Whittle & Whittle v Parnell Mogas Pty Ltd - [2005] SADC 26

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
WHITTLE & WHITTLE v PARNELL MOGAS PTY LTD
Judgment of His Honour Judge David
24 March 2005
CONTRACTS
Plaintiff claims breach of agreement by defendant to lease roadhouse and service station - claims pre-conditions as to work to be done and providing of environmental site assessment waived by defendant - argues alternatively if such conditions not wavied they were fulfilled.
HELD no wavier of conditions - evidence of defendant preferred - reports provided by previous tenant do not fulfil condition that environmental site assessments were provided.

ESTOPPEL
Plaintiff claims if no agreement reached nevertheless defendant behaved unconscionably and should be estopped from arguing there was an agreement.
HELD no such unconscionable behaviour proved.
Claim dismissed.
Waltons Stores (Interstate) Limited v Maher and Another 164 CLR 387, considered.

WHITTLE & WHITTLE v PARNELL MOGAS PTY LTD
[2005] SADC 26

The plaintiffs are the owners of land at Port Augusta upon which there is a roadhouse and a service station. They hold the land on trust for the Whittle Family Trust. The defendant is a Company which carries on the business of petroleum distribution and it is undisputed that during the course of negotiations which are the basis of this matter the Marketing Manager, Mr Bob Hicks, had authority to speak on behalf of the defendant. At the relevant times a Mr John Parnell (a witness for the plaintiff) was a shareholder and a Director of the Company and Mobil Australia Limited was also involved in the defendant Company.
It is claimed, and there is no dispute, that in May of 2000 the defendant offered to be a lessee of the roadhouse and service station subject to certain conditions. One of the conditions was that the then present monthly tenant, Caltex, vacate the said land by a certain date. Other conditions were that there would be the completion of certain improvements and the provision by the plaintiffs to the defendant of an environmental site assessment. It is the plaintiffs’ case that at a meeting on the 1^st June 2000 at Port Lincoln between Mr Albert Whittle and Mr Bob Hicks the conditions mentioned above were waived and the lease was to be executed and commence from the 1^st August 2000 subject to three other conditions namely:-
(a)the Plaintiffs completed site levels and compacted land so as to ensure uninterrupted operations of the Petrol Station.
(b)The Defendant to have right to amend plans for development of Petrol Station site and inspected by Mr Hicks prior to the 16^th May 2000.
(c)The Plaintiffs to carry out approved development plans expeditiously.
The plaintiffs’ case is that an agreement was reached. They claim that as a result of that agreement, work to compact land to ensure uninterrupted operations with the petrol station was completed and also on the 28^th June 2000 a notice was served on Caltex terminating their lease. The defendant however refused to execute a lease and refused to take possession of the business. The plaintiffs therefore claim damages for work done as a condition precedent to there being a lease, for loss of prospective rent and also loss of capital value of the land because there was no lease as agreed. Alternatively it is claimed by the plaintiffs that if there was no agreement, from August 2000 until approximately the end of the year, the defendant behaved in an unconscionable way by holding out that there was a binding agreement and it is therefore estopped from denying that there was such an agreement. As a result of that alternate plea the plaintiffs also claim damages.
The defendant claims that at all times they were interested in obtaining a lease over the plaintiffs’ property. They admit that serious negotiations took place and that they made an offer by letter of the 16^th May 2000 (Exhibit P2). However they claim that there was never an agreement reached either in June 2000 or at any time because the conditions precedent set out in the above Exhibit were never waived or fulfilled. They claim that at the meeting on the 1^st June 2000 between Mr Whittle and Mr Hicks there was no such waiver. They claimed that an environmental site assessment was never provided. They say that from August 2000 until the time when negotiations were finally broken off they never held out they were going to enter into an agreement as claimed by the plaintiffs but admit that they were keen to negotiate a lease. It is the defendant’s case that these negotiations could not form the basis of a claim for damages.
The plaintiffs’ case is slightly complicated by the fact that in their final Statement of Claim they say that the defendant at a meeting on the 1^st June 2000 waived the conditions set out in the letter of the 16^th May 2000 (Exhibit P2). One of those conditions was “the plaintiffs providing an environmental site assessment”. In their Reply the plaintiffs say that not only did the parties waive compliance with a satisfactory environmental site assessment (ESA) but if there was such a condition and it was not waived it was in fact fulfilled by two reports from Coffey Geosciences Pty Ltd which were provided to the previous tenant namely Caltex and were produced to the defendant. In other words even if there was a condition precedent to provide an ESA report which was not waived as claimed by the plaintiffs nevertheless that condition was fulfilled by the production of the above reports. The significance of the above reports will become clear when I set out a chronology of important and undisputed facts.
The issues I have to decide are therefore, was there a contract arrived at on 1^st June 2000? In deciding that question I have to decide whether certain condition precedents were waived or not. If there was no agreement, was the behaviour of the defendant from that time onwards such that it was unconscionable for them to withdraw from negotiations because they had induced the plaintiffs to believe they were already bound by a legally binding agreement?
Before turning to the respective cases on liability I wish to set out a chronology of the more important undisputed facts and events.
Chronology of Undisputed Facts and Events
This chronology is obviously not exhaustive and is a selection of what I consider to be the more important events and documents:-
1.The defendant made an offer to lease the plaintiffs’ premises by letter dated 16^th May 2000. It is important that I set that letter out in full (Exhibit P2):-
“Dear Albert & Marie,
I am writing to propose an offer from Parnell Mogas Pty Ltd to Lease the Service Station located at Highway 1, Port Augusta, known as ‘Andy’s Truck Stop’.
I draw your attention to Clause 7, of Lease No. 7653236, and your obligations under that clause to Caltex (Australia) Pty Limited.
The Parnell Mogas offer, which is conditional upon the termination of the existing monthly tenancy with Caltex, and Caltex not exercising its rights under clause 7 of the agreement of Lease, is as follows:
Term:
10 (ten) years, with an option for a further 10 (ten) years.
Rental:
$11,500 per month, ($138,000 per annum).
Rental Review:
Annually by the lesser of CPI or 4 (four) percent.
Area:
The area leased is to include the forecourt, driveways, shop/restaurant/kitchen, house and office, but, to exclude the shed immediately to the rear of the site, currently occupied by Bridgestone.
Parnell Mogas will provide uninterrupted access to the shed.
Improvements:
Parnell Mogas will enter the lease subject to the following improvements being completed:
1)     The realignment of the eastern access, site drainage, and sealing of the forecourt and driveways.
2)     The toilets are upgraded to meet all regulations, including wheel chair access.
3)     The proposed integration of the newly installed office into the main building be completed to include additional restaurant seating for 20 people, and provide for approximately 60 square meter sales room, immediately adjacent to the console.
LPG Equipment:
Parnell Mogas will be responsible for installation of the LPG equipment. This will include relocating the storage vessel in such a manner to permit realignment of the eastern ingress.
No ground rental will be applicable in relation to the LPG installation.
Underground Fuel Tanks:
The existing underground fuel storage tanks are to be provided for the use of Parnell Mogas.
Any additional underground storage equipment required by Parnell Mogas during the term of the lease is to be installed at Parnell Mogas expense, and surrendered to AT & MJ Whittle at the termination of the proposed lease.
AT & MJ Whittle are to provide an environmental site assessment prior to the execution of the proposed lease.
Fuel Dispensing Equipment:
Parnell Mogas to install and maintain all fuel dispensing equipment.
Signage:
Parnell Mogas to install prime image Mobil signage.
Kitchen Equipment:
Parnell Mogas will install and maintain all required kitchen equipment.
Salesroom and Restaurant:
Parnell Mogas will install and maintain all salesroom and restaurant equipment.
Future Developments:
Parnell Mogas is interested in securing an option to purchase the adjoining land, you currently hold an option over, and any subsequent developments, subject to planning approval.
Parnell Mogas is prepared to cover all costs associated with subdivision of the property, and the creation of a separate title.
I trust you will find this offer attractive.
Yours faithfully,
R G Hicks
Marketing Manager”
2.Mr John Wellington, acting on behalf of the plaintiffs, acknowledged receipt of Exhibit P2 by fax dated the 18^th May 2000 (Exhibit D71).
3.It is agreed that there was then a meeting between the plaintiff Albert Whittle and Mr Bob Hicks on behalf of the defendant in Port Lincoln on the 1^st June 2000. The contents of that meeting are in dispute.
4.Mr Bob Hicks sent a fax dated the 9^th June 2000 to the plaintiffs referring to the conversations and meeting on the 1^st June 2000. I set out that Exhibit in full (Exhibit P3):-
“Lease – Andy’s Truckstop
Albert
I am writing to confirm the following, as a result of our meeting on Thursday 1^st June and with Minas Makridis at Caramag on Monday 5^th June:
1.     Parnell Mogas accepts your proposed commencement date of 1^st August, subject to receipt of your lease document, and its execution prior to July 1^st.
Parnell Mogas would prefer to complete the execution as soon as possible, due to the lead times required for pumps & LPG equipment.
As indicated in the Parnell Mogas offer of the 16^th May, 2000, the execution of any lease is dependant upon the termination of the existing agreement with Caltex.
2.     I met with Minas at Caramag on the morning of the 5/6/00, and indicated the preferred Parnell Mogas site layout. I have asked him to forward to you for your consideration.
3.     Parnell Mogas is interested in purchasing the house on the site subject to the ability to be able to transport to another location. Could you please give some indication as to your willingness to sell and its value.
Bob Hicks”
5.On the 21^st June 2000 Mr John Wellington acting for the plaintiffs prepared and sent a draft lease to the defendant (Exhibit D59).
6.On the 27^th June 2000 there was a fax from Bob Hicks on behalf of the defendant to John Wellington on behalf of the plaintiffs whereby the original draft lease was accepted except clauses were to be added whereby Parnell Mogas would not accept responsibility or indemnify the lessor in relation to prior contamination.
7.In response to that Mr Wellington replied to Mr Hicks and that response is set out in Exhibit P5.
8.Caltex were served with a termination notice by the plaintiffs on the 28^th June 2000 (Exhibit P6).
9.On the 18^th July 2000 a report dated 14^th July 2000 from Coffey Geosciences Pty Ltd to Caltex concerning environmental issues was sent to the defendant by fax. There is a dispute as to whether this report qualifies as an environmental site assessment being, on the defendant’s case, one of the conditions precedent to an agreement.
10.That report from Coffey Geosciences Pty Ltd on being received by the defendant was provided to the defendant’s environmental advisers namely PPK. PPK reported back to the defendant on the 21^st July 2000.
11.As a result of PPK’s advice the defendant faxed the plaintiffs on the 21^st July 2000 asking for further information (Exhibit P8).
12.On the 25^th July 2000 a copy of an environmental report from Coffey Geosciences Pty Ltd dated the 19^th May 2000 was faxed to the defendant who then couriered it to PPK.
13.On the 3^rd August 2000 the defendant wrote to the plaintiffs. The defendant argue this letter amounts to a fresh offer because the pre-conditions of the original offer had not been met. The plaintiffs argue that this letter is clearly a breach of the original agreement. I set out that letter in full (Exhibit P20):-
“Dear Albert & Marie,
I am writing to confirm the terms and conditions Parnell Mogas Pty Ltd require to be met before committing to the Lease the Service Station located at Highway 1, Port Augusta, known as ‘Andy’s Truck Stop’.
1)Development Application and Building Approval obtained from the Corporation of the City of Pt Augusta, and a copy of the approval forwarded to our office.
2)Immediately Parnell Mogas is notified of the Building Approval being granted Parnell Mogas will obtain, at is own expense, an Independent Environmental Site Assessment, ESA.
3)Subject to the results of the ESA, upon Building Approval being obtained, providing this occurs after 1^st September 2000, Parnell Mogas to commence paying 50% of the agreed rental, or $5,750.00 per month until such time as the building works are completed, and the business can commence operating without disruption.
4)Parnell Mogas undertakes that subject to the above it will make all reasonable attempts, as soon as practicable, to commence full operation of the site.
I trust you will find this acceptable, and reconfirm Parnell Mogas’s commitment to a long term successful business association.
Yours faithfully,
R G Hicks
Marketing Manager”
14.On the 4^th August 2000 Con Traianos acting on behalf of the plaintiff replied and I set that letter out in full (Exhibit P21):-
“Dear Sir
A & M WHITTLE
We acknowledge receipt of your fax of 3^rd August 2000 and the copies of letters dated 16^th May 2000 and 3^rd August 2000 with it.
We have spoken to our client Albert Whittle concerning your letter of 3^rd August 2000.
As has been communicated to you by Mr Whittle, the matters raised in that letter conflict with what has already been agreed. For you to insist on the matters raised in the letter will cause our client significant damage.
We would have hoped that the start of what is to be a long relationship between you and our client could have occurred without the hick up generated by your letter.
We trust that the matters raised in this letter will quickly and quietly subdue the situation.
We consider that there is ample evidence of an agreement as to terms of Lease having been concluded following your letter to us of 27^th June 2000 and our response to you of that date.
Nowhere in that agreement are there to be found conditions such as those you refer to in your letter of 3^rd August 2000.
The salient facts are as follows:-
1.When our client commenced discussions with you concerning leasing the premises, Caltex was a monthly tenant.
2.There was another party interested in leasing the premises from our client but our client chose to deal with you.
3.Your letter to our client of 16^th May 2000 offering to lease the premises sets out the basic terms of your offer. The letter contains, on the second page, the reference to particular improvements being completed.
4.It was never intended that those improvements be completed prior to the commencement of the Lease. It was never stated that they should be. Indeed, you indicated to our clients that you required the Lease to commence on 31^st July 2000 or 1^st August 2000 which clearly confirms the fact, given that the monthly tenancy to Caltex had to be terminated before the works could progress.
5.By your fax to our client of 9^th June 2000, you purported to accept a commencement date of 1^st August 2000. Despite your letter suggesting that that date was proposed by our client, our notes indicate that was a date originally proposed by you. Your letter indicates that you met with Caramag which was preparing the building plans, indicating your preferred site layout. Your requirements relating to the plans required amendments to the plans.
6.On 21^st June 2000, we forwarded to you a draft Lease covering the agreement that had been reached.
7.On 27^th June, you wrote to us accepting the draft Lease except for clause 7.2, stating that you would not accept responsibility for prior contamination.
8.On the same day, we made appropriate amendments to that clause and faxed them to you.
9.At that stage, we suggested that the terms and conditions relating to the letting had been agreed. That is clearly the case.
10.Those terms and conditions do not contain the matters now sought to be introduced by you in your letter of 3^rd August 2000.
11.Based on having reached agreement with you, the following day, on 28^th June 2000, we served notice on Caltex terminating its monthly tenancy.
As one clear month’s notice had to be given, the tenancy would not cease until the end of July 2000.
12.Our client kept you fully informed of all progress with respect to his requirement that Caltex prepare environmental assessment reports.
Our client also advised you and you did not disagree to Caltex having 7 days to de-commission the premises post the termination of the Lease on 31^st July 2000.
13.As late as last week, the existing occupier of the premises by way of a licence from Caltex, indicated to our client that it wished to discuss it’s continued occupation of the premises.
That was made known to you, and you confirming your commitment to the site led to our client not progressing the matter with the current occupier.
Given the above, our client’s expectation and what should have happened is that you should have commenced paying the full rent on and from Monday, 7^th August 2000. Our client’s obligation pursuant to the agreed terms was to complete the building within a reasonable time, as no set time was stated.
There was no provision relating to payment of half rental until such time as the building works are completed. That was simply not agreed. What is in the Lease is a provision to the effect that our client will cause as little disruption to your business as is possible during any building works.
Were matters such as those raised by your letter of 3^rd August 2000 raised in June 2000, our client would have acted in a completely different manner. He may have preferred to deal with the other interested party. He may have left Caltex in occupation of the premises on a monthly tenancy until such time as the necessary building approvals (which we understand are a formality) had been attended to or indeed the building substantially completed.
Given the above, we ask that you reconsider your position. We invite you to seek independent legal advice.
For our part, our client will proceed diligently with obtaining necessary approvals in completing the building works in accordance with the Plans.
Please advise us of your attitude as a matter of urgency.
Yours faithfully
BONNINS
Con Traianos”
15.Exhibit P21 was withdrawn by the plaintiffs. It was clear at this stage that irrespective of whether there was a contract or not both parties were still hopeful of some final resolution between them.
16.Negotiations continued in September 2000 culminating in a letter from John Wellington on the 4^th October 2000 to the defendant with a proposed draft lease (Exhibit P28).
17.On the 9^th October 2000 a letter from Greg Patten, Chief Executive Officer of the defendant Company was sent to the plaintiffs and I set that letter out in full (Exhibit P29):-
“Dear Albert & Marie,
We refer to our letter dated 3^rd August 2000, which outlined certain terms and conditions to be met prior to committing to the lease at ‘Andy’s Truck Stop’.
As these conditions have not been met to date, we advise that we will not be making any further arrangements to lease the site until you have resolved these matters.
If our stance is not acceptable to you, we acknowledge that there is nothing stopping you from making arrangements with any other party to lease the site from you.
Accordingly we will immediately cease any planning associated with leasing the site until you have advised that you have resolved these outstanding terms and conditions.
Yours faithfully,
Greg Patten
Chief Executive Officer
ATTENTION JOHN WELLINGTON”
18.In reply to that letter Mr Whittle himself wrote to the defendant on the 27^th October 2000 and I set that letter out in full (Exhibit P30):-
“Attention Greg Patten
We note the content of your letter dated 9^th October 2000.
Bob hicks is invited to attend a final planning meeting at Port Augusta Truckstop on the 31^st October at eleven o’clock.
We will respond to your participation and future involvement in the site after that meeting of all parties which will include council planers and consultants.
Council has emphasised that there be no restrictions on operating the existing facilities until council approval is received. It must be taken into account that the total project includes transport facilities, truck wash, loading ramp, trailer interchange and overnight accommodation.
The process will be two submissions, one for complying development and the second for non-complying development.
We will succeed in having the total concept approved providing we follow the due process.
We cannot leave the fuel and restaurant outlet closed for much longer as Bridgestone has experienced at 30% decline in their business and as they are our most reliable tenants we must protect there interests.
Yours faithfully
A T WHITTLE
ATTENTION JOHN WELLINGTON”
19.On the 17^th November 2000 the plaintiffs wrote a letter to the defendant (Exhibit P31) concerning Council approvals.
20.That was replied to by letter of the 20^th November 2000 from Mr Hicks. I set out that letter in full (Exhibit P32):-
“Dear Albert & Marie,
I am writing in response to your letter dated 17^th of November 2000.
Parnell Mogas will not be able to meet your time requirement of acceptance by 4 pm Wednesday 22^nd of November.
The company is still interested to lease the property, and we are making all efforts to put a final proposal to our board as soon as possible, however, with the processes involved in meeting it’s requirements this may take until the end of December 2000.
Final Parnell Mogas Pty Ltd board approval is required to proceed with leasing your premises.
Parnell Mogas acknowledges that you have other parties interested in leasing the premises and confirms you are free to explore these options as it has no hold over the premises.
I apologise for the delay, however, changes in market conditions since April, have resulted in our board requesting a total review of this proposal.
Yours faithfully,
R G Hicks
Marketing Manager”
21.On the 4^th December 2000 John Wellington of Norman Waterhouse wrote to the defendant but that letter was withdrawn on the morning of the 6^th December 2000.
22.On the 7^th February 2001 the defendant wrote to the plaintiffs offering a supply agreement (Exhibit P46) and that was executed on the 12^th February 2001. That agreement of course is totally different from the lease which was originally sought.

It is against the background of those undisputed events that I turn to the cases for the respective parties, however before doing so I wish to comment on the nature of the pleadings.
Pleadings
In the plaintiffs’ Third Further Amended Statement of Claim dated the 4^th December 2003 paragraph 4 the plaintiffs plead the following:-
“4.By letter dated the 16^th May 2000, the Defendant offered to lease the Petrol Station subject to (i) the completion of certain improvements referred to therein (ii) the termination of the Caltex lease without Caltex exercising its right to renew under clause 7 of its lease on terms, and (iii) the Plaintiffs providing an environment site assessment.
The terms offered were inter alia:-
(a)Term of the lease to be 10 years
(b)     Annual rental of $138,000 payable in 12 equal monthly instalments of $11,500.
(c)     Rent to be reviewed annually by the Lesser of CPI or 4%.
(d)     The Defendant to be responsible for installation of the LPG equipment including relocation of the storage vessel in alignment with eastern ingress.
(e)     The Defendant to install any additional storage tank at its own expense and such storage tank to be surrendered to the Plaintiff upon expiry of loan.
(f)     The Defendant to install and maintain all fuel dispensing equipment, kitchen equipment, all sales room and restaurant equipment.
The Plaintiff will refer to the said letter of offer for its full force and effect at the hearing of this action.”
In paragraph 6 the plaintiffs then go on to plead the following:-
“6.    On about the 1^st June 2000 at a meeting at Port Lincoln between the first Plaintiff and Bob Hicks, the Defendant offered to abandon the conditions precedent to the execution of lease referred in para 4 herein, and to execute lease commencing from 1^st August 2000 upon Caltex vacating the Petrol Station provided:-
(a)    the Plaintiffs completed site levels and compacted land so as to ensure uninterrupted operations of the Petrol Station.
(b)    The Defendant to have right to amend plans for development of Petrol Station site and inspected by Mr Hicks prior to the 16^th May 2000.
(c)    The Plaintiffs to carry out approved development plans expeditiously.
The Plaintiffs at the said meeting accepted the Defendant’s offer of the 16^th May 2000 as varied by the Defendant’s offer stated herein (“the said Agreement”).”
In its Further Amended Defence (9^th December 2003) the defendant pleads paragraphs 4, 5 and 8:-
“4.    As to paragraph 4 of the Statement of Claim the defendant:
4.1.   says that by letter dated 16 May 2000 it offered to lease the Petrol Station from the plaintiffs subject to:
4.1.1.the completion of certain improvements referred to therein by the plaintiffs;
4.1.2.the provision by the plaintiffs to the defendant of a satisfactory environmental site assessment in respect of the Petrol Station,
(“Offer”)
4.2.admits that the terms of lease offered by the defendant included those terms specified in sub paragraphs (a) to (f);
4.3.says that the Offer was subject to the following conditions precedent:
4.3.1.the termination of Caltex’s existing monthly tenancy of the Petrol Station; and
4.3.2.Caltex not exercising its rights under clause 7 of Memorandum of Lease Registered No: 7653236 (“Caltex Lease”.
…
5.As to paragraph 10 of the Statement of Claim, the defendant admits only that by letter dated 27 June 2000 it agreed the terms of a draft lease proposed by the plaintiffs (“draft lease”) except for clause 7.2 thereof. The defendant says that clause 7.1 of the draft lease required the plaintiffs and the defendant to acknowledge and agree that they had examined a copy of the Environmental Site Assessment appended to the lease prior to executing the lease.
….
8.The defendant says that:
8.1.   the plaintiffs did not complete the improvements referred to in the defendant’s letter of 16 May 2000 referred to in paragraph 4.1 above by 1 August 2000 or at all;
8.2.   the plaintiffs did not provide the defendant with a satisfactory Environmental Site Assessment in respect of the Petrol Station by 1 August 2000 or at all;
8.3.   no concluded agreement was made between the plaintiffs and the defendant for the lease of the Petrol Station;
8.4.   since at least 12 February 2001 Portlin No. 2 Pty Ltd (“Portlin”) has operated a petrol station on the Land;
8.5.   the first named plaintiff is a director and shareholder of Portlin;
8.6.   on 12 February 2001 Portlin entered into an agreement in writing with the defendant for the supply of fuel and petroleum products for a term of 5 years commencing on 10 March 2001.”
In its Reply to the Further Amended Defence the plaintiffs pleaded the following:-
“1.As to paragraph 4 and 8.2 of the Defence, the Plaintiffs say that the letter of the 16 May 2000 did not require a satisfactory Environment Site Assessment (ESA). Further, the parties waived compliance or in the alternative, the Plaintiffs complied with any condition by providing a report of Coffey dated 17 May 2000 and a report of 14 July 2000 in or about July 2000.
……”
I set out those pleadings because at the end of the day it appears to me as though the issues have refined themselves in deciding whether the conditions precedent and the offer of the letter of 16 May 2000 were waived or not. But along with that it is pleaded by the plaintiffs that even if they were not waived the documents provided and described as the “Coffey reports” fulfilled the condition precedent that an environmental site assessment be provided.
The earlier pleadings of the plaintiffs show inconsistencies with their final pleaded position. In the Further Amended Statement of Claim dated November 2002 there was no mention of the plaintiffs providing an environmental site assessment as being one of the conditions required by the letter of offer of 16^th May 2000 (Exhibit P2). It was not until the final pleadings that that condition precedent was both raised by the plaintiffs and waived. In the earlier pleadings of November 2002 the only condition precedents that were pleaded were the completion of certain improvements and the termination of the Caltex lease. It was also pleaded in the November 2002 pleadings that the requirement of completion of improvements was waived by the defendant at a meeting between Mr Whittle and Mr Bob Hicks at Carumag. This is to be contrasted with the final pleaded position where it said that the conditions precedent of completion of the improvements and the providing of an environmental site assessment were waived by a conversation which took place at Port Lincoln.
I point out those changes and difficulties in the pleadings for the purposes of making it clear that I do not use those difficulties as a means of casting doubt upon the credibility of Mr Whittle when he gave evidence. I never found Mr Whittle to be an untruthful witness and any of the problems he may have had concerning his giving of evidence in this case in my view is due to confusion and the difficult negotiations he was involved in during the period of this saga, sometimes without the assistance of a solicitor. I deal with the case on the basis of the issues that I have identified above. With the chronology of events as a background I turn to the plaintiffs’ case on liability.
Plaintiffs’ Case on Liability
Mr Albert Whittle gave evidence and called a number of witnesses as to various topics. Mr David Robinson was called to give evidence of an offer he had made for the property which is the subject of the action at a time that negotiations were going on between the parties. He gave evidence that that offer was rejected. A designer Mr Minas Makridis was called about work he did in contemplation of the lease. John Kenneth Wellington who was the solicitor for the plaintiffs during the period of negotiations gave evidence as to certain events and John Whitfield Parnell, who had an interest in the defendant Company nevertheless gave evidence for the plaintiff. I will deal with his evidence later but I hasten to add that he did not have direct involvement with the negotiations which are the subject of this action. Finally, an accountant Mr William Fudali was called in relation to damages. I deal with the evidence of Mr Albert Whittle.
With the undisputed facts set out as a background I remind myself of the main aspects of Mr Whittle’s evidence. He gave evidence that he purchased the roadhouse in May 1999. At the time Caltex had a lease and they in turn sub‑leased it to David Robinson. Mr Whittle and Mr Robinson planned to redevelop the site and needed a long term lease to do so. In early 2000 Caltex were only monthly tenants their long term lease having expired. Mr Whittle gave evidence that in late April 2000 or May 2000 he spoke to Bob Hicks with whom he was friendly and there was talk of the defendant acquiring a lease. Eventually an offer was received from the defendant for them to take a lease by letter of the 16^th May 2000. The contents of that letter (Exhibit P2) have already been set out. It was obvious that Mr Hicks was the contact person for the defendant in relation to the proposed lease and both Mr Whittle and Mr Hicks were keen to do business in the terms of the letter of 16^th May 2000. They eventually met on the 1^st June 2000 in Port Lincoln and a conversation took place which is vital to the issue of whether waiver of the conditions of the letter of 16^th May 2000 was made out.
When examined by his counsel on the topic of that conversation Mr Whittle gave the following evidence (transcript pages 49-58). I set out that evidence in full as it is of vital importance in this case:-
"QApproximately when did you meet.
AEarly June, about 1 June.
QWhere was it that you met.
AIn Port Lincoln.
QAnd whereabouts.
AIt was at the depot, I always met Bob at the depot.
QWhat happened at the depot then on that occasion.
AWe went over the proposition and what we might do for the future and I made it quite clear that in exactly the same way as I’d talked to Caltex that I would not be prepared to do any major development in –
QWhat did you say to Mr Hicks about that.
AAbout the development?
QAbout what you were not prepared to do or prepared to do in your reference to Caltex. What did you actually say to him.
AThat’s difficult, I remember saying that we wouldn’t do any major development and major development was really –
HIS HONOUR
QIf you can’t remember the exact words, just tell us the gist of what you remember on that topic.
AMajor development was very expensive.
QWe don’t want to know the reasons why at the moment, just tell us what was said between the two of you.
AThat we were not prepared to carry out any major development without a long term lease.
XN
QDid he respond to that.
AYes, he seemed happy and –
QHow did he convey that.
AHe said that he was comfortable with that position and we then went on to discuss the areas that might impact on them entering the site and they said they wanted to enter in the shortest possible time because continuation is very valuable to everybody in business.
QWas there any discussion on 1 June about when the defendant might commence occupation.
AYes, there was. It was 1 August 2000.
QHow did that arise. What discussion took place before that was agreed.
AWe needed to give Caltex one month’s notice but we were not to – that’s basically it, I said we couldn’t do it in a shorter time, but Bob also said they needed some lead time to prepare for pumps and equipment, so that’s about it.
QWas anything said about preparation and execution of documents.
AYes. Well the other thing that we actually agreed to do was, Bob and I discussed the – without disruption issue and we identified the forecourt as an area that would have to be done before they commenced operation because that was in a very poor state and we agreed to level and compact the forecourt of the property which was the area adjacent to the pumps.
QWas anything said about execution of a lease or a lease.
AYes, we agreed that we should execute a lease in the shortest possible time.
QAnd who was to prepare the lease. Anything said about that.
AWell I was using John Wellington at the time and of course it was assumed – we agreed that John would be the person that would put the lease together. There didn’t seem to be any objection to that.
QAt that meeting on 1 June 2000, what did you understand was agreed.
OBJECTION:     MR LANE OBJECTS
QWhat did you understand had been agreed.
AI agreed that we were to do business.
QWhat business.
AThat Parnells would enter the site on 1 August and that I was obligated to compact and level the forecourt and in due course to terminate Caltex’s monthly tenancy. They were the three things that we agreed to on the day.
HIS HONOUR
QThat’s what you understood the situation –
AI understood the situation to be.
QUpon what basis did you understand that to be the situation at that time.
ABecause there was no way in the world that I would commit to any development whatsoever unless I had a firm commitment for a date of occupation.
QNo, but what I’m getting at is, you came to that conclusion that that was the agreement. What led you to believe that and I know that’s what you wanted but what led you to believe that the other side were agreeing to that too.
ABob said he was happy with the situation.
XN
QWas anything at that meeting said about a future development and the issues that had been raised in the letter of 16 May.
AWith regards to the toilets, the building and environment?
QYes.
AYes, we were always quite accommodating. The size of the rent offered to us –
OBJECTION:     MR LANE OBJECTS
QIf you could just listen to the question, was anything said –
AI would answer yes.
Q– between either you or Mr Hicks about the other improvements other than the compacting and the levelling.
AYes, we discussed those.
QWhat did you discuss.
AWhat we actually discussed was that the restaurant area had to be enlarged and Bob had a free hand. I said that I would give Bob a free hand to design the building within the perimeters of the area that we defined which is the area we use today.
QIf you go back to the letter of 16 May 2000, P2, you will see that at the top of p.2 is a reference to improvements.
AYes.
QWas anything said about the realignment of eastern access site drainage.
AYes.
QWhat was said about that.
AThat was the only thing that Bob and I agreed that had to be done in the short term.
QWas anything said about sealing of the forecourt and driveways.
AYes, well that was to come in the process, that was not a prerequisite to enter.
QWas anything said about upgrading of toilets.
AYes, we discussed the toilets.
QWhat was said about that.
ABob mentioned a wheelchair access and this was no problem, we could do that easily but it was not a precondition.
QWhat was said about when that work would be done, if anything.
AWe sought information from the council and Caltex had operated the site in –
HIS HONOUR
QNo, but what was said about that.
AThat it was no great deal.
QSo this letter of 16 May 2000 was incorrect in these assertions 1, 2 and 3.
ANot necessarily – they were preconditions that perhaps they wanted but we didn’t agree –
QI’m sorry, I’ve put it wrongly.
AI’m confused.
QThey were not accord with what you thought the agreement was after your conversation before that?
XN
QThe conversation came later, so you got the letter.
AYes.
QMaybe if I could explain it this way, having received a letter of 16 May 2000, did you discuss the issue of improvements in your meeting of 1 June.
AYes.
QDid you reach an agreement with respect to the issue of improvements on 1 June with Mr Hicks.
OBJECTION:     MR LANE OBJECTS
HIS HONOUR
QThese suggested conditions upon entering into the lease by Parnell Mogas on 16 May 2000 – the 1,2,3 here – were they spoken about when you met at the site that time.
AYes.
QWhen you spoke about those was it made clear that some of these would not be preconditions.
AYes, Bob understood that.
QYou understand that.
AYes I understood it and Bob did too.
QSo the point I’m trying to make is that this letter here is not really in accord with those conversations.
AI don’t understand.
XN
QHaving received the offer of 16 May 2000 did you then discuss the issue of improvements referred to in that offer with Mr Hicks and in meeting of 1 June.
AYes.
HIS HONOUR:           What I want to know and I’m probably unreasonable wanting to know it is that the difference between the first conversation at the site and this letter. Can you explore that for me?
MR WALSH:              That’s going back to the first conversation.
HIS HONOUR:           Yes.
MR WALSH:              Well there were no conditions.
HIS HONOUR:           He just said there were, they talked about it.
XN
QDo you remember your first discussion with Mr Hicks, the first time you met him.
AYes.
HIS HONOUR:           Let me interrupt, I’m terribly sorry. What we’ve got here is a letter saying what his position is. Now rightly or wrongly I’d like to know what was discussed about that position before the letter came along and whether this letter was different than those discussions. That’s all I want to know.
MR WALSH:              I see.
XN
QBefore you received the letter of 16 May 2000 had you discussed with Mr Hicks any conditions with respect to improvements.
AConditions to comply with?
QYes.
ANo. We had a general discussion – all of these items here were the site inspection. These were the items that were identified that was in 16 May offer that needed to be attended to.
QSo just going back then –
HIS HONOUR
QTheses items 1,2 and 3, had you discussed those before you got this letter.
AYes. On site.
QOn site yes. Now when you discussed those before you got this letter, they were not all preconditions.
ANo.
QSo that letter in a sense doesn’t really represent your discussions on site because here they’re preconditions aren’t they according to Morgan –
AThat’s basically as I see it.
XN
QHaving received the letter then on 16 May 2000 did you discuss the issue of the conditions and improvements on 1 June.
AYes.
QI know you’ve given some evidence about this but just to put it back into context, what was said about what improvements would be undertaken.
AFor occupation?
QYes.
AThe improvement that was agreed to by myself was that I would level and compact the forecourt.
QAnd when was that to be done.
AThat was to be done before Parnell’s occupation.
QAnd was anything said about other improvements.
AI told Bob that we had Minus Makridis of Carumag as our designer, site planner whatever, and Bob agreed that it would be best for him to meet with Minus, and I gave Bob a free hand to draw to his discretion the internals of the building. He mentioned to me that we would need additional amount of seating which was something like 20, and he had visions of the way they would have a service station that would operate. I had no objection because we were looking at a 10 x 10 period in somebody’s operations. I didn’t want to impede on that.
QAnd as far as those other improvements were concerned, what was said at the meeting of 1 June 2000 if anything about when those improvements would be undertaken.
AThere was no time limit on them. As soon as possible, I mean we all wanted to complete the project.
QWhat was said about occupation and the date of occupation of premises if anything by Parnell.
ABob suggested that 1 August would suit them.
QDid you respond to that.
AI said I was happy with that.
QWas anything said at that meeting of 1 June about Caltex.
APart of the discussion was that we would have to terminate Caltex’s lease.
QWas anything said about the topic of LPG equipment.
AYes. Bob said that there was necessary leave time to get – the place whatever the LPG tanks, the whatever – because see what actually – am I allowed to expand?
QYou just tell us what he said about it if anything.
AHe identified that the LPG tanks that were on the site were in the wrong place, because they interfered with the realignment of the eastern entrance which they wanted to open up.
QSo what was said about that topic then.
AWe just said well you’ll have to pick a place where you think’s best.
QWas anything said about the issue of underground fuel tanks.
AYes, they wanted the use of those tanks, but they would make good any tanks during the course of their occupation, they would make good on those tanks and replace them if the need grows.
QNow anything on the topic of fuel dispensing equipment.
AParnell’s would always own their own site dispensing equipment and Caltex own theirs. That was to be removed on the day Caltex vacated which happened anyway.
QSignage, what was said if anything about that.
ASignage, they would undertake to do all the signage, that’s a Mobil thing.
QAnd kitchen equipment.
AKitchen equipment, they would provide kitchen equipment.
QSalesroom and restaurant.
AThey would undertake to do all of that.
QDo all what.
AWe were to provide the area of around 60 sq m. That’s why I gave Bob the free hand to do the design as he so desired.”

Treating that meeting of the 1^st June 2000 as a discrete topic I turn to Mr Whittle’s cross-examination on that topic (transcript pages 213-219):-
"QGo back to the letter of 16 May at p.4 in MFI P1. Do you have that, p.4.
AYes.
QAt the top of p.2 there are three specified improvements that were said that had to be completed before Parnell Mogas would enter the lease, aren’t there, in that letter.
AYes.
QWhat do you say Mr Hicks abandoned on 1 June at the meeting you had with him in Port Lincoln, in relation to improvements.
AImprovements to enter or to complete? To enter the site or complete?
QTo enter the site.
ATo enter the site; I say that we agreed to terminate Caltex, realign and compact and level the fore court and provide an environmental assessment or report.
QIs that all that you say he offered to abandon.
ATo enter the site we are talking now?
QYes.
AThat is as I remember it.
QLook at para. 2. Did he still require that the toilets were to be upgraded before they entered the lease.
AThey were upgraded toilets there.
QDid he agree to abandon the requirement that the toilets had to be upgraded before they entered the lease.
AThere was no requirement to change anything on that site as an existing operation. We discussed each and every one of those issues and anything that Mr Hicks would have required to enter that site without disruption would have been completed. We discussed it even with the builder, there were – the disabled toilet piece was not a requirement to enter that site. I think there is a letter from the council at some stage.
QDid Mr Hicks, at the meeting on 1 June, say to you anything like this ‘Parnell Mogas is prepared to abandon the requirement of the following things’.
ANo.
QDid he say that they would abandon anything as a requirement.
ATo enter or to?
QTo enter the lease.
AWell, it was technically impossible to carry out the entire list –
QMr Whittle, please answer my question. Did he offer to abandon anything as a pre-condition to entering into the lease.
AThe upgrading of the site was not a pre-condition to enter that site, only those three issues that we discussed.
QLet me start again. Look at p.2 of the letter of 16 May. Do you understand what it means when it says ‘Parnell Mogas will enter the lease subject to the following improvements being completed’. Don’t worry about what they were, do you understand that sentence.
AYes.
QIt means doesn’t it, that provided the specified improvements were completed Parnell Mogas would enter the lease.
ABut I don’t think that’s what we discussed on the 1^st.
QIs that what it says.
AIt does say that.
QDid Mr Hicks ever say to you words to the effect ‘I no longer require each of those three specified improvements to be completed’.
APrior to entering?
QPrior to entering the lease.
AI believe that we never pursued the necessity for it to be completed.
HIS HONOUR
QThat is down on paper you see that they have to be completed. When did he change the situation.
AOn 1 June.
XXN
QWhat did he say.
AWhen we walked and talked the site we were familiar with, both of us, that the realignment –
QI am sorry, I am talking about –
AI am confused myself now.
HIS HONOUR
QIt is pretty simple actually you see; it is written down here in this letter that certain things have to be done before –
AI thought we agreed on the 1^st.
Q– before you can enter into the lease, that is written in that letter.
AYes.
QWhat Mr Lane wants to know is if and when was that changed.
HIS HONOUR: Is that right Mr Lane?
MR LANE: That will be do for starters.
AI believe we changed it on 1 June.
XXN
QThat meeting on 1 June was in Port Lincoln wasn’t it.
AYes.
QNot at Port Augusta.
ANo.
QAt the meeting on 1 June what did Mr Hicks say, if anything, about the way in which he was prepared to change what he had put in this letter about improvements.
AWhat, in the short term or the long term?
QBefore he would enter the lease.
AThe realignment, from my understanding, was to terminate the Caltex amendment, realign the eastern entrance, level and compact and drain the fore court.
QI am sorry, I have asked you what did he say he would no longer require.
AThe upgrade of the building, in the short term, but the council approval had to be got, it was impossible to do that before the 1^st for the lease.
QIs that the best answer.
AI am confused.
HIS HONOUR
QI accept all that. I just want to make it nice and clear for you if Mr Lane isn’t. That says certain things have got to be done before you enter the lease.
AYes.
QYou say those things didn’t have to be done.
AYes.
QMr Lane is asking you about the details of how you were told that that wasn’t to be done, needn’t be done.
AI thought that was between Bob and I who sat down and we would satisfy them to enter without disruption.
XXN
QWhat his Honour needs to understand is what was discussed between you and Mr Hicks on that topic. You do your best to tell his Honour on 1 June at Port Lincoln what was discussed.
AMy recollection of the day was that it was quite urgent for Parnells to take up the site, they expressed a lot of enthusiasm, we realised that, and the upgrade and lots of discussions were taking place. There were plans and all the other things. What we agreed to in principle on the day and we highlighted the issues that would allow them to take over the existing operation, you know, whether they take the staff which was offered to them, the buildings was offered to them, the plant was offered to them and there was three or four items that we identified that the fore court was a hell of a mess, the eastern entrance had to be realigned. We discussed the toilets but we found out there was no regulation because it was an existing building, it only had to be changed once the building was remodelled. Now we discussed with the builder to put in a disabled ramp to the new existing ablution block, which had been purchased the year preceding and that’s it as far as I can remember. We then pursued all the other issues –
QIs that all you can remember that was discussed between you and Mr Hicks at the meeting in Port Lincoln on 1 June.
AYes. I didn’t think it was a great deal of concern really just that we were proceeding.
QIs there anything else at all that you can remember you and Mr Hicks discussing at that meeting.
AWell, we were to provide the environmental report, which I believe was part of the deal.
QWas that discussed at the meeting on Port Lincoln, 1 June.
AYes, I believe we were just to supply the one that was supplied to us in May.
QDid you hear my question.
AI am confused, I must confess I am confused. I can’t get really right down to what we are trying to achieve here.
HIS HONOUR
QWhat Mr Lane wants to know is this. In a letter which we have talked about for several hours now, 16 May 2000, Mr Hicks says in that letter, which he has written and signed, his mob will only enter into the lease if certain things are done all right, 1, 2, 3; we have been through that a thousand times.
AYes.
QYou now say that was all changed on 1 June.
AWell, we were pursuing it.
QHang on, that was all changed on 1 June. What Mr Lane wants to know is how you were told that was changed. How was that communicated to you that was changed. What was said.
AIt didn’t seem to be a prerequisite to enter the site.
QBut there was that letter.
AI understand that letter but I thought the letter of the 9^th went on to deal with the letter of the 1^st. The letter of 9 June went on to respond.
XXN
QDon’t worry about the letter of 9 June, what I want to assist his Honour to understand is what was discussed at the meeting in Port Lincoln on 1 June as to the way, if at all, anything written in Mr Hicks’ letter was to be changed.
AI thought we answered this in such a way that we were to proceed with all of the developments and all of the other business in time but they were to take over the existing site with those few agreed outcomes on the 1^st and we were to go to the council, everybody. I mean, that was, he was to meet with Carumag, he was to do all of those things and they were just going to take up the existing site on 1 August, on the issues we agreed to carry out the three or four improvements so they could actually enter the site. We were then to proceed to get the council approval, all of the other things in due course.”
That evidence is to be contrasted with the evidence of Mr Hicks which I will turn to later. I continue with the summary of the important factors of Mr Whittle’s evidence.
He then gave evidence that he received the fax of the 9^th June 2000 from the defendant (Exhibit P3) and instructed Mr John Wellington of Bonnins to prepare a lease to be forwarded to Mr Hicks. He then gave evidence that he instructed his solicitor Mr Wellington to amend the lease reflecting the instruction that Parnell Mogas would not accept responsibility for prior contamination. He then instructed Mr Wellington to terminate the Caltex lease which was done and the reason he did that was because he had considered that the meeting of the 1^st June 2000 amounted to an agreement.
He then gave evidence that he engaged the company of PA & CI Martin to carry out the work of the delivering and compacting of the forecourt and this cost around $77,000 and that was done as a pre‑condition of the lease. He gave evidence that he contacted Bob Hicks to tell him that he had terminated the monthly tenancy with Caltex. He then said there was an agreement reached between the two of them but because of difficulties with Caltex they could delay their departure from the 31^st July 2000 to the 6^th August 2000. It was also indicated by him that the compacting work would be finished by the 6^th or 7^th August 2000. That was in fact done. Mr Whittle gave evidence that other than the work done on the forecourt further work was done by PA & CI Martin for drainage and levelling of the site. He gave evidence that the levelling and compacting work was done to comply with the conditions of the agreement of the 1^st June 2000. The other drainage work was done because it was part of the 16^th May letter because he felt he had an agreement to proceed and to complete the project. He also gave evidence that on the 1^st June 2000 after his discussion with Mr Hicks it was agreed that that work would be done after the execution of the lease but before the defendant had taken possession.
He was then asked questions on the question of an environmental site assessment and I turn to that topic.
Environmental Site Assessment
Mr Whittle gave evidence that he was given a copy of the Coffey report dated the 19^th May 2000 which had been provided to Caltex. He said he was provided with that in early July 2000. He said that he sent that onto Bob Hicks in the middle of July 2000. He gave evidence that he got a further Coffey report dated the 2^nd August 2000 which had also been provided for Caltex Australia Ltd and he said that he passed that also to Bob Hicks on the 2^nd August 2000. He was asked the following questions (transcript pages 85-86):-
"QAre you able to help his Honour as to what your understanding was as to why this report was being provided on 2 August.
AThis report here is a response to a concern by Parnell to the environmental health of the site. I didn’t fully understand that there was a problem but they kept saying that the report was not sufficient. On 1 August, Bob Hicks, myself and I think the man now is called Huxtey Lawler of Coffey’s. I had a meeting in Coffey’s office. I’m sure Simon Capels came from Caltex as well and we discussed what might need to take place to satisfy Parnells of the environmental health of the site. The one thing that everybody kept talking about was that we had seemed to have exhausted the work outside of the building but because the small contamination – the identified contaminated area was at the front of the building, there was a health risk concern for the internal part of the building or the occupants that occupied the building. But we were never prepared to release Caltex, so they – Simon Capels agreed to carry out additional ground monitoring – internal monitoring, I think they called it or something.
QWas this report, as you understood it, the result of that.
AYes.”
He then gave evidence that he received a report from Coffey dated the 30^th August 2000 and handed that on to Parnell Mogas because they seemed concerned about the health of the site. On the topic of the environmental site assessment Mr Whittle was asked the following questions in cross-examination (transcript pages 173-174):-
"QWhat I want to suggest to you, towards the ends of July 2000 you were told by Mr Hicks words to the effect that Parnell Mogas required a summary of the conclusions that could be gleaned from the reports that were prepared by Coffey Geosciences.
AYes.
QDo you agree with that.
AI agree with that.
QAnd they required it because the issue of the environmental condition of the Andy’s Truckstop site was a very important issue for them.
AI agree with that too.
QIt remained an important issue for them for some time even after 27 July 2000, didn’t it.
AUntil the additional report, the work that was carried out.
QIt did remain an issue for some weeks after 27 July.
AYes, for four weeks.
QI also suggest to you that, because 1 August 2000 was fast approaching, you were getting concerned that this environmental issue still had not been resolved.
AFrom my point of view I believed it was, from their’s it wasn’t obviously.
QBecause they were concerned, you were concerned.
AAbsolutely. We needed to try and resolve it.
QYou required it to be resolved urgently.
AYes.
MR LANE:For your benefit and my learned friend those last few questions have been directed to the middle of the first page of Exhibit D54, the paragraph commencing ‘What I need’ and the last sentence over the page on p.139.
XXN
QAt no stage leading up to 27 July 2000 had Mr Hicks ever said to you anything to the effect that the environmental condition of this site was not important any more, had he.
AI believe we all understood it was important.”
I return to the summary of his evidence. On the topic of the letter of 3^rd August 2000 he said that even though that appeared to be a change of direction by the defendant he still continued with the process of talking to Mr Hicks and undertaking works because he was desperate and he was trying to comply with the defendant and nobody had actually said the matter was finished.
Mr Whittle gave evidence that from the 3^rd August 2000 onwards although he was committed to the project of leasing to the defendant he still had two or three other options. One in particular was a discussion with the previous person who had been running the service station namely David Robinson. When he informed Mr Hicks of that conversation his evidence was that he was told that that was not an option because they were committed to taking over on the 6^th August 2000. He gave evidence that eventually he entered into a fresh agreement with the defendant as part of a company called Portlin Ltd No. 2 to run the site and be supplied by the defendant.
Mr Whittle after having completed his evidence-in-chief was recalled to give further evidence about a discussion with Mr David Robinson on the 12^th June 2000. He said that Mr Robinson made an unconditional offer of $650,000 to buy the freehold and the business which is the subject of this action.
He then gave evidence that on about the 13^th June 2000 he discussed this offer with Mr Hicks who was away, they talked over the phone and he gave this evidence on that topic (transcript pages 383-384):-
"QOnce he communicated that offer what did you do.
AAt the time I thought about it, it was very attractive. My wife said ‘Sell it’ and I said ‘Well, I really need to discuss this with Bob Hicks’, who I believed we had reached an agreement with on behalf of Parnell. So I rang Bob and I said ‘Bob, we have this very attractive offer’ and that we would consider it but he said – and I said ‘Well, it was unconditional.’ We spoke in detail and I said to him that I was prepared to release them from any obligation that we might have and his response to me was that they were committed to take the lease on 1 August.
QCan you recall when it was, approximately, that you had this discussion with Mr Hicks.
AAround about the 13^th or something like that. I think he was away somewhere, I’m not sure, so it was a little hard to get on to him.
QHow did the conversation take place, was it face-to-face or over the phone.
AIt was a phone conversation.
QIf Mr Hicks had said to you at that time that Parnell Mogas were prepared to allow you to proceed in dealing with Mr Robinson would you have.
AYes. My wife wanted to sell it. My wife had had enough of the oil industry quite frankly. She wanted to sell the site but I believed, because I knew John Parnell very, very well over a period of 15 years and I really thought I was dealing with Parnell Mogas, I’m not that fond of large oil companies, but individuals I am. I had had a bad experience early.”
I do not wish to traverse the detail of Mr Whittle’s cross-examination and I have touched on some of it already, in particular the question of waiver as it related to the conversation of the 1^st June 2000, and the question of the environmental site assessment.
When cross-examined about the letters of the 17^th November 2000 (Exhibit P31) and the 20^th November 2000 (Exhibit P32) Mr Whittle gave the following evidence (transcript pages 254-256):-
"QIn effect – you correct me if you think this is an unfair summary, then, of the position that you were seeking to convey to Parnell Mogas on 17 November – you recognised that they had a choice whether or not they wanted to proceed with their negotiation with you, and you gave them until 4 o’clock on the Wednesday 22 November to advise what they were proposing to do.
AI would have to say that would be fairly accurate, yes.
QAnd, indeed, they did respond within five days, didn’t they.
AYes.
QAnd if you go within MFI P1 to p.156 to Exhibit P32, that is a letter of 20 November sent to you by Mr Hicks.
AYes.
QAnd you received that letter.
AYes.
QAnd he explicitly said that he was responding to your letter of 17 November.
AYes.
QAnd then went on to say that they couldn’t respond within the five days that you required.
AYes.
QAnd then they went on, I suggest, in the third paragraph, to convey to you that they were still interested but they needed more time.
AYes.
QAnd then, in the fifth paragraph, yet again Parnell Mogas confirmed to you, didn’t it, that you were free to explore other options.
AYes.
QThey were in no way holding you to any binding arrangement.
ANo.
QYou had told Mr Hicks again, I suggest, that there were other parties interested in leasing the premises.
AWell, the same people were around.
QThat’s right, but you were holding out the hope, weren’t you, that you could still do a deal with Parnell Mogas because, for you, they were the most attractive of the prospective tenants.
AWe’d done all the groundwork; that’s what we’d done. We’d proceeded to do the groundwork over six months or more.
QBut the fact of the matter is, isn’t it, that you were still holding out the hope that you could come to an arrangement with Parnell Mogas because they were your preferred prospective tenant, ahead of the others who were interested.
AYes.”

On the question of required improvements as set out in the letter of the 16^th May 2000 (Exhibit P2) Mr Whittle in cross-examination was referred to the letter of the 17^th November 2000 (Exhibit P31) and asked the following questions (transcript pages 249-252):-
"QThe first two lines of that letter indicate that, as at 17 November, you believed that approval and certification for the rebuild was then complete.
AI believed so, yes.
QYou then go on to say ‘This is the final request in your letter of offer on May 16 2000’.
AYes.
QThe letter of 16 May did not talk, did it, of council approval in respect of the redevelopment; it talked about certain improvements being completed.
AYes.
QSo for you to say, in this letter of 17 November, that having got approval that that constituted the final request in Parnell Mogas’s letter of 16 May was incorrect.
AI would have to say that is correct; I would probably say yes to that.
QYou were then, as at 17 November, looking at a prospective opening date of 15 January 2001.
AYes.
QYou went on in that letter of 17 November to tell Parnell Mogas that they, effectively, had five days from the date of this letter in which to indicate their intent.
AYes.
QCould you go to the third paragraph of that letter. I want to you read that to yourself please.
AYes.
QIn second line of that paragraph it refers to the fact that ‘construction is in process on the new toilet block’.
AYes; we got approval for that earlier.
QCompletion of the upgrading of the toilet was the second of the conditions set out in the letter of 16 May, wasn’t it.
AThere was a new block of E-Mac toilets there because Parnell purchased them to take them on to the site, so that was there.
QThe upgrading of the toilets was the second of the conditions referred to on Parnell Mogas’s letter of 16 May, wasn’t it.
AYes.
QThe upgrading had not been completed by 17 November, had it.
AOnly the access, which was not a requirement to operate the existing facility.
QThe upgrading of the toilet had not been completed by 17 November.
ANo, it wasn’t required.
QThe upgrading of the toilet –
AOkay, I agree with that.
QYou agree that that is correct.
AYes.
QDo you see then, and I am still focusing on the third paragraph, you speak or you refer to ‘The final planning meeting is scheduled for Thursday 23 November 2000’.
AYes; that was the layout of the building, basically.
QSo there were still issues of a planning nature that had not been determined as at 17 November, weren’t there.
ABut that was only between Bob and I.
QThere were still issues of a planning nature that had not been finalised by 17 November.
AYes.
QDo you recall that the third of the conditions that are referred to in the letter of 16 May required that there be completion, before Parnell Mogas entered the lease, of the integration of the newly installed office into the main building, which was to include an additional restaurant seating for 20 people.
AYes.
QAnd provision for approximately 60 metres of sales room.
AYes.
QBy reference to your letter of 17 November, do you agree with me that the earliest date on which the commencement of the construction of the restaurant and the showroom could occur was 30 November.
AYes, I would say that.
QYou, then, received a response, didn’t you, in due course.
HIS HONOUR
QThere is an argument of course, between you and the defendant about whether the conditions set out in the letter of 16 May were either complied with.
AYes.
QBut looking at those conditions set out on 16 May, to get those things done that all needed council approval.
AYes. But I mean the building, whatever, yes.
QSo if you didn’t get council approval you wouldn’t get to do it.
ANo.
QWould you start the work on something like that without council approval.
ANo, but we did get provisional –
QNo, would you start the work without council approval.
ANo, not on the actual building work.
QWhen we go back to the letter of 17 November you then re-assert that the letter of 16 May – reading that letter quite literally – you go back to 16 May and you say it is a binding arrangement.
AYes.
QWhen you talk about the approval and certification for the rebuild of Port Augusta truck stop are you talking about council approval.
AYes.
QAnd are you talking about council approval of these three things set out in the letter of 16 May.
AYes, well the building and whatever, yes.
XXN
QAs at the date that you wrote that letter, namely 17 November 2000, I suggest to you that in your own mind you still thought that Parnell Mogas had a choice whether to proceed with the lease or not to proceed; do you agree with that.
AI would have to say that’s possible, yes.
QAnd that’s why, in that third paragraph of the letter of 17 November in line 5, you said ‘Should you wish to proceed with your letter of offer and an agreement is reached you are invited to attend the final planning meeting’, et cetera.
AYes.
QThat is only consistent, isn’t it, with you as at 17 November recognising that they had a choice whether or not they wanted to proceed with their letter of offer.
AI would say yes.”
By way of summary I deal with the rest of the plaintiffs’ case on liability.
Mr David Robinson was called and gave evidence that in mid‑June of 2000 he made an offer to purchase the property which is the subject of this action from the plaintiffs. He gave evidence that he spoke to Mr Whittle in relation to that and offered him $650,000 for the pre-freehold premises, including the business. He gave evidence that after thinking about it for sometime the plaintiffs did not wish to take the matter any further.
The plaintiffs also called John Wellington who for periods of time was acting for him in relation to these negotiations. He gave evidence consistent with his role in the chronology of events. He gave evidence of preparing and sending to the defendant two draft leases. One was sent on 21^st June 2000 (Exhibit D59) and later a draft lease was sent on the 4^th October 2000 by him to the plaintiffs (Exhibit P28). It was conceded that in both of these draft leases there was an equivalent clause (section 7.1(b) of Exhibit D59 and 7.1.2 of Exhibit P28) both of which were sent to the parties in order that they examine a copy of the environmental site assessment attached prior to executing the lease. In neither case was such a report attached.
The plaintiffs called Mr John Parnell who at the time of the transactions which are the basis of this claim had an interest in the defendant Company. He said that in relation to the dealings between the defendant Company and the plaintiffs, Mr Bob Hicks had authority to speak on behalf of Parnell Mogas. He also said that Mr Hicks had authority to commit Parnell Mogas to a lease starting on the 1^st August 2000. He gave evidence that as far as he was concerned the Company were prepared to execute a lease. However, he concedes that in his position he was not concerned with what he described as the “bits and pieces” of the negotiations (transcript page 397). It is clear from his evidence that Mr Hicks had authority to negotiate the lease and bring it to a conclusion however it is also clear that Mr Parnell knew very little of the details, the only significance in his evidence is that the defendant Company was willing to enter into a lease with the plaintiffs. I can take no more from his evidence than that.
A final witness called by the plaintiffs on liability was Minas Makridis who was associated with the company of Carumag Corporation Pty Ltd which was involved in the drafting of plans. He gave evidence that in the year 2000 he did work for the plaintiffs in relation to the Truckstop. He gave evidence that he was asked by Mr Whittle to contact Mr Hicks in relation to some plans. He gave evidence that at a meeting on the 5^th June 2000 he spoke with Mr Hicks concerning work to be done on the Truckstop. He said there was still contact between himself and Mr Hicks after the 6^th August 2000 indicating that negotiations were still continuing regarding changes to the Truckstop. His evidence was not disputed. I turn to the case for the defendant on liability.
Defendant’s Case on Liability
The defendant called three witnesses. Robert Graham Hicks who it is agreed spoke on behalf of the defendant in relation to all negotiations which are the subject of this action. Mr Adrian Hall who gave expert evidence as an environmental consultant on the topic of whether the Coffey reports could be described as environmental site assessments. The defendant also called Mr Brenton Wayne Ellery in relation to damages.
Mr Hicks gave evidence that he had been employed by the defendant Company for over 8 years as Marketing Manager. He said that his General Manager was Mr Greg Patten. He gave evidence that he first met Mr Albert Whittle in February 2000 and at that time Mr Whittle had approached Parnell Mogas asking whether they would be interested in doing a deal involving his service station at Port Augusta. Mr Hicks then started negotiations with Mr Whittle. They first met at Port Lincoln in February 2000 and it was made clear that Mr Whittle was interested in giving a lease to the defendant because Caltex did not seem to be interested in any further plans or expansion. He gave evidence that whenever his Company was interested in acquiring a site for leasing, that environmental status of the site was always a prerequisite. He then gave evidence of sending the letter of the 16^th May 2000 to Mr Whittle (Exhibit P2). He gave evidence that leading up to the sending of that letter there were a number of discussions culminating in the terms set out in that letter. He gave evidence that he met Mr Makridis during the time of these negotiations and there was a discussion about the proposed development. He gave evidence that he prepared and put a proposal to the defendant Company for the leasing of the site in April 2000 (Exhibit D74). That proposal was submitted to a Mr Greg Patten for review and was to be provided to the Board of the defendant Company. Mr Hicks was then given the authority to proceed with the matter culminating in the letter of the 16^th May 2000 (Exhibit P2).
Mr Hicks then gave evidence of a conversation, already referred to, which he had with Mr Whittle on 1^st June 2000 at Port Lincoln. This conversation of course is (on the pleadings) the basis of the plaintiffs submission that conditions were waived. By reference to notes which were made at the time by Mr Hicks he gave the following evidence (transcript pages 535-538):-
"QCan you tell his Honour, by refreshing your memory from those notes, the effect of the discussion you had with Mr Whittle on that occasion.
AThe meeting Mr Whittle wanted was to discuss a proposed development he was putting to Bridgestone to relocate from the shed at the rear of the site to a new purpose-built facility with greater visibility, improved access.
QDid he tell you where he had in mind building this new Bridgestone facility.
AYes, it was on that vacant paddock and it’s indicated on my drawing there.
QBy looking at p.291 in MFI D53, could you mark in blue biro where Mr Whittle told you he had in mind this building being constructed. In relation to that topic, what, if anything else, did Mr Whittle say.
AMr Whittle was aware and he might have been –
QYou can only tell his Honour what Mr Whittle told you.
AMr Whittle told me that he was aware that Parnell Mogas had also been negotiating with Bridgestone about a potential truck tyre facility and that he requested that I give an undertaking we would cease future negotiations with Bridgestone so that they would go ahead with his site. That’s what Mr Whittle told me.
QWhen he said that to you, what did you say in response.
AI told Mr Whittle that there was no way that I had the ability or the right to say that the company wouldn’t continue discussions with Bridgestone and that the proposed development for Parnell Mogas on the western side was proceeding and Bridgestone were a part of that proposed development.
QDid Mr Whittle say anything in response to that reply by you.
AIt is my recollection that Mr Whittle believed –
QOnly tell us –
AIt’s my recollection that Mr Whittle was going to put his offer and that his site was a better location and would suit them better.
QDid he tell you that.
AIt wasn’t hostile or argumentative. It was quite a friendly conversation. I just made Mr Whittle very aware that I couldn’t say Parnell Mogas wouldn’t continue to negotiate with Bridgestone.
QBy refreshing our memory from your notes of that conversation on 1 June, can you tell his Honour what, if any, other topics were discussed on that occasion.
AFrom my notes, I see that Mr Whittle told me that the lease document was going to be available for Parnell Mogas by 30 June and I can see by the reference to minutes that I had to contact Mr Makridis and tell him how many male showers and toilets we required as cubicles and that I was to see him on the next Monday at 9 a.m.
QDid you, in fact, see him on the following Monday.
AYes, I did.
QWhere was that meeting.
AThat was at Mr Makridis’ office in Currie Street.
QApart from those topics that you have told his Honour were the subject of discussion between you and Mr Whittle at that meeting in Port Lincoln on 1 June, were there any other topics discussed by the two of you.
OBJECTION:     MR WALSH OBJECTS.
MR WALSH:              The witness has already said to your Honour that he has no recollection of anything said, other than what is contained in his notes.
HIS HONOUR:           Mr Lane asked that question and that will probably be the answer but he can still ask the question.
XN
QWere there any other topics that you can recall being discussed, apart from those you’ve told his Honour about.
AI have no recollection of any other topics being discussed.
QDid you, at that meeting on 1 June in Port Lincoln, say to Mr Whittle words to the effect that Parnell Mogas was abandoning, as a condition of its offer to lease the site at Andy’s Truckstop, the requirement for an ESA to be provided prior to the execution of a lease.
ANo.
QAt that same meeting, did you tell him that Parnell Mogas was abandoning its requirement for those improvements specified on p.2 of your letter of 16 May to be completed; that Parnell Mogas would abandon that as a condition.
ANo.
QDid you, on any subsequent occasion, ever tell Mr Whittle that Parnell Mogas had abandoned the condition relating to the environmental site assessment.
ACertainly not.
QIn relation to the completion of the improvements, did you ever subsequently tell him that Parnell Mogas had abandoned that as a condition of its offer.
ANo.”
He then gave evidence that discussions continued from then onwards over the next period of time in relation to improvements. He gave evidence that he received a copy of the report from Coffey Geosciences Pty Ltd and sent that report (dated 14^th July 2000) to PPK who are a company they use for environmental assessments. He gave evidence that he received a letter from Dr Peter Woods (Exhibit P9) concerning the Coffey Geosciences Pty Ltd report of the 14^th July 2000 in which a certain caution was recommended. He gave evidence that when he was in the Northern Territory in late July 2000 a further Coffey report was received by the defendant Company, dated the 19^th May 2000 and he instructed his staff to have it couriered to PPK.
By reference to notes Mr Hicks gave evidence of a telephone conversation he had with Mr Whittle in late July 2000 after he had come back to South Australia from the Northern Territory. This conversation is before the letter of the 3^rd August 2000 (Exhibit P20) was sent from the defendant to the plaintiffs. I set out his evidence on that topic (transcript pages 580-585):-
"QCan you tell his Honour, by reference to those notes, what topics were discussed and as best you can now recollect with the assistance of those notes, tell him what was said by each of you and Mr Whittle on the various topics. If I could invite you, with a view to assisting his Honour, if you could identify a topic and then tell us what was said and then when you are ready to move to another topic tell us and then tell us what was said on that topic.
AI note point 1 says ‘40 KL, 20 KL abandoned in 1986’ that would refer –
OBJECTION: MR WALSH OBJECTS.
MR WALSH: It is better that the witness should refresh his memory and then say what were the topics, rather than simply reading out what is in the note. Because otherwise that means all we are getting is simply the note.
HIS HONOUR
QThe object of this exercise is you have got some notes before you about this conversation. Obviously it hasn’t got all of the conversation that down. What you are allowed to do is, by looking at those notes, relate that conversation. Even though what you might say is not in the note itself, but if that note brings about a memory of that conversation you can tell us about it. Do you understand that.
AYes.
XN
QWhat was the first topic that was discussed.
AInitially it was discussed the existence of two abandoned underground fuel tanks at the site, what was the status and what remediation had taken place with those site tanks.
QAs to that topic what did Mr Whittle say.
AI was told there were two tanks that had been abandoned, that if they had to be removed it would be at Caltex’s expense. And there wasn’t a problem unless if there was a problem identified it would be fixed by Caltex.
QIn response to that, what did you say, if anything.
AI just noted down those things. I was looking to clear up the situation of the lack of the environmental site assessment.
QWas that all that you can now remember was said on that topic.
AIn relation to the abandoned tanks, I don’t remember anything else being suggested.
QWhat was the next topic that was discussed.
AThe next topic was the information that the company would provide Mr Whittle regularly to show that any fuel tanks that were in use at that stage were being regularly monitored, and if there was any variation from the physical stock and the calculated stock, that would be investigated and he would be informed.
QDid you tell Mr Whittle that.
AI told Mr Whittle we would provide that information.
QDid he say anything in response to that.
AI assume Mr Whittle took that as – no, I don’t remember him directly saying anything. I believed he was reassured that we would give him that information.
QWhat was the next topic that was discussed.
AAny remedial work that was required at the site.
QWhat was said on that topic.
AIt was – Mr Whittle assured me that any remedial work that was required in relation to any prior contamination would be cleared up at Caltex’s expense.
QDid you say anything in relation to that topic.
AI don’t remember directly saying anything at that stage.
QWhat was the next topic that was discussed.
AIt was discussed that Peter Martin, who is an earthmoving contractor at Port Augusta, had been contracted to commence work on the site shortly –
QWho was saying this.
AMr Whittle was telling me that Mr Martin would be doing the work to realign the driveways and the earlier site works discussed.
QDid he tell you what was the nature of the work that Mr Martin would be doing.
AHe told me there would be excavations, concreting, laying of bitumen.
QIn response to that, did you say anything.
AI remember saying to Mr Whittle that I thought it was strange that he would spend all the money on the site before it was determined whether there had to be any remediation work carried out.
QCan you elaborate on that for his Honour’s benefit.
AIt seemed strange to me, before the conclusion of the site – environmental site assessment – and any remedial work required, that someone would seal the forecourt that might then have to be ripped up again and then re-sealed.
QDid you say that to Mr Whittle.
AYes, I did say that to Mr Whittle.
QWas there anything else that either you or he said, that you can now recollect, on the topic of work that Mr Martin would be doing. You can refresh your memory from your notes if it would assist.
AIt was the laying of the underground gas lines for the LPG dispenser was discussed and the plan of where those gas pipelines were going to go, they needed on the site so it didn’t mean they laid it and immediately had to cut it up again.
QWhat was the next topic that was discussed.
AI see it’s something about the existing tanks had been stabilised. Caltex were completing their monitoring and they were going to measure the hydro of the building, and I can only assume that was – there had been a report earlier that had shown elevated benzine levels and that they were going to do a test to check whether that was dangerous to workers in the building.
QWas that information that was conveyed to you by Mr Whittle in the course of that conversation.
AYes, I believe that it was.
QWas there anything that you said on that topic.
AI believed that we had a copy of the report or shortly after that a copy of the report. I’m not – I can’t exactly say to the timing. But when it says –
QIf you can confine your answer to what, if anything, you said to Mr Whittle in response.
AI don’t remember saying anything directly.
QWhat was the next topic that was discussed.
AThe next topic was that Mr Whittle informed me that it would take three months to complete all the construction of the building on the site which included the tendering of the job and the council approval and that the plans for redevelopment were going to be re-submitted within four days.
QIs that what he told you.
AYes.
QDid you say anything in response to.
ANo, I noted that point down.
QWhat was the next topic that was discussed.
AThe next topic that was discussed was operation of the site. So I assumed it was closed –
QAgain, I know it’s difficult. Try and confine yourself to what you said and what he said.
AThe next topic that was discussed was what would happen to the site and its operation immediately after the current tenant left and before Parnell Mogas commenced and when we would commence operating.
QWhat was said by Mr Whittle.
AMr Whittle suggested that the site could operate from the existing facility throughout the period and that construction could occur and wouldn’t disrupt the building – wouldn’t disrupt the operation.
QWhat did you say.
AI noted that point down.
QWhat was the next topic.
AI just reaffirmed that it was going to take 10 to 12 weeks for construction and any construction or site works wouldn’t disrupt the safe operation of the site, according to Mr Whittle.
QWas there any other topic discussed.
AThere was – of where the – the status of the lease documentation, where it was and when –
QAs to that, is that a topic that you raised or he raised.
AI believe I raised that topic because I wished to know where that document was because –
QWhat did you say to him on that topic.
AWe required the lease documentation because until that was executed, I couldn’t do anything else.
QWhat did he say on that topic.
AI don’t directly remember what he said.
QAs you have previously said to his Honour, you had a discussion with Mr Patten in the course of which you made some notes.
AYes.
QYou then went on to prepare the letter of 3 August, Exhibit P20, which appears at p.114 in MFI P1; is that correct. You look at the folder. That is, MFI P1, p.114.
AYes.”

He then gave evidence of a telephone conversation between himself and Mr Whittle about which Mr Whittle gave evidence, namely the topic of somebody else other than the defendant wanting to purchase the Truckstop site. He said that when this telephone call took place he was in a motel in Alice Springs and it was either late July 2000 or early August 2000. He gave this evidence on that topic (transcript pages 585-586):-
"QIf you could tell his Honour what Mr Whittle said on that topic and then what you said in response.
AI remember taking the call on the balcony of a motel in Alice Springs and Mr Whittle phoned to say that he had received an offer to purchase the property from Caltex’s current sub lessee at that stage. He rang me to say this offer was on the table; where was Parnell Mogas at; were we going to proceed with the deal; what was happening and that the offer was reasonably attractive. I remembered clearly advising Mr Whittle that it was his business decision and that the decision he had to make in his own interests and that I could not offer him any advice.
QWas there anything further said on that topic in the course of that conversation between you and Mr Whittle.
AI again stated our offer was on the table but he had to make his own decision.”
He then gave evidence as to conversations between himself and Mr Whittle in the presence of Mr Patten which led up to the supply agreement between the two parties being executed.
In cross-examination Mr Hicks agreed as he did in evidence-in-chief that both he and the defendant Company were keen to go ahead and lease the Truckstop. He was cross-examined about the meeting and discussions which took place at Port Lincoln on the 1^st June 2000. It was put to him that at that meeting he agreed to execute a lease in the shortest possible time. Mr Hicks however did not agree with that proposition because at that time he did not have a lease document.
There was no cross-examination on the topic of whether conditions as to the ESA or improvements were waived. However Mr Hicks agreed that although the starting date for the lease would be the 31^st July 2000 he did not expect that improvements could be finished by then. He was cross-examined about his conversation with Mr Whittle concerning the offer by Mr Robinson. He gave this evidence (transcript pages 672-673):-
"QIn all events, you did have a conversation with Mr Whittle later, I think it was in, I think you said, sometime in July, when the name of Mr Robinson was mentioned and the possibility of Mr Robinson purchasing the site.
AYes.
QAnd I suggest to you that you told Mr Whittle, when he spoke to you about that, that Parnell was committed to the lease and that, in effect, you would be leasing it, ‘therefore you shouldn’t be dealing with Mr Robinson’.
AMy recollection of that phone conversation is that I told Mr Whittle that I couldn’t be his business adviser, that Parnell Mogas were keen to go ahead with the proposal but he had to make his own business decision, and I could not be advising him.
QDo you accept you may have told Mr Whittle, in that conversation, that Parnell Mogas were committed to taking the lease.
AThis conversation happened in late July. From when we received the first copy of Mr Wellington’s lease, where up until that point it had been very, very clear there would be no contamination and Caltex were responsible for cleaning up the site on their exit and everything was very amicable, we then approached the situation where we had a lease document prepared that asked us to take – accept responsibility for prior environmental damage, and that was alarm bells times for us.
QJust pause there. My question is: do you concede or accept that you may well have told Mr Whittle, in that telephone conversation, that Parnell Mogas was committed to the lease.
AI told Mr Whittle in that telephone conversation that Parnell Mogas was very keen to proceed but it was his business decision whether he took the money or not. As I say, I was in Alice Springs and it was in an evening.”
It was also put in cross-examination that prior to the 3^rd August 2000 (the date of Exhibit P20) Mr Hicks knew that the Caltex tenancy had been terminated and also knew that work had commenced on the forecourt and prior to Exhibit P20 being sent did not tell Mr Whittle to withdraw the termination of the tenancy or stop doing the work. Mr Hicks agreed with that proposition.
In re-examination on the question of the environmental site assessment he was asked the following questions (transcript pages 779-780):-
"QIn your letter of 16 May 2000, which is at p.37 in MFI D53, you refer on p.2, under the heading ‘Underground Fuel Tanks’, in the third paragraph under that heading, to the fact that Mr and Mrs Whittle are to provide an environmental site assessment prior to the execution of the proposed lease’.
AYes.
QFor what purpose did you require to be provided with an environmental site assessment prior to the execution of the proposed lease.
AThe purpose was it was company policy that an environmental site assessment be obtained before the purchase of any property or the head lease of any property.
QDid you still require the provision of an environmental site assessment after you had been satisfied that a clause such as 7.2, dealing with prior contamination and liability in relation to that, had been inserted in the draft lease.
OBJECTION:     MR WALSH OBJECTS.
MR WALSH:              We are really going beyond the original topic. This is a bit unfair to me. My whole cross-examination proceeds on the basis of evidence-in-chief and now my friend has dealt with that topic and he is going to another topic.
HIS HONOUR:           I think what Mr Lane is trying to find out is as to how the report and the clause co-relate, is that right Mr Lane?
MR LANE:                  Yes.
HIS HONOUR:           I’ll allow him to do that.
XN
LAST QUESTION READ BY REPORTER
AYes.
QWhy was that.
ABecause it needs to be established a line in the sand from the start date.”
The final witness on liability was Mr Adrian Hall. He prepared a report (Exhibit D94) in which he assessed whether the two reports from Coffey Geosciences Pty Ltd dated the 19^th May 2000 and the 14^th July 2000 could properly be described as an environmental site assessment. The importance of his evidence goes to the question of whether the two reports of Coffey Geosciences Pty Ltd fulfil the condition that an environmental site assessment report had to be provided. Mr Hall’s qualifications and academic achievement were set out in the report itself and I accept him as an expert witness in this area qualified to give the opinion sought above. He said that none of the Coffey Geosciences Pty Ltd reports either individually or collectively would constitute an environmental site assessment. He sets out the reasons for his opinions at paragraph 2.3 of Exhibit D94 and I will not repeat them. When cross-examined by Mr Walsh QC for the plaintiffs he was asked the following the question (transcript page 826):-
"QIn all events, you chose to conclude that there was some implication in the Coffey Geosciences report that it didn’t purport to be an environmental site assessment.
AThat’s correct, that was my conclusion as an expert in reading that Coffeys’ report. Obviously the Coffeys’ report did not actually say this is not an ESA, it didn’t use those words and you wouldn’t expect a report like that to use such words but the implication, in my opinion, was there in the wording, the logic, the reasoning of that Coffey’s report.”
No evidence was called by the plaintiffs to contradict the opinions of Mr Hall.
Findings
I find that the letter of 16^th May 2000 (Exhibit P2) from the defendant to the plaintiffs was an offer which clearly required a number of pre-conditions before a lease could be executed. I find that those pre-conditions clearly set out in that letter are:-
“1)The realignment of the eastern access, site drainage, and sealing of the forecourt and driveways.
2)The toilets are upgraded to meet all regulations, including wheel chair access.
3)The proposed integration of the newly installed office into the main building be completed to include additional restaurant seating for 20 people, and provide for approximately 60 square meter sales room, immediately adjacent to the console.”
I also find that a pre-condition required before a lease could be entered into was “AT & MJ Whittle are to provide an environmental site assessment prior to the execution of the proposed lease”. In deciding whether a contract was entered into by the parties and therefore breached by the defendant the question that I have to decide is whether these conditions set out above were waived and if not whether they were fulfilled.
Were the Conditions Precedent in the Letter of 16^th May 2000 waived by the Defendant?
I have already set out the testimony of the plaintiff Mr Whittle and Mr Hicks speaking on behalf of the defendant. I find that it is clear that there was no waiver of the condition to provide an environmental site assessment prior to the execution of the proposed lease. Mr Hicks is adamant that there was no such waiver and Mr Whittle in his evidence of the conversation which took place on the 1^st June 2000 is really uncertain as to whether a conversation which could be in anyway interpreted as a waiver took place. I have already set out the bulk of his evidence on that topic and in my view I prefer the clear evidence of Mr Hicks that at the meeting of the 1^st June 2000 at Port Lincoln between he and Mr Whittle that he did not say words to the effect that Parnell Mogas was abandoning the requirement for an environmental site assessment report to be provided prior to execution of the lease nor abandoning its requirement of the improvements which were set out in the letter of the 16^th May 2000 (Exhibit P2). I have already referred to that evidence when summarising the defendant’s case on liability at pages 580‑585 of the transcript.
I am fortified in my preference for Mr Hicks’ evidence on that topic by virtue of the fact that rather than there being a waiver of the condition for the production of an environmental site assessment, that from 1^st June 2000 onwards there is an undisputed concern by the defendant about environmental issues. The defendant was so understandably concerned about those issues that when receiving a copy of the reports which were provided by Caltex to the plaintiffs they had those checked by their own environmental experts. Also during the course of negotiations after the meeting of the 1^st June 2000 namely on the 27^th June 2000 a draft lease was prepared and sent by the plaintiffs’ solicitor to the defendant (Exhibit D59). Within that draft lease there was a requirement for an environmental site assessment report to be provided. In my view the behaviour of both the plaintiffs and defendant from the 1^st June 2000 was consistent with there being no waiver of that pre-condition.
I find that the letter of the 3^rd August 2000 (Exhibit P20) from the defendant to the plaintiffs in which the defendant offers as a term of a new arrangement to provide its own environmental site assessment report is consistent with the pre‑condition for such a report having not been either waived or fulfilled by the plaintiffs.
Was the Pre-Condition that an Environmental Site Assessment be provided fulfilled by the Coffey Geosciences Pty Ltd reports to Caltex being given to the defendant.
I have already found that the pre-condition as to environmental site assessment report was not waived. It is argued in the alternative that if it was not waived it was nevertheless fulfilled when two reports which were provided by Caltex to the plaintiffs from Coffey Geosciences Pty Ltd dated the 19^th May 2000 and the 14^th July 2000, were sent to the defendant on the 18^th July 2000 and the 25^th July 2000. I have already referred to the evidence of Mr Adrian Hall and his opinion that neither of these two reports would constitute an environmental site assessment.
Not only is there no evidence disputing Mr Hall’s opinion but that opinion is consistent with the narrative of events whereby, after the receipt of those reports by the defendant, nevertheless there were still concerns by the defendant about environmental matters. This is clearly evidenced by the letter from the defendant to the plaintiffs dated the 3^rd August 2000 (Exhibit P20). It was also clear from the evidence of Mr Hicks, which I accept, that the obtaining of an environmental site assessment was Company policy before the execution of a proposed lease and that clause 7.2 of the draft lease dealing with prior contamination would not satisfy the condition for the provision of an environmental site assessment (transcript pages 779-780). The difference between the two types of reports is also made clear in the draft lease prepared by the plaintiffs’ solicitor (Exhibit P5). That lease contains both clause 7.1(b) as set out as follows:
“7.1(b) They have examined the copy of the Environment Site Assessment attached to this Lease and marked Annexure A prior to executing this Lease; and
…”
as distinct from clauses 7.2 and 7.3 as set out as follows:
“7.2 Responsibility for Residual Hydrocarbons
The Lessor will be responsible for the presence of any residual hydrocarbons and anything incidental to them including compliance with all relevant legislation or requirements of any authority in respect of them and will indemnify the Lessee and keep the Lessee indemnified against that liability against all claims, demands, suits, proceedings, losses, costs, penalties or damages resulting in any way from the existence of the residual hydrocarbons including actions based on injury to any person, corporation or property.
7.3Responsibility for Contamination
On and from the Commencement Date, the Lessee will be responsible for the presence of any contamination and anything incidental to it including compliance with all relevant legislation or requirements of any authority in respect of it and will indemnify the Lessor and keep the Lessor indemnified against that liability against all claims, demands, suits, proceedings, losses, costs, penalties or damages resulting in any way from the existence of the contamination including actions based on injury to any person, corporation or property.”
In other words there is a clear difference between responsibility for past contamination and the provision of an environmental site assessment report. I find that such a condition was never fulfilled and never waived and therefore there was no binding agreement.
Were the Pre-Conditions as to Improvements contained in the letter of 16^th May 2000 waived or fulfilled.
In the light of my findings concerning the pre-condition as to an environmental site assessment report not being waived or fulfilled this question now becomes academic. However the first condition as to improvements in the letter of 16^th May 2000 namely the levelling and compacting of the forecourt was completed a little after the 1^st August 2000. The work mentioned in the other two conditions was not done. I also find that those conditions were not waived by Mr Hicks in his discussions with Mr Whittle on the 1^st June 2000 as I prefer Mr Hicks’ evidence on that topic for the reasons already given. However these considerations are academic because in my view there was no agreement reached because no environmental site assessment report was ever provided.
Nevertheless it is the defendant’s alternative argument that even if no agreement was reached between the parties, nevertheless the defendant acted in such a way that their behaviour was unconscionable in that they held out that there was a binding agreement and therefore they should be estopped from denying that there was such an agreement. I turn to that question.
Promissory Estoppel - The Law
Both parties cited the High Court decision of Waltons Stores (Interstate) Limited v Maher and Another 164 CLR 387 in which Brennan J set out the elements promissory estoppel as follows (pages 428-429):-
“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.”
It is argued by the plaintiffs that, applying the above principles the conduct by the defendant should lead to the defendant being estopped from denying that there was a contract. Reliance is placed upon Mr Whittle’s evidence that he rejected the offer of the witness Robinson to sell the business because he was told by Mr Hicks that he could not do so and was bound by their agreement. However there is a divergence between the evidence of Mr Whittle and the evidence of Mr Hicks about the contents of that conversation. I have already set out the salient evidence of the witnesses in relation to that disputed conversation. I indicate that I prefer the evidence of Mr Hicks on that topic. I do not find that Mr Whittle is deliberately not telling the truth on that topic but I find the recollections of Mr Hicks more reliable and find in favour of his evidence that he told Mr Whittle that it was his business whether he sold the business and the freehold to somebody else. In my view that version is supported by a letter of the 9^th October 2000 (Exhibit P29) and the letter of the 20^th November 2000 (Exhibit P32). In both of those letters it was made clear to the plaintiffs that they were free to negotiate with other parties and were not bound by any agreement with the defendant.
I find that from the 3^rd August 2000 onwards although serious negotiations were taking place between the parties, there was never a binding agreement reached nor was it ever held out by the defendant to the plaintiffs that there necessarily would be such an agreement.
In light of those findings the plaintiffs’ claim must fail and there will be judgment for the defendant. It is unnecessary for me, therefore, to assess damages.