance on that being the position. The exchange that occurred between those representing the parties made it clear to those whose knowledge was the knowledge of the State that the assurance that the money would be repaid was an important consideration upon which TD made its deposit. The promise is unfulfilled, to the obvious detriment of TD, which now claims relief in the form of a declaration that the State is estopped from resiling from the assurances which I have found were given.
In truth, however, the plaintiff's claim is for damages for the breach of the contract of guarantee, an outcome which I have held to be unavailable because of the operation of s 4 of the Statute of Frauds 1677 and the lack of writing which, it will be recalled, at the time was sought for TD, but expressly refused.
The plaintiff does not, I think, grapple with the point that the consequence of upholding the plea of estoppel would seem to me to be tantamount to a declaration that there is an enforceable contract of guarantee despite the operation of the Statute of Frauds. If the only relief available is the simple declaration that the State is estopped from resiling from the assurances given by way of guarantee, then it would remain the case that the assurances, upon their acceptance and undertaking by TD of the process of deposit of the $50M, would still constitute an oral contract of guarantee unenforceable at law.
In the defence and counterclaim, par 48A, the defendant makes a plea to that effect, asserting that "accordingly, no action can be brought in respect of either alleged estopped because there is no note or memorandum sufficient to satisfy the Statute of Frauds 1677".
The plaintiff replies to that pleading, effectively by asserting that because Edwards, for the State, maintained the promise by way of guarantee, merely declining to put it in writing, and because TD relied, to its detriment, upon that representation, "the defendant is estopped from relying on the Statute of Frauds 1677. In addition, there is a plea that the proper law governing the transaction is that of New South Wales, but I have already expressed the view that in my opinion the proper law governing the transaction was the law of this State. It cannot be an effective plea that a party is estopped from relying upon the statute law which would otherwise govern the enforceability of the contracts said to have been made. But the plea certainly crystallises the point that this is the effect of what, under the heading of estoppel, TD seeks should be the result.
In Waltons Stores the case turned upon certain negotiations for a lease of land to the defendant by the plaintiff, who was to demolish a building and construct a new one to the defendant's requirements. The plaintiff, who was the owner of the land, made known to the defendant, through its solicitor, that it did not wish to demolish the building and arrange reconstruction until it was clear that the lease would go ahead. By way of conclusion to the negotiations as to the terms of the lease, the plaintiff's solicitor forwarded to the defendant's solicitor an executed lease, and the plaintiff began to demolish the building. However, the defendant had second thoughts, and although it was aware that demolition was proceeding and that building work would then commence, it did not execute the lease, but on the contrary finally advised that it did not propose to proceed to lease the land.
It was held, at first instance and on appeal ultimately to the High Court, that although there was no lease and no agreement for a lease, the defendant was estopped from denying that it was bound to take and execute the lease.
By s 43A(1) of the Conveyancing Act 1919 (NSW), the owners of the land could not sue upon the agreement for the lease because such a contract was unenforceable unless in writing or evidenced by a signed note or memorandum. That was held to provide no impediment to reliance upon the equitable estoppel, which, it was held, was not directly a process by which, in that case, a contract was created and held to be enforceable, although otherwise unenforceable at law: see per Brennan J at 432 ‑ 3, Deane J at 445 ‑ 6, and Gaudron J at 464. With those judgments, the other members of the Court, Mason CJ and Wilson J, expressed their agreement at 408.
However, the assumption which founded the application of the doctrine of estoppel was that there was or would be an executed lease, thus satisfying the requirements of the Conveyancing Act. As Brennan J put it at 432:
"If the true inference to be drawn from the facts is that Waltons induced the Mahers to assume that a binding contract had come into existence, the assumed contract was a written contract."
Deane J said, at 446, that the assumption upon which the estoppel operated was that there was a binding, in the sense of valid and enforceable, agreement to lease, and, at 464, Gaudron J made the same point by saying that the assumption was that the agreement was duly executed by the proposed lessee.
I think, in truth, that is quite a different situation from that which is relied upon by the plaintiff here, in circumstances where the assurance in the nature of a guarantee was expressly oral and expressly not to be recorded in writing. In that circumstance, as was held in the House of Lords in Actionstrength Ltd v International Glass Engineering IN.GL.EN SpA [2003] 2 AC 541, the doctrine of estoppel cannot be applied so as to defeat the operation of s 4 of the Statute of Frauds, rendering unenforceable a promise by way of guarantee made orally, if, as in this case, there is no other element to the estoppel claimed than that the creditor has acted to its detriment on the basis of the guarantor's oral promise. In my opinion, the plaintiff cannot rely upon promissory estoppel in this case.

Release is granted

I have discussed the events after Derby and up till the end of 1988 in some detail. I have not found it necessary to deal with evidence about a conversation between Dowding and Anderson alleged to have occurred in April 1989. The plaintiff originally pursued claims arising out of these events, but they have been abandoned and the present relevance of the events after Derby and up to the execution of the deed of release dated 30 December 1988 arises out of the pleading by way of defence.
The defendant relies on the deed in both its operative aspects. It relies on the acknowledgment that no representations were made concerning the solvency of Rothwells or otherwise in relation to the deposit by TD of money with Rothwells by the agents of the State, and that in making that deposit TD did not rely upon any such representation. Further, the State relies upon the release, which it contends, on the proper construction of the deed, was provided in relation to any claim against the State arising out of the deposit of the $50M, whether the liability asserted be directly that of the State or a vicarious liability arising out of the conduct of the agents of the State expressly released.
It is also alleged that the events and exchanges, particularly between Wran, acting for the State, and Anderson, acting for TD, resulted in an agreement between the parties that, in consideration of the completion of the Westralia Square transaction, TD promised not to sue the defendant in respect of any alleged liability arising out of the deposit into Rothwells of the $50M. The deed of release was, it is asserted, entered into pursuant to the release agreement so made. It is therefore contended that the plaintiff is barred from pursuing any cause of action by proceedings against the State, regardless of the proper construction of the deed.
The defendant counterclaims for the rectification of the deed by the insertion of the phrase "State of Western Australia or" between the words "against" and "any" in the second line of cl 3 of the deed, and by the insertion of the phrase "including the State of Western Australia" between the words "herein" and "shall" in the first line of cl 5 of the deed. That claim is made if the Court does not agree that, on a proper construction of the deed, TD is estopped from pursuing any cause of action against the State.
There is a further counterclaim for the specific performance of the release agreement which, it is contended, contained an implied term breached by TD requiring it to act in good faith to ensure that the agreement to release the State was carried into effect in the deed of release. By the pursuit of this action, it is contended that the implied term of good faith was breached, causing loss and damage to the defendant incurring the costs of its defence of the action and the costs of its counterclaim for rectification of the deed, all of which are claimed.
Of course, I have found only one cause of action made out, that for breach of the contract made in March 1988. But I have also found that that contract is unenforceable, pursuant to s 4 of the Statute of Frauds 1677 (Imp) because it is a contract by way of oral guarantee. It is therefore strictly unnecessary that I should consider whether, by way of defence, TD is estopped and barred from pursuing any cause of action against the State. However, the counterclaim relies on the deed, aided by the claim for rectification required, together with a breach of the oral lease agreement in the claim for damages which is made. So the issues raised by this pleading must be dealt with.
The plaintiff, by way of reply, asserts that the true nature of the release agreement was that Anderson and TD agreed to release the Ministers and instrumentalities of the State, but not to release the State itself. That was agreed, it is asserted, because Wran threatened that if that agreement was not made, the Government would stop the SGIC and GESB from completing the purchase of Westralia Square Stage 1 from Sharland and Skeat. So it is pleaded that a more limited form of agreement was made, which is reflected precisely in the terms of the deed of release, which was only to become effective when Dowding provided Mr Anderson with an acceptable proposal for repaying the advance made by TD.
In any event, the plaintiff pleads that the threat made by Wran constituted illegitimate pressure to make the agreement because Dowding was proposing to use, improperly, his authority as Premier and Treasurer, to prevent the Westralia Square transaction being completed unless the agreement was made. This was illegitimate pressure and, the contract having been made under duress or as a result of the pleaded unconscionable conduct on the part of Dowding and the State, it is asserted that the contract is illegal and unenforceable.
By way of defence to the counterclaim, those contentions are repeated, effectively denying, on the true construction of the deed of release, that it has the effect contended for by the State, denying the entitlement to rectification, denying the enforceability of the release agreement, and denying the implied term of good faith. Finally, it is pleaded that the counterclaim, insofar as it relies upon the release agreement and does not solely rely upon the deed of release as drawn or as rectified, is statute barred by s 38(1)(c)(v) of the Limitation Act 1935 (WA) or, by analogy to that provision, in equity, and it is pleaded that, in any event, the claim for specific performance should be refused on discretionary grounds by reason of what is described as gross delay in bringing the claim. The defendant joins issue in relation to those issues and finally pleads that the Limitation Act has no application to it.
As to the release agreement, I note that both sides assert that one was made. I have discussed the evidence in some detail. I have found that further to the Government's desire to settle all outstanding matters concerning TD, its $50M deposited in Rothwells, the disputation about the Westralia Square transaction, and the disputation about the sale of land in Joondalup, Whitlam Turnbull were engaged to act for the Government. I have found that Turnbull was involved with Anderson in early December 1988, renegotiating the purchase of Westralia Square, and there were discussions, not only about the $50M, but about the dispute with the Joondalup Development Corporation. I have found that Dowding left these matters to Whitlam Turnbull, and I am not satisfied, on the balance of probabilities, that he made any promise that the Government would see that TD recovered its $50M.
I am not persuaded to accept Anderson's version of the exchanges he had with Wran and Dowding on 21 December 1988. I do not find that Wran exerted undue or improper pressure on Anderson, which Anderson said, in any event, produced an agreement that he would give a release, but would only deliver it and cause it to be made operative upon receipt of the State's acceptable proposals for the repayment of the $50M. I do not accept that it was agreed that the release should only be of Dowding and the other Ministers of the Crown and State instrumentalities, but not of the State itself.
So far as the $50M deposited in Rothwells was concerned, the agreement was that those involved for the State and the State itself were to be released from all liability and the agreement was to be reflected in a deed. The deed was to be executed by Anderson and TD. Until that was done, the Westralia Square transaction would not be completed. The transactions were thus closely linked. I accept that the matter was dealt with upon the basis that if Anderson and TD and the other corporate entities with which he was associated were to have the benefit of the Westralia Square and Central Park transactions, that would only be upon the settlement of all outstanding matters at issue between those interests and the State, and a principal element of that was the execution of a deed of release. The position, I think, was that all outstanding issues were to be dealt with together, or at least that was the desire of the State, and they were the instructions given to Whitlam Turnbull.
The resolution of those outstanding matters involved the making of agreements which Anderson, for TD, was interested in pursuing because they were beneficial. The price was the release from liability of all involved in the Rothwells matter, the Ministers and persons involved for the State, the Government instrumentalities and the State itself, described by Anderson and those involved in the process of making an agreement as the Government. There was no express qualification to the agreement which excluded the Government.

Nor, in my opinion, is there any evidence, from Anderson or anyone else, capable of establishing that the agreement so made was illegal and unenforceable on the ground that TD was caused to enter into it by improper duress or unconscionable conduct. For the plaintiff, reliance was placed on Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40, in which case McHugh JA, as he then was, with the agreement of Samuels and Mahoney JJA, at 46 said, of the subject of duress which might result in an incapacity in the other party to enforce a contract:
"The proper approach, in my opinion, is to ask whether any applied pressure induced the victim to enter into the contract and then ask if that pressure went beyond what the law is prepared to countenance as legitimate. Pressure will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct. But the categories are not closed. Even overwhelming pressure, not amounting to unconscionable or unlawful conduct, however, will not necessarily constitute economic duress."
In that case, the question was whether a mortgage was entered into because of illegitimate economic duress exerted by a bank who held some proceeds of sale of a property belonging to the party with whom the bank was dealing. The bank declined to make the funds available until the mortgage documents were executed. Not surprisingly, the view is expressed that that constituted an unlawful detention of those moneys, although ultimately the agreements were upheld because it was found that they had not been caused to be entered into by the duress involved.
However, that case is far from this. There can be nothing unlawful or improper in one party requiring that a number of transactions, some beneficial to one party and some to the other, are to be entered into together, or none at all. Nor do I see anything unconscionable in taking such a stance and in making an agreement in those terms.
In short, it was agreed, relevantly between TD and the State, that in consideration of the State supporting and not preventing the transactions between the interests associated with Anderson and the SGIC and the GESB in relation to Westralia Square and Central Park, TD would release from any liability the Ministers and other persons, Government agencies and the State in relation to their involvement with TD in the circumstances concerning its deposit of $50M into Rothwells, and the question of the repayment of that sum.
It follows that there is no reason why the release agreement may not be enforced by the State as an agreement to release the State, which agreement was intended to be reduced to the formal terms of the deed of release. Another way of putting that, I think, is that this would be, in my opinion, a proper case in which to imply, in the oral release agreement, the term of good faith sought by the State. It was a term of the agreement that the State have the benefit of the agreement recorded in a deed of release which accurately reflected the terms of the agreement.
This was, I think, a case where the release agreement was of the first kind described by the High Court in Masters v Cameron (1954) 91 CLR 353 at 360. In other words, the agreement was:
"… one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect."
The enforcement of that contract pursuant to the counterclaim is, of course, subject to the plaintiff's contention that the claim is statute barred or that there is a discretionary ground for the refusal of relief. The plaintiff relies upon the Limitation Act1935 (WA) s 38(1)(c)(v), which provides that actions founded on any simple contract must be commenced within six years after the cause of action arose. As I understand it, this aspect of the counterclaim was not instituted until early July 2005. Regardless of when precisely the cause of action arose, it would be statute‑barred if governed by that section. However, by s 48 of the Act, its provisions do not bind or affect the Crown, except as expressly provided in them. That is not the case with respect to s 38. It does not apply here to bar this aspect of the counterclaim and it follows, in my opinion, that if it might otherwise be possible to apply equitable doctrine to bar the claim for specific performance of the release agreement by analogy to the provisions of s 38 of the Limitation Act, it would not be appropriate to do so.
Finally, it seems to me that the delay in making the claim for specific performance of the release agreement itself may not, in the circumstances of this case, given its history and the many changes made to the pleaded cases over time, provide any discretionary ground to refuse the relief of specific performance.
I note that in seeking an order for specific performance of the release agreement, the State particularises that form of relief as an order for the execution by Anderson and the plaintiff of a deed in the form it would take after its rectification in the manner pleaded in the counterclaim. No other form of specific performance is sought in relation to the release agreement and it may be that it adds little, other than in evidentiary terms, to the claim made to enforce the deed of release.
I should not overlook that the State pursues a claim for damages arising out of the loss said to have been caused by the breach of the implied term of the release agreement to which I have referred. The pleading in this regard is rather confusing. In the defence, par 49I, it is pleaded that it was a term of the release agreement to be implied therein that the release of liability included the defendant, ie, as it is pleaded, that the defendant was to be a beneficiary of the release. It will be apparent from what I have written that I think that was an express term of the agreement.
However, in the counterclaim, the matter is put rather differently. There, as I have indicated, it is pleaded in par 54B, that it was an implied term of the release agreement that Anderson, TD and the State should each do, in good faith, all that was necessary to be done for the carrying out of the release agreement. But when that is boiled down, the relevant assertion is to give the defendant the benefit contracted by the release agreement, the deed of release was to be drafted in a form which reflected the terms of the release agreement. This, it is pleaded, TD failed to do, and it is alleged TD failed to draw to the attention of the State that the deed did not expressly reflect the release agreement. By that failure, and by issuing the writ and prosecuting the action against the State, it is said that TD has breached the implied term of good faith, causing loss and damage to the State in the form of the costs incurred in defending the action, and in having to counterclaim for rectification of the deed.
It will be recalled that both parties were represented by solicitors, and that so far as Anderson was concerned (although relief is not now sought against him) he relied upon legal advice. There was an exchange of drafts and changes were made. In its final form as executed, I have no doubt that the deed was thought to reflect the terms of the release agreement. Of course, for TD it is said that in that view they were right, and the deed precisely reflects exactly what it was supposed to say, but whether it accurately reflects the terms of the release agreement is another question.
At this stage, it is sufficient for me to say that the evidence as to the creation of the deed and its execution does not persuade me that the implied term of good faith which I would find existed was breached by TD or anyone else. I would not, by way of an award of damages, indemnify the State against all costs incurred in the litigation.

The deed of release

As I understand the defendant's case, it is that the State may rely on and enforce the deed, either because, on its proper construction, the State was released from all claims in respect of the deposit of the $50M or, alternatively, by releasing the Ministers of the Crown and instrumentalities of the Government of Western Australia, the State was necessarily released from liability. Alternatively, it is contended that the deed should be rectified in the manner set out above, so as to expressly release the State from liability.
In either event it is argued that, although not a party to the deed, the State would be expressly a party for whose benefit the deed was made, and therefore a party who might rely upon it and enforce it: Property Law Act 1969 (WA), s 11(2); Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107.
I accept that these matters are to be dealt with by interpretation of the deed, and in that regard, as Mason J held in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352:
"The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed."
If it is permissible to have regard to the surrounding circumstances, the principal such circumstance is, of course, the negotiation towards and the content of the agreement which I have found was made, which has been termed the release agreement. It was not an agreement in the qualified terms asserted by the plaintiff, but simply an agreement to release those persons, instrumentalities and the Government, by which I think was meant the State, from all liability arising out of the deposit of $50M by TD into Rothwells. To my mind, that would provide clear evidence that the intention of the parties was that the State should be released from all such liability.
However, one starts with the terms of the deed of release themselves, and when they are analysed I am unable to accept the submission for the State that the deed, read in its entirety, manifests an intention to release the State from all claims and liability in respect of the deposit. Nor am I attracted by the argument that the objective intention to release the State may be discerned from the fact that the potential liability would include tortious liability and the release of all those for whose tortious conduct the State would be vicariously liable, manifests an intention to release the State of all liability across the board, so to speak. The outcome which is at the heart of that submission would, in my opinion, be simply an effect of relieving the State from vicarious liability by the release of those for whose torts the State would be vicariously liable: Bell v Western Australia (2004) 28 WAR 555.
Even less attractive, I think, is the argument in the case where the alleged liability of the State in tort was joint or joint and several, with one or more of the Ministers of the Crown and the servants or agents of the State, that the release of those persons manifests an intention to release the State from all liability. There is no reason why even the release of a joint tortfeasor from claim or liability should release another joint tortfeasor: Law Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947 (WA), s 7(1)(a); Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574.
In my opinion, the terms of the deed are clear. It refers throughout, in cls 1 and 2, to the "Government of Western Australia". It is, of course, the case that the defendant is a legal person which, under s 5 of the Crown Suits Act 1947 (WA), may sue and be sued in the same manner as a subject. It is the Crown which is the description of that legal entity, proceedings being taken by or against the Crown under the title "State of Western Australia". By s 3 of the Crown Suits Act, in that Act the term "Crown" means the Crown in right of the Government of Western Australia: Western Australia v Watson [1990] WAR 248, 266.
But the persons referred to in those clauses are the Ministers of the Government, officers or employees of the Government, or any instrumentality of the Government. It is understandable that those natural persons or legal entities are those whom TD and Anderson acknowledge made no representations or inducements concerning the solvency of Rothwells and acknowledge that no such representations or inducements were relied upon as to the solvency of Rothwells otherwise in relation to the deposit made. But the operative clause of the deed, cl 3, provides the release in favour of "any of the persons or institutions mentioned in Clauses 1 and 2". It does not seem to me to be at all apt to say that by the word "institutions" the State, described as the Government of Western Australia, is included as a beneficiary of the release granted by cl 3. To my mind, the persons mentioned in cls 1 and 2 are the Ministers, officers and employees of the Government, and the institutions mentioned in cls 1 and 2 are the instrumentalities of the Government.
It is those persons who, under cl 5, as "the persons and institutions named herein", are entitled to claim the benefit of the deed and plead it in bar to any proceedings brought against them by TD or Anderson in connection with the deposit of moneys with Rothwells. To my mind, that reinforces the conclusion to which I have come. The State is not mentioned or named in cls 1 and 2 as an entity which, of itself, may claim the benefit of the release. It is merely referred to by way of a description of the persons and institutions who are mentioned or named in the deed.
In leaving this point I should, I think, make it clear that I do not accept an argument presented by the defendant, which was a variant to other arguments to which I have referred. It was put that the Ministers of the Government comprised the Executive Government, and their release releases the Government, a term synonymous with the entity which may be sued as the State of Western Australia. But of course, it is each Minister acting individually who is released, not the Ministers of the Government acting collectively as the Executive Council to advise the Governor, the entity which constitutes the Executive arm of Government under our law. I observe, in passing, that it was not put to me for TD that the State could not enforce the deed without the Ministers of the Crown being parties to the litigation in their official capacities. The defendant's application to join all those Ministers need not, in my opinion, be dealt with.
It follows from what I have written above, that the capacity of the State to enforce the deed, to rely on it as barring the plaintiff's action and the claims it makes, will depend upon the success of the counterclaim for rectification of the deed. In Mander Pty Ltd v Clements (2005) 30 WAR 46, 50-51 [11] ‑ [14], 57 [49] ‑ [53], 62 [84] ‑ [87]; the Full Court reviewed earlier authorities and held that rectification of a written instrument is available where it is established, by clear or convincing proof, that the written instrument does not embody what was in fact the final intention of those who made it.
The Court will not rewrite the instrument and so rectification will not be available where the mistake is as to the terms of an agreement, rather than that the instrument embodies those terms. As it is sometimes put, the mistake must produce a disconformity between the intention and the written instrument.
In this case, the intention of the parties who executed the deed of release was the intention of Mr Anderson, and I have found that he, in common with those with whom he dealt who acted for the State, intended there to be a release of the State from all liability arising out of the deposit into Rothwells. He did not, in my view, make the reservation which he professes, that he was prepared to release the individuals but reserved his rights to sue the State. Mr Anderson accepted, I think, that those acting for the State sought a complete release of all liability potentially borne by the State or any person or entity acting for the State. All involved mistakenly thought that the deed achieved that outcome. The deed may be rectified accordingly.

Conclusion

It follows from what I have written above that the plaintiff's claim is dismissed. I give judgment for the defendant on its counterclaim and would order rectification of the deed of release dated 30 December 1988 in the terms sought in par 3 of the prayer for relief. I will hear the parties as to what further orders should be made.