Anaconda Nickel Limited v Edensor Nominees Pty Ltd & Gutnick [2004] VSCA 167

5. The appellant ("Anaconda") held substantial laterite nickel mining interests in Western Australia in three areas called provinces. The chief objective of Anaconda was to be the dominant nickel miner in the three provinces. Cawse was in one of the provinces. In November 1999, Anaconda and Centaur entered into an agreement to conduct a feasibility study of an expansion of nickel production at Cawse. The agreement contemplated that Anaconda and Centaur would enter into a joint venture to develop the Cawse project.

8. On 4 December 1997, Centaur issued bonds in the United States securing a loan of US$225 million in order to construct a plant at Cawse. The obligations of Centaur to the bondholders were secured by a debenture over all Centaur's assets. Centaur entered into a number of arrangements with its banker, the Chase Manhattan Bank ("Chase"), to hedge the price of gold mined and sold by Centaur. By 2000, Centaur was in a certain amount of financial difficulty. It had underestimated the cost of the Cawse nickel project by some US $150 million. Its indebtedness to Chase was increasing, due to the fact that it was not producing sufficient gold to fulfil contracts of sale it had made and to movements in the value of the Australian currency.

11. By August 2000, Centaur's financial difficulties had become marked. At a meeting on 3 August 2000 Gutnick raised with John Andrew Forrest, the chief executive officer of Anaconda, the possible sale by Edensor of its shares in Centaur to Anaconda. On 23 August 2000, Gutnick and Forrest reached agreement and executed a share sale deed that day.

14. By the deed Edensor agreed to sell to Anaconda the shares which Edensor held in Centaur at a price of $1.35 per share, a total price of $8,521,704.90. Clause 4.1(a) of the deed provided:

"(a) Completion of this Deed is conditional upon the Transferee, by the Completion Date, completing a due diligence investigation (and being satisfied with the results thereof in its absolute discretion) of the assets, trading position and liabilities of Centaur and being further satisfied in its absolute discretion that nothing in this Deed ... will result in a `Change of Control' ... "

The expression "Change of Control" was taken from the deed between Centaur and the United States bond-holders. The completion date was 4 September 2000. The price was payable by a deposit of $3,500,000 and payment of the balance on the completion date. The deposit was duly paid. Edensor charged its shares in Centaur as security for the repayment of the deposit. On 23 August 2000, Gutnick executed transfers of the shares, which were held in escrow by Anaconda's solicitors. On the same day Anaconda granted to Mordechai Gutnick, a son of Gutnick, an option to sell to Anaconda 1,573,041 shares which he held in Centaur.

19. The due diligence investigation was supervised by Stephen Dennis, the group general manager of Anaconda. On 29 August 2000, Dennis sent a memorandum to Forrest. In the memorandum Dennis pointed out the risks to Anaconda of the proposed sale and advised Forrest not to proceed with it. Dennis proposed that Forrest should persuade Gutnick to wait and agree not to deal with anyone else. In the meantime, Anaconda should come to an agreement with the bond-holders, who were "the key to controlling the Cawse tenements", and strike a fresh bargain with Gutnick.

22. Anaconda was ready to settle the purchase of the shares on 4 September 2000. A bank cheque for the balance of the price was ordered and a cheque for the price of Mordechai Gutnick's shares was drawn on Anaconda's bank account. On 4 September 2000, Gutnick and Forrest held a telephone conversation which the trial judge described as "pivotal to the dispute between" Anaconda and Edensor. Forrest was in London. Gutnick was in his office in Melbourne with his solicitor, Paul Ehrlich.

25. According to Gutnick's witness statements Forrest telephoned him and said:

"I want to delay settlement. I want time to fuck the bondholders. I want board control now because that will help me."

Gutnick said that he demanded payment of the price of the shares. Forrest responded:

"I need you to cooperate. I give you my word that I'm going to settle. I give you my word Joseph. I just need time to fuck the bondholders. I need a 6 month extension ... You can trust me. We've known each other for many years and I have never let you down."

Gutnick said that Forrest promised that the price of the shares would be paid that day and that the payment was to be described as a loan until the extended date of settlement, with interest at a rate of 5% per annum. Gutnick agreed. While Gutnick spoke to Forrest, from time to time he placed his hand over the receiver and relayed Forrest's statements to Ehrlich. Ehrlich gave evidence corroborating Gutnick's account of the conversation.

32. Forrest's version of the conversation was that Gutnick telephoned him in an agitated state and said that he wanted the deal to be completed because he needed the money badly. Forrest said that he told Gutnick that Anaconda was not going to proceed on the basis of the due diligence investigation alone and that if it did proceed, Anaconda needed more time. Gutnick offered Anaconda board control and said Anaconda could conduct an extended due diligence from that position. In return, Gutnick sought payment of the balance of the price as a loan. Gutnick said that he would guarantee repayment of the loan if Anaconda elected not to proceed with the purchase. Gutnick wanted Forrest to negotiate with the bond-holders. Forrest agreed to Gutnick's proposal.

35. The solicitors for the parties settled the terms of a further agreement, which was embodied in a facsimile letter sent by Anaconda to Gutnick in the evening of 4 September 2000 and was signed by the parties.

38. The letter deferred completion of the sale to 5 March 2001. Anaconda agreed to forthwith pay the balance of the price of the shares held by Edensor and Mordechai Gutnick and treat that sum and the deposit, a total of $10,645,310.25, as a loan to Edensor for a period of six months at an interest rate of 5% per annum. Gutnick guaranteed repayment of the loan. By the letter, Gutnick and Edensor agreed to cause Gutnick Resources to grant Centaur an option to sell its gold assets to Gutnick Resources at fair market value less liabilities under hedging contracts or $1, whichever was the greater. The letter provided that control of the board of Centaur was to pass to Anaconda. The letter stated:

"Completion of the Sale Agreement as amended by this letter is subject to the same condition as is set out in clause 4.1(a) of the Sale Agreement ... "

The balance of the price was paid shortly after the letter was signed.

43. The relationship between the parties quickly deteriorated after the variation agreement was executed. At the same time Centaur's financial difficulties increased as its expenses outstripped its income. Gutnick insisted that Anaconda had agreed to contribute $20 million to the capital of Centaur. Anaconda denied making any such commitment. Anaconda floated the possibility of acquiring Centaur's nickel assets by assuming the obligations owed to the bond-holders. Anaconda complained about Centaur's financial position, attributing it to Gunick's management, while Gutnick maintained that Anaconda had promised to ensure that Centaur remained solvent. On 16 November 2000, Gutnick wrote to Forrest with a catalogue of complaints, including Anaconda's failure to acquire Edensor's shares in Centaur "despite your binding commitment to do so", and demanded that Anaconda's representatives resign their position as directors of Centaur, threatening to call a meeting and remove them by exercising proxy votes, which he controlled.

46. Finally, on 17 November 2000, Anaconda publicly announced that it had determined not to proceed with the acquisition of shares in Centaur. Forrest and the other Anaconda representatives resigned from the board of Centaur. On 1 December 2000, Anaconda formally wrote to Edensor stating that Anaconda did not intend to complete the agreement of 4 September 2000 and that the loan of $10,645,310.25 was repayable on 5 March 2001.

49. Edensor and Gutnick sued Anaconda, alleging that Anaconda wrongfully failed to complete the agreement to purchase Edensor's Centaur shares. The plaintiffs pleaded that the failure constituted a breach of the agreement made on 23 August 2000, as varied on 4 September 2000, alternatively that it constituted a breach of a collateral contract made orally on 4 September 2000, alternatively that Forrest's representations to Gutnick on 4 September 2000 that Anaconda would settle the purchase on the extended date constituted an equitable estoppel that obliged Anaconda to complete the original agreement or in the further alternative constituted misleading and deceptive conduct within the meaning of ss.51A and 52 of the Trade Practices Act 1974. It was alleged that the notice of termination given by Anaconda on 1 December 2000 was a wrongful repudiation of its obligations. For its part Anaconda relied upon the terms of the written agreements of 23 August 2000 and 4 September 2000 and claimed repayment of the loan of $10,645,310.25.

52. The respondents' case depended upon establishing Gutnick's version of his telephone conversation with Forrest on 4 September 2000. Her Honour said:

"Ultimately, having had the benefit of observing both Gutnick and Forrest in the witness box I accept the Gutnick version of the telephone call. Gutnick gave oral evidence in a manner that was brief even, on occasion, staccato in form. I accept that Gutnick was a businessman who had stated facts and ideas in short form and left the precise detail of arrangements to his lawyers. Gutnick was a truthful witness in all respects of his evidence. Having observed Forrest, including his physical demeanour, especially in the course of giving evidence-in-chief, I am unable to accept his version of the conversation of 4 September 2000. Forrest was an untruthful witness."

Accordingly, her Honour found that on 4 September 2000 Forrest made the representations described by Gutnick.

57. The trial judge held that the respondents had established the elements of promissory estoppel. Anaconda induced Edensor and Gutnick to assume that Anaconda would not withdraw from the legal relationship with Edensor of purchaser and vendor and would complete the purchase on 5 March 2001. Edensor and Gutnick relied on the representation by accepting the delay in settlement, agreeing to treat the payment of the price as a loan with an obligation to pay interest, transferring board control to Anaconda and ceasing to explore alternative arrangements with other mining companies. Anaconda intended that Gutnick and Edensor would act in reliance upon the representations made by Forrest. Finally, detriment would be occasioned to both Edensor and Gutnick if the assumption or expectation induced in them was not fulfilled.

60. The trial judge said that the respondents did not appear to rely upon promissory estoppel to found a claim in damages, but added that in any event the only loss they sustained could have been the difference between the sale price of the shares and their current price and "no satisfactory evidence was led about these matters." Her Honour said that instead of damages "the appropriate relief as moulded to the justice of the case is to grant ... declaratory relief. ..." Her Honour made declarations that Anaconda was estopped from contending that it was entitled to not complete the share sale agreement on 5 March 2001 and that the sum of $10,645,310.25 was due and payable by Edensor to Anaconda. Her Honour also declared that the charge over Edensor's shares in Centaur was of no effect and was unenforceable and that Gutnick was not bound by the terms of the guarantee. The counterclaim was dismissed.

63. Although the declarations disposed of the proceeding, the trial judge also held that Anaconda was obliged to complete the share sale agreement because it could not rely upon clause 4.1(a) in that it did not form an honest opinion as to the matters set out in the clause. Her Honour found that Anaconda repudiated the share sale deed and the variation agreement by its conduct on 17 November and 1 December 2000. The respondents, however, had not proved any quantifiable loss flowing from Anaconda's breach. Her Honour also found that Anaconda breached an obligation of good faith, but again no loss was proved to have ensued from the breach. Finally, the trial judge held that the respondents had established that Forrest's representations made on 4 September 2000 constituted misleading and deceptive conduct in breach of the provisions of the Trade Practices Act. She said that she would not award damages but would, if necessary, make the declarations recited above pursuant to the Act.

66. The appellant attacked the trial judge's findings on the basis that they were so inconsistent with established facts that this Court should say that her Honour erred despite the advantage which she enjoyed in seeing and hearing the witnesses give their evidence. It was submitted that the decision was "glaringly improbable"[1] or "contrary to compelling inferences"[2]. This was a case, so it was said, where "... incontrovertible facts or uncontested testimony ... demonstrate that the trial judge's conclusions are erroneous, even though they appear to be, or are stated to be, based on credibility findings."[3]

69. On its face, the variation agreement which the parties prepared and executed immediately after the conversation between Forrest and Gutnick on 4 September 2000 was entirely at odds with an assurance given by Forrest and accepted by Gutnick in that conversation that Anaconda would complete the transaction on 5 March 2001. Anaconda could not be obliged to complete the purchase and at the same time be entitled to elect not to complete the agreement if it was not satisfied, in its absolute discretion, with the assets, trading position and liabilities of Centaur. Logically, if Gutnick's account of his conversation with Forrest was correct, the variation agreement should have varied the original sale agreement by deleting clause 4.1(a). Further, if Anaconda was obliged to complete the purchase, its pre-payment of the purchase price could not be viewed as a loan. There was no question of repayment of principal or interest by Edensor and, accordingly, no need for a guarantee by Gutnick.

72. The only apparent explanation for the variation agreement with its express retention of clause 4.1(a) lies in Gutnick's evidence that Forrest wanted to "fuck the bondholders", who stood between Anaconda and the prized nickel assets of Centaur. That aim could have been achieved by satisfying the debt secured by the bonds by payment of a sum less than the amount of the debt. The aim was more likely to be achieved if the bondholders believed that Anaconda, a company with large resources, was not obliged to acquire a controlling interest in Centaur. Hence the apparent preservation of Anaconda's ability to refuse to complete and the dressing up of the payment of the price of the shares as a loan secured by a guarantee and the presence of the other terms of the variation agreement which are now said by Anaconda to be inconsistent with an assured purchase of the shares.

75. Apart from the remark as to the fate of the bondholders, which Gutnick attributed to Forrest, neither the parties to the litigation in their evidence nor their legal representatives in the pleadings or in their conduct of the proceeding put forward a case based upon this view. No attempt was made to elicit evidence that the variation agreement was in fact used to deceive the bondholders. Presumably, Anaconda was reluctant to paint itself as the initiator of a scheme to deceive others and Edensor and Gutnick did not wish to be seen as participating in such a scheme. At all events, notwithstanding Gutnick's allegation, no plea of illegality or bad faith or lack of clean hands or the like was advanced by Anaconda at trial, and the trial judge made no finding as to whether the variation agreement was a sham. On appeal, Anaconda contended that it was inherently unlikely that the variation agreement was to be explained as the product of a plan to deceive the bondholders; rather, it supported Forrest's version of his conversation with Gutnick.

78. The reluctance of the parties to explore or rely upon a scheme to deceive the bondholders lent an artificial atmosphere to the proceeding. Nevertheless, a desire of the parties not to reveal a relationship of committed buyer and seller remained available as a basis for not regarding the variation agreement as fatal to the respondents' case. Anaconda's fear of the bondholders served to explain the terms of the variation agreement without the trial judge being forced to accept Forrest's evidence.

81. Counsel for Anaconda contended that it was not necessary to construct the variation agreement in order to enable Anaconda to apply pressure to the bondholders. That objective could have been achieved more directly and simply by expressing the share sale agreement as conditional upon striking a bargain with the bondholders.

84. While such an arrangement may have suited Anaconda, Gutnick and Edensor evidently were not prepared to agree to any conditions. If Anaconda wanted time, it could only be achieved at the price of an unconditional promise to purchase Edensor's Centaur shares. Counsel for Anaconda also contended that Gutnick's evidence that due diligence was not discussed with Forrest should not be believed in the light of the doubt as to Centaur's financial position expressed in documents such as the Dennis memorandum dated 29 August 2000. Dennis and others thought the acquisition of a controlling interest in Centaur was of dubious value or even posed a threat to Anaconda. There was, however, a body of evidence which established that Forrest did not share their doubts or, if he did, regarded the achievement of the three provinces strategy as a matter of such importance that it warranted running the risks perceived by fainter hearts. Thus, in his evidence, Dennis described Forrest's reaction to the Dennis memorandum in the following terms:

"I think it's fair to say that Andrew made it very clear that this was a transaction that he thought must be proceeded with, or a transaction involving the Cawse project, or Centaur to the extent it had an interest in the Cawse project, that it was somehow integral to his nickel strategy and that we had to come up with some basis of moving forward."

88. It was submitted on behalf of Anaconda that the conduct of the respondents after 4 September 2000 was inconsistent with a commitment by Anaconda to settle the purchase of the shares in any event. Ehrlich and Gutnick in correspondence treated Anaconda as having no more than the interest of a caretaker of the Centaur shares pending completion of the purchase. They contemplated that the agreement might not be completed and were concerned that Centaur be maintained in good condition.

91. I doubt that the letters did indicate that Ehrlich and Gutnick contemplated that the purchase might not be completed. When the letters were written, Anaconda was not registered as a holder of shares in Centaur. The letters sought to impress upon Anaconda that the directors they appointed were to promote the interests of the Centaur shareholders especially during the period when Anaconda had board control but was not on the share register. The letters are to be viewed as the expression of the opinion of a director of Centaur, not a shareholder in Edensor. Further, on 11 October 2000, Anaconda floated the possibility of Anaconda acquiring the bonds and purchasing Centaur's nickel assets at a price of $1 as an alternative to purchasing Edensor's shares. While that possibility remained, Anaconda's role could accurately be described as that of a caretaker. During the same period, Gutnick's solicitors, in letters dated 18 October 2000 and 2 and 14 November 2000, were asserting Anaconda's commitment to settle the purchase, assertions which were not denied by Anaconda.

94. It was submitted on behalf of the appellant that the trial judge erred in deciding the case by preferring the evidence of Gutnick to the evidence of Forrest. It was submitted that the case could not be resolved solely on the basis of an assessment of the credibility of the main protagonists, but depended upon assimilating and weighing their evidence in the light of the surrounding circumstances. I do not think that the trial judge fell into the error identified by counsel. Her Honour made a detailed examination of the events leading up to and succeeding the telephone conversation on 4 September 2000 and analysed the documentary evidence that related to the variation agreement. It was in the context of the evidence of the acts of the parties and their communications that the trial judge evaluated the evidence of Gutnick and Forrest. In my opinion, it does not appear that her Honour based her acceptance of Gutnick's version of the conversation and rejection of Forrest's version solely upon an evaluation of the manner in which the witnesses gave their evidence.

97. The appellants sought leave to rely upon fresh evidence in the appeal. The evidence consisted of three documents, a letter dated 21 May 2001 from Gutnick to his solicitors, a file note dated 11 July 2001 and a letter dated 17 July 2001 to Gutnick from his solicitors, which came to the attention of Anaconda's solicitors after the conclusion of the proceeding. The documents, which were not discovered by the respondents in the course of the proceeding, concerned events which occurred prior to the delivery of the trial judge's judgment.

100. In the letter dated 21 May 2001, Gutnick said that Dennis of Anaconda "was involved in the phone call to Paul (Ehrlich) and I last September 4 (when an amendment to a share sale deed was agreed) and when the relationship with Anaconda was still warm and strong." This was said to be inconsistent with Gutnick's evidence that the negotiation and preparation of the terms of the letter dated 4 September 2000 were undertaken by Ehrlich alone. The letter, six pages long, was written by Gutnick to the managing partner of his former solicitors in defence of Ehrlich, whom Gutnick thought was being ill-treated by the solicitors. Gutnick's statement was made in rebuttal of a suggestion that at a meeting with James and Dennis, Ehrlich "ranted and raved and was agitated". I doubt that the statement as to Gutnick's observations of Ehrlich's demeanour in a conversation establishes that Gutnick was involved in the negotiation of the variation agreement. I would not conclude that the letter stated that the variation agreement was negotiated in the conversation, but rather that the conversation took place on the day the variation agreement was made. In any event, whether Gutnick was involved in the preparation of the letter containing the variation agreement does not appear to have been an issue of any moment at the trial. The burning question was whether, prior to the preparation of the letter, Forrest assured Gutnick that Anaconda would complete the purchase of the shares.

103. The appellant made large claims for the statement in the letter. It was said to prove that Gutnick was directly involved in the negotiation of the variation agreement, that the parties' true agreement was contained in the letter dated 4 September 2000, that Gutnick did not trust Forrest and that Forrest did not make the representations alleged by Gutnick. I do not consider that those claims can be established.

106. I think that the letter was discoverable and thus misconduct on the part of the respondents has had the result that relevant evidence in their possession has remained undisclosed until after the judgment. In assessing what will best serve the interests of justice, it is necessary to weigh the degree of culpability of the respondents, any lack of diligence on the part of the appellant and the extent of any likelihood that the result would have been different if the letter had been discovered.[4] I do not view the failure to discover the letter as gravely reprehensible having regard to the relevance to the issues in the case of what amounts to a passing comment in a lengthy document, and it does not appear to me that there is a real possibility that the result of the trial would have been different if the letter had been discovered. The fresh evidence related to a collateral matter and ultimately could only affect the credibility of Gutnick. "It could only be a rare case that a judgment would be set aside because of fresh evidence" of that character.[5]

109. The appellants contend that the file note shows that Ehrlich attended a conference with the respondent's junior counsel and solicitor during which Gutnick's witness statement was traversed. The letter dated 17 July 2001 from the respondent's solicitors to Ehrlich enclosed a draft of Gutnick's statement which, it was said, demonstrated that Ehrlich and Gutnick collaborated in preparing their evidence. The respondents relied upon affidavits from the respondents' junior counsel and solicitor and Ehrlich. They deposed that Ehrlich was not present when counsel and the solicitor prepared Gutnick's statement and had nothing to do with its preparation. Ehrlich had instructed the solicitors that he did not wish to see Gutnick's statement or be involved in its preparation. Sending a copy to him was an oversight on the part of a solicitor. When Ehrlich received it he tore it up without reading it and remonstrated with the solicitor. The deponents of the affidavits were not cross-examined. The file note and the letter had no significance in the light of the evidence contained in the affidavits.

112. In the end, I am not satisfied that the trial judge fell into error in employing her estimates of the witnesses' credibility as a substantial part of her reasons. Nor do I think that there were incontrovertible facts or uncontested evidence which demonstrated that her Honour's conclusions were wrong. Accordingly, I would not interfere with her Honour's findings.

115. The appellant contended on appeal, though not at trial, that the variation agreement signed by the parties on 4 September 2000 was claimed by Gutnick to have been made to deceive the bondholders by inducing them to believe that Anaconda had not committed itself to acquiring shares in Centaur, and, accordingly, the respondents should have been denied equitable relief as their claim was predicated on the basis that they had knowingly participated in a fraudulent scheme.

118. In advancing this argument Anaconda overlooked the fact that, if Gutnick's evidence was accepted, Anaconda had proposed the scheme and the denial of the relief sought by the respondent entailed the vindication of the legal rights conferred upon Anaconda in the document which was brought into existence to enable Anaconda to deceive the bondholders. Unmeritorious or immoral conduct will not disentitle a plaintiff from equitable relief unless it has "an immediate and necessary relationship to the equity sued for"[6] in that the conduct gave rise to the transaction sued upon.

121. In Meyers v. Casey[7] the stewards of the Victoria Racing Club disqualified the plaintiff and his horse for suspicious practices in connection with the running of the horse in a race. The plaintiff brought an action seeking to have his disqualification declared invalid and, being a member of the Club, to restrain the Club from expelling him from his membership with the Club, on the ground that he was not given an opportunity of defending himself against the charge upon which it was proposed to expel him. It was held that his misconduct in respect of the running of the horse did not disentitle the plaintiff to the relief claimed. The relief he sought was independent of any misconduct and the question of his guilt or innocence of such misconduct was not an issue in the action. Isaacs, J. said:

"[T]he rights asserted by the appellant, namely, membership of the club and public right under the by-laws to enter the racecourse, of course exist, if at all, by reason of circumstances wholly independent of the alleged misconduct; the wrong he complains of, namely, his condemnation by an incompetent and unauthorized tribunal in the one case, and a disregard of natural justice in the other, are equally independent of any misconduct by him. ... It is altogether different from the cases where the right relied on, and which the Court of equity is asked to protect or assist, is itself to some extent brought into existence or induced by some illegal or unconscionable conduct of the plaintiff, so that protection for what he claims involves protection for his own wrong."[8]

In Attwood v. Small[9] Lord Brougham said:

"... that general fraudulent conduct signifies nothing; that general dishonesty of purpose signifies nothing; that attempts to overreach go for nothing; that an intention in design to deceive may go for nothing, unless all this dishonesty of purpose, all this fraud, all this intention and design, can be connected with the particular transaction, and not only connected with the particular transaction, but must be made to be the very ground upon which the transaction took place, and must have given rise to this contract."[10]

127. In the present case the equity sued upon arose from the assumption induced in the respondents by Anaconda that it would complete the purchase of the shares. Its promise to do so was not induced by any anterior wrongdoing on the part of the respondents. The variation agreement was directed, not to Anaconda, but to the bondholders. Further, even if the variation agreement was brought into existence with the aim of deceit, in fact no deceit was practised. The unmeritorious conduct now relied upon by Anaconda did not bear the requisite necessary relation to the equity sued for by the respondents to found refusal of relief.

130. Once it was found that Forrest induced in Gutnick the belief that Anaconda would not invoke its legal entitlement to refuse to complete the purchase of the shares on the ground that it was not satisfied with the assets, trading position and liability of Centaur and, acting on that belief, the respondents agreed to postpone the settlement, yielded control of Centaur to Anaconda and dealt exclusively with Anaconda to the exclusion of other potential purchases or investors in Centaur, the elements of promissory estoppel[11] could be readily established.

133. It was submitted on behalf of the appellant that it was not unconscionable for Anaconda not to make good Forrest's promise to complete the purchase of the shares. The promise was made in the course of commercial dealings between well-advised corporations, each concerned to advance its own interests.[12] I regard unconscionability as the underlying principle informing the elements of estoppel, rather than a discrete ingredient which is additional to those elements. Anaconda effectively quarantined the prize nickel assets of Centaur by creating in Gutnick and trading on a belief that completion of the purchase would take place. The injustice in allowing Anaconda to depart from the parties' common assumption sprang from the creation of the assumption by Anaconda and the foregoing by the respondents of any other remedy to meet Centaur's deteriorating position.[13]

136. The appellant argued that the relief granted by the trial judge was unjustified and disproportionate to the detriment suffered by Edensor.

139. The argument rested upon assertions that the trial judge held that Edensor had suffered no damage as a result of Anaconda's refusal to complete the share purchase and that the only detriment suffered by Edensor was that it transferred board control of Centaur to Anaconda. Neither assertion was correct. The trial judge said only that the quantum of damages depended upon the price of the Centaur shares and that there was no evidence of the price. Her Honour did not find that Edensor suffered no loss as a consequence of Anaconda's failure to honour its promise. Indeed, her Honour proceeded on the basis that Anaconda deprived Edensor of a potentially valuable resource. The detriment suffered by Edensor was principally the loss of an opportunity to rescue an ailing Centaur by remaining faithful to Anaconda and ignoring the approaches of a number of mining companies interested in Centaur.

142. The value of Centaur's nickel and gold assets was less than the amount of its debts. When Forrest promised that Anaconda would complete the purchase of the shares, the position of Centaur was that, without a significant capital injection or the re-negotiation of the terms of the bonds, Centaur could not survive. Upon its abandonment by Anaconda, Centaur slid towards oblivion. The trial judge found that the respondents were not disabused of their assumption until Anaconda's announcement to the stock exchange on 17 November 2000 that it was not proceeding with the purchase, and "By that time it was too late in any practical sense for Gutnick to seek alternative investor support." In December 2000, Centaur was in breach of its obligation to the bondholders to retain sufficient funds in an account to meet the next instalment of interest due in respect of the bonds In mid-March 2001, the board of Centaur appointed administrators to the company and on the following day the bondholders appointed receivers.

145. In my view, the relief granted by the trial judge was appropriately moulded to meet the justice of the case in that "the minimum equity to do justice to the plaintiff"[14] was to hold Anaconda to its promise. As Deane, J. said in The Commonwealth v. Verwayen:

"Prima facie, the operation of an estoppel by conduct is to preclude departure from the assumed state of affairs. It is only where relief framed on the basis of that assumed state of affairs would be inequitably harsh, that some lesser form of relief should be awarded."[15]

The substantial loss, which her Honour found was sustained by Edensor, was the chance to preserve and exploit Centaur's nickel and gold prospects. In effectively requiring Anaconda to pay the price for that opportunity, which it had originally agreed upon, I am of the view that her Honour did justice between the parties.

150. I am also of the view that the trial judge was correct in holding that Forrest's representation constituted misleading and deceptive conduct contrary to s.52 of the Trade Practices Act 1974. Section 51A(2) of the Act provides that a representation in relation to a future matter will be taken to be misleading unless evidence to the contrary is adduced. It was difficult for Anaconda to discharge this onus once Forrest denied making the representation alleged by the respondents.[16] Although Forrest was more enamoured than his subordinates of the prospect of gaining control of Centaur, it appears that he only intended to settle the purchase if he could successfully re-negotiate Centaur's obligations to the bondholders, and his failure to qualify his assurance to Gutnick that Anaconda would complete the purchase rendered it misleading.[17] The relief granted by the trial judge in equity was also available pursuant to s.87 of the Act.

153. Finally, it was submitted on behalf of the appellant that Edensor's acceptance of a repudiation by Anaconda of the share sale deed and the variation agreement disentitled Edensor to equitable relief. The trial judge said that by announcing that it would not proceed with the purchase of Edensor's Centaur shares Anaconda repudiated the share sale deed and the variation agreement and the respondents "accepted the repudiation and claimed damages." It was submitted by counsel for Anaconda in this Court that by accepting a repudiation of the contract, the innocent party terminates the contract.[18] Thereafter, the innocent party is entitled to no more than damages. Alternatively, it was submitted that Edensor waived its right to compel Anaconda to proceed with the share purchase by Gutnick's insistence that

those appointed as directors of Centaur by Anaconda resign.

157. Although Edensor pleaded in its statement of claim that Anaconda repudiated the share sale agreement, it did not plead that Edensor accepted the repudiation. In my view, the respondents' demand for the resignation of the persons appointed to the board of Centaur by Anaconda did not amount to acceptance of Anaconda's repudiation or waiver of any right possessed by Edensor. The time for the performance of Anaconda's obligation to complete the purchase lay in the future. Anaconda had effectively declared that it was not interested in the welfare of Centaur. The respondents desired that the affairs of Centaur should be conducted so as to preserve any value the company might have. In my view, the respondents' action was not to be viewed as an election between inconsistent rights. On 16 and 17 November 2000, Gutnick demanded that the Anaconda representatives quit the board of Centaur, yet on 14 and 20 November 2000 his solicitors by letter were asserting that Anaconda was obliged to complete the purchase of the shares. The respondents were able to maintain those positions without inconsistency because the obligation to complete was to be performed on 5 March 2001.

160. For the foregoing reasons, I am of the opinion that no error has been shown to attend the findings made or relief granted by the trial judge. I would dismiss the appeal.

[1] Brunskill v. Sovereign Marine & General Insurance Co. Ltd. [1985] HCA 61; (1985) 59 A.L.J.R. 842 at 844 per Gibbs, C.J., Wilson, Brennan, Deane and Dawson, JJ.

[2] Chambers v. Jobling (1986) 7 N.S.W.L.R. 1 at 10 per Kirby, P.

[3] Fox v. Percy [2003] HCA 22; (2003) 197 A.L.R. 201 at 209 per Gleeson, C.J., Gummow and Kirby, JJ. See also Devries v. Australian National Railways Commission (1993) 177 C.L.R. 472 at 479 per Brennan, Gaudron and McHugh, JJ.; Rennie v.The Commonwealth (1995) 61 F.C.R. 351.

[4] Commonwealth Bank of Australia v. Quade (1991) 178 C.L.R. 134 at 142-3 per Mason, C.J., Deane, Dawson, Toohey and Gaudron, JJ.

[5] McDonald v. McDonald [1965] HCA 45; (1965) 113 C.L.R. 529 at 543 per Menzies, J. See also Orr v. Holmes [1948] HCA 16; (1948) 76 C.L.R. 632 at 636 per Latham, C.J. and at 643 per Dixon, J.; Akins v. National Australia Bank Ltd. (1994) 34 N.S.W.L.R. 155 at 160-1 per Clarke, J.A.

[6] Dering v. Earl of Winchelsea (1787) 1 Cox. Eq. Cas. 318 at 319 per Lord Chief Baron Eyre.

[7] [1913] HCA 50; (1913) 17 C.L.R. 90.

[9] [1838] EngR 515; (1838) 6 Cl & Fin 232.

[10] Above at [447]. See also F.A.I. Insurances Ltd. v. Pioneer Concrete Services Ltd. (1987) 15 N.S.W.L.R. 552; Official Trustee in Bankruptcy v. Tooheys Ltd. (1993) 29 N.S.W.L.R. 641.

[11] See Waltons Stores (Interstate) Ltd. v. Maher [1988] HCA 7; (1988) 164 C.L.R. 387 at 428-9 per Brennan, J.

[12] Austotel Pty. Ltd. v. Franklins Selfserve Pty. Ltd. (1989) 16 N.S.W.L.R. 582 at 585 per Kirby, P.; Australian Competition and Consumer Commission v. C.G. Berbatis Holdings Pty. Ltd. (2003) 197 A.L.R. 153 at 157 per Gleeson, C.J.

[13] Cf. The Commonwealth v. Verwayen (1990) 170 C.L.R. 394 at 444-5 per Deane, J.

[14] Crabb v. Arun District Council [1976] Ch. 179 at 198 per Scarman, L.J.

[15] Above at 443. See also at 416 per Mason, C.J. and at 487 per Gaudron, J.

[16] See Cummings v. Lewis (1993) 41 F.C.R. 559 at 565-6 per Sheppard and Neaves, JJ.

[17] Sweetman v. Bradfield Management Services Pty. Ltd. [1993] FCA 598; (1994) A.T.P.R. 41-290; Wheeler Grace & Pierucci Pty. Ltd. v. Wright [1989] FCA 127; (1989) A.T.P.R. 40-940.

[18] DTR Nominees Pty. Ltd. v. Mona Homes Pty. Ltd. [1978] HCA 12; (1978) 138 C.L.R. 423; McDonald v. Dennys Lascelles Ltd. [1933] HCA 25; (1933) 48 C.L.R. 457 at 477 per Dixon, J.