Adaz Nominees Pty Ltd v Castleway Pty Ltd [2020] VSCA 201

CONTRACT - Principles in relation to terms implied by law - Terms implied as a matter of law whereby each party obliged to do all things necessary to enable the other party to have the benefit of the contract and not hinder or prevent the fulfilment of the purpose of the express promises - Whether a substantial charitable donation a breach of the implied term - Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596, Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 253 CLR 169, Byrne v Australian Airlines (1995) 185 CLR 410, considered.

CONTRACT - Commission payable under the contract on 'Introduced Projects' - Whether projects were 'Introduced Projects' within the meaning of the contract.

TORT - Conspiracy and breach of directors' duties - Whether applicants conspired to injure respondents by unlawful means or acted with the predominant purpose of injuring them, and whether applicants breached directors' duties - Trial judge accepted directors' evidence as to purpose - Trial judge's findings not 'glaringly improbable' or inconsistent with 'incontrovertible' evidence.

INTEREST - Whether undisputed invoices were payable under the terms of the agreement prior to resolution of disputes.

The application for leave to appeal, the notice of contention, and the application for leave to cross-appeal - the proposed grounds and the issues raised

Construction of the PDSA and the term implied under BP Refinery v Hastings (Proposed appeal grounds 1 to 6, 7, and contentions 1 and 2)

Legal principles in relation to construction of commercial agreements and the implication of terms (other than terms implied by law)

Terms implied by law (Proposed appeal grounds 4 and 8, and contention 3)

Legal principles in relation to terms implied by law

Was the claim based upon terms implied by law pleaded and advanced below?

Conspiracy and breach of duty (Proposed cross-appeal ground 7 and 8)

Expenses related to the Foundation (Proposed appeal ground 9)

Introduced Projects (Proposed appeal ground 10, and cross-appeal grounds 1 to 6)

The TPC Group's submissions on the construction issues

Castleway and Mr Keeghan's submissions on the construction issues

Analysis and conclusions on the construction issues

Castleway and Mr Keeghan's submissions on Kawana Waters

Submissions on the IBIS retirement home investment

Analysis and conclusions on the IBIS retirement home investment

The TPC Group's submissions on the further issues

Castleway and Mr Keeghan's submissions on the further issues

Interest (Cross-appeal proposed grounds 9 to 13)

1 The applicants are ten related companies associated with the Rado family. We will refer to them as the 'TPC Group'. Seven of the ten companies are trustees. Of particular relevance to these applications is the Rado No 2 Trust, of which the first applicant, Adaz Nominees Pty Ltd ('Adaz Nominees'), is the trustee.

2 The TPC Group (and one additional company, which is not a party to the proceedings) entered into a written agreement with the two respondents, Castleway Pty Ltd ('Castleway') and Gerard Keeghan, entitled 'Property Development and Services Agreement', dated 7 December 2010 ('PDSA'). The agreement was expressed to have effect on and from 1 July 2007.

3 The PDSA appointed Castleway as the 'Manager' to provide property development services to the TPC Group. Castleway was to be remunerated by a 'Service Fee', being a scaled percentage of the 'TPC Group Profit' calculated as set out in a schedule to the agreement. Provision was made for the termination of the PDSA and Castleway had an entitlement to further payment, called 'Commission', after termination in relation to what the PDSA defined as 'Introduced Projects'. There was a related agreement entitled 'Executive Services Agreement' under which Mr Keeghan was appointed as chief executive officer of the TPC Group's central operating company.

4 The PDSA terminated on 29 June 2017. Prior to that termination disputes had arisen between the TPC Group on the one hand and Castleway and Mr Keeghan on the other.

5 The TPC Group commenced this proceeding in 2015. The issues between the parties have changed over time. For present purposes the significant issues now in dispute are:

1. Immediately prior to the termination of the PDSA, Adaz Nominees, as trustee of the Rado No 2 Trust, made a donation of $20 million to a charitable foundation which had been recently established by the Rado family. Upon the TPC Group's construction of the PDSA this had the effect of significantly reducing the Service Fee to which Castleway would be entitled in relation to the 2016/2017 financial year. Castleway and Mr Keeghan contest that construction and contend (among other things) that the making of the donation was pursuant to a conspiracy to injure Castleway, and was a breach of duty by the Adaz Nominees' majority directors.
2. There are disputes as to which expenses are properly to be taken into account in calculating the TPC Group Profit under the PDSA.
3. There is a dispute as to which projects, if any, are Introduced Projects under the PDSA.
4. There is a dispute as to when the Service Fee is payable under the PDSA. This particularly affects the question of interest.

6 In a series of judgments between October 2017 and January 2019 Robson J decided these, and a number of other issues then in dispute between the parties.

7 In brief summary, the trial judge determined that:

1. The PDSA was properly to be construed as limiting the expenses to be taken into account in calculating the TPC Group Profit under the PDSA to expenses relating to the TPC Group's normal business activities. Alternatively, a term was to be implied to the same effect.
2. By reason of this construction, or implied term, the donation of $20 million was not to be treated as an expense of the TPC Group when calculating the TPC Group Profit for the purpose of calculating the Service Fee under the PDSA.
3. The other disputed expenses should be referred to a Special Referee, to report on the question of whether those expenses related to the TPC Group's normal business activities. He later rejected some of the Special Referee's conclusions as to these expenses.
4. Fourteen of the 16 TPC Group assets which Castleway and Mr Keeghan contended to be Introduced Projects were Introduced Projects under the PDSA.
5. Under the PDSA the Service Fee was not payable until disputes between the parties had been resolved and he accordingly rejected claims by Castleway for interest.

8 By an application for leave to appeal dated 18 February 2019, the TPC Group seek leave to appeal from declarations and orders made by Robson J on 31 January 2019 consequent upon these determinations.

9 In summary, the TPC Group submit that the trial judge:

(a) misapplied the principles for the interpretation of commercial agreements;

(b) misapplied the principles for the implication of a term into commercial agreements; and

(c) departed from the principles applicable to the adoption of a report of a special referee.

10 By a notice of contention dated 19 March 2019, the respondents, Castleway and Mr Keeghan, contend that the finding of the trial judge that only expenses incurred in the normal course of the TPC Group's business may be taken into account when calculating the Service Fee payable to Castleway should have also been made on the additional bases that:

(a) the contrary interpretation would give rise to uncommercial and unreasonable results;

(b) it was supported by the evidence of a profit sharing arrangement recorded in the minutes of a meeting of directors dated 17 June 2008; and

(c) there was a term implied by law requiring the TPC Group to do all things necessary to enable Castleway to have the benefit of the PDSA and to act reasonably and in good faith so as not to frustrate or prevent fulfilment of the PDSA's commercial purpose.

11 By a cross-application for leave to appeal dated 19 March 2019, Castleway and Mr Keeghan also seek leave to appeal from the declarations and orders made by the trial judge on 31 January 2019. In summary, they submit that the trial judge erred in:

(a) his construction of the term 'Introduced Project' in the PDSA;

(b) determining that two particular assets, referred to as the Kawana Waters project and the IBIS retirement home investment, were not Introduced Projects;

(c) rejecting the claims of conspiracy and breach of duty in relation to the

$20 million donation;

(d) dismissing Castleway's claims for interest; and

(e) ordering that each party pay their own costs.

12 The recitals and clauses 2 and 3 of the PDSA are set out in full in Annexure A to these reasons.

13 The recitals state that Castleway and Mr Keeghan had been providing 'property development services' to the TPC Group for some time, that in a meeting on 17 June 2008 a proposal for continued provision of those services had been discussed, that the TPC Group wished to 'formalise the arrangements for the provision of services' and had requested Castleway to provide property development services on the terms set out in the agreement, and that Castleway had agreed to do so.

14 Clause 2.1 appointed Castleway as the 'Manager' to provide 'property development services' to the TPC Group. Castleway agreed to provide those services, and in particular agreed in cl 2.5 to 'identify and investigate ... property development opportunities', to assist in the 'planning, structuring and negotiation of' land acquisitions and property development, and to 'manage existing properties owned by the TPC Group to a profitable development outcome'.

15 Clause 3 provided for the calculation and payment of what the heading to the clause described as a 'Property Procurement and Development Fee' and what the provisions themselves referred to as the 'Service Fee'. It will be necessary to refer to some of these provisions in detail below. For present purposes, it suffices to say that the Service Fee was calculated as a percentage of the 'TPC Group Profit', which is a defined term. Relevantly, cl 1.1 defined that term as 'the net profit...of the TPC Group calculated in accordance with Schedule 2 ...'. Schedule 2 is set out in full in Annexure B to these reasons. The critical feature of the calculation it provided for, in the current context, is the calculation of TPC Group Profit in item 2 which begins with the words 'Total Taxable Income ... as per income tax returns' for the relevant specified TPC Group entities. Item 1 of Schedule 2 sets out the percentages of TPC Group Profit to which Castleway was entitled. The percentages were on a sliding scale from 15 per cent below $500,000 to 40 per cent above $5 million.

16 Clause 3 and Schedule 2 are central to the most significant current disputes between the parties. The TPC Group maintains that all tax deductible expenses must be taken into account when calculating the TPC Group Profit, and that the trial judge erred by failing to give effect to what had been expressly provided for in the PDSA in cl 3 and in Schedule 2.

17 It is accepted that the $20 million donation was tax deductible.

18 Castleway seeks to uphold the trial judge's conclusion that only expenses incurred in the course of the TPC Group's normal business activities are to be taken into account on the grounds relied upon by the trial judge, being that that is the correct construction of the express terms of the PDSA, or, alternatively, because a term to that effect is to be implied under the principles in BP Refinery (Westernport) Pty Ltd v Shire of Hastings.[1] By way of contention, Castleway also says that the judge's conclusion should be upheld on the basis of terms implied by law.

19 The parties realised very early that there had been an 'oversight' in relation to the Schedule 2 calculation. The calculation required the Service Fee itself to be deducted from the TPC Group Profit, as it was a tax deductible expense. The relevant board minutes of 21 March 2011 described the 'oversight' as being that the calculation 'did not add back any fee paid pursuant to the PDSA'. The minutes record that an amendment was tabled and signed by the parties at that meeting rectifying this 'oversight'.

20 Clause 4 provided that the term of the PDSA was on and from 1 July 2007 until 30 June 2017 (cl 4.1), subject to the parties' agreement to extend (cl 4.2), the TPC Group's right to terminate for cause (cl 4.4), and Castleway's right to terminate on six months' written notice (cl 4.6). This clause also provided that the TPC Group would pay Castleway a Commission after termination in relation to Introduced Projects

(cl 4.5). The term 'Introduced Project' was defined in cl 1.1 to mean:

[A] project that the TPC Group was made aware of by the Manager or the Executive Director (as the case may be) before the termination of this Agreement for the purposes of acquisition, development or management.

21 With respect to the nature of the relationship between the parties, cl 5 provided as follows:

5.1 The TPC Group is not bound to follow or accept any advice or recommendation by the Manager. The management, policies and operations of each TPC Entity shall be the sole responsibility of that TPC Entity.

5.2 Notwithstanding anything to the contrary in this Agreement, the Manager is at all times an independent contractor to the TPC Group. Nothing in this Agreement shall be construed to create a joint venture, partnership, agency or an employment relationship between the Manager and the TPC Group.

22 In the 1970s, Mr Rinaldo 'Ron' Rado established the Standard Roads Group, which was in the business of asphalting, road construction and quarrying.

23 In about 1982, Mr Keeghan was employed by the Standard Roads Group after he became engaged to Ms Tania Rado, one of Mr Ron Rado's daughters.

24 In 1994, Mr Keeghan was employed as chief executive officer of the Standard Roads Group.

25 After the death of Mr Ron Rado on 25 April 2001, Mr Lee, then a partner of William Buck accountants, later Grant Thornton, was appointed as a director of companies within the Standard Roads Group.

26 In 2002, the road construction, quarrying and asphalting parts of the business were sold. The continuing Rado companies were eventually 'rebranded' as the TPC Group and predominately engaged in real estate investment and development.

27 In about late 2007, Mr Keeghan separated from Ms Tania Rado.

28 Mrs Agnes 'Nancy' Rado, the wife of Mr Ron Rado, became the ultimate shareholder of the TPC Group on her husband's death. Minutes of a meeting of directors of TPC Group Pty Ltd dated 17 June 2008 record that Mr Keeghan and Mrs Nancy Rado attended. It is a matter of controversy as to what was agreed at that meeting, but the minutes record the following:

Profit Distribution: It was agreed that commencing from the financial year ended 30 June 2008, a 50% share of the gross profit before tax of the financial performance of TPC Group Pty Ltd would be paid to Gerard Keeghan or as directed by him, subject to the following:

1. Gross Profit calculated before distributions received/paid.

1. After the year-end accounts have been audited/prepared by the external Accountants.

3. Payable subject to the availability of funds held.

1. If there is a loss generated in TPC Group Pty Ltd for any period commencing from the financial year ended 2008, that this loss must be deducted against future gross profit before any profit share is payable.
2. From the financial year ended 2008, in the event no profit is generated in RG Group and TPC (i.e. loss), no profit share is payable until those collective losses are absorbed by future profits in future years.

29 As noted above, on 7 December 2010, the TPC Group, Castleway and Mr Keeghan entered into the PDSA. The recital to the PDSA which referred to a discussion on 17 June 2008 of 'a proposal for the continued provision of property development services to the TPC Group' was a reference to the meeting that day between Mrs Nancy Rado and Mr Keeghan.

30 Also on 7 December 2010, Mr Keeghan and SR Consolidated Pty Ltd

('SR Consolidated'), the central operating company for the TPC Group, entered into the Executive Services Agreement whereby Mr Keeghan accepted an offer of continued employment as chief executive officer of the TPC Group. Under that agreement, Mr Keeghan was entitled to indexed remuneration starting at $300,000 per annum and reimbursement of certain expenses.

31 In 2012, Mrs Rado decided to realise the assets of the TPC Group so that the proceeds could be distributed to her children during her lifetime. In December 2012, Mr Keeghan was informed of Mrs Rado's decision. He objected on the basis that a realisation without fully developing the projects to realise their maximum potential profit was a breach of the PDSA. A particular focus of this dispute was an uncompleted development project known as Kawana Waters. The issue of whether Mrs Rado's decision to procure a realisation of the TPC Group assets was a breach of the PDSA was one of the issues before the trial judge. The trial judge determined that issue in favour of Mrs Rado and the TPC Group. That determination is not the subject of any application for leave to cross-appeal.

32 From 2014, other disputes arose between the TPC Group on the one hand and Castleway and Mr Keeghan on the other. In particular:

(a) Castleway disputed the Service Fees for the 2014, 2015 and 2016 financial years as calculated by Grant Thornton, principally on the basis that certain expenses should have been excluded from the calculation of the TPC Group Profit.

(b) The issue of Introduced Projects became a matter of controversy. In a letter dated 5 May 2015 to the TPC Group, Castleway attached a list of current projects/assets/properties held at 1 July 2014 which it contended were Introduced Projects for the purposes of the PDSA. The TPC Group asserted that there were no Introduced Projects within the meaning of the PDSA.

33 On 29 June 2016, SR Consolidated gave a notice under the Executive Services Agreement terminating Mr Keeghan's employment on 30 June 2017.

34 On 28 December 2016, Castleway gave notice of its intention to terminate the PDSA under cl 4.6, with effect from 29 June 2017.

35 On 18 January 2017, Rado Family Foundation Pty Ltd, which was the trustee of the Rado Family Foundation ('the Foundation') was incorporated, and on 7 February 2017 the Foundation was registered with the Australian Charities and Not-For-Profits Commission.

36 By an email of 15 June 2017 to the other directors of Adaz Nominees, Mr Keeghan, Mr Lee and Mr Stephen Rado (Mrs Rado's son), Mrs Rado gave notice of a directors' meeting of Adaz Nominees scheduled for 23 June 2017 to consider a resolution that Adaz Nominees pay $20 million as a tax deductible charitable donation from the trust fund of the Rado No 2 Trust to the Foundation.

37 On 29 June 2017, the directors of Adaz Nominees resolved, by a majority of Mr Lee, Mrs Rado and Mr Stephen Rado, to donate the sum of $20 million to the Foundation. The donation was made that day.

38 On 29 June 2017, the PDSA was terminated pursuant to the notice given by Castleway on 28 December 2016. Thus, the final financial year in relation to which Castleway was entitled to a Service Fee was the year ended 30 June 2017, and the tax deductible donation of $20 million was made in that year.

39 The effect of the donation on the TPC Group Profit and Service Fee calculations was very significant. It had the effect of reducing what would otherwise have been the TPC Group Profit for the final financial year by approximately half (from approximately $40 million to approximately $20 million). As the TPC Group Profit (however calculated) in the year ended 30 June 2017 was well above $5 million (the level at which the maximum percentage under item 1 of Schedule 2 became applicable), the consequent reduction in the Service Fee calculation (an $8 million reduction, being 40 per cent of $20 million) was more than half.

40 The litigation between the parties began before the PDSA was terminated.

41 This proceeding was commenced by the TPC Group by an originating process filed 30 October 2015. The TPC Group sought the following declarations:

(a) None of the projects listed in the attachment to the 5 May 2015 letter is an Introduced Project within the meaning of the PDSA.

(b) On the proper construction of the PDSA, the eighth applicant, Tynong Pastoral Co Pty Ltd, may dispose of the Kawana Waters land without the respondents' consent, notwithstanding any advice or recommendation from Castleway or Mr Keeghan to the contrary, without breaching the PDSA.

(c) On the proper construction of the PDSA, the Service Fee payable to Castleway was to be calculated by reference to a computation of the TPC Group Profit, as referred to in Schedule 2 to the PDSA, which takes into account on a consolidated basis all expenses of the TPC Group and their associated entities, which are set out in Annexure A to the PDSA, that are properly deductible for income tax purposes.

42 Pleadings were ordered, and they were amended from time to time. In their statements of claim the TPC Group sought the declarations referred to above, and an additional declaration on an issue which is not relevant to the applications now before the Court. Castleway and Mr Keeghan counterclaimed seeking declarations, injunctive relief and damages alleging (amongst other things) that:

(a) An Introduced Project on the proper interpretation of the PDSA is a project:

(i) concerning real property or any other asset (including equities, hybrids, joint venture interests, cash holdings, business operations or properties held for philanthropic or charitable purposes) to be acquired, developed or managed by the TPC Group and includes the TPC Group Projects listed in Annexure B to the PDSA;

(ii) in respect of which the respondents made the TPC Group aware before the commencement of the PDSA or during its term; and

(iii) which is to be completed after termination of the PDSA.

(b) The TPC Group was in breach of the PDSA by directing Castleway and Mr Keeghan to assist them in achieving the realisation of an Introduced Project prior to that project achieving an optimum profitable development outcome.

(c) Only expenses incurred in the TPC Group's normal business activities, and not the expenses of the beneficiaries of any TPC Entities or Rado family members, or the expenses incurred by any Excluded Entity, or extraordinary expenses not incurred in the normal business activities of the TPC Group, may be taken into account when calculating TPC Group Profit for the purposes of calculating the Service Fee payable to Castleway.

(d) The following expenses (defined as the 'Disputed Expenses') were not properly deductible in calculating TPC Group Profit for the purposes of calculating the Service Fee payable to Castleway:

(i) the costs of high net worth tax audits conducted by the Australian Taxation Office with respect to various TPC Entities and Rado Group entities to ascertain whether any issues arose in relation to Division 7A of the Income Tax Assessment Act 1936 (Cth);

(ii) the costs of preparing financial statements and income tax returns and providing other accountancy or tax advisory services related to some 'Excluded Entities' listed in item 5 of Schedule 2 to the PDSA and to Mrs Rado and other Rado family members;

(iii) legal and accounting costs associated with Mrs Rado's decision to realise assets held by the TPC Group;

(iv) legal costs incurred in connection with a dispute between the TPC Group and minority shareholders in SR Consolidated who were claiming oppression, which resulted in a share buyback;

(v) Mr Lee's director's fees insofar as they related to Mrs Rado's decision to realise assets held by the TPC Group;

(vi) legal and accounting costs incurred in connection with negotiating and preparing proposed variations to the PDSA;

(vii) costs for a tree planting memorial for the late Mr Ron Rado;

(viii) personal expenses of Mrs Rado and Rado family members;

(ix) costs incurred in 'taking action' against Castleway and Mr Keeghan;

(x) costs of bi-monthly meetings to implement the asset realisation plan; and

(xi) costs of winding up or closing down the TPC Group and its projects, including future redundancy fees and office closure costs.

43 By a further proceeding (S CI 2017 2344) filed 19 June 2017, Castleway and Mr Keeghan sought orders restraining the directors of Adaz Nominees from voting in favour of the $20 million donation and restraining Adaz Nominees from making the $20 million donation. On 22 June 2017, interim orders were made by Vickery J and, after a further hearing before Hargrave J on 27 and 28 June 2017, the proceeding was dismissed, undertakings having been given by the TPC Group.

44 Castleway and Mr Keeghan then introduced allegations concerning the $20 million donation into this proceeding. By a second further amended defence and counterclaim filed 19 July 2017, Castleway and Mr Keeghan made additional allegations including the following:

(a) There were implied terms of the PDSA that only expenses incurred in the TPC Group's 'normal business activities' were to be allowed in calculating the Service Fee payable to Castleway.

(b) Castleway was entitled to payment of the undisputed parts of the Service Fee for the 2014, 2015 and 2016 financial years prior to resolution of the disputed parts.

(c) By voting in favour of the resolution to make the $20 million donation the directors had breached the duties they owed to Adaz Nominees under ss 181 and 182 of the Corporations Act 2001 (Cth), and had unlawfully or wrongfully conspired among themselves to breach the PDSA with the intention of preventing Castleway from receiving the Service Fee which it would otherwise be entitled to receive.

45 The trial of the proceeding was heard before Robson J over 12 days from

46 Robson J delivered a judgment on the substantive issues on 5 October 2017.[2]

47 Robson J rejected the breach of duty and conspiracy claims concerning the

$20 million donation because he accepted the evidence given on the issue by

Mrs Nancy Rado, Mr Stephen Rado, and Mr Lee.[3]

48 On the issue of expenses to be taken into account in calculating the Service Fee, Robson J accepted a contention by Castleway that the term 'net profit' in the definition of 'TPC Group Profit' in cl 1.1 would be understood by reasonable business people to be profit calculated by deducting from the income of the business the expenses incurred in earning that income, and he found that there was an ambiguity or contradiction between that definition and the formula in Schedule 2.[4] He held that this ambiguity or contradiction was resolved by reference to the other terms of the PDSA which reveal it to be a profit sharing agreement, and that, construed in that light, the proper construction of Schedule 2 was that 'only expenses relevant to the calculation of the profit ... in the sense understood by reasonable business persons should be taken into account in calculating the TPC Group Profit'.[5]

49 On the issue of implied terms, Robson J expressly referred to Castleway and Mr Keeghan's reliance on a term implied by law said to require a party to do all things necessary on its part to enable the other party to have the benefit of the contract, and to act reasonably and in good faith so as not to frustrate or prevent the contract's purpose being fulfilled.[6] He then addressed their contention that a term was to be implied under the principles in BP Refinery v Hastings. He accepted Castleway and Mr Keeghan's submission that, as an alternative to his conclusion as to the proper construction of the PDSA, a term should be implied which would preclude expenses not incurred in connection with the TPC Group's normal business activities from operating to reduce the Service Fee.[7]

50 It is clear that Robson J reached the conclusion which he did concerning the expenses based upon his construction of the PDSA, and, alternatively, based upon a term implied under the principles in BP Refinery v Hastings.[8] It is not clear whether that conclusion was also based upon the term implied by law upon which Castleway had also relied, and which it is clear that the judge did not reject. His specific conclusion on the relevant issue seems to confine itself to construction and the

BP Refinery v Hastings term,[9] but very shortly prior to that conclusion he had said that to permit expenses to be deducted which were not incurred in the normal course of business would be 'contrary to and would defeat the purpose of the PDSA.'[10]

51 In their written submissions the TPC Group interpreted Robson J's reasons as containing a finding that there was 'an implied term requiring the TPC Group to do all things necessary to enable Castleway to have the benefit of the PDSA' and addressed the trial judge's relevant conclusions as to the expenses in that context.[11] This was clearly a reference to the term implied by law. That position is also reflected in their proposed ground of appeal 4 ('... implying (as a matter of law or fact) a term...'). Counsel for the TPC Group resiled from this position in the course of oral submissions.

52 Next, the TPC Group had relied upon a provision in Schedule 2 which said that in the event of a dispute regarding the calculation of TPC Group Profit, the parties were agreed that the calculation should be undertaken in accordance with the 'principles and standards reflected' in a calculation for the 2008 financial year which was annexed to the PDSA as Annexure C. Robson J was not persuaded that the annexure demonstrated any 'principles and standards' relevant to determining how expenses not incurred in the normal course of business were to be treated.[12]

53 Robson J rejected Castleway and Mr Keeghan's contention that Mrs Nancy Rado was precluded from realising the assets of the TPC Group, and that the TPC Group was bound under the provisions of the PDSA to complete their projects in such a way as to achieve their optimum profitable development outcome.[13] As noted earlier, no issue concerning this conclusion is raised by the applications now before the Court.

54 Robson J addressed the disputes concerning the Introduced Projects at length.[14] At paragraph 100 of the October 2017 Reasons he tabulated the 16 assets which were in contention, and the reason why the TPC Group maintained each of them did not fall within the relevant definition. He accepted the TPC Group's contentions in relation to two of them, being the Kawana Waters project and the IBIS retirement home investment.

55 The final conclusion reached by Robson J in the October 2017 Reasons, which is relevant to the issues now before this Court, concerns Castleway's entitlement to payment or part payment of the Service Fee. Robson J accepted the TPC Group's construction of cl 3.3 of the PDSA. On this construction, Castleway was not entitled to issue an invoice for an undisputed part of a Service Fee,[15] and was not entitled to any part payment, until any outstanding dispute had been resolved.[16]

56 Robson J adjourned the further hearing of the proceeding without making any final orders to enable the parties to have the opportunity to resolve the outstanding issues in the light of the findings and conclusions in the October 2017 Reasons.

57 After a hearing on 7 December 2017, Robson J delivered a further judgment,[17] and made an order referring questions to Mr Greg Meredith, a chartered accountant, ('the Special Referee') for him to give his opinion and provide a written report with reasons. Relevantly for present purposes, one of the questions referred was whether 12 categories of Disputed Expenses were expenses 'relating to the TPC Group's normal business activities.

58 The Special Referee's report was issued on 27 April 2018.

59 On 26 July, 27 July and 28 August 2018, Robson J heard argument on adoption of the Special Referee's report. Robson J did not adopt all of the Special Referee's report. He delivered his reasons on 22 October 2018.[18]

60 After a further hearing on 11 December 2018, Robson J delivered his reasons on the issues of interest and costs on 31 January 2019,[19] and he made final declarations and orders.

61 On 31 January 2019 Robson J made declarations as to the amount of the Service Fee for each of the 2014, 2015, and 2016 financial years. The effect of these declarations was to increase the Service Fees from the amounts previously calculated by the TPC Group's nominated accountant under cl 3.2 of the PDSA. The increases were a result of disallowing certain expenses thereby increasing the TPC Group Profit.

62 In relation to the 2016-2017 financial year, and in relation to the Introduced Projects, Robson J made the following declarations:

1. The Court declares that only expenses incurred in earning the income of the TPC Group's business or, in other words, in the normal course of business, are entitled to be treated as expenses of the TPC Group when calculating:

(a) the Service Fee payable under the PDSA in respect of the

2016-2017 financial year;

(b) the Commission on Introduced Projects completed after the termination of the PDSA under cl 4.5 of the PDSA; or

(c) the Termination Adjustment under Item 4 of Schedule 2 to the PDSA.

1. The Court declares that the charitable donation of $20 million paid by the First Defendant by Counterclaim, Adaz Nominees Pty Ltd to Rado Family Foundation Pty Ltd, as trustee for the Rado Family Foundation, in the 2016-2017 financial year is not entitled to be treated as an expense of the TPC Group when calculating the Service Fee payable under the PDSA for the 2016-2017 financial year.
2. The Court declares that the TPC Group's accounting and legal fees incurred in connection with the carriage and conduct of this proceeding, or in connection with the carriage and conduct of the Related Proceeding, are not entitled to be included as an expense of the TPC Group when calculating:

(a) the Service Fee payable under the PDSA in respect of the

2016-2017 financial year;

(b) the Commission on Introduced Projects completed after the termination of the PDSA under cl 4.5 of the PDSA; or

(c) the Termination Adjustment under Item 4 of Schedule 2 to the PDSA.

1. The Court declares that the expenses of the 'Excluded Entities' listed in Item 5 of Schedule 2 to the PDSA are not entitled to be included as an expense of the TPC Group when calculating:

(a) the Service Fee payable under the PDSA in respect of the

2016-2017 financial year;

(b) the Commission on Introduced Projects completed after the termination of the PDSA under cl 4.5 of the PDSA; or

(c) the Termination Adjustment under Item 4 of Schedule 2 to the PDSA.

1. The Court declares that all accounting, directors' and legal fees or other fees and expenses incurred in relation to:

(a) the establishment and continued operation of the Rado Family Foundation and Rado Family Foundation Pty Ltd, and the making of the $20 million charitable donation by Adaz Nominees to Rado Family Foundation Pty Ltd as trustee for the Rado Family Foundation; or

(b) any work done in a personal capacity for any members of the Rado family or their entities,

are not entitled to be included as an expense of the TPC Group when calculating:

(c) the Service Fee payable under the PDSA in respect of the

2016-2017 financial year;

(d) the Commission on Introduced Projects completed after the termination of the PDSA under cl 4.5 of the PDSA; or

(e) the Termination Adjustment under Item 4 of Schedule 2 to the PDSA.

1. The Court declares that each of the projects listed in paragraph 100 of the October Reasons is an 'Introduced Project' for the purposes of that term's definition in the PDSA, save for:

(a) the IBIS Care Retirement Home investment; and

(b) the Kawana Waters project.

1. The Court declares that when calculating the Commission on Introduced Projects completed after the termination of the PDSA under cl 4.5 of the PDSA, any Termination Adjustment under Item 4 of Schedule 2 to the PDSA that Castleway has already received in relation to the Introduced Projects will be taken into account.

63 Robson J dismissed Castleway's claim for damages by way of interest and ordered each party to pay their own costs of the proceeding.

The application for leave to appeal, the notice of contention, and the application for leave to cross-appeal - the proposed grounds and the issues raised

64 The proposed grounds of appeal, the matters raised in the notice of contention and the proposed grounds of cross-appeal (other than in relation to costs) are set out in full in Annexure C to these reasons.

1. What is the proper construction of the PDSA in relation to the expenses to be taken into account in the calculation of the TPC Group Profit? Is a term to be implied under the principles in BP Refinery v Hastings which precludes expenses not incurred in the normal course of business from being taken into account? (Proposed appeal grounds 1 to 6, and, depending on the conclusion reached, proposed appeal ground 7;[20] and contentions 1 and 2).
2. Was a term implied by law breached by the $20 million donation or any of the other Disputed Expenses? (Proposed appeal grounds 4 (in part) and 8; and contention 3).
3. Should the conspiracy and breach of duty claims relating to the $20 million donation have been upheld? (Proposed cross-appeal grounds 7 and 8).
4. Which of the 16 relevant assets are Introduced Projects? (Proposed appeal ground 10; and proposed cross-appeal grounds 1 to 6).
5. Is Castleway entitled to interest? (Proposed cross-appeal grounds 9 to 13).

66 The application for leave to cross-appeal also contains proposed grounds contesting the costs orders made below (proposed cross-appeal grounds 14 to 16). That issue cannot be addressed until the substantive issues are determined.

67 There are some further discrete issues to be addressed. These are:

(a) whether the claim for breach of the term implied by law as now put was an issue properly raised before the trial judge (a TPC Group submission made orally on these applications);

(b) whether the TPC Group had impermissibly re-opened its case on the Introduced Projects (contention 4);

(c) whether certain of the Disputed Expenses were precluded by specific provisions of the PDSA concerning 'Excluded Entities' and concerning costs, and whether an order made by the trial judge on 31 January 2019 (order 8(a)) concerning expenses related to the $20 million donation ought to have been made (proposed appeal grounds 6, 7 and 9).

We will address these issues in the course of dealing with the principal issues.

Construction of the PDSA and the term implied under BP Refinery v Hastings (Proposed appeal grounds 1 to 6, 7, and contentions 1 and 2)

68 On behalf of the TPC Group, it was submitted that the trial judge had erred in finding that:

(a) the PDSA was ambiguous or contradictory;

(b) the PDSA was a profit sharing agreement; and

(c) a term should be implied to give business efficacy to the agreement;

for the following reasons:

(i) The expression 'TPC Group Profit' was not ambiguous because it was expressly defined to mean an amount 'calculated in accordance with Schedule 2'. Item 2 of Schedule 2 tabulated the calculation starting with 'Total Taxable Income ... as per income tax returns for the

TPC Group Entities ...'. The parties at trial had each contended that the PDSA was not ambiguous or contradictory.

(ii) The PDSA was not a profit sharing agreement or a joint venture. The PDSA expressly stated in cl 5.2 that it did not create a joint venture, partnership, agency or an employment relationship between Castleway and the TPC Group. In oral submissions counsel for the TPC Group said the arrangement was correctly characterised as one under which the fee was calculated 'by reference to' the defined 'TPC Group Profit'.

(iii) The clear language of the PDSA did not permit the implication of a term which would preclude expenses not incurred in connection with the TPC Group's normal business activities from operating to reduce the Service Fee. Schedule 2 expressly provided that the starting point was taxable income as per the tax returns so that all tax deductible expenses had to be taken into account.

(iv) The trial judge had failed to give effect to the agreement of the parties expressed in Schedule 2 that the principles and standards reflected in the calculation of TPC Group Profit for the 2008 financial year should apply.

(a) The PDSA was, as the trial judge found, a profit sharing agreement. Reference to the full terms of the PDSA showed that it envisaged a long term relationship during which the TPC Group would combine their resources and Mr Keeghan's expertise to generate profits from property development opportunities, which would then be shared between the parties.

(b) The trial judge correctly found that the meaning of 'TPC Group Profit' was ambiguous as a result of the conflict between the definition of 'TPC Group Profit' in cl 1.1 and the tabulated formula in item 2 of Schedule 2.

(c) The TPC Group's construction of the PDSA would produce an absurd and uncommercial result because the TPC Group could have the benefit of profits derived from Castleway's provision of property development services but could unilaterally reduce the amount of those profits by having the TPC Group incur expenses unconnected with the property development services.

(d) The words 'as per income tax returns' in item 2 of Schedule 2 are not clear or intractable. The words can mean 'consistently with' or 'having regard to' the tax returns, and do not mandate a conclusion that the TPC Group Profit must include every expense included in each relevant TPC entity's tax return.

(e) Although both parties had contended at trial that the relevant terms of the PDSA were not ambiguous, they had each contended for different and inconsistent meanings. As a result, it was not surprising that the trial judge identified ambiguity and contradiction.

(f) Clause 5 of the PDSA did not preclude the trial judge from finding that the PDSA was a profit sharing agreement. The term 'joint venture' does not have a settled common law meaning and a contractual arrangement to profit share does not necessarily characterise a relationship as a joint venture.

(g) The term which the trial judge found to be implied into the PDSA, being that only expenses incurred in earning the income of the business or in the normal course of business should be included in calculating the Service Fee, satisfied all the necessary requirements for implying a term as set out in BP Refinery v Hastings.

(h) Annexure C provided no assistance in resolving the PDSA construction issues because nothing in the Annexure indicated that the figures in the 'taxable income' column for each entity included expenses that were not incurred in the normal course of business of the TPC Group.

Legal principles in relation to construction of commercial agreements and the implication of terms (other than terms implied by law)

70 To construe the terms of a commercial contract, the Court asks 'what a reasonable businessperson would have understood those terms to mean'.[21] To answer that question, 'the reasonable businessperson [is] placed in the position of the parties',[22] and the Court applies the following principles:

(a) The terms are construed objectively, and the subjective intentions of the parties are irrelevant.[23]

(b) The objective approach requires reference to the text and its ordinary meaning, together with:

(i) the context, being the entire text of the contract including matters referred to in the text; and

These matters will ordinarily be identified by reference to the contract alone,[24] but evidence of mutually known objective background circumstances relevant to the purpose is admissible 'no matter how clear the "ordinary meaning" of the words'.[25] Identification of purpose may allow admission of evidence of the genesis of the transaction, the background, the context and the market in which the parties are operating.[26]

(c) Unless a contrary intention appears in the contract, the court is entitled to approach the task of interpretation on the assumption that the parties intended to produce a commercial result, and should construe it so as to avoid a commercial nonsense.[27] However, the court does not weigh the commerciality of the agreement, and business common sense is a topic on which reasonable minds may differ.[28]

(d) If, after completion of this process, the language used in the contract 'is ambiguous or susceptible of more than one meaning', then evidence of surrounding circumstances external to the contract is admissible to assist with interpretation of the language in question.[29]

(e) However, 'evidence of the parties' statements and actions reflecting their actual intentions and expectations' is inadmissible.[30] Although evidence of prior negotiations is admissible to establish objective background facts known to both parties and the subject matter of the contract, evidence of negotiations reflective of actual intentions and expectations is not receivable.[31]

(f) Post-contractual conduct is inadmissible to construe the terms of the contract.[32] However, the parties' subsequent communications may be relevant to determine whether the parties intended to enter into a binding contract.[33]

71 In relation to the implication of terms (other than terms implied by law), it is well established that five criteria must be satisfied before a term will be implied to give business efficacy to a contract. These are that the implied term:

(a) must be reasonable and equitable;

(b) must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;

(c) must be so obvious that 'it goes without saying';

(d) must be capable of clear expression; and

(e) must not contradict any express term of the contract.[34]

72 The trial judge's analysis of the PDSA is careful and considered. His observations as to the usual meaning of the term 'net profit' are unassailable. The commercial rationale for his conclusions as to the construction of the PDSA, and as to the implied term under the principles in BP Refinery v Hastings, is clear, particularly in the context of the extraordinary (using that word in its non-pejorative sense) $20 million donation.

73 Nevertheless, with considerable reluctance, we are compelled to a different conclusion to that his Honour reached on the issue of construction, and our conclusion on that issue also means we cannot accept the implied term under the principles in BP Refinery v Hastings upon which the judge relied in the alternative. The term implied by law gives rise to different considerations which we address separately below.

74 It seems to us that on this issue the TPC Group's construction of the PDSA is the correct one. In calculating the TPC Group Profit all tax deductible expenses have to be taken into account.

75 The starting point is clause 3. Clause 3.2 provides that the Service Fee shall be calculated in the manner set out in Schedule 2. Item 1 of Schedule 2 sets out the percentages to be applied to the TPC Group Profit so as to calculate the Service Fee. Item 2 sets out the calculation of the TPC Group Profit. The starting figure in that calculation is expressly provided in item 2 of Schedule 2 to be the 'Total Taxable Income ... as per income tax returns'. There is no ambiguity or contradiction in these provisions. The source of the ambiguity and contradiction found by the trial judge is in the definition of 'TPC Group Profit' in cl 1.1, and, in particular, the reference to 'net profit'.

76 We understand and accept the accuracy of what the trial judge said about how the term 'net profit' is ordinarily to be understood. But we are unable to accept the ambiguity and contradiction which the trial judge found by reference to the definition in cl 1.1. The reference to 'net profit' in cl 1.1 does not appear in isolation. The full relevant wording is: 'net profit ... of the TPC Group calculated in accordance with Schedule 2'. We do not consider that the reference to 'net profit', appearing as part of an expression which expressly incorporates Schedule 2, creates any relevant ambiguity or contradiction with respect to the calculation provided for in Schedule 2. That calculation is founded on taxable profit as per the tax returns. Tax deductible expenses cannot be removed consistently with the express terms of Schedule 2.

77 We do not accept the respondents' submission that the words 'as per income tax returns' in item 2 of Schedule 2 are ambiguous. The full context for the use of those words is important. The expression used is 'Total Taxable Income (loss) as per income tax returns'. This refers to a specific figure in income tax returns, not any other amount that, despite being a different figure, might somehow be 'consistent with' the figure in the return in question, or which merely 'has regard to' the latter figure.

78 Nor does reference to the minutes of the 17 June 2008 meeting assist, as Castleway and Mr Keeghan contend in the notice of contention. Even assuming that recourse to that document were to be permitted for the purposes of construction because the PDSA makes express reference to the meeting, the PDSA itself treats the meeting as only having involved discussion of a proposal. The proposal discussed before the PDSA was entered into does not assist in identifying the method of calculation under the PDSA. The PDSA makes it clear that it is the repository of the final agreement, notwithstanding what had been discussed previously.

79 As indicated, our conclusion on the construction issue means we also cannot accept the implied term under the principles in BP Refinery v Hastings upon which the judge relied in the alternative. This is because the implied term found by the trial judge is inconsistent with our construction of the express terms of the PDSA. We consider that the express terms of the PDSA provide that all tax deductible expenses must be taken into account. The implied term found by the trial judge under the principles in BP Refinery v Hastings would contradict those express terms by excluding some tax deductible expenses.

80 These conclusions mean we reach a different conclusion to that His Honour reached in relation to the $20 million donation, insofar as His Honour determined, on the basis of his construction of the PDSA and, alternatively, a term implied under the principles in BP Refinery v Hastings, that that donation was not to be treated as an expense when calculating the Service Fee.

81 They also mean we reach a different conclusion to His Honour in relation to the Disputed Expenses. Whereas his Honour, and the Special Referee acting as instructed, assessed the expenses by reference to whether they were normal business expenses, we consider that for the purposes of the Schedule 2 calculation the relevant issue is whether they were tax deductible.

82 Accordingly, the trial judge's findings disallowing:

1. accounting and legal expenses incurred in connection with this proceeding;[35] and

b. increases in directors' fees paid to Mr Lee; [36]

which were based on the trial judge's construction of PDSA, must be set aside. It was not pleaded or contended that the incurring of such expenses was a breach of any term implied by law.

83 At this point we turn to address one of the discrete matters to which we referred earlier, being the effect of specific provisions of the PDSA dealing with 'Excluded Entities'.

84 Item 5 of Schedule 2 to the PDSA provided that 11 nominated 'Excluded Entities' were not part of the TPC Group:

The parties acknowledge and agree that the following entities are not part of the TPC Group and will not be included for the purpose of calculating TPC Group Profit: [a list of 11 companies].

85 The Special Referee opined that the accounting expenses of the Excluded Entities constituted normal business expenses. The trial judge did not accept the Special Referee's opinion because he found that expenses of Excluded Entities were specifically excluded from the TPC Group Profit calculation by item 5 of Schedule 2 to the PDSA.[37]

86 The TPC Group submitted that the relevant expenses were accountancy expenses paid by SR Consolidated relating to meetings and the preparation of documents in respect of distributions to be made through the Excluded Entities, but ultimately benefiting the group. As they were tax deductible for SR Consolidated, they were properly taken into account in calculating the TPC Group Profit.

87 Castleway and Mr Keeghan submitted that the trial judge was entitled to find that the relevant expenses fell within item 5 of Schedule 2 to the PDSA. They relied on the expert evidence of Mr Campbell Jackson of Ernst Young who had concluded that $68,321 of Grant Thornton's fees related to professional services it provided for Excluded Entities.

88 By a report dated 26 February 2018, Mr Jackson undertook 'key word searches over the [relevant data] to identify [n]arrations that may relate to activities, persons, entities or tasks per [his] [i]nstructions'. He identified Grant Thornton fees of $68,321 for the 2014, 2015 and 2016 financial years that 'may relate' to Excluded Entities.

89 The trial judge found that item 5 of Schedule 2 to the PDSA expressly excluded the expenses of Excluded Entities in the calculation of the TPC Group Profit and therefore decided that these fees should be excluded. This conclusion assumed that the fees were properly the expenses of Excluded Entities.

90 The Special Referee noted that 'this item relates to accounting fees, expensed and paid for by SR Consolidated which impact the TPC Group Profit calculation' and concluded as follows:

In my view, the accounting expenses incurred in respect of the profit recipient companies and funding trusts Excluded Entity types above are Normal Business Expenses as they appear to:

(a) be a result of the corporate and funding structure of the TPC Group;

(b) have been established for the purpose of tax planning activities, profit sharing and funding; and

(c) not carry on a separate and distinct business to the TPC Group.

I accept the Plaintiffs' assertion that '[a]ny outcomes generated in relation to Excluded Entities ultimately benefited the TPC Group entities', due to the benefit of their existence from a tax and funding perspective.

91 In our opinion, the Excluded Entities' accounting expenses were properly included in the calculation of the TPC Group Profit, for the following reasons:

(a) The relevant expenses were expensed and paid for by SR Consolidated and therefore were an expense in the tax returns of the TPC Group Entities, as referred to in item 2 of Schedule 2 to the PDSA.

(b) The opinion of the Special Referee was, in substance, that the fees were properly recorded as expensed and paid for by SR Consolidated and were for the benefit of the TPC Group Entities.

(c) The evidence that the fees 'may relate' to Excluded Entities does not justify the conclusion that they were expenses of the Excluded Entities and not of the TPC Group Entities.

92 These conclusions mean leave to appeal should be granted and the appeal allowed on proposed grounds 1, 2, and 6.

93 Proposed ground 3 concerns the judge's characterisation of the PDSA as a profit sharing agreement in the October 2017 Reasons. We are unpersuaded that there is any real significance in the label placed upon the arrangement, but to the extent that there is any significance in it, we consider that the judge was correct to characterise it in that way. It is an arrangement where the manager's remuneration is a percentage of taxable profit as per the tax returns with specified adjustments. In our view, that may be properly characterised as a profit sharing arrangement. We are also unpersuaded of the validity or relevance of the complaint made in proposed ground 3 about the judge's reference to joint venturers in the October 2018 Reasons, but the issue does not arise given our conclusion on the construction issue. We would refuse leave to appeal on proposed ground 3.

94 Proposed ground 4 concerns a term which it is said the judge implied 'as a matter of law or fact'. Putting to one side for the moment the issue of a term implied by law, our conclusion on the issue of construction of the PDSA necessarily means we must differ from the trial judge on the issue of a term implied under the principles in BP Refinery v Hastings. Leave to appeal should be granted and the appeal allowed on proposed ground 4 insofar as it concerns what it characterises as the term implied as a matter of fact.

95 As to proposed ground 5, we consider that the judge was correct when he found that the annexed 2008 calculation did not reveal any principles or standards which assist in determining the relevant controversy. The annexed 2008 calculation adds nothing of relevance to what is set out in item 2 of Schedule 2. Leave to appeal should be refused on this proposed ground.

96 Our conclusions on the construction issue, and the term implied under the principles in BP Refinery v Hastings, mean that the Special Referee was asked an irrelevant question. Proposed ground 7 has been rendered largely otiose by these conclusions. However, that ground also raised one of the discrete issues that requires separate consideration.

97 The judge held that cl 10.1 of the PDSA, which required the parties to bear their own costs of negotiating 'this Agreement', precluded the Special Referee from taking into account, in the calculation of the TPC Group Profit, costs of the TPC Group in relation to proposed variations to the PDSA.[38] No such variation was ultimately made. The definition of 'Agreement' in the PDSA is 'this agreement and any variations made to it'.

98 In our opinion, these expenses were not precluded by cl 10.1.

99 First, cl 10.1 only addresses the costs of negotiating the 'Agreement'. The definition of 'Agreement' does not extend to proposed variations which do not come into effect. Second, and more fundamentally, the fact that a party cannot claim reimbursement of its costs from any other party says nothing as to whether it can claim those costs as a tax deduction. If such costs feed into the definition of TPC Group Profit, that does not constitute a reimbursement of costs by any other party. To this extent, leave should be granted in respect of proposed grounds 6(c) and 7 and the appeal allowed.

100 Leave to appeal on proposed ground 7 should be otherwise refused.

Term implied by law (Proposed appeal grounds 4 and 8, and contention 3)

101 The trial judge recorded Castleway and Mr Keeghan as having submitted that there was a term implied into the PDSA by operation of law requiring a contracting party to do all things necessary on its part to enable the other to have the benefit of their contract, and to act reasonably and in good faith so as not to frustrate or prevent their contract's commercial purpose being fulfilled.[39]

102 Before this Court counsel for Castleway and Mr Keeghan adopted that as their position on this issue. They submitted that by resolving to make, and by making, the donation, intending it to be taken into account in calculating the Service Fee, the TPC Group breached this implied term. Thus, they submitted the breach occurred on 29 June 2017 and that damage was suffered as a result because it was then 'inevitable' the Service Fee would be reduced by $8 million.

103 The TPC Group submitted that before a term implied by law 'can have work to do' it is necessary to determine what was the agreed benefit under the PDSA and what was its commercial purpose. These were issues of construction. It was submitted in this context that it was not permissible to construe the PDSA from an a priori position as a profit sharing agreement as, it was submitted, the trial judge had done.

104 The TPC Group submitted that Castleway and Mr Keeghan had not pleaded, or advanced before the trial judge, a claim based upon a term implied by law in the manner in which it was put on these applications. In particular, it was submitted that no damages claim for breach of a term implied by law had been advanced and that the TPC Group would have contended that no damage had been suffered.

105 At the outset of the hearing before this Court, the first matter addressed by counsel for the TPC Group was evidence of other charitable activities of the TPC Group. The relevance of this evidence was never entirely clear. It seemed to be directed at altering or qualifying the perception that the $20 million donation was an extraordinary transaction, divorced from the normal activities of the TPC Group. In the context of the implied terms generally, the TPC Group submitted that the implications sought were 'contradicted' by the philanthropic activities and the 'family' character of the TPC Group's business.

Legal principles in relation to terms implied by law

106 In Mackay v Dick, Lord Blackburn said that there is a general rule that where parties have contracted for a thing to be done each agrees to do all that is necessary on its part for the carrying out of that thing though there may be no express words to that effect.[40] In Butt v McDonald, Griffith CJ said there is a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary to enable the other party to have the benefit of the contract.[41] In Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd, the High Court quoted and adopted these statements of general principle.[42]

107 The High Court has also recognised the existence of a negative covenant implied by law. In Peters (WA) Ltd v Petersville Ltd, Gleeson CJ, Gummow, Kirby and Hayne JJ said this covenant required a party 'not to hinder or prevent the fulfilment of the purpose of the express promises made' in the contract.[43] In that respect they cited a passage from Dixon J's judgment in Shepherd v Felt and Textiles of Australia Ltd where he said, in describing the obligations of a sales agent:

The express promise of the appellant to use his best endeavours to obtain orders for the respondent and to influence business on its behalf necessarily includes an obligation not to hinder or prevent the fulfilment of its purpose. Moreover, the contract established a relation between the parties intended to subsist for a period, and it involved some degree of mutual confidence and required a continual co-operation. Its object was the increase of the sale of the respondent's manufactures, and to that end the extension of the respondent's business connection. Such an agreement inevitably imported a tacit condition that the appellant should perform the services faithfully which he contracted to give the respondent, and should not endeavour to impede or defeat the respondent in the sale of its manufactures at the prices it might think proper to ask.[44]

108 In this context, the express reference by Dixon J, and by Gleeson CJ, Gummow, Kirby and Hayne JJ, to hindering or preventing fulfilment of the 'purpose' of the express promises is important.

109 It has not always been clear whether these principles apply as a matter of construction or as implied terms. The current most authoritative exposition of the principles appears to us to be found in the plurality judgment of the High Court in Commonwealth Bank of Australia v Barker.[45]

110 Commonwealth Bank v Barker concerned a dispute between an employer (the bank) and an employee (Barker) over the circumstances of his redundancy. He contended that his employment contract contained an implied term requiring mutual trust and confidence, and he also contended for a breach of the Mackay v Dick duty to cooperate. The postulated obligation of mutual trust and confidence was a new implied term which the High Court was urged to adopt relying upon authorities in the United Kingdom.

111 In that context French CJ, Bell and Keane JJ addressed the issue of implied terms generally.[46] They referred to terms implied under the principles in BP Refinery v Hastings as terms implied 'in fact or ad hoc'. A separate category of implied terms was terms implied 'in law in all classes of contract'.

112 The plurality observed that it has been argued that some terms said to be implied by law are in fact rules of construction and that all such terms of universal application fall into that category.[47] They observed that the principle enunciated by Lord Blackburn in Mackay v Dick had been characterised in that way by Mason J in Secured Income, although he had also referred to the rule as an implied 'duty to cooperate'.[48]

113 The plurality endorsed an academic observation that in practice the two kinds of implied terms, in fact and by law, tend to 'merge imperceptibly' into each other.[49]

114 In the specific context of the term implied by law they emphasised the criterion of 'necessity', and, in that context, they quoted and adopted the analysis of McHugh and Gummow JJ in Byrne v Australian Airlines,[50] an earlier High Court appeal concerning an employment contract. The plurality said:

In Byrne v Australian Airlines Ltd, McHugh and Gummow JJ emphasised that the 'necessity' which will support an implied term in law is demonstrated where, absent the implication, 'the enjoyment of the rights conferred by the contract would or could be rendered nugatory, worthless, or, perhaps, be seriously undermined' or the contract would be 'deprived of its substance, seriously undermined or drastically devalued'.[51]

Later, the plurality returned to this issue saying that the relevant 'necessity' was not satisfied by demonstrating 'reasonableness', but may be demonstrated by the 'futility' of the transaction absent the implication.[52]

115 As to the other judges, Keifel J also quoted and adopted what McHugh and Gummow JJ had said in Byrne v Australian Airlines about 'necessity' in this context.[53] Gageler J, in referring to the 'requisite inquiry' before a new term implied by law might be found, said that it had been described as the application of a 'test' of 'necessity' and cited the relevant passage from Byrne v Australian Airlines which the other judges had quoted and adopted.[54]

116 Thus, it seems that the relevant principles are best analysed as terms implied by law. 'Necessity' is the rationale for their existence and the circumstance which must be 'demonstrated' for them to be operative. The requisite necessity is so demonstrated where, absent the implication, the enjoyment of the rights conferred by the contract would or could be rendered nugatory, worthless, or, perhaps, seriously undermined; or the contract would be deprived of its substance, seriously undermined or drastically devalued.

117 On this basis, the law will imply, in appropriate circumstances, a positive obligation to take action (to co-operate and to do all such things as are necessary to enable the other party to have the benefit of the contract), and a negative covenant not to hinder or prevent the fulfilment of the purpose of the express promises made in the contract.

118 The relevant duty 'is a duty to afford the other party the benefit of what he has contracted for; not a duty to act generally in the other party's best interests'.[55] A term implied by law cannot be used as a basis for imposing on a party something commercially advantageous to the other party but for which the contract does not provide.[56] The implied term is necessarily informed by the express terms of the contract.[57] Thus, this Court has not accepted contentions that a term implied by law can, in effect, turn a contractual non-exclusive licence into an exclusive one;[58] or require a party to act as if an express contractual right did not exist.[59] As the Court of Appeal of the Supreme Court of Western Australia recently observed, the term implied by law, whether expressed positively or as a negative covenant, is not only limited by the criterion of necessity but must relate to bringing about something which the contract requires to happen.[60] Even more recently, the Court of Appeal of the Supreme Court of Queensland has held that the implied duty to co-operate is 'conditioned' by the concept of reasonableness.[61]

119 Before addressing the application of these principles here, it is necessary to briefly address the evidence relied upon concerning the TPC Group's other philanthropic activities, and the submission made by the TPC Group that the claim now made founded upon a term implied by law had not been pleaded and was not advanced before the trial judge.

120 Counsel for the TPC Group relied upon the following evidence:

(a) Mr Lee gave the following evidence with respect to a property called Gumbuya Park:

Gumbuya Park was a recreational park in Tynong that Ron established, which incorporated rides, animal exhibits, a café and attractions for children. It usually operated at a loss. Ron was passionate about the area and had wanted to create a golf course and units in the area as well, however, this never transpired.

(b) Mr Lee gave the following evidence with respect to a charity called Cornerstone:

Cornerstone is one charity that Ron and Nancy have supported for many years. Cornerstone mainly helps homeless people in Dandenong, which is where Ron and Nancy lived for many years. Ron bought an old church and related buildings on the corner of Mason and Walker Streets, Dandenong (Dandenong Church), in the late 1980s and allowed Cornerstone to use it. Cornerstone occupied the Dandenong Church on a rent free basis for approximately

25 years.

Cornerstone did not provide accommodation out of the Dandenong Church, but had a soup kitchen and offered counselling services by Cornerstone and related organisations. Cornerstone is funded by donations. I am unsure whether the TPC Group ever made any cash donations to them.

(i) At the TPC Group's board meeting held on 17 June 2014, Mrs Rado said she was undecided as to whether she would give the property to Cornerstone or sell it and give them the proceeds.

(ii) Mr Ron Rado was posthumously inducted into the Dandenong Chamber of Commerce Hall of Fame for his services to the community and was involved in other community activities.

121 In relation to these activities, Castleway and Mr Keeghan relied upon the following evidence of Mr Keeghan:

(a) The charitable donations made by the TPC Group were in the range of $5,000 to $15,000 and would not have exceeded $25,000 in any one financial year.

(b) In February 2006, he was instructed to obtain board approval before making any charitable donations.

(c) With respect to Cornerstone, in 1988 the TPC Group bought the Dandenong Church but had not obtained development approval before the recession. The Church of Christ was permitted to use it for charitable purposes, which meant that no land tax was payable. It was not donated to charity and the Church of Christ was asked to vacate it several months ago. The TPC Group intends to sell the property.

(d) With respect to Gumbuya Park, it was run to break-even with the intention to develop it in future. It was sold in June 2016 and the proceeds were not donated to charity.

122 The trial judge noted the evidence that the TPC Group would from time to time make 'small donations to charities of $5,000 up to $15,000', which he considered could be classified 'as being made in the normal course of business, such as many businesses do from time to time as part of giving back to the community or part of their civic duties'.[62] He otherwise did not attribute any significance to the evidence of charitable activities, and we consider that he was correct to do so. Whatever may be said about the other charitable activities of the TPC Group, the $20 million donation was unprecedented and extraordinary. In our opinion, those activities have no relevant bearing upon the analysis of that donation in the context of the terms implied by law.

Was the claim based upon terms implied by law pleaded and advanced below?

123 The TPC group submitted that at trial Castleway had not conducted its case on the basis that it was entitled to damages for breach of a term implied by law. It was not suggested that an issue concerning such an implied term had not been raised. The trial judge expressly referred to it, and the TPC Group's written submissions before this Court asserted that the judge had found against them on the issue. As we understood it, what was put was that no claim as it was put on the applications before us had been pleaded or advanced before the trial judge and that the TPC Group had had no proper opportunity to meet it, particularly on the issue of damages.

124 By their second further amended defence and counterclaim filed 19 July 2017, Castleway and Mr Keeghan relevantly pleaded as follows:

6. There are further terms of the PDSA, inter alia, that:

...

(r) the parties agree to do all such things as are necessary on their part to enable the other parties to have the benefit of the PDSA; (implied term)

(s) the TPC Group and the Defendants, acting by their directors, employees, contractors and agents (where applicable), will act reasonably and in good faith so as not to frustrate or prevent the fulfilment of the commercial purpose of the PDSA ('Commercial Purpose'); (implied term)

...

20. In the circumstances, on the proper construction of the PDSA:

...

(c) a fundamental commercial purpose of the PDSA is to enable the First Defendant to receive the benefit of a share of the gross profits of the TPC Group before tax in consideration of the First Defendant providing property procurement, development and management services in relation to projects owned by the TPC Group to achieve their optimum profitable development outcome.

...

60BP Further, and in the premises, on the proper construction of the PDSA the TPC Group will breach the PDSA if the expense Adaz Nominees has incurred by way of the Charitable Donation:

(a) has the effect of reducing Adaz Nominees' taxable income as per its income tax return for the purpose of calculating the Service Fee payable to the First Defendant under the PDSA for the financial year ending 30 June 2017; and

(b) is taken into account when determining the TPC Group Profit for the purpose of calculating the Service Fee payable to the First Defendant under the PDSA for the financial year ending 30 June 2017.

60BQ If, as it is presently intended, the expense Adaz Nominees has incurred by way of the Charitable Donation is taken into account in determining and thereby reducing the TPC Group Profit, for the purpose of calculating the Service Fee payable to the First Defendant for the financial year ending 30 June 2017, then in breach of the terms of the PDSA:

...

(c) the TPC Group will fail:

(i) to act reasonably and in good faith so as not to frustrate the Commercial Purpose or prevent the fulfilment of the Commercial Purpose; and

(ii) to do all such things as are reasonably necessary on its part to enable the First Defendant to have the benefit of the PDSA;

...

125 With respect to the allegations that the $20 million donation was made in breach of directors' duties and in furtherance of the conspiracy, it was further alleged:

60BV ...

(e) in the premises, the First Defendant has been deprived of $8m, being the additional amount of the Service Fee which it would be entitled to receive from the TPC Group under the PDSA in respect of the financial year ending 30 June 2017 had Adaz Nominees not paid the Donation in that financial year.

60BW by reason of the matters alleged in each of paragraphs 60BS to 60BV, above, or, alternatively, any of them, the First Defendant will suffered [sic] loss and damage.

Particulars

The First Defendant's loss and damage is $8m, being the additional amount of the Service Fee which the First Defendant would be entitled to receive under the PDSA in respect of the financial year ending

30 June 2017 had Adaz Nominees not paid the Donation in that financial year.

126 The prayer for relief relevantly included the following:

1. Damages representing the full amount of the Service Fee which remains outstanding and which the First Defendant is, or will be, entitled to be paid under the PDSA, including:

...

(x) $8,000,000, being the additional amount of the Service Fee which the First Defendant would be entitled to receive from the TPC Group under the PDSA in respect of the financial year ending 30 June 2017 had Adaz Nominees not paid the Donation in that financial year.

1. A Declaration that, on the proper construction of the PDSA, the First Defendant is entitled to receive payment from the TPC Group for:

...

(iii) $8m, being the additional amount of the Service Fee which the First Defendant would be entitled to receive from the TPC Group under the PDSA in respect of the financial year ending 30 June 2017 had Adaz Nominees not paid the Donation in that financial year ...

127 The trial closing submissions of Castleway and Mr Keeghan dated

7 September 2017 included submissions with respect to the alleged terms implied by law and in particular submitted:

1. The Defendants rely on terms implied into the PDSA by operation of law. Those terms require a contracting party to do all things necessary on its part to enable the other to have the benefit of their contract, and to act reasonably and in good faith so as not to frustrate or prevent their contract's commercial purpose being fulfilled. It has been considered 'easy' to imply such a duty to co-operate when it relates to the parties' fundamental obligations under a contract.[63]

1. Accordingly, it is submitted that the law implies into the PDSA the terms on which the Defendants seek to rely to preclude the TPC Group from frustrating or preventing the PDSA's profit-sharing purpose, by taking active steps to diminish the [sic] Castleway's share of the TPC Group profit (and therefore the Service Fees payable to Castleway), and by relying upon various expenses unrelated to the TPC Group's normal business activities.

128 By their notice of contention dated 19 March 2019, Castleway and Mr Keeghan contended the following:

In the alternative to the findings at [77] and [85] of the October 2017 Reasons, the primary judge should have reached the Permitted Expenses Finding by reason of terms implied by law requiring the TPC Group to do all things necessary on its part to enable Castleway to have the benefit of the PDSA, and to act reasonably and in good faith, so as not to frustrate or prevent the PDSA's commercial purpose being fulfilled.

129 In the October 2017 Reasons, the trial judge found that on the proper construction of the PDSA the $20 million donation should not be treated as an expense of the TPC Group in calculating the 2017 Service Fee.[64]

130 By email of 22 August 2018, Grant Thornton reported on the calculation of the Service Fee and other matters under the PDSA for the 2017 financial year. The calculation was adjusted to add back the '$20m donation in accordance with commentary provided by the Honourable Justice Robson'.

131 By notice of dispute dated 29 August 2018, the TPC Group disputed Grant Thornton's calculation of the Service Fee on the basis that it had wrongfully added back the $20 million donation to the TPC Group Profit.[65]

132 We do not consider that Castleway and Mr Keeghan should be precluded on these applications, and appeals, from contending for relief for breach of the alleged terms implied by law by reason of their pleadings or the conduct of the trial below, for the following reasons.

133 Castleway and Mr Keeghan's pleading alleges the terms implied by law and the fact that the making of the $20 million donation was a breach of those terms. Their written submissions at trial reveal that, despite their emphasis on other claims, they maintained the allegation that the making of the $20 million donation was a breach of the alleged terms implied by law.

134 The matter of potential significance which is missing from Castleway and Mr Keeghan's relevant pleading is a clear claim for damages founded upon breach of the alleged terms implied by law. Damages in contract will generally attempt to place a plaintiff in the position which it would have been in had the breach not occurred.[66] Had the alleged breach not occurred, the Service Fee for the financial year ended 2017 would have been calculated by the nominated accountant without the deduction of the $20 million donation. As at the time of the trial, and when the October 2017 Reasons were delivered, the nominated accountant's report for the 2017 financial year had not been provided. That report was provided after the October 2017 Reasons, and the nominated accountant did calculate the Service Fee without the deduction of the $20 million donation in accordance with what was said to be 'the commentary' of the trial judge. The 'missing' claim for damages would have been premature at the time of the trial. In the course of these applications we were informed that the Service Fee for the 2017 financial year is now the subject of a separate proceeding pending in the trial division.

135 The allegation of breach of terms implied by law was pleaded and was before the trial judge. A damages claim based upon that breach had not been clearly pleaded, but it could well have been seen as premature at the time of trial. As matters in fact transpired, the donation was excluded from the nominated accountant's calculation. In our view, the substantive claim made can and should be determined on these applications, although the relief to be granted should the claim succeed, and the effect of our conclusions on the pending trial division proceeding, is a matter upon which we will need to hear the parties further.

136 The PDSA is an agreement about property development. It is an arrangement whereby Castleway is to provide property development services to the TPC Group. Amongst other things, Castleway is obliged by cl 2.5 to investigate relevant opportunities, to assist in planning and in securing finance for acquisitions, and to manage properties of the TPC Group 'to a profitable development outcome'.

137 Objectively assessed, the purpose of the PDSA was, as Castleway and Mr Keeghan submitted, to provide for a long term relationship between the TPC Group on the one hand and Castleway and Mr Keeghan on the other whereby the TPC Group would combine its resources and Castleway and Mr Keeghan's expertise to generate profits from property development opportunities. Whether the Service Fee provisions are characterised as a 'sharing' of profits or as a calculation 'by reference to' profits makes no difference. The parties determined that Castleway's remuneration should be entirely dependent on the TPC Group Profit. This is explicable by the obligations of Castleway as Manager as provided for in the PDSA. It is Castleway's work as Manager which will generate the profits. The purpose of the express promises in the PDSA, both Castleway's obligation to source and manage projects to a profitable outcome, and the TPC Group's obligation to pay the Service Fee, was maximisation of the TPC Group Profit.

138 At the risk of laboring the obvious, the express promises in the PDSA regulate a profit making venture. They do not regulate a charitable undertaking.

139 Under terms implied by law, Castleway and the TPC Group were each obliged to do all such things as were necessary to enable the other party to have the benefit of the PDSA, and not to hinder or prevent the fulfilment of the purpose of the express promises made in the PDSA.

140 In our opinion, the $20 million donation to the charity associated with Mrs Rado and the Rado family was a breach of these implied terms.

141 The $20 million donation was an action which necessarily had the effect of substantially reducing the TPC Group Profit, thereby preventing Castleway from having the benefit of the PDSA, and hindering or preventing the fulfilment of the purpose of the express promises in the PDSA, by depriving Castleway of a substantial part of its remuneration. Absent the implied term, this donation 'seriously undermined' and 'drastically devalued' the benefit for which Castleway had contracted. The capacity to make such a donation, absent the implied term, would potentially render 'nugatory' or 'worthless' Castleway's entitlement to remuneration under the PDSA and 'deprive it of substance', for the profit could be given away to charity.

142 The terms implied by law must be informed by the express terms of the contract. But where the requisite necessity to which the authorities refer has been demonstrated, as it has been in this case in our opinion, it cannot be an answer to say that the express terms do not provide for the relevant implied obligation or prohibition. If that were so, terms implied by law would never become operative. Similarly, in our view it is no answer to say that Schedule 2 provides for all tax deductible expenses to be taken into account and that the implied terms cannot vary or qualify that provision. The implied terms do not vary or qualify that provision. It is because of that provision that the TPC Group had the capacity to seriously undermine and drastically devalue Castleway's agreed remuneration by giving the profits away as a tax deductible donation. The implied terms do not alter the operation of Schedule 2. Rather, the TPC Group breached the terms implied by law by making the donation precisely because of the effect Schedule 2 would then produce.

143 In the course of argument it was put to counsel for the TPC Group that on their construction of the PDSA, and analysis of the implied terms, Mrs Rado could have decided in each financial year to donate the entire profit to charity, thereby reducing the Service Fee to zero, while still requiring Castleway to carry out its management obligations. Counsel accepted that that was so, and submitted that the 'remedy' for Castleway would be to give six months' notice of termination. Even on that scenario, Castleway would be required to carry out its management obligations for at least 18 months (assuming all the profits were gifted at the end of the first financial year and notice was given immediately) for no remuneration. We consider that that outcome reveals the TPC Group's analysis to be untenable.

144 Mrs Rado's position in her evidence was that what she had done was to 'mak[e] a donation with my money'. When challenged on the source of the funds she said the money came from 'my own company'. She took the view in relation to Mr Keeghan that 'it was nothing to do with him'.[67]

145 Mrs Rado was of course entitled to give 'her own money' to charity, or, consistently with her director's duties, to procure companies she controlled to do so. But she was not entitled to do so in a way which deprived Castleway of the benefit it had contracted for under the PDSA. She could have made this donation out of dividends paid to her or she could have procured the companies she controlled to make the donation after 30 June 2017. There would then have been no effect on the calculation of the Service Fee.

146 Insofar as the trial judge found that there had been a breach of terms implied by law, in our opinion he was right to do so. But the terms breached were not referable to 'normal business expenses'. The obligations breached were as we have described them.

147 There is then an issue as to how proposed grounds of appeal 4 and 8 and contention 3 are to be dealt with as a consequence of our conclusions, especially in the light of the nominated accountant's report (which did not deduct the donation) and the separate pending proceeding concerning the 2017 financial year. In the circumstances, as indicated, we will hear the parties further on that issue.

Conspiracy and breach of duty (Proposed cross-appeal grounds 7 and 8)

148 The trial judge found that the $20 million donation was not made for an improper purpose. The finding was based on his acceptance of the following evidence:

(a) Mrs Rado said that Mr Keeghan was not told of the proposed donation until 16 June 2017 'because it was not his business and it was her money that was being dealt with'.[68] She considered that it was not a relevant matter for Mr Keeghan's duties as CEO, because it related to the distribution of her property.[69]

(b) Mr Stephen Rado said that:

[H]e only realised that the donation would adversely affect the Service Fee when that was brought to his attention in about June 2017 by Mr Lee, after Mr Skinner, who was the accountant at Grant Thornton primarily responsible for reporting on the net profit under the PDSA, provided accruals for that year.[70]

(c) Mr Lee's evidence was that, despite what he had deposed to in an earlier affidavit, 'he only realised that the donation would adversely affect the service fee when Mr Skinner provided the accruals for the 2017 financial year', and he chose the figure of $20 million because it represented approximately

20 per cent of the net family worth and would reduce the tax payable for the 2017 financial year by approximately $10 million.[71] He also considered that it was not a relevant matter for Mr Keeghan as CEO, because it related to the distribution of Mrs Rado's property.[72]

149 On behalf of Castleway and Mr Keeghan, it was submitted that the trial judge failed to give adequate consideration to:

(a) the implausibility of the evidence of Mrs Rado, Mr Stephen Rado and Mr Lee in the circumstances;

(b) the fact that each of the above witnesses knew that the donation would be paid from Adaz Nominees' funds and not from Mrs Rado's personal funds;

(c) the fact that each of the witnesses knew before the directors' meeting on 29 June 2017 that the $20 million donation would reduce the Service Fee by $8 million in the 2017 financial year; and

(d) the evidence that the witnesses concealed the proposed donation from Mr Keeghan.

150 On behalf of the TPC Group, it was submitted as follows:

(a) It was not put to any of the three directors that the purpose of the $20 million donation was to give a personal benefit to Mrs Rado or that there was any agreement between them to injure Castleway or Mr Keeghan's interests.

(b) In closing submissions, senior counsel for Castleway and Mr Keeghan did not seriously pursue the conspiracy allegations stating:

The conspiracy issue, Your Honour, was raised as an alternative to the main claim in this case and damages would double up in any event, so it may well be that if Your Honour makes a finding favourable on the main issue, there is no need to canvass it, but if Your Honour wants to canvass the conspiracy, we say we've got a legitimate claim, for all the various reasons set out in the submission, and we propose Your Honour read the contents of the submission.

(c) The trial judge had the benefit of seeing and hearing the evidence of the three directors and the findings of the trial judge were not 'glaringly improbable' or inconsistent with 'incontrovertible evidence'.

151 We will give leave to cross-appeal on proposed grounds 7 and 8 as the matters raised are arguable, but we will dismiss the cross-appeal on those grounds for the following reasons.

152 The elements of the tort of conspiracy are that:

(a) two or more persons act in combination;

(b) to either:

(i) commit an unlawful act with the intention of causing harm to the plaintiff;[73] or

(ii) perform an otherwise lawful act with the predominant purpose of causing harm to the plaintiff;[74] and

(c) the act causes damage to the plaintiff.[75]

153 The claim of conspiracy based on an unlawful act must fail for the following reasons:

(a) Castleway's claim based on the tort of conspiracy was put to the trial judge as an alternative to the contractual claim. The allegation was that the conspiracy was to do an unlawful act, being the making of the $20 million donation in breach of the PDSA. Accordingly:

(i) if the making of the $20 million donation was found to be in breach of the PDSA, it was unnecessary to rely on this alternative claim; and

(ii) if the making of the $20 million donation was not in breach of the PDSA, the conspiracy claim could not succeed.

(b) With respect to the allegation that the making of the $20 million donation was in breach of directors' duties, Mrs Rado consented to the $20 million donation. She was the sole shareholder of Adaz Nominees. The directors in making the donation, acted in accordance with the wishes of the sole shareholder. There was no issue as to Adaz Nominees' solvency. In the circumstances, the directors could not be liable for any breach of fiduciary duty to the company.[76]

154 The claim of conspiracy based on an otherwise lawful act must fail because to establish the tort of conspiracy on that basis, it must be proved that the predominant purpose of the conspirators was to injure Castleway.

155 The trial judge found, in substance, that the majority directors of Adaz Nominees had made the decision to make the $20 million donation in the belief that it was in effect a distribution of Mrs Rado's own property that the TPC Group was contractually entitled to make.[77] The trial judge had the opportunity to observe the relevant witnesses. Their evidence, which the trial judge accepted, was not 'glaringly improbable' or inconsistent with 'incontrovertible' evidence, so as to permit this Court to overturn the trial judge's finding.[78]

156 In fact, it was Castleway and Mr Keeghan's contention at trial that '[t]he predominant purpose of that agreement was to harm Castleway's interests and benefit the interests of the Rado Family'.

157 In McKernan v Fraser, Dixon J said that, for a combination, or acts done in furtherance of a combination, to amount to conspiracy, where the end sought to be achieved is not unlawful, the means are not unlawful and no threat of illegality is made, the parties must have been impelled to act by a desire to harm the plaintiff, which must have been 'the sole, the true, or the dominating, or main purpose' of the conspiracy.[79] If the sole or predominant purpose of the action taken was to advance or protect the interests of the alleged conspirators, or of another person, that excludes a sole or predominant purpose of harming the plaintiff.[80]

158 The trial judge's finding amounts to a finding that the predominant purpose of the alleged conspirators was to make a distribution of Mrs Rado's own property, which is inconsistent with the predominant purpose having been to harm Castleway.

159 Castleway cannot establish the necessary predominant purpose by simply pointing to the fact that the result of the $20 million donation was harmful to it. As McDougall J explained in Ballard v Multiplex:

The purpose of a conspiracy (or combination) is not necessarily to be identified with its immediate result. For example, merchants may combine for the purpose of enhancing their business and profits. The inevitable result of that combination may be that a competitor is ruined. Indeed, the ruin of a competitor may be the means by which they intend to achieve their purpose. But the law seems to recognise that such a combination would not be actionable (leaving aside, of course, any statutory prohibitions), because the purpose was lawful even though both the result and the means to the achievement of that purpose was the ruin of a competitor.[81]

Expenses related to the Foundation (Proposed appeal ground 9)

160 The trial judge declared that all accounting, directors' and legal fees, or other fees and expenses incurred in relation to the establishment and continued operation of the Foundation and Rado Family Foundation Pty Ltd, and the making of the

$20 million charitable donation by Adaz Nominees to Rado Family Foundation Pty Ltd as trustee for the Foundation, were not to be included as expenses of the TPC Group when calculating:

(a) the Service Fee payable under the PDSA in respect of the 2017 financial year;

(b) the Commission on Introduced Projects completed after the termination of the PDSA under cl 4.5 of the PDSA; or

(c) the termination adjustment under item 4 of Schedule 2 to the PDSA.

161 The TPC Group submitted that this category of expenses was not disputed in any pleading, nor was it the subject of evidence or submissions at trial. It was not addressed in any of the trial judge's reasons because it was never an issue before the Court.

162 Castleway and Mr Keeghan submitted that the exclusion of this category of expenses from the calculation of the Service Fee is a necessary corollary of the trial judge's finding that the donation is itself excluded from that calculation and that it was not necessary for this category of expenses to be the subject of separate or additional evidence or argument.

163 This finding was based on the trial judge's construction of the PDSA, with which we have been unable to agree. Accordingly, this finding ought also be set aside.

164 It was not pleaded or contended that the incurring of such expenses was a breach of the terms implied by law.

Introduced Projects (Proposed appeal ground 10, and cross-appeal grounds 1 to 6)

165 Under cl 4.5 of the PDSA, on termination of the agreement, the TPC Group was liable to pay Castleway a Commission on Introduced Projects 'calculated in accordance with the principles in Schedule 2 for each Introduced Project completed in any Financial Year'. The term 'Introduced Project' was a term defined in cl 1.1. We have earlier set out that definition in full. An 'Introduced Project' was one the TPC Group was 'made aware of' by Castleway or Mr Keeghan before termination of the PDSA 'for the purposes of acquisition, development or management'. As earlier set out, the parties were in dispute as to the construction of the relevant provisions.

166 On the disputed construction issues, the trial judge found that an Introduced Project was a project that:

(a) fell within the activities referred to in cl 2.5 of the PDSA and had 'some property element';[82]

(b) the TPC Group was made aware of by Castleway or Mr Keeghan before the TPC Group was otherwise aware of it;[83]

(c) had not been realised or completed during the term of the PDSA;[84] and

(d) had been introduced at any time prior to the termination of the PDSA, including prior to the commencement of the PDSA.[85]

167 The trial judge found that 14 of the 16 disputed projects were Introduced Projects within the meaning of the PDSA, but excluded two, the Kawana Waters and the IBIS retirement home investment. These are addressed below.

The TPC Group's submissions on the construction issues

168 The TPC Group submitted that, on a proper construction of the PDSA, an Introduced Project had to be:

(a) a project that was not an existing project of the TPC Group as at the commencement of the PDSA. Reliance was placed upon the fact that Annexure B to the PDSA listed 'TPC Group Projects (as at 1 July 2007)'. It was said that it was to be inferred that this list had been included for the purpose of avoiding subsequent argument about what projects had existed before the PDSA came into effect, thereby indicating those projects were not Introduced Projects under the PDSA.

(b) a project that was not 'taken up' by the TPC Group until after the termination of the PDSA. Reliance was placed on the termination adjustment in item 4 of Schedule 2 which provided for unrealised capital gains to be included in the TPC Group Profit for the final financial year. It was submitted that it was to be inferred that only projects taken up after termination could be Introduced Projects because otherwise the entitlement to Commission in addition to the allowance for unrealised capital gains would result in double counting.

169 On an application of these additional criteria, it was submitted that none of the 16 disputed projects would be an Introduced Project.

Castleway and Mr Keeghan's submissions on the construction issues

170 Castleway and Mr Keeghan submitted that on a proper construction of the PDSA, the definition of Introduced Projects did not include the additional temporal limitations contended for by the TPC Group. The purpose of the Commission was to share any additional profits generated by the TPC Group on projects realised or completed after termination of the PDSA in relation to which Castleway had provided services. The trial judge correctly addressed the potential for double counting by concluding that any calculation of profit on an Introduced Project would take into account payments Castleway had already received in relation to that project.[86]

171 In relation to the proposed cross-appeal, Castleway and Mr Keeghan submitted that for a project to be an Introduced Project it was not necessary for the TPC Group to be unaware of it prior to Castleway or Mr Keeghan making the TPC Group aware of it. It was only necessary for them to make the TPC Group 'aware' of the project before the termination of the PDSA, which Castleway did by the letters dated 5 May 2015 and 22 June 2015, both signed by Mr Keeghan. It was submitted that the trial judge's construction would result in unreasonable consequences because the expenses incurred in connection with a project would reduce the Service Fee, regardless of whether the project had been 'introduced' by Castleway or Mr Keeghan, but, if the project was uncompleted on termination, Castleway would be precluded from sharing in the eventual profit.

Analysis and conclusions on the construction issues

172 We consider that the trial judge was correct to reject the TPC Group submission that an Introduced Project could not be an existing project at the commencement of the PDSA. Our reasons are as follows:

(a) The definition of Introduced Project requires the following elements:

(i) The TPC Group was made aware of the project by Castleway or Mr Keeghan.

(ii) The TPC Group was made aware of the project before the termination of the PDSA.

(iii) The TPC Group was made aware of the project for the purposes of acquisition, development or management.

(b) There is no justification for adding an additional temporal element being that the TPC Group was made aware of the project after the commencement of the PDSA.

(c) The fact that Annexure B to the PDSA lists 'TPC Group Projects (as at 1 July 2007)' does not entitle the Court to infer that the purpose of the list was to exclude the listed projects as Introduced Projects. No such provision exists in the PDSA.

173 We consider that the trial judge was also correct in rejecting the TPC Group's contention that Introduced Projects are limited to projects 'taken up' by the TPC Group after termination of the PDSA. The definition in cl 1.1 simply does not contain this limitation.

174 We are unpersuaded that the trial judge was wrong in concluding that any amount received on account of an unrealised capital gain would have to be taken into account in relation to a subsequent Commission, but, even if there is the potential for 'double counting', that would not, in our view, warrant the imposition of an additional requirement which is not present in the relevant provisions.

175 The TPC Group contends, in effect, that the postulated additional requirement must be imposed as a matter of commercial common sense. The limits of such an approach were explained by Nettle J in Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd as follows:

Where there is ambiguity which permits of two alternative and semantically not improbable interpretations, construction in accordance with what it may be supposed would be the approach of honest and reasonable businesspersons may assist in choosing one such alternative over the other. But where, as here, the language and surrounding circumstances of a commercial contract present a choice between, on the one hand, a plain, ordinary and commercially not irrational meaning of a clause and, on the other, a meaning which is significantly removed from the natural and ordinary meaning of the terms of the clause, which ill-accords with other provisions of the agreement, and which in the end produces an outcome that is more commercially acceptable from one of the parties' point of view only, the precept runs out of application.[87]

176 In our opinion, the definition of Introduced Project is unambiguous and does not permit the exclusion of projects 'taken up' before termination of the PDSA.

177 The trial judge found that to constitute an Introduced Project, Castleway had to make the TPC Group aware of the project before the TPC Group was otherwise aware of it. Again, we consider that he was correct to do so.

178 We reject Castleway and Mr Keeghan's submission that the TPC Group could be 'made aware' of a relevant project by Castleway or Mr Keeghan simply informing the TPC Group of its existence. They contend that listing the existing projects in the letters of 5 May and 22 June 2015 met this requirement. We do not agree for the following reasons:

(a) In ordinary English usage, one makes another aware of something only when they were previously unaware of it. If a person is aware of a fact, another person who informs the first person of the same fact does not make the first person aware of it. In our opinion, this proposition is supported by the use of the adjective 'introduced' to qualify 'project'. The definitions of 'introduce' in the Macquarie Dictionary include:

1. to bring into notice, knowledge, use, vogue, etc.: to introduce a fashion.
2. to bring forward for consideration, as a proposed bill in parliament, etc.

1. introduce someone to, to bring a person to the knowledge or experience of: to introduce a person to chess.

(b) The purpose of paying a commission for introducing a project is to remunerate Castleway for providing the TPC Group with an opportunity to develop a project. If the TPC Group is already aware of the project when informed by Castleway or Mr Keeghan, then the information does not create that opportunity.

179 Castleway and Mr Keeghan submitted that the trial judge's construction would result in unreasonable consequences because the expenses incurred in connection with a project would reduce the Service Fee and, if the project was uncompleted on termination, Castleway would be precluded from sharing in the profits of the project. Even assuming that the construction may work to the overall disadvantage of Castleway (which may not be the case as the eventual profits might be referrable to activities or events unrelated to Castleway's period of management), a commercially unsatisfactory result from one party's point of view does not entitle the Court to rewrite the contract, for the reasons referred to by Nettle J above.

180 The trial judge was not satisfied that Castleway or Mr Keeghan introduced the Kawana Waters project to the TPC Group, finding that the evidence showed that the Kawana Waters project was introduced directly to the TPC Group by a company named Partners in Property Queensland Pty Ltd ('PIPQ') under an agreement between PIPQ and Tynong Pastoral Co Pty Ltd ('Tynong Pastoral'), one of the companies in the TPC Group ('the PIPQ agreement').[88]

181 In relation to the Kawana Waters project, the trial judge found the relevant facts to be as follows:

(a) By the PIPQ agreement, commencing 1 July 2006, Tynong Pastoral had engaged PIPQ to source and oversee property developments.[89] Pursuant to

cl 4.1 of the PIPQ agreement, PIPQ had to refer to Tynong Pastoral any opportunity that came to its attention so that Tynong Pastoral had the chance to elect whether or not it wished to pursue the opportunity. Clause 4.2 of the PIPQ agreement forbade PIPQ from referring an opportunity to any other party unless it was first referred to Tynong Pastoral.[90]

(b) In or about February 2007, PIPQ brought to Mr Keeghan's attention the development opportunity for the TPC Group at Kawana Waters.[91]

(c) Tynong Pastoral purchased Kawana Waters on 26 February 2007 for $3.5 million (exclusive of GST).

(d) The PIPQ agreement acknowledged that certain existing projects, including the Kawana Waters project, had been introduced as opportunities by PIPQ to Tynong Pastoral and that fees were payable to PIPQ in respect of those existing projects (cl 9).

(e) PIPQ was entitled to receive a consultancy fee of $25,000 per month (cl 10.2) and 25 per cent of the cumulative net profit derived from existing projects

(cls 1(j) and 9.2).

Castleway and Mr Keeghan's submissions on Kawana Waters

182 Castleway and Mr Keeghan submitted that the trial judge erred in failing to find that Mr Keeghan had introduced Kawana Waters to the TPC Group for the following reasons:

(a) It was unchallenged that Mr Keeghan had engaged PIPQ as agent on behalf of the TPC Group to source property development opportunities in Queensland.

(b) Mr Keeghan reviewed the development opportunities introduced by PIPQ.

(c) Mr Harmer of PIPQ brought the Kawana Waters project to Mr Keeghan's attention.

(d) Tynong Pastoral purchased Kawana Waters in May 2007 at Mr Keeghan's instigation.

(e) Neither Mr Lee nor any other member of the TPC Group board met Mr Harmer prior to 29 June 2017.

(f) The PIPQ agreement was not executed until 31 May 2011, four years after the TPC Group had acquired Kawana Waters.

183 The TPC Group submitted that the trial judge's finding was based on the PIPQ agreement and the evidence of Mr Keeghan was not capable of discharging the onus of proving that Castleway or Mr Keeghan were responsible for introducing Kawana Waters to the TPC Group, rather than PIPQ. Any other finding would require the Court to disregard the express terms of the PIPQ agreement.

184 We consider that the trial judge was correct in concluding that the Kawana Waters project was not an Introduced Project in respect of which Castleway was entitled to Commission because he was not satisfied that Castleway, through Mr Keeghan, had introduced it to the TPC Group. The project was introduced pursuant to the PIPQ agreement. Tynong Pastoral paid PIPQ for that introduction.

185 Castleway and Mr Keeghan argue that the fact that PIPQ brought the Kawana Waters project to Mr Keeghan means that Mr Keeghan 'introduced' it to the TPC group. We reject this. Mr Keeghan was the chief executive officer of the TPC Group. Castleway and Mr Keeghan put the position correctly in their Amended Rejoinder and Amended Reply to Amended Defence to Second Further Amended Counterclaim dated 4 August 2017 when they pleaded that pursuant to the PIPQ agreement PIPQ identified the project and informed Mr Keeghan 'at which time the TPC Group was made aware of the Kawana Waters Project'. PIPQ made the TPC Group aware of the Kawana Waters project by informing Mr Keeghan of it.

186 The trial judge held that an Introduced Project had to have 'some property element' to fall within the definition. He accepted the TPC Group's contention that the asset must entail the acquisition, development or management of real estate.[92] The TPC Group had contended that it was relevant to have regard to Castleway's obligations under cl 2 of the PDSA:

(a) to use its reasonable endeavours to identify and investigate and, where appropriate, prepare a business case for property development opportunities (cl 2.5(a)); and

(b) to fully and fairly disclose to the TPC Group details of all property acquisitions or development opportunities that arise during the term of the PDSA (cl 2.8).[93]

187 The trial judge found that the IBIS retirement home investment was not an Introduced Project because it was an investment in a business providing aged care services and did not have 'some property element to fall within a possible project'.[94]

Submissions on the IBIS retirement home investment

188 Castleway and Mr Keeghan submitted that the trial judge erred in the above conclusion for the following reasons:

(a) The definition of Introduced Project did not include any 'property element' requirement.

(b) 'Property' is a wide concept and a joint venture interest in an aged care business comprising of real estate does have a 'property element' in a wider sense.

189 The TPC Group submitted that the trial judge was correct.

Analysis and conclusions on the IBIS retirement home investment

190 As to the IBIS retirement home investment, the trial judge found that it was a necessary element that an Introduced Project was introduced for the purposes of acquisition, development or management of real estate. The implication of this element was said to arise from the fact that cl 2 of the PDSA related to property, in particular, the obligations on Castleway under cls 2.5, 2.6 and 2.8 which relate to property acquisition and development.[95]

191 The relevant facts with respect to the IBIS retirement home investment are as follows:

(a) The TPC Group's interest in the IBIS retirement home was a 9 per cent shareholding in Ibis Care Holdings Pty Ltd which it acquired before July 2007. Ibis Care Holdings Pty Ltd operated retirement homes in Melbourne, Sydney and Brisbane. Thus, TPC Group was a small minority investor in the business.

(b) Mr Keeghan gave evidence that he was a director of Ibis Care Holdings Pty Ltd, and his 'management' of the business consisted of attending monthly meetings and reviewing the manager's logs to ensure that the aged care licensing requirements were complied with.

(c) The businesses were sold progressively over three or four years prior to a final sale on 28 July 2017.

192 In our view, there are two questions that arise in determining whether the IBIS retirement home investment was an Introduced Project. The first is whether it was a 'project'. The second is whether it was introduced for the purposes of acquisition, development or management.

193 The Macquarie Dictionary defines the noun 'project' as:

something that is contemplated, devised, or planned; a plan; a scheme; an undertaking.

194 It is not necessary to decide whether the word 'project' has any narrower meaning in the context of the PDSA, so that it is confined to projects involving 'some property element', as the judge found. That is because, for reasons similar to those of the trial judge, an introduction to an investment in a business providing aged care services is not an introduction for the purposes of acquisition, development or management, within the meaning of the PDSA.

195 It is true that the introduction of such an investment could be described as being 'for the purposes of acquisition' of the 9 per cent shareholding. However, the PDSA did not contemplate that Castleway would be remunerated for introducing an acquisition of whatever kind. The word 'acquisition' in the definition of 'Introduced Project' has to be read with cl 2 of the PDSA. In particular, the services which Castleway is required to provide concern the acquisition of land and land holding entities, and property acquisition generally. In our opinion the acquisition of a small minority shareholding in a company, even one that happens to hold land, is not an 'acquisition' for these purposes unless the acquisition is in substance an acquisition of land, with a view to its development.[96]

196 On the same reasoning, the introduction of a project for the purpose of managing a business would not fall within the definition unless the project involves managing property to a profitable development outcome, that being the kind of management provided for in cl 2.5 of the PDSA.

• The acquisition of the 9 per cent shareholding in Ibis Care Holdings Pty Ltd was in any relevant sense an acquisition of land;

• the 9 per cent shareholding in Ibis Care Holdings Pty Ltd was acquired for any contemplated plan, scheme or undertaking as to the development of land;

• the 9 per cent shareholding in Ibis Care Holdings Pty Ltd was acquired for managing the profitable development of land; or

• the TPC Group developed or had any role in the business beyond monitoring regulatory compliance.

198 It follows that the introduction of the project to acquire the shareholding and take part in managing the business was not an introduction for the purposes of acquisition, development or management within the meaning of the PDSA. We uphold the trial judge's finding that the IBIS retirement home investment did not fall within the definition of an Introduced Project.

199 We now turn to the TPC Group's contention that Castleway and Mr Keeghan had failed to discharge their burden of proving that they had introduced any of the 16 projects, and the TPC Group's contention that a further two of the 16 projects which were the subject of the PIPQ agreement ought to have been found not to be Introduced Projects for the same reasons as Kawana Waters.

The TPC Group's submissions on the further issues

200 The TPC Group contended that Castleway had not satisfied the burden of proving that it or Mr Keeghan had introduced any of the 16 projects. This contention is the subject matter of Castleway and Mr Keeghan's contention that the TPC Group impermissibly re-opened their case.

201 The TPC Group also submitted that the trial judge's conclusion that the Kawana Waters project was not an Introduced Project because it was not introduced to the TPC Group by Mr Keeghan or Castleway should have also applied to two other projects introduced by PIPQ under the PIPQ agreement, being:

(a) Hillcrest Park Estate, Tallowwood Street, Maleny Qld 4552 ('Hillcrest Park'); and

(b) 120-130 Alma Road, Dakabin Qld 4503 ('Alma Road')

Castleway and Mr Keeghan's submissions on the further issues

202 Castleway and Mr Keeghan submitted that the evidence at trial was that each of the 16 projects was an Introduced Project under the PDSA, that is, a project that the TPC Group was made aware of by Castleway or Mr Keeghan before the termination of the PDSA.

203 The trial judge was entitled to find that the TPC Group was first made aware of the disputed projects by Castleway or Mr Keeghan, other than the projects introduced by PIPQ, because:

(a) the TPC Group's pleading did not contend otherwise; and

(b) the trial was conducted on the basis that the only issues with respect to the Introduced Projects were those identified in paragraph 100 of the October 2017 Reasons.

204 In cl 9.1 of the PIPQ agreement, Tynong Pastoral acknowledged that PIPQ had introduced eight projects. These included two of the 16 projects, other than the Kawana Waters project, being:

(a) Hillcrest Park; and

(b) Alma Road.

205 The trial judge recorded the TPC Group's contention with respect to these projects,[97] but otherwise did not specifically address them.

206 Before this Court Castleway and Mr Keeghan did not submit that there was any basis upon which these two projects could be distinguished from the Kawana Waters project.

207 Accordingly, for the same reasons as applied to the Kawana Waters project, we conclude that Castleway failed to establish that the Hillcrest Park and Alma Road projects were Introduced Projects within the definition in the PDSA.

208 The TPC Group contends more generally that Castleway and Mr Keeghan failed to prove that they had introduced any of the 16 projects to the TPC Group. Putting to one side the PIPQ projects and the IBIS retirement home investment, this complaint now concerns 12 of the projects.

209 In his witness statement dated 19 December 2016, Mr Keeghan stated as follows:

Neither Mrs Rado, Mr Lee, nor anyone else associated with them, introduced any projects to TPC Group at any time. I was responsible for introducing to the TPC Group, and its predecessor, all the projects introduced to the group from 2002. Some projects were acquired prior to 2002. I use the term 'introduced project' because, at my instigation, I investigated and identified appropriate development opportunities on behalf of the TPC Group for the purpose of acquisition, development and/or management and disposal. Subsequently, Castleway, pursuant to the PDSA, as the Manager, continued to develop, manage and in some cases dispose of the projects which I introduced prior to 2010 including the projects identified in Annexure B of the PDSA, which were held by a TPC Group company as at 1 July 2007.

210 Mr Keeghan was not challenged on this evidence. It was not put to him that he had not introduced the 12 projects. It had not been pleaded that Castleway had not introduced the 12 projects. The trial judge's recording of the TPC Group's position with respect to each of the disputed projects does not include a contention that Castleway had not introduced the 12 projects.[98]

211 We reject the TPC Group's contention with respect to these 12 projects.

212 Finally, in this context, it is necessary to address the contention by Castleway and Mr Keeghan that the TPC Group had impermissibly re-opened their case on the Introduced Project issues.

213 The trial judge made relevant findings with respect to the issues identified by the parties in each of the October 2017 Reasons, the October 2018 Reasons and the January 2019 Reasons. His Honour made no final orders consequential to those findings until the orders of 31 January 2019, authenticated on 7 February 2019.

214 In oral submissions made on 26 July 2018, the TPC Group contended that Castleway and Mr Keeghan

(a) had not established their 'positive case' that the disputed projects had been introduced by Castleway; and

(b) had declined the opportunity to reopen their case to do so.

215 Castleway and Mr Keeghan submitted that the trial had been conducted by the parties on the basis that the primary judge's determination of the proper interpretation of the term 'Introduced Project' would dispose of the issues regarding which projects satisfied the definition. It was only after the delivery of the October 2017 Reasons that the TPC Group sought to put in issue whether Castleway and

Mr Keeghan had proved that they had introduced the relevant projects to the TPC Group, other than in relation to the Kawana Waters project.

216 It was said that this submission constituted an impermissible application to re-open their case.

217 On behalf of the TPC Group, it was submitted that Castleway and Mr Keeghan bore the onus of proving that the 16 projects were Introduced Projects, including that each opportunity had in fact been introduced by them to the TPC Group. The TPC Group were not seeking to re-open their case by pointing out why Castleway was not entitled to the declaratory relief sought.

218 In Fletcher Construction Australia Ltd v Lines McFarlane & Marshall Pty Ltd, Chernov JA said:

In the case of a superior court of record, judgment is not relevantly finalised until it is entered in the records of the court. Hence, until that occurs, the judge can recall the order and the reasons and make a different order and give different reasons.[99]

219 Similarly, in Smith v New South Wales Bar Association, Brennan, Dawson, Toohey and Gaudron JJ said:

It has long been the common law that a court may review, correct or alter its judgment at any time until its order has been perfected.[100]

220 We do not accept Castleway and Mr Keeghan's position on this issue for the following reasons:

(a) The TPC Group did not seek to reopen their case to lead further evidence, but only submitted that Castleway and Mr Keeghan had failed to prove that they had relevantly 'introduced' the projects.

(b) The TPC Group were entitled to submit prior to final orders that, on the evidence, Castleway and Mr Keeghan had not established their case and were not entitled to the relief sought.

• we will grant leave to appeal on proposed ground 10, and allow the appeal on that ground insofar as the trial judge found Hillcrest Park and Alma Road to be Introduced Projects,

• we will grant leave to cross-appeal on proposed grounds 1 to 6, as those proposed grounds were arguable, but dismiss the cross-appeal on those grounds.

Interest (Cross-appeal proposed grounds 9 to 13)

222 On 30 October 2015, the TPC Group instituted this proceeding.

223 The PDSA contained a provision, cl 9, requiring the parties to undertake a dispute resolution procedure culminating in an expert determination. On 1 March 2016, the parties agreed that the dispute resolution procedure in cl 9 of the PDSA would no longer apply so that all disputes would be tried and determined in this litigation.

224 On 3 April 2017, Castleway sent the TPC Group invoices for payment of the 'uncontested amounts of the Service Fees' for the 2014 and 2015 financial years in a total amount of $5,789,994.10 (inclusive of GST) without prejudice to its claims in the proceeding.

225 On 4 July 2017, Castleway issued an invoice in the sum of $8,881,985.20 (inclusive of GST) for the 2016 financial year.

226 The above invoices, amounting to a total of $14,671,979.30, were the amounts reported by Grant Thornton, the nominated accountant under the PDSA, for the 2014 to 2016 financial years.

227 On 4 July 2017, Castleway issued supplementary invoices totalling $99,293.44 (inclusive of GST), in the following amounts:

(a) $43,236.60 (inclusive of GST) for the 2014 financial year;

(b) $27,727.04 (inclusive of GST) for the 2015 financial year; and

(c) $28,329.80 (inclusive of GST) for the 2016 financial year.

228 On 29 October 2018, after the trial judge had delivered the October 2018 Reasons, Castleway issued invoices for the Service Fees for the same three years (2014, 2015, and 2016) for a total of $15,098,815.06, which included an additional $426,836 in excess of the undisputed Service Fee amounts, comprised as follows:

(a) $1,214,882.46 for the 2014 financial year, being the undisputed amount plus additional sums totalling $17,926.26.

(b) $4,792,004.40 for the 2015 financial year, being the undisputed amount plus additional sums totalling $198,966.50.

(c) $9,091,928.20 for the 2016 financial year, being the undisputed amount plus additional sums totalling $209,943.00.

229 On 28 November 2018, the TPC Group paid the amended invoices.

230 By orders made 31 January 2019, Robson J declared that Castleway was entitled to the amounts of the Service Fees rendered in the invoices on 29 October 2018.

231 The trial judge rejected Castleway's claim for interest pursuant to s 58(1) of the Supreme Court Act 1986 from 30 days after each of the original invoices to

28 November 2018 on the basis that the PDSA provided that the Service Fee was payable only once disputes had been resolved and an invoice for the 'settled' sum had been issued, there being no provision for issuing an invoice for an undisputed sum.[101] Based upon the provisions of cl 3.3 of the PDSA the trial judge held there was no entitlement to payment until notices of dispute had been resolved.[102]

232 Castleway and Mr Keeghan submitted that statutory interest should have been allowed on the non-disputed Service Fees from 30 days after each invoice was issued to 28 November 2018, the date the invoices were paid, because:

(a) cl 3.3(e) of the PDSA requires payment to be made by the TPC Group of the non-disputed component within 30 days of service of Castleway's invoices; and

(b) the trial judge's finding that the TPC Group were not required to make any payment until the Court had determined every issue in dispute concerning the Service Fees, was inconsistent with cl 3.3(f)(i) of the PDSA.

233 The TPC Group supported the trial judge's analysis. They submitted that cl 3.3 of the PDSA provided for the following mechanism:

(a) calculation of the Service Fee payable by the nominated accountant;

(b) an opportunity for either party to dispute the calculation in accordance with cl 9 (the dispute resolution clause);

(c) submission of an invoice by Castleway within 14 days after the dispute is resolved (cl 3.3(d)); and

(d) payment by the TPC Group within 30 days after receipt of a correctly rendered invoice (cl 3.3(e)).

234 The TPC Group submitted that cl 3.3(f) of the PDSA permits the TPC Group to withhold a 'disputed component' of an invoice issued by Castleway if its amount does not coincide with the accountant's report. It does not provide for payment of any 'undisputed' component of a Service Fee prior to Castleway having a right to issue an invoice.

235 Clause 3.3 begins by providing that the Service Fee due under the agreement is to be 'paid annually in arrears'. There are then a number of sub-clauses, denoted (a) to (g), which set out how the fee is to be calculated and paid.

236 Sub-clauses (a), (b), and (c) do not give rise to any particular difficulties in the current context. Sub-clause (a) provides that tax returns are to be prepared by the TPC Group by a specified date. Sub-clause (b) provides that a nominated accountant acting for the TPC Group is to then calculate the TPC Group Profit in the manner set out in Schedule 2 and report to the TPC Group and the Manager on the Service Fee payable for that financial year. Sub-clause (c) provides that after that report, either party has 10 days to give a Dispute Notice in accordance with cl 9. If no Dispute Notice is given the Service Fee is deemed to be agreed.

237 The terms 'Dispute' and 'Dispute Notice' are defined in cl 1.1. Each of those expressions is said to have the meaning given in cl 9. Clause 9 sets out a procedure for the resolution of any dispute arising between 'any of the parties ... in connection with this Agreement'. It sets out a procedure for an expert determination which is to be 'final and binding'. Thus, a 'Dispute Notice' might be in relation to any issue arising between the parties under the agreement.

238 The difficulties begin at sub-clause (d). The sub-clause provides:

[T]he Manager shall submit a Tax Invoice to the TPC Representative for the Service Fee, within fourteen (14) days after the accountant provides the report containing details of the Service Fee payable or, if there is a Dispute over the Service Fee, within fourteen (14) days after the Dispute is resolved in accordance with clause 9. The invoice must be a compliant Tax Invoice, and the invoiced amount must equal the amount of Service Fee as set out in the report (including any GST payable). Any failure or delay in submitting a Tax Invoice shall not be construed as a waiver of the Manager's right to submit the Tax Invoice;

239 The first sentence of sub-clause (d) provides for time limits on the submission of an invoice for the Service Fee by the Manager, being within 14 days after the nominated accountant's report unless there is a Dispute over the Service Fee, in which case the time provided for is within 14 days after the Dispute is resolved in accordance with clause 9. It seems from the last sentence of the sub-clause that non-compliance with these time limits may not be fatal, but that is not an issue arising here.

240 The second sentence of sub-clause (d) gives rise to difficulty. Having expressly provided for a circumstance where there is a Dispute as to the Service Fee, and for the provision of an invoice after resolution of that Dispute, the second sentence states that '[t]he invoice ... must equal the amount of the Service Fee as set out in the report'. The only report to which this can be referring is the report of the nominated accountant. The nominated accountant's report can be disputed and the figure it specifies is deemed to have been agreed only where no Dispute Notice has been given within 10 days. The second sentence of sub-clause (d) cannot be interpreted to mean that the Manager must submit an invoice equal to the amount in the nominated accountant's report even where a Dispute as to the Service Fee consequent upon the accountant's report has been resolved in its favour under clause 9. Thus, the second sentence of sub-clause (d) must be read as being confined to the position where there has been no Dispute Notice as provided for in sub-clause (c).

241 Sub-clause (e) provides that, subject to cl 3.3(g) concerning cash flow, the TPC Group is to pay all correctly rendered invoices within 30 days after receipt.

242 The TPC Group contends, and the trial judge accepted, that the provisions of sub-clauses (d) and (e) mean that, where there is a Dispute as to the Service Fee, nothing is payable by the TPC Group until that Dispute is resolved. This is said to be the position because under sub-clause (e) the TPC Group is only liable to pay on correctly rendered invoices, and under sub-clause (d), where there is a Dispute, an invoice cannot be rendered until the Dispute is resolved. This approach characterises the provisions of sub-clause (d) as imposing, where there is a Dispute, both a time limit on the rendering of an invoice, which is explicit (but delay may not be fatal), and a prohibition on doing so before resolution. If that prohibition is to be found in sub-clause (d) it must be implicit because it is not explicit.

243 Sub-clause (f) gives rise to difficulties similar to the difficulty encountered with sub-clause (d).

244 The first sentence of sub-clause (f) reads as follows:

[T]he TPC Group may dispute an invoice if the amount is not equal to the amount of Service Fee as set out in the applicable report from the accountant.

This first sentence cannot mean that the TPC Group can only raise a Dispute where an invoice is rendered for an amount which is not equal to the amount set out in the report. Provision has already been made in sub-clause (c) for either party to raise a Dispute as to the Service Fee consequent upon the report. Like the second sentence of sub-clause (d), the first sentence must be read as being confined to the position where there has been no Notice of Dispute as provided for in sub-clause (c).

245 The second sentence of clause 3.3(f) then reads as follows:

If either party disputes an invoice:

(i) the TPC Group will pay the non-disputed component (if any) of the invoiced amount in accordance with clause 3.3(e); and

(ii) the TPC Group may withhold the disputed component until the dispute is resolved in accordance with clause 9, in part or in whole, in favour of the Manager and, subject to clause 3.3(g), shall pay any amount so resolved in favour of the Manager to the Manager within thirty (30) days of resolution of the dispute.

246 The second sentence has the following important features:

• It is not dealing with the same issue as that dealt with in the first sentence. It governs a position where either party disputes an invoice. The first sentence expressly applies only to the TPC Group, and, as seen above, must be read as confined to a circumstance where no Notice of Dispute has been given and the Service Fee has been deemed to be agreed. It accordingly must be read as standing apart from the first sentence notwithstanding that it appears in the same sub-clause.
• Sub-paragraphs (i) and (ii) expressly envisage, and provide for, a position where an invoice is rendered which contains non-disputed and disputed components. Thus, this part of sub-clause (f) is inconsistent with an approach whereby invoices can only be rendered after any Dispute has been resolved.
• Sub-paragraph (i) imposes the payment obligation in sub-clause (e) on the TPC Group in relation to the non-disputed component regardless of whether the Dispute has been resolved. This is inconsistent with an approach whereby no payment obligation can arise until after any Dispute is resolved.

247 The second sentence of sub-clause (f) is not inconsistent with the time limits on the submission of an invoice provided for in sub-clause (d), but it is inconsistent with a contention that the Manager is precluded from rendering an invoice where there is a Dispute until after the Dispute is resolved.

248 The clear and express provisions of the second sentence of sub-clause (f) mean that the contention that the Manager is precluded from rendering an invoice containing a non-disputed component and an unresolved disputed component, based upon an implicit prohibition in sub-clause (d), must be rejected. The second sentence of sub-clause (f) provides for that very circumstance, and it does so by expressly incorporating the payment obligation in sub-clause (e) in relation to the non-disputed component.

249 It is neither necessary nor desirable to attempt to formulate a construction of these provisions which addresses all conceivable situations. For present purposes, it is sufficient to conclude that where there is a Dispute as to the Service Fee consequent upon the nominated accountant's report, the Manager is not precluded from rendering an invoice containing non-disputed and disputed components, and, if it does so, the TPC Group is obliged to pay the non-disputed components in accordance with sub-clause (e), that is, 30 days after receipt (subject to sub-clause (g), where that applies).

250 Thus, we do not consider that the trial judge was correct in his construction of cl 3.3. The trial judge's conclusion on this issue was fundamental to his treatment of the interest claims which were made. In our view the undisputed components of the invoices issued were payable under cl 3.3(e). Thus, leave to appeal should be granted and the appeal allowed on proposed cross-appeal ground 9 which addresses this specific issue. We will hear the parties further on proposed cross-appeal grounds 10 to 13 in the light of our conclusions on the proper construction of cl 3.3.

251 Our conclusions by reference to brief paraphrases of the proposed grounds of appeal, the contentions and the proposed grounds of cross-appeal (which are set out in full in Annexure C) are as follows:

Construction - error in construction of Schedule 2 of the PDSA - 'taxable profit'...'as per income tax returns'.

Construction - error in treating the PDSA as ambiguous or contradictory,.

Construction - error in construing the PDSA as a profit sharing agreement.

Implied terms - error in implying term (as a matter of law or fact) re. 'normal business activities'.

Construction - error in not giving effect to the agreement re. the calculation of TPC Group Profit for the 2008 Financial Year'.

Error in disallowing: accountancy, legal and director's fees.

Error in not adopting in full the report of the special referee.

Leave to appeal granted and appeal allowed in relation to the judge's conclusion concerning cl 10.1 of the PDSA, otherwise leave refused.

Introduced Projects - error in finding that 14 of the 16 assets listed at [100] of the October 2017 Reasons were 'Introduced Projects' within the meaning of the PDSA.

Leave to appeal granted, and appeal allowed in relation to Hillcrest Park and Alma Road, otherwise appeal dismissed.

Construction - uncommercial and unreasonable results.

Introduced Projects - error in finding must be a 'project' in relation to 'land'.

Introduced Projects - error in relation to 'make aware'.

Introduced Projects - error in failing to find the letters dated 5 May 2015 and 22 June 2015 made the board of the TPC Group 'aware' of the project;

Introduced Projects - error re. - IBIS Care Retirement Home.

Conspiracy re. $20 million donation - error in failing to find conspiracy.

Breach of duty re. $20 million donation - error in failing to find breach of duty.

Construction - error re. invoices for the undisputed Service Fees.

Interest pursuant to s.58(1) of the SCA.

Interest pursuant to s.60(1) of the SCA.

Interest pursuant to s.60(1) of the SCA.

Interest pursuant to s.60(1) of the SCA.

252 Given our conclusions, the orders made 31 January 2019 will need to be set aside. We will not make orders at present but will hear the parties further on the orders to be made in accordance with our conclusions, including on the issues of costs at first instance and on these applications and appeals.

253 I have had the very considerable advantage of reading in draft the reasons of Whelan JA and Riordan AJA. I adopt their outline of the proceeding and the issues

that arise on this appeal,[103] together with the abbreviations they use.

254 I agree with Whelan JA and Riordan AJA in relation to the proper construction of the PDSA, the conspiracy claims, the Introduced Projects and the construction of the PDSA as it affects Castleway's entitlement to interest.

255 I also agree with their reasons and conclusions in respect of the further issues they identify at [67] of their reasons.

256 Unfortunately, however, I have come to a different conclusion in relation to the term implied by law said to have been breached by the making of the $20 million donation, for reasons explained below.

257 As Whelan JA and Riordan AJA point out, the respondents plead in paragraphs 6(r) and (s) of the second further amended defence and counterclaim implied terms of the PDSA that:

(a) the parties agree to do all such things as are necessary on their part to enable the other parties to 'have the benefit' of the PDSA, and

(b) the TPC Group (relevantly) will act reasonably and in good faith so as not to frustrate or prevent the fulfilment of the commercial purpose of the PDSA'.

258 The 'commercial purpose' of the PDSA is said in paragraph 6A to include:

(a) that [Castleway] is to receive the benefit of a share of the gross profits of the TPC Group before tax in consideration of [Castleway] providing property procurement, development and management services in relation to projects owned by the TPC Group to achieve their optimum profitable development outcome; and

(b) that [Castleway] is to provide property procurement, development and management services to the TPC Group in consideration of [Castleway] being paid a Service Fee and/or Commission by the TPC Group, representing an agreed proportion of the TPC Group Profit (or TPC Group Loss) in each relevant financial year in accordance with Schedule 2 of the PDSA, calculated on the basis of the TPC Group's normal business activities.

259 Paragraph 20(c) describes as a 'fundamental commercial purpose of the PDSA':

to enable [Castleway] to receive the benefit of a share of the gross profits of the TPC Group before tax in consideration of [Castleway] providing property procurement, development and management services in relation to projects owned by the TPC Group to achieve their optimum profitable development outcome.

260 Although expressed literally in terms of an obligation on the part of Castleway alone, it is clear that what is alleged is that it was a commercial purpose of the PDSA that projects owned by the TPC Group achieve their optimum profitable development outcome. In other words, it was a commercial purpose of the PDSA that Castleway and the TPC Group work towards maximising the profits derived from the projects. It is a small step from there to identifying an allegation that it was a commercial purpose of the PDSA to maximise the TPC Group Profit, as defined (albeit that Castleway bridged that step differently, by its 'normal business activities' construction which has now been rejected). In my view, the pleading should be read that way even though the allegation is not expressly made.

261 If Castleway's case went no further than to allege that the TPC Group was required to do all things necessary to ensure that Castleway have the benefit of the contract, without specifying that benefit, then the case based on the implied term would fail. That is because the benefits for which the PDSA stipulates are, relevantly, various payments and in particular the Service Fee. Castleway received those benefits.

262 The primary case advanced by Castleway for displacing the effect of the $20 million donation raised the proper construction of the provisions defining the Service Fee. That case was based on the notion of 'normal business activities' and fails for the reasons given by Whelan JA and Riordan AJA. In other words, the $20 million payment was correctly taken into account in determining the Service Fee. The alternative case, as Whelan JA and Riordan AJA demonstrate, was that the making of the payment was contrary to the PDSA so as to give rise to damages for breach. This depends on the alleged term implied by law.

263 This is where the allied notions of the 'benefit of the contract' and its 'commercial purpose' become critical. The case law makes it plain that the identification of these features depends on the contract itself. Once identified, a term is implied by law, on the basis of necessity, limiting the actions which a party may take in respect of that benefit or commercial purpose. As mentioned below, however, the 'commercial purpose' of the contract must, like its benefit, be tied closely to the terms of the contract.

264 It is necessary to look briefly at the case law before turning to its application to the present case.

265 In Byrne v Australian Airlines Ltd,[104] McHugh and Gummow JJ said of terms implied by law:

[T]he more modern and better view is that these rules of construction are not rules of law so much as terms implied, in the sense of attributed to the contractual intent of the parties, unless the contrary appears on a proper construction of their bargain ...

This ... is consistent with the proposition that terms of this kind, although treated as implied by law, may be excluded by express provision made by the parties and also as a result of inconsistency with terms of the contract. The result is that, even if treated as rules of law, they only apply in the absence of an expression of contrary intent.[105]

Many of the terms now said to be implied by law in various categories of case reflect the concern of the courts, that, unless such a term be implied, the enjoyment of the rights conferred by the contract would or could be rendered nugatory, worthless, or, perhaps, be seriously undermined. Hence, the reference in the decisions to 'necessity'.[106]

McHugh and Gummow JJ also spoke of the contract being 'deprived of its substance, seriously undermined or drastically devalued in an important respect'.[107]

267 The above passages were endorsed by French CJ, Bell and Keane JJ in Commonwealth Bank of Australia v Barker,[108] in the course of declining to imply a duty of mutual trust and confidence.

268 The implied obligation relied on in the present case, which is part of a wider duty to cooperate, was described by Griffith CJ in Butt v M'Donald as:

a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his part to enable the other party to have the benefit of the contract.[109]

269 In Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd Mason J, with whom Barwick CJ, Gibbs, Stephen and Aickin JJ agreed, explained the position further. After setting out Griffith CJ's statement in Butt, he said:

It is easy to imply a duty to co-operate in the doing of acts which are necessary to the performance by the parties or by one of the parties of fundamental obligations under the contract. It is not quite so easy to make the implication when the acts in question are necessary to entitle the other contracting party to a benefit under the contract but are not essential to the performance of that party's obligations and are not fundamental to the contract. Then the question arises whether the contract imposes a duty to co-operate on the first party or whether it leaves him at liberty to decide for himself whether the acts shall be done, even if the consequence of his decision is to disentitle the other party to a benefit. In such a case, the correct interpretation of the contract depends, as it seems to me, not so much on the application of the general rule of construction as on the intention of the parties as manifested by the contract itself.[110]

270 It is plain enough that Castleway's claim is in the second kind of case described by Mason J. It is not alleged that the TPC Group did anything to impede the performance of Castleway's fundamental obligations under the contract, but that its actions disentitled Castleway to a benefit. It is clear, also, that the scope of the implied obligation depends on what has been promised under the contract. In Secured Income, the implied obligation was invoked in respect of a power in a purchaser of land to approve the entry into of leases in respect of the land pending settlement, in circumstances where the vendor needed the leases approved or the balance of the purchase price owing to it would be reduced to zero. The issue was whether, by refusing its approval, the purchaser had deprived the vendor of its entitlement to the full balance amount in breach of the implied obligation. That issue was resolved according to whether the purchaser's refusal of approval was arbitrary or capricious, that being the express contractual limitation on its power to refuse approval.

271 Similarly, in Wolfe v Permanent Custodians Ltd, Warren CJ, Neave and Whelan JJA stated:

Although the duty to cooperate is broadly stated in Butt v McDonald, the scope of the Butt obligation is defined by what has been promised under the contract; it is not a general duty to ensure another party obtains an anticipated benefit.[111]

272 The Court rejected a submission that the Butt obligation required, in the circumstances of a loan agreement, that the lender facilitate or assist the borrower in making repayments by direct debit, which was contemplated by the agreement as a possibility but not the subject of any contractual promise. The borrower had submitted a direct debit form which was incorrectly completed. He contended that the lender was obliged to draw this to his attention and ensure that the form was correctly completed. The lender had made unsuccessful attempts to inform the borrower of his error. The borrower defaulted as a result of the direct debit not proceeding. The borrower contended that the lender had failed to do all that was necessary on its part to enable him to have the benefit of the agreement. The Court held that the loan agreement required that repayments be made on time, and that the use of a direct debit facility, although contemplated, was neither contractually required, nor fundamental to the performance of the repayment obligation.

273 In Australis Media Holdings Pty Ltd v Telstra Corporation Ltd, the New South Wales Court of Appeal elaborated along similar lines. [112] The Court stated:

Many terms now said to be implied by law in various categories of contract reflect the concern of the courts that, unless such a term be implied, the enjoyment of the rights conferred by the contract would or could be rendered nugatory, worthless, or, perhaps, be seriously undermined_. It would be, however, fallacious to elide the purpose of implying such terms with the terms themselves. To do so would replace necessity with desirability ... A contract may 'contemplate' many benefits for the respective parties, but each can only call on the other to provide, or co-operate in the providing of, benefits promised by that party_.[113]

The 'implication' of a term implied in law depends upon the demonstration of 'necessity'. It follows that, leaving aside fiduciary obligations (which are not involved here), there cannot be a duty to co-operate in bringing about something which the contract does not require to happen. An 'implication, arising as it does from necessity, must be limited by the extent of the need'.[114]

275 Similarly, French CJ, Bell and Keane JJ stated in Barker that the implied duty to cooperate 'is directly related to contractual performance' and 'can arguably be characterised as a rule of construction'.[115]

276 Two final cases may be mentioned. In McMahon v National Foods Milk Ltd,[116] Nettle JA (with whom Neave and Dodds-Streeton JJA agreed) rejected a submission that the implied obligation to enable the other party to have the benefit of a non-exclusive licensed distribution agreement precluded the supplier from supplying other distributors in the territory. Nettle JA stated that, once the trial judge construed the contract as being a non_-_exclusive distributorship, the idea of an implied obligation to effectively treat the distributorship as exclusive was 'bound to fail'.[117] Since the distributor had not contracted for an exclusive distributorship, it was not necessary to imply such an obligation to give the distributor 'the benefit of the thing for which it has contracted'.[118]

277 In Beerens v Bluescope Distribution Pty Ltd,[119] Nettle JA (with whom Redlich JA agreed, and Tate JA relevantly agreed) stated that the implied duty to afford the other party the benefit of what he or she has contracted for is not an implied duty 'to act generally in the other party's best interests', nor to act as if contractual provisions exercisable to one party's advantage (and another's disadvantage) had 'ceased to exist'.[120] Likewise, Tate JA considered that the implied obligation contended for, an obligation preventing a party from exercising its rights under a particular provision, would, far from being necessary to secure the benefit of the contract, negate that party's contractual rights and be at odds with the plain terms of the contract.[121]

278 The above decisions make clear that the obligation to ensure that the other party has the 'benefit of the contract' is not an obligation to ensure that the contracted arrangement is broadly to the other party's benefit, nor an obligation to ensure that the arrangement operates in the most commercially beneficial way for the other party. Nor is it an obligation to act so that the other party receives benefits which the contract anticipates but does not promise - it is simply an obligation to cooperate so that the other party gets the fundamental promises they have contracted for, and a corresponding negative obligation not to deprive the other party of that benefit.

279 It follows that an alleged obligation to afford the other party the benefit of the contract cannot conflict with any express term of the contract. In Campbell v Backoffice Investments Pty Ltd, Gummow, Hayne, Heydon and Kiefel JJ stated that care must be taken in identifying 'both the content and operation of an implied obligation to co‑operate lest it be at odds with the terms upon which the parties have expressly agreed'. [122]

280 The cases also illustrate that the 'benefit of the contract' is distinct from, and does not always precisely coincide with, the contract's apparent commercial purpose. The 'benefit of the contract' is performance of the fundamental contractual promises. The commercial purpose may be described in terms that extend beyond the performance of the contract to include things which the parties hope or expect, but are not obliged, to achieve. Outcomes which a party is not obliged to provide lie beyond the scope of the 'benefit of the contract'.

281 In the present case, Castleway's claim is advanced by reference to the 'benefit of the contract' and its 'commercial purpose'. As set out earlier, the latter concept depends on a contention that it was a commercial purpose of the PDSA that projects owned by the TPC Group achieve their optimum profitable development outcome and that Castleway and the TPC Group work towards maximising the profits derived from those projects. I described it above as a small step from there to identifying a contention that the commercial purpose of the PDSA was to maximise the TPC Group Profit, as defined.

282 The cases show that nominating a benefit or commercial purpose without reference to the contract is insufficient to attract an implied obligation to provide that benefit or to cooperate in achieving that purpose. The question is therefore whether the PDSA imposed any obligation on the TPC Group of the kind alleged.

283 In approaching this question, it is not especially helpful to consider other cases in which implied terms have been found to exist which prevent the diminution of income streams. There is of course no reason why terms of that kind cannot be

283 implied into contracts as a matter of fact, where the test for doing so is met.[123] When that is done, the implied term at law will attach to the extent necessary to prevent one party depriving the other of the benefit of the implied term in fact. But, as with questions of construction generally, it is the terms of the contract in question, together with the particular admissible evidence of other matters, rather than decisions regarding other contracts, that must be determinative.

284 There is no express obligation to maximise the TPC Group Profit in the PDSA. Nor, in my view, is there an obligation to be implied.

285 Once it is accepted that the TPC Group Profit is not determined by reference solely to business expenses (and, it might be added, not solely by reference to business income), it follows that the parties accepted that, whatever profits were derived from the project work of the TPC Group, the TPC Group Profit might be reduced as a result of expenses extraneous to that work. The maximising of profit from project work therefore does not necessarily have the effect of maximising TPC Group Profit.

286 This means that, if TPC Group Profit is required under the PDSA to be maximised, then the TPC Group must be required, not only to work towards maximising profit on its projects, but also to minimise net non-project expenses. An implied term to the latter effect is therefore essential to Castleway's argument. But such a term would represent a significant restriction on the activities of the TPC Group. In light of its history of charitable expenditure, on a not inconsiderable scale, it could not be said to be an 'obvious' term, or one which would 'of course' reflect the parties' common intention.[124] A reasonable observer, knowing that history and also aware that cl 5.1 of the PDSA provides that the 'management, policies and operations of each TPC Entity shall be the sole responsibility of that TPC Entity' would rather have thought that the parties had left decisions as to the content and extent of non-project activities to resolution by the corporate entities in the group, in which Castleway through Mr Keeghan had representation, as part of their overall operations. The PDSA had business efficacy without implying a term that net non-project expenses must be minimised. That suffices to mean that there was no implied term requiring TPC Group Profit to be maximised.

287 In any event, I also do not consider that it is necessary to imply a term that the parties cooperate to maximise the profit derived from projects. Even if Castleway was required to do that, and bearing in mind that cl 2.5(d) requires it to manage existing projects to a 'profitable development outcome', again cl 5.1 gives the TPC Entities sole authority to determine their own management, policies and operations. It was this clause, in particular, that caused the trial judge to hold that Mrs Rado was entitled to realise the assets of the business.[125] In the course of reaching that conclusion, the judge rejected an implied term 'that the projects being undertaken by the TPC Group should be completed in such a way as to achieve their optimum profitable development outcome'.[126] That is the very foundation upon which the current argument rests. The respondents have not challenged the trial judge's rejection of this implied term. In my view the judge was correct to hold that the suggested term was contrary to the express term in cl 5.1.

288 Without either of the implied terms considered above, the alleged obligation of TPC Group not to deprive Castleway of the benefit of the contract and its allied obligation to cooperate in achieving its commercial purpose lose their essential contractual anchor. The implied term at law therefore has no work to do and the claim for damages for its breach fails.

289 Whelan JA and Riordan AJA conclude that the donation 'seriously undermined' and 'drastically devalued' the benefit for which Castleway had contracted. In my respectful opinion, that is not so.[127]

290 The law as to whether there is a term implied by law preventing a party to a contract from seriously undermining or drastically devaluing the other party's benefit under that contract is not settled. In both Byrne and Barker, the High Court prefaced the 'seriously undermined' formulation with the word 'perhaps', McHugh and Gummow JJ in Byrne supporting the possibility by reference to a case that addressed the point only tangentially.[128] But in any event, there is no reason for thinking that an implied term of this description must not also be identified and defined according to the parties' rights and obligations under the contract. The New South Wales Court of Appeal in Australis overturned a trial judge's implication of a term that a party not do anything to render a contemplated benefit 'nugatory or worthless or seriously undermined' on the basis that it failed to focus on contractual promises and the need to imply a term based on those promises.[129] As the Court said, 'there cannot be a duty to co-operate in bringing about something which the contract does not require to happen'.[130] Equally, there cannot be a duty not to seriously undermine a benefit which the contract does not require to be provided.

291 When one looks to the PDSA, if the identified benefit is the Service Fee, calculated according to the contractual formula, then that benefit is received in full and cannot be said to have been undermined or devalued, merely calculated according to figures different to those that would have applied had the $20 million payment not been made. It is only if the contractual benefit is a Service Fee calculated after the parties have maximised the TPC Group Profit that the donation can be said to have seriously undermined or drastically reduced the benefit for which Castleway had contracted. For the reasons given earlier, that contractual benefit has not been established.

292 Finally, the case does not, in my view, bear comparison with a hypothetical situation where the whole of the net profit from the projects in a given year is donated to charity so as to ensure that the amount that otherwise would have been payable as the Service Fee does not become payable. Such action might well breach a term implied in fact requiring the TPC Group not to deprive Castleway of the ability to earn the Service Fee. Such a scenario is qualitatively different to the present situation, which depends on a different and more far-reaching implied term. In that regard, it should be recalled that, after the $20 million donation, the Service Fee for 2016/17 on a TPC Group Profit of $20 million would have been $6,127,500.

293 Accordingly, in my opinion the making of the $20 million payment was not in breach of the PDSA. I would uphold appeal grounds 4 and 8 and reject ground 3 of the notice of contention.

294 However, I agree that the Court should hear from the parties as to the orders that should be made disposing of this aspect of the appeal in accordance with the conclusion of Whelan JA and Riordan AJA, as well as in relation to the questions of interest and costs.

1. Entities associated with the Executive Director [Mr Keeghan] and the Manager [Castleway] have provided property development services to the TPC Group from time to time.
2. ln a meeting held on 17 June 2008 the Executive Director and a director of the TPC Group Entities discussed a proposal for the continued provision of property development services to the TPC Group.

1. The TPC Group wishes to formalise the arrangements for the provision of services and has requested that the Manager provides property development services to the TPC Group on the terms set out in this Agreement.

1. The Manager has agreed to provide those services to the TPC Group on the terms set out in this Agreement.
2. The Executive Director is executive director and controller of the Manager.

Engagement

2.1 The TPC Group appoints the Manager to provide property development services to the TPC Group during the Term.

2.2 The Manager must, from time to time during the Term and to the extent reasonably requested by the TPC Group, provide the Services (as listed in clause 2.5 below) to the TPC Group.

2.3 The Manager accepts the engagement and agrees to make itself available from time to time to consult with the TPC Group in connection with the Services and to procure the active and continued involvement of the Executive Director in the provision of the Services.

2.4 The Manager may, at its own cost, arrange for, hire and coordinate the services of other professionals including experts and consultants in addition to the services of its own personnel, if required to perform the Services.

2.5 The Manager agrees to use its reasonable endeavours to provide the following services to the TPC Group:

(a) identify and investigate and, where appropriate, prepare a business case for property development opportunities for:

(i) land held by any TPC Entity at the date of this Agreement;

(ii) land to be acquired by any TPC Entity after the date of this Agreement; and

(iii) land held by third parties to be made available (by any means) to the TPC Group for development;

(b) assist the TPC Group in the planning, structuring and negotiation of any:

(i) potential acquisition of any land or land holding entities;

(ii) property development; or

(iii) disposal of any asset held by any TPC Entity;

(c) assist the TPC Group to identify, assess and secure financing sources, and co-developers, partners or joint venturers in connection with any property acquisition or development conducted by any TPC Entity; and

(d) manage existing properties owned by the TPC Group to a profitable development outcome.

2.6 The Manager shall be responsible for supplying all necessary plant, equipment and tools of trade required by it to perform the Services.

2.7 The TPC Group agrees to provide to the Manager all information necessary to enable the Manager to fully perform the Services in accordance with this Agreement.

2.8 The Manager must fully and fairly disclose to the TPC Group, in such detail as the TPC Group may reasonably require, details of all property acquisition or development opportunities that arise during the Term.

2.9 Subject to clause 2.10, the Manager must not, and must procure that the Executive Director does not, undertake any property development during the Term, in any capacity other than in accordance with this Agreement unless:

(a) the opportunity to conduct the property development has first been disclosed to the TPC Group in accordance with clause 2.8; and

(b) the TPC Group gives written notice to the Manager within 60 days of the opportunity being disclosed to it electing not to undertake the property development. For the avoidance of doubt, if the TPC Group does not provide written notice to the Manager within this period, then the TPC Group is deemed to have rejected the opportunity to undertake the property development.

2.10 Nothing in this agreement restricts the Executive Director or Manager, in his personal capacity, entering into a joint venture with a third party to undertake property development or undertaking any property development opportunity rejected by the TPC Group in accordance with clause 2.9.

Property Procurement and Development Fee

3.1 The TPC Group must pay the Manager a property procurement and development fee (Service Fee) in respect of each Financial Year ending during the Term.

3.2 The parties agree that the Service Fee shall be calculated by the TPC Group's nominated accountant based on TPC Group Profit in each Financial Year during the Term in the manner set out in Schedule 2.

3.3 The Service Fee shall be paid annually in arrears on the following basis:

(a) the TPC Group shall use reasonable endeavours to procure that financial statements and tax returns for each TPC Entity for a Financial Year are finalised on or before 31 December in the Financial Year following the year to which they relate, and shall procure in any event that such financial statements and tax returns are finalised by no later than 31 March in the Financial Year following the year to which they relate;

(b) the TPC Group shall procure that the nominated accountant acting for the TPC Group calculates the TPC Group Profit in the manner set out in Schedule 2 and reports to the TPC Group and the Manager on the Service Fee payable in respect of a Financial Year within thirty (30) days of finalisation of the TPC Group tax returns for that Financial Year;

(c) after the Service Fee is reported to the TPC Group and the Manager, either party has ten (10) days to give to the other party a Dispute Notice in accordance with clause 9. If no Dispute Notice is given then the Service Fee is deemed to be agreed by the parties;

(d) the Manager shall submit a Tax Invoice to the TPC Representative for the Service Fee, within fourteen (14) days after the accountant provides the report containing details of the Service Fee payable or, if there is a Dispute over the Service Fee, within fourteen (14) days after the Dispute is resolved in accordance with clause 9. The invoice must be a compliant Tax Invoice, and the invoiced amount must equal the amount of Service Fee as set out in the report (including any GST payable). Any failure or delay in submitting a Tax Invoice shall not be construed as a waiver of the Manager's right to submit the Tax Invoice;

(e) subject to clause 3.3(g), the TPC Group will pay all correctly rendered invoices within thirty (30) days after receipt of the invoice.

(f) the TPC Group may dispute an invoice if the amount is not equal to the amount of Service Fee as set out in the applicable report from the accountant.

If either party disputes an invoice:

(i) the TPC Group will pay the non-disputed component (if any) of the invoiced amount in accordance with clause 3.3(e); and

(ii) the TPC Group may withhold the disputed component until the dispute is resolved in accordance with clause 9, in part or in whole, in favour of the Manager and, subject to clause 3.3(g), shall pay any amount so resolved in favour of the Manager to the Manager within thirty (30) days of resolution of the dispute.

(g) if in the opinion of the TPC Representative the cash flow position of the TPC Group does not prudently allow for payment of the Service Fee within the time specified in clause 3.3(e) or clause 3.3(f)(ii) (as the case requires), the TPC Group shall request and the Manager shall agree to an extension of the date for payment of the Service Fee of up to one hundred and fifty (150) days.

3.4 The TPC Group and the Manager agree to provide to the accountant all information necessary to calculate the Service Fee (if any) payable under clause 3.1.

3.5 The TPC Group shall maintain, for a period of seven (7) years after the Financial Year to which they relate, accurate records and accounts to determine the Service Fee payable in respect of the relevant Financial Year. The TPC Group will permit an accountant or auditor of the Manager from time to time during ordinary business hours to inspect and verify all or any records required to be maintained by the TPC Group under this clause 3.5, provided that prior to inspecting such records and accounts, the accountant or auditor enters into a confidentiality agreement in favour of the TPC Group in a form approved by the TPC Group (acting reasonably).

3.6 Notwithstanding anything in clause 3.3, the parties agree that the FY2008 Service Fee and the FY2009 Service Fee are agreed and will be paid to the Manager on or before the day that is 45 days after the date of this Agreement.

3.7 If the TPC Group defaults in payment of any monies due under this clause 3 the TPC Group shall, upon demand by the Manager, pay interest at the rate of 2% higher than the current ANZ 90 day Bank Bill Swap Bid Rate (BBSY) on the amount in default from the time it fell due until that amount has been paid in full.

1. Calculation of Service Property Procurement & Development Fee (Service Fee)

The Service Fee for each Financial Year during the Term shall be determined based on TPC Group Profit for that Financial Year and calculated in accordance with the following table.

If TPC Group Profit falls within Band 1 to Band 7 (both inclusive) the Manager shall be entitled to a Service Fee calculated in accordance with column 5 'Aggregate Amount payable to Manager'. If the calculation of TPC Group Profit results in a loss (TPC Group Loss) then no Service Fee will be payable.

$75,000 plus 20% of TPC Group Profit above $500,000

$175,000 plus 25% of TPC Group Profit above $1 million

$425,000 plus 25% of TPC Group Profit above $2 million

$675,000 plus 30% of TPC Group Profit above $3 million

$975,000 plus 30% of TPC Group Profit above $4 million

$1,275,000 plus 40% of TPC Group Profit above $5 million

For the purposes of this Agreement TPC Group Profit means the TPC Group's share of adjusted taxable profit before income tax on a consolidated basis calculated as follows:

Total Taxable Income (loss) as per income tax returns for the TPC Group Entities and associated entities set out in Annexure A to this Agreement

Inter-entity current year taxable dividends or taxable trust distributions declared

Notional non assessable gain (loss) on pre-CGT assets (See Note 1 below)

Current year post CGT capital losses not otherwise offset in taxable income (loss)

Carried forward capital losses offset against current year capital gains

Any post 1 July 2007 dividend paid from profits for shares in any TPC Entity sold or disposed of to external parties

Carried forward income losses offset against current year taxable income (loss)

Percentage share owned by external parties of non-wholly owned TPC Entities (See Note 3 below)

Any carried forward TPC Group Loss (See Note 2 below)

The parties acknowledge that the calculation of TPC Group Profit for the Financial Year ending 30 June 2008 is attached as Annexure C to this Agreement. The parties agree that if there is any dispute regarding calculation of TPC Group Profit in any subsequent Financial Year the calculation shall (where practicable) be undertaken in accordance with the principles and standards reflected in the calculation of TPC Group Profit for the 2008 Financial Year.

Note 1: Notional non assessable gain (loss) on pre-CGT assets

'Notional non assessable gain (loss) on pre-CGT assets' is the difference between the net sale proceeds on sale of the Land & Properties or Shares listed below and the notional market value for the relevant Land & Properties or Shares as agreed by the parties and (in the case of Land & Properties) set out below or (in the case of Shares) calculated as set out below.

A surplus amount is a gain (to be added to the calculation of TPC Group Profit) a deficit amount is a (loss) (to be subtracted from the calculation of TPC Group Profit).

Land & Properties

The 'notional market value' for pre-CGT land and properties is the value as per the council or land tax unimproved values as at 1 July 2007 for the following 'listed assets'.

Tynong Pastoral Co Pty Ltd ATF Tynong Pastoral Unit Trust

Tynong Pastoral Co Pty Ltd ATF Tynong Pastoral Unit Trust

Tynong Pastoral Co Pty Ltd ATF Tynong Pastoral Unit Trust

50% interest in 179 Currumburra Road Ashmore QLD

Shares

The 'notional market value' for shares is the recorded net assets as at 1 July 2007 adjusted for any increase (decrease) in land and property values as at 1 July 2007 for the following 'listed assets':

Note 2: Carried forward TPC Group Loss

If the calculation of TPC Group Profit results in a loss (TPC Group Loss) in any Financial Year (commencing with the Financial Year ended 30 June 2008), the amount of the TPC Group Loss shall be carried forward and offset against the adjusted taxable income for the TPC Group for the following Financial Year.

Whilst a TPC Group Loss shall be carried forward and set-off in the calculation of TPC Group Profit in the next Financial Year, the Manager shall not be required to make any payment to the TPC Group in respect of any TPC Group Loss (other than as expressly set out in the Agreement).

Note 3: Wholly Owned Entities and Partly Held Interests

The parties agree that the TPC Group Profit shall include only the TPC Group's proportionate share of profit attributable to any entity, trust, partnership or joint venture for which the TPC Group does not hold a 100% ownership interest.

The parties acknowledge and agree that, as at the date of this Agreement, columns 1 and 2 of the table in Annexure A are entities comprising a 100% TPC Group ownership interest. The companies, trusts, partnerships and joint ventures in which the TPC Group has a part interest only are set out in columns 3, 4 and 5 of Annexure A.

3. Adjustments

Amended Income Tax Assessments

If for any Financial Year ending during the Term there is an amended income tax assessment for any TPC Entity the amount of the adjustment shall be offset (added or subtracted as the case requires) against the calculation of TPC Group Profit for the Financial Year in which the amended assessment is finalised.

Prior Year Errors

If an audit conducted under clause 3.5 of the Agreement reveals an underpayment or overpayment of the Service Fee for any Financial Year or the TPC Group and the Manager otherwise determine that there has been an overpayment or underpayment due to an error, omission or incorrect calculation of the Service Fee the amount of the underpayment or overpayment shall be adjusted (added or subtracted as the case requires) against the calculation of TPC Group Profit for the Financial Year in which the underpayment or overpayment was detected.

No Interest on Adjustments

The parties agree that any adjustment shall not be subject to default interest under clause 3.7 of this Agreement.

4. Termination Adjustment and Final Service Fee

The TPC Group Profit for the final Financial Year (or part Financial Year) of the Term shall be adjusted as follows:

(a) TPC Group Profit shall be reduced by an amount equal to the unrealised capital losses as at the date of termination or expiry of the Agreement;

(b) TPC Group Profit shall be increased by an amount equal to unrealised capital gains as at the dated [sic] of termination or expiry of the Agreement.

The parties agree that if the Term ends on a date other than at the end of a Financial Year, the Service Fee shall be reduced on a pro rata basis for the period between the date of termination and the end of the relevant Financial Year.

5. Excluded Entities

The parties acknowledge and agree that the following entities are not part of the TPC Group and will not be included for the purpose of calculating TPC Group Profit:

(a) Corilla Pty Ltd ATF Corilla Unit Trust

(b) Dana Investments Pty Ltd ATF Dana Investments Joint Venture

(c) Trabeel Pty Ltd ATF Collins Street Joint Venture

(d) Racmon Pty Ltd ATF Rado Investment Trust

(e) Kashalight Pty Ltd

(f) TPC Group Pty Ltd

(g) The Promenade Berwick Pty Ltd

(h) Tinapher Pty Ltd

(i) Rado Management ATF Rado Management Trust

(j) Roading Management ATF Roading Management Trust

(k) Eden Valley Escape Pty Ltd

6. New TPC Group Entities

The parties agree that for the purpose of calculating TPC Group Profit, the TPC Entities will include any entity established by the one or more TPC Group Entities after the date of this Agreement for which the Manager provides property development services under this Agreement.

7. TPC Group Projects

The parties agree that the property development projects being undertaken by the TPC Group (or any of them) as at 1 July 2007 are listed in Annexure B to this Agreement (TPC Group Projects).

8. Variation of Calculation Mechanism for TPC Group Profit

The parties agree that the calculation mechanism in this Schedule 2 may be varied from time to time by unanimous agreement of the Executive Director and each of the directors of the TPC Entities.

The primary judge erred in not construing the agreement between the parties (the PDSA) according to its terms, namely as an agreement providing for payment of an annual service fee to the First Respondent as remuneration for services, calculated by reference to 'TPC Group Profit', being 'the TPC Group's share of adjusted taxable profit before income tax on a consolidated basis' following the steps prescribed in Schedule 2 to the PDSA.

The primary judge erred at paragraph [72] of the October 2017 Reasons in treating the PDSA as ambiguous or contradictory, contrary to the agreement of the parties noted at paragraphs [48] and [54] of the October 2017 Reasons that the PDSA was not ambiguous.

The primary judge further erred at paragraph [77] of the October 2017 Reasons in construing the PDSA as a profit sharing agreement, and at paragraphs [33] and [34] of the October 2018 Reasons in construing the PDSA as a joint venture, when it was not, and was expressly stated in clause 5.2 not to create a joint venture, partnership, agency or an employment relationship between the First Respondent and the Applicants.

The primary judge further erred at paragraph [77] of the October 2017 Reasons in implying (as a matter of law or fact) a term into the PDSA 'which would preclude expenses not incurred in connection with the TPC Group's normal business activities from operating to reduce the service fee' when the circumstances, including the clear language of the PDSA, did not permit any such implication.

The primary judge further erred at paragraph [81] of the October 2017 Reasons in not giving effect to the agreement of the parties expressed in Schedule 2 to the PDSA that 'any dispute regarding calculation of TPC Group Profit in any subsequent year ... (where practicable) be undertaken in accordance with the principles and standards reflected in the calculation of TPC Group Profit for the 2008 Financial Year', which were inconsistent with treating the PDSA as a profit sharing agreement or as requiring the adding back of expenditure properly deductible for income tax purposes when calculating the service fee payable under the PDSA.

Accordingly, the primary judge erred in the October 2018 Reasons in increasing the adjusted taxable profit of the TPC Group before income tax for the purposes of the service fee calculation for the financial years ending 30 June 2014, 30 June 2015 and 30 June 2016 by disallowing expenditure deductible for income tax purposes in those years, namely:

(a) Accountancy expenses in respect of the Excluded Entities (at [101]-[102] of the October 2018 Reasons);

(b) Accountancy expenses in connection with the proceeding (at [35] of the October 2018 Reasons);

(c) Legal fees incurred in connection with negotiating variations to the PDSA which did not eventuate (at [51] of the October 2018 Reasons);

(d) Legal fees relating to the commencement and conduct of the proceeding (at [35] of the October 2018 Reasons); and

(e) Mr Lee's director's fees (at [85]-[87] of the October 2018 Reasons).

Further or alternatively, the primary judge erred in the October 2018 Reasons in not adopting pro tanto the report of the special referee dated 27 April 2018 contrary to the principles laid down in Wenco Industrial Pty Ltd v W Industries Pty Ltd [2009] VSCA 191; (2009) 25 VR 119, having by Order of 11 December 2017 referred to Mr Greg Meredith of Ferrier Hodgson as special referee the question of determining the quantum of expenses of the TPC Group which were:

(a) deductible for income tax purposes in the calculation of TPC Group Profit in the financial years ending 30 June 2014, 30 June 2015 and 30 June 2016; but

(b) nevertheless on the Court's interpretation of the PDSA to be disallowed in the calculation of the particular years' service fee.

The primary judge further erred at paragraph [85] of the October 2017 Reasons in finding that the $20 million tax‑deductible charitable donation made by the First Applicant during the financial year ended 30 June 2017 was not to be taken into account in calculating the service fee for that financial year.

The primary judge further erred in making order 8(a) of the 31 January 2019 Orders, as it was unsupported by any evidence or finding, and not based upon the issues pleaded or heard at trial.

The primary judge further erred at paragraph [113] of the October 2018 Reasons in finding that 14 of the 16 assets listed at [100] of the October 2017 Reasons were 'Introduced Projects' within the meaning of the PDSA.

In addition to the reasons provided at [62] to [73] of the October 2017 Reasons, the primary judge should have found that only expenses incurred in the ordinary course of the TPC Group's business may operate to reduce the Service Fee payable to Castleway under the PDSA (Permitted Expenses Finding) on the basis that the contrary interpretation would give rise to uncommercial and unreasonable results.

Upon finding an ambiguity or contradiction in the application of the formula set out in Schedule 2 of the PDSA for calculating Castleway's Service Fee at [72] of the October 2017 Reasons, the primary judge should have reached the Permitted Expenses Finding having regard to the evidence of the profit sharing arrangement recorded in the minutes dated 17 June 2008, as representing the intention of the parties in entering the PDSA.

In the alternative to the findings at [77] and [85] of the October 2017 Reasons, the primary judge should have reached the Permitted Expenses Finding by reason of terms implied by law requiring the TPC Group to do all things necessary on its part to enable Castleway to have the benefit of the PDSA, and to act reasonably and in good faith, so as not to frustrate or prevent the PDSA's commercial purpose being fulfilled.

In addition to the reasons provided at [111] to [114] of the October 2018 Reasons, the primary judge should have found that Castleway was entitled to declarations as to which projects constitute 'Introduced Projects' for the purposes of the PDSA on the basis that the TPC Group was seeking to re-open its case and had not established the necessary exceptional circumstances which might otherwise entitle it to do so.

The primary judge erred in concluding in the October 2017 Reasons [118]

that the definition of 'Introduced Project' at clause 1.1 of the PDSA required that Castleway (through Mr Keeghan) 'would need to make the TPC Group aware of 'development opportunities of the project' (clause 2.5(a)) in relation to land; and the means by which the TPC Group might undertake the development opportunities';

On a proper construction of clause 1.1 of the PDSA, the primary judge should have concluded that Castleway (by Mr Keeghan) made the TPC Group 'aware' that a project was an Introduced Project by giving notice to the TPC Group before the termination of the PDSA that a project had been acquired by the TPC Group for the purposes of acquisition, development and/or management;

The primary judge should have concluded, on the evidence, that Castleway (by Mr Keeghan) made the TPC Group 'aware' in relation to the Kawana Waters project, before the termination of the PDSA, by letters dated 5 May 2015 and 22 June 2015 and was in error in the October 2017 Reasons [142] in finding that the Kawana Waters project was not an Introduced Project because Castleway or r Keegan had not made the board of the TPC Group 'aware' of the project;

In any event, the finding by the primary judge that the Kawana Waters project was introduced to the TPC Group by Partners In Property Qld Pty Ltd in the October 2017 Reasons [141], was erroneous and against the evidence and the weight of the evidence. The primary judge should have concluded on the evidence that the development opportunities relating to the Kawana Waters project were in fact introduced to the TPC Group by Castleway (through Mr Keeghan);

The primary judge was in error, on a proper construction of the term Introduced Project in the PDSA, in concluding by the October 2017 Reasons [127] that the IBIS Care Retirement Home property, as a business providing aged care services acquired and managed by the TPC Group, did not constitute an Introduced Project under the PDSA and that the project would have to have some property element to fall within a possible project;

The primary judge should have concluded contrary to October 2017 Reasons [127] that:

(a) it was not was not a requirement of the PDSA that an Introduced Project was required to have a 'property element'; or

(b) in the alternative, the IBIS Care Retirement Home business did have a 'property element' within the meaning of the PDSA;

The primary judge was in error, on the evidence, to find in the October 2017 Reasons [47] that the establishment of the Rado Family Foundation and making of the $20 million donation to that Foundation was not made for any improper purpose or part of a conspiracy by breach of duty of the directors of the donor company, Adaz Nominees Pty Ltd;

The primary judge should have concluded as a proper matter of reasonable inference, on the evidence and the weight of the evidence, that Mrs Rado, Mr Lee and Mr Stephen Rado as the majority of the directors of Adaz Nominees breached their duties as directors under s.181 of the Corporations Act 2001 and committed the civil tort of conspiracy when combining to arrange, conceal from Mr Keeghan, and implement the making of the $20 million charitable donation from Adaz Nominees to the Rado Family Foundation, with the objective of causing harm to Castleway, by preventing it from receiving its proper Service Fee entitlement for the 2016-2017 financial year and reducing Castleway's Service Fee by $8 million;

The primary judge erred in concluding in October 2017 Reasons [189] that the first cross-applicant was not entitled to the payment of its invoices nos. 1701, 1702 and 1703 (Invoices), which were equal to the amount of the undisputed Service Fees reported in the 2013/14, 2014/15 and 2015/16 financial years by the nominated accountant, and that it was not entitled to the payment of the undisputed components of the Service Fees until all disputes the subject of dispute notices were determined;

Accordingly, interest should have accrued on the non-disputed Service Fees set out in October 2017 Reasons [181] pursuant to s.58(1) of the SCA, on the amounts in the Invoices, from 30 days of service of the Invoices on the TPC Group to 28 November 2018, being the date of payment of the Service Fees found to be due, which exceeded the Invoices, were ultimately paid;

The primary judge erred in law in January 2019 Reasons [12] in dismissing the cross-applicants' claim for interest under s 60(1) of the SCA. The primary judge should have ordered that interest be paid upon the sums totalling $15,098,815.06 (inclusive of GST) that the TPC Group was found by the Court to be payable to Castleway;

The primary judge should have concluded on a proper construction of s 60(1) of the SCA that the counterclaim by the first cross-applicant for recovery of outstanding Service Fees:

(a) was a proceeding for the recovery of a debt or damages within meaning of s 60(1) of the SCA;

(b) that Castleway was obliged to take proceeding to recover the money sums due to it as the Service Fees were outstanding, and in the meantime Castleway had been kept out of moneys which it could otherwise have used, or upon which it could otherwise have earned interest;

(c) that the provision of s.60(1) was intended to apply to justify an award of interest upon the sums found to be recoverable by Castleway, from the date of the filing of Castleway's second further amended defence and counterclaim on 19 July 2017, to the date of payment being 28 November 2018;

The primary judge was in error in January 2019 Reasons [33] in concluding that because the amounts found payable to Castleway under the PDSA did not become due and owing until an invoice was raised for an undisputed amount, and was then payable within 30 days of the presentation of the invoice, this precluded Castleway from claiming interest on the sums found due and payable as outstanding Service Fees under s.60(1) of the SCA.

ADAZ NOMINEES PTY LTD (ACN 006 228 119) (AS TRUSTEE FOR THE RADO NO 2 TRUST)

ROADING GROUP PTY LTD (ACN 097 993 292) (AS TRUSTEE FOR THE RADO INVESTMENT TRUST NO 2)

ROADING INVESTMENTS PTY LTD (ACN 104 325 797) (AS TRUSTEE FOR THE RADO INVESTMENT TRUST NO 3)

LOOILLA PTY LTD (ACN 092 067 322) (AS TRUSTEE FOR LOOILLA TRUST)

BELLONIC PTY LTD (ACN 092 015 828) (AS TRUSTEE FOR BELLONIC TRUST)

TYNONG PASTORAL CO PTY LTD (ACN 060 828 364) (AS TRUSTEE FOR TYNONG PASTORAL UNIT TRUST)

TYNONG PROPERTY DEVELOPMENTS PTY LTD (ACN 081 950 647) (AS TRUSTEE FOR AMARCO SERVICES TRUST)

TYNONG PROPERTY DEVELOPMENTS PTY LTD (ACN 081 950 647) (AS TRUSTEE FOR AMARCO SERVICES TRUST)

CASTLEWAY PTY LTD (ACN 131 870 481) (AS TRUSTEE FOR THE CASTLEWAY TRUST)

CASTLEWAY PTY LTD (ACN 131 870 481) (AS TRUSTEE FOR THE CASTLEWAY TRUST)

ADAZ NOMINEES PTY LTD (ACN 006 228 119) (AS TRUSTEE FOR THE RADO NO 2 TRUST)

ROADING GROUP PTY LTD (ACN 097 993 292) (AS TRUSTEE FOR THE RADO INVESTMENT TRUST NO 2)

ROADING INVESTMENTS PTY LTD (ACN 104 325 797) (AS TRUSTEE FOR THE RADO INVESTMENT TRUST NO 3)

LOOILLA PTY LTD (ACN 092 067 322) (AS TRUSTEE FOR LOOILLA TRUST)

BELLONIC PTY LTD (ACN 092 015 828) (AS TRUSTEE FOR BELLONIC TRUST)

TYNONG PASTORAL CO PTY LTD (ACN 060 828 364) (AS TRUSTEE FOR TYNONG PASTORAL UNIT TRUST)

TYNONG PROPERTY DEVELOPMENTS PTY LTD (ACN 081 950 647) (AS TRUSTEE FOR AMARCO SERVICES TRUST)

[1] (1977) 180 CLR 266 ('BP Refinery v Hastings').

[2] Re Adaz Nominees Pty Ltd (No 2) [2017] VSC 578 ('October 2017 Reasons').

[11] Written Case of the Cross-Respondents in Opposition to the Cross-Application for Leave to Appeal and of the Applicants in Response to the Notice of Contention dated 16 April 2019, [26]. The submission footnotes the October 2017 Reasons at [74], [77]-[78] as containing what are said to be erroneous conclusions reached based upon the term implied by law.

[17] Re Adaz Nominees Pty Ltd (No 4) [2017] VSC 755 ('December 2017 Reasons').

[18] Re Adaz Nominees Pty Ltd (No 5) [2018] VSC 624 ('October 2018 Reasons').

[19] Re Adaz Nominees Pty Ltd (No 6) [2019] VSC 14 ('January 2019 Reasons').

[20] Proposed appeal ground 7 concerns the trial judge's decision not to adopt parts of the Special Referee's report. For the most part, but not entirely, that decision flowed from his construction of the provisions for calculation of the TPC Group Profit.

[21] Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640, 656-7 [35] (French CJ, Hayne, Crennan, and Kiefel JJ) ('Woodside'); Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104, 116 [47] (French CJ, Nettle and Gordon JJ) ('Mount Bruce').

[22] Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; (2017) 261 CLR 544, 551 [16] (Kiefel, Bell and Gordon JJ) ('Ecosse').

[24] Eureka Operations Pty Ltd v Viva Energy Australia Ltd [2016] VSCA 95, [45]-[47] (Santamaria, Ferguson and McLeish JJA); Mount Bruce [2015] HCA 37; (2015) 256 CLR 104, 116 [46]-[48] (French CJ, Nettle and Gordon JJ); Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2012] WASCA 216; (2012) 45 WAR 29, 50 [76] (McLure P, with whom Newnes JA and Le Miere J agreed) ('Hancock').

[25] Lopes v Taranto [2018] VSCA 288, [66]-[72] (Kyrou, McLeish and Hargrave JJA), quoted with approval in Canale v G W & R Mould Pty Ltd [2018] VSCA 346, [45] (Whelan and McLeish JJA with whom Tate JA agreed).

[26] Mount Bruce [2015] HCA 37; (2015) 256 CLR 104, 116-7 [46], [49] (French CJ, Nettle and Gordon JJ).

[27] Woodside [2014] HCA 7; (2014) 251 CLR 640, 656-7 [35] (French CJ, Hayne, Crennan, and Kiefel JJ).

[28] Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR 181, 198 [43] (Gleeson CJ, Gummow and Hayne JJ) ('Maggbury').

[29] Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, 352 (Mason J) ('Codelfa'). See, Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 240 CLR 45, 62-3 [39] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ); Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; (2011) 282 ALR 604, 605 [2]-[5] (Gummow, Heydon and Bell JJ); Mount Bruce [2015] HCA 37; (2015) 256 CLR 104, 116-7 [46]-[49], [52] (French CJ, Nettle and Gordon JJ).

[31] Codelfa (1982) 149 CLR 337, 352 (Mason J); Golf Australia Holdings Ltd v Buxton Construction Pty Ltd [2007] VSCA 200, [28] (Nettle and Redlich JJA, with whom Neave JA agreed). As Gordon J said in Construction Forestry Mining Energy Union v Bovis Land Lease Pty Ltd [2008] FCA 1669, [15]: 'the back-and-forth of the parties in concluding the transaction' is not considered in construing the document.

[32] FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd [1993] VicRp 76; [1993] 2 VR 343, 350.

[33] Queensland Phosphate Pty Ltd v Korda [2017] VSCA 269, [37] (Tate, Beach JJA and Sifris AJA).

[34] BP Refinery v Hastings (1977) 180 CLR 266, 283 (Lord Simon, Viscount Dilhorne and Lord Keith) adopted in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596, 605-6 (Mason J).

[37] October 2018 Reasons [94], [101]-[102].

[40] (1881) LR 6 App Cas 251, 263.

[42] [1979] HCA 51; (1979) 144 CLR 596, 607 (Mason J, with whom Gibbs, Stephen and Aickin JJ agreed; Barwick CJ determining the appeal on a narrower basis without disagreeing) ('Secured Income').

[43] [2001] HCA 45; (2001) 205 CLR 126, 142 [36] (Gleeson CJ, Gummow, Kirby and Hayne JJ).

[45] [2014] HCA 32; (2014) 253 CLR 169 ('Commonwealth Bank v Barker')

[51] Commonwealth Bank v Barker [2014] HCA 32; (2014) 253 CLR 169, 189 [29].

[55] Beerens v Bluescope Distribution Pty Ltd [2012] VSCA 209; (2012) 39 VR 1, 13 [54] (Nettle JA) ('Beerens').

[56] McMahon v National Foods Milk Ltd [2009] VSCA 153; (2009) 25 VR 251, 265 [13] (Nettle JA) ('McMahon').

[57] Beerens [2012] VSCA 209; (2012) 39 VR 1, 13 [54].

[58] McMahon [2009] VSCA 153; (2009) 25 VR 251, 265 [13].

[59] Beerens [2012] VSCA 209; (2012) 39 VR 1, 13 [54].

[60] Bell Group NV (in liq) v Insurance Commissioner of Western Australia [2017] WASCA 229, [113].

[61] Wellington and others v Huaxin Energy (Aust) Pty Ltd [2020] QCA 114, [78].

[63] Citing Secured Income [1979] HCA 51; (1979) 144 CLR 596, 607 (Mason J, with whom Barwick CJ, Gibbs, Stephen and Aickin JJ agreed).

[65] On 8 April 2020, senior counsel for the applicants submitted that the purpose of the notice of dispute was to avoid the 2017 Grant Thornton report being deemed as agreed and to protect the TPC Group's position on this appeal.

[66] Monarch Steamship Co Ltd v Karlshamns Oljefabriker (A/B) [1949] AC 196, 220.

[67] The trial judge quoted this passage from Mrs Rado's evidence in the October 2017 Reasons at [43].

1. [73] Williams v Hursey [1959] HCA 51; (1959) 103 CLR 30, 122-7 (Menzies J); Uber Australia Pty Ltd v Andrianakis [2020] VSCA 186 [31] (Niall, Hargrave and Emerton JJA) adopting Dresna v Misu Nominees Pty Ltd (2003) FCA 1537 [99] (Weinberg J).

[74] McKernan v Fraser [1931] HCA 54; (1931) 46 CLR 343, 362 (Dixon J); McKellar v Container Terminal Management Service Ltd [1999] FCA 1101; (1999) 165 ALR 409, 434 [131] (Weinberg J).

[75] Cornwall v Rowan [2004] SASC 384; (2004) 90 SASR 269, 427-8 [697] (Bleby, Besanko and Sulan JJ).

[76] Multinational Gas & Petrochemical Co Ltd v Multinational Gas & Petrochemical Services Ltd [1983] Ch 258; Pascoe Ltd (in liq) v Lucas (1998) 27 ACSR 737, 767 (Debelle J).

[78] Fox v Percy [2003] HCA 22; (2003) 214 CLR 118, 128 [29] (Gleeson CJ, Gummow and Kirby JJ), 133 [48] (McHugh J).

[79] [1931] HCA 54; (1931) 46 CLR 343, 362.

[80] Ibid 362 (Dixon J), 398-400 (Evatt J); Cox v Journeaux (No 2) [1935] HCA 48; (1935) 52 CLR 713, 718-9 (Dixon J).

[81] [2012] NSWSC 426 [67], citing Mogul Steamship Co v McGregor Gow & Co [1891] UKLawRpAC 50; [1892] AC 25, 36.

[82] October 2017 Reasons [124], [127].

[86] October 2017 Reasons [112]-[113].

[87] [2017] HCA 12; (2017) 261 CLR 544, 580 [98].

[92] October 2017 Reasons [99](a), [127].

[99] [2001] VSCA 167; (2001) 4 VR 28, 47 [49] (with whom Charles and Vincent JJA agreed).

[100] [1992] HCA 36; (1992) 176 CLR 256, 265.

[103] Noting that the Court is granting leave to appeal.

[108] [2014] HCA 32; (2014) 253 CLR 169, 189 [29] ('Barker').

[109] (1896) 7 QLJ 68, 70-1 ('Butt').

[110] [1979] HCA 51; (1979) 144 CLR 596, 607-8 ('Secured Income') (emphasis added).

[111] [2013] VSCA 331, [28] ('Wolfe').

[112] (1998) 43 NSWLR 104 (Mason P, Beazley and Stein JJA) ('Australis').

[113] Ibid 125 (emphasis added); see also Marmax Investments Pty Ltd v RPR Maintenance Pty Ltd [2015] FCAFC 127; (2015) 237 FCR 534, 560-1 [134]-[137] (Middleton, Foster and Gleeson JJ); New Standard Energy PEL 570 Pty Ltd v Outback Energy Hunter Pty Ltd [2019] SASCFC 132, [130] (Nicholson J, Kourakis CJ relevantly agreeing at [1], Lovell J agreeing at [190]); Wellington v Huaxin Energy (Aust) Pty Ltd [2020] QCA 114, [77]-[78] (Philippides JA, Morrison JA agreeing at [1], Ryan J agreeing at [101]).

[114] Ibid 124 (emphasis added) (citations omitted).

[115] Barker [2014] HCA 32; (2014) 253 CLR 169, 194 [37].

[116] [2009] VSCA 153; (2009) 25 VR 251 ('McMahon').

[119] [2012] VSCA 209; (2012) 39 VR 1 ('Beerens').

[122] [2009] HCA 25; (2009) 238 CLR 304, 358 [168] ('Campbell'); see also Beerens [2012] VSCA 209; (2012) 39 VR 1, 36 [159]-[161] (Tate JA).

[123] Moorhead v Brennan (1991) 20 IPR 161, 165-6 (Bryson J); RJD International Pty Ltd v Performed Line Products (1996) 39 NSWLR 417, 422-3 (Young J); EW Blanch Pty Ltd v Cooper [2004] NSWSC 631 [187]-[204] (Bergin J).

[124] BP Refinery (Westernport) v Shire of Hastings (1977) 180 CLR 266, 283 (Lord Simon of Glaisdale, Viscount Dilhorne and Lord Keith of Kinkel).

[127] Nor did Castleway advance the case in those terms at trial or on appeal. However, for the reasons that follow, that matter can be put to one side.

[128] Byrne (1995) 185 CLR 410, 450, citing Nullagine Investments Pty Ltd v Western Australian Club Inc [1993] HCA 45; (1993) 177 CLR 635; Barker [2014] HCA 32; (2014) 253 CLR 169, 189 [29] (French CJ, Bell and Keane JJ).

[129] (1998) 43 NSWLR 104, 124-5 (Mason P, Beazley and Stein JJA).