Atlas Tiles Ltd v Briers [2020] WASC 28 | Case summary

Atlas Tiles Ltd v Briers [2020] WASC 28 | Case summary | Zoe

[135]

Mirvac submits that there are two independent pathways[1] which lead to the conclusion that Binningup must repay the money it was lent. The first pathway relies on the termination of the Services Agreement being a 'Trigger Event'. The second relies on an allegation that Binningup repudiated the Services Agreement, constituting an 'Event of Default'. Each pathway depends upon specific contractual provisions.
Under the Services Agreement,[2] Binningup appointed Mirvac WA to carry out the 'Services'. 'Services' is defined to mean 'subject to any approvals required ..., all services which [Mirvac WA] determines are necessary or desirable for the carrying out of the Project'. 'Project' is defined as including the obtaining of necessary or desirable 'Approvals' for subdivision, the procurement of the carrying out of works, and the procurement of the marketing and sale of 'Sale Lots'.
Under the Loan Agreement,[3] Mirvac WA initially advanced $25 million to Binningup (Initial Advance) and then made a number of further advances to fund Binningup's 'Project Cost Payments' under the Services Agreement. Interest is payable on the advances.[4] As at October 2014, the outstanding loan amount (OLA), of principal and interest, was $42,776,962. Binningup has not paid any part of the OLA.
On 2 October 2014, Binningup sent a notice alleging Mirvac WA had repudiated the Services Agreement and purporting to accept the repudiation (Binningup's Termination Notice).
On 24 October 2014, Mirvac WA sent a notice alleging Binningup had repudiated the Services Agreement and purporting to accept the repudiation (Mirvac's Termination Notice).[5]
It is common ground[6] that the Services Agreement was terminated in October 2014 (either, on Binningup's case, on 2 October 2014 when Binningup terminated the Services Agreement by accepting Mirvac WA's alleged repudiation or, on Mirvac's case, on 24 October 2014 when Mirvac WA terminated the Services Agreement by accepting Binningup's alleged repudiation).
A termination, regardless of the reason, is a 'Trigger Event' under cl 1.1 of the Loan Agreement. It is therefore common ground that a Trigger Event occurred at the latest by 24 October 2014.
Clause 5.5(b) of the Loan Agreement provides that '[d]espite any other provision', if a Trigger Event occurs, Binningup must repay the OLA one year after the date of the Trigger Event.
Mirvac submits that, therefore, the OLA became payable one year after October 2014, being October 2015. This is the first of the two pathways which Mirvac submits leads to the conclusion that Binningup must pay the OLA (First Pathway).
Binningup submits that, because, on its case, it was Mirvac WA who repudiated the Services Agreement, the 'prevention principle' means that Mirvac WA cannot rely on cl 5.5(b). 'The essence of the prevention principle is that a party cannot insist on the performance of a contractual obligation by the other party if it itself is the cause of the other party's non‑performance'.[7] Mirvac submits that the Transaction Documents exclude the prevention principle from operating on Mirvac WA's entitlement to be repaid the OLA under cl 5.5(b).
Binningup also submits that, because of the principle of circuity, Mirvac WA is not entitled to the OLA. The circuity principle prevents one party recovering an amount from another party that is identical to what that second party had a right to recover from the first. In essence, Binningup alleges that, if Mirvac WA had not breached the Services Agreement, the OLA would have been repaid. Therefore, Binningup asserts, its damages claim includes the OLA that would have been repaid and that component of its claim is identical to Mirvac WA's entitlement to the OLA.
Binningup also pleads that, if it is found to owe any amount, the damages to which it is entitled should be set‑off in reduction or extinction of Mirvac WA's claim.[8] Binningup appears to argue that, because Mirvac WA's right of recovery is limited to the Project Assets, Mirvac WA is not entitled to set off all of the OLA against Binningup's damages.
It is common ground that, if Mirvac WA did not breach the Services Agreement, it is entitled to the OLA under the First Pathway. If it did breach the Services Agreement, its entitlement will turn on whether the prevention principle applies and, if the principle does not apply, the effect, if any, of the principles of circuity and set‑off.
Mirvac WA's second pathway alleges that an 'Event of Default' occurred as a result of Binningup's Termination Notice (Second Pathway).
Clause 7.1 of the Loan Agreement defines an Event of Default as including a default under a Transaction Document, if a Trigger Event has occurred. Mirvac submits that Binningup's Termination Notice was a repudiation at common law,[9] and a default under the Services Agreement. It submits it accepted Binningup's repudiation, terminating the Services Agreement. The termination was a Trigger Event, making the default under the Services Agreement an Event of Default.
Clause 7.2 of the Loan Agreement relevantly provides that Binningup must immediately repay the OLA if there is an 'Event of Default' and Mirvac WA gives notice that the OLA is immediately repayable. Mirvac submits, therefore, that the OLA became payable by Binningup to Mirvac WA immediately on notice being given. Binningup denies it repudiated, and says it was entitled to terminate the Services Agreement.
Accordingly, whether Mirvac WA should succeed under the Second Pathway will turn on whether Binningup was entitled to terminate the Services Agreement. This will turn on, among other things, whether Mirvac WA breached the Services Agreement as alleged in Binningup's counterclaim.

[145]

In closing submissions, Binningup confirmed that, in relation to the allegations of delay, it relied only on alleged delays relating to a second access road and the potential development of a golf course that was on the land.[23]
In relation to the second access road, this was an issue that arose in the context of obtaining approval for the 'Local Structure Plan' (Plan). Before the development could proceed, it was necessary that a Plan be approved by the local authority. This was the Shire of Harvey. Binningup alleges that Mirvac WA deliberately caused delay in obtaining the Shire's approval by, in effect, resisting the Shire's demands and creating a false issue.
The possibility of converting the golf course into residential lots arose in 2013. This would have required an amendment to the Services Agreement,[24] but the parties nevertheless were considering it. Mirvac WA's view was that, if it was decided to develop the golf course, it would be necessary to first seek an amendment to the Plan, which would cause a significant delay in overall progress. Binningup disagreed it was necessary to first seek an amendment to the Plan. Binningup's view was that work could commence on the first stage of the development (Stage 1) and, if it was decided to develop the golf course, approval could be sought to develop it when the work was about to occur. Mirvac WA prepared a budget and program for the September 2014 PCG meeting which included the development of the golf course, and factored in the significant delay that amending the Plan would cause. Binningup asserts that this was done to deliberately delay progress.[25] Binningup asserts that it had made it clear that it would not agree to the potential development of the golf course causing substantial delay.
In Binningup's written submissions, it summarised the matters which it said manifested the Alleged Decision not to perform under the Services Agreement.[26]
First, statements alleged to have been made by Brett Draffen on 3 April 2014 and by a Kimberley Lawrance on 13 June 2014.[27] Mr Draffen is the Chief Investment Officer of Mirvac Ltd, and was the National Developments Chief Executive Officer at the time. Mr Lawrance was the Development Director of Mirvac Ltd at the time. In its closing submissions, Binningup modified (or clarified) what it had pleaded:[28]

[148]

Second, that, after a meeting between Mr Draffen and Barry Waller, a director of Binningup, Mirvac WA did work to consider a possible Stage 1 to be located at the foreshore, away from established services. Binningup asserted this was not a logical place to start and showed that Mirvac never intended to develop the first stage.[31]
Third, Binningup alleged that there was no possibility of an 'approval to commence construction' (ACC) being issued by Mirvac Ltd to commence construction on any stage of the Project as at the dates of the statements alleged to have been made by Mr Draffen and Mr Lawrance.[32] Mirvac WA sought to renegotiate the Services Agreement (allegedly manifesting the Alleged Decision[33]) and its feasibility studies were based on assumptions that the Services Agreement would be varied. Later, in February 2013, Mirvac provisioned for a loss on the basis that Binningup would agree to release Mirvac WA from its obligations under the Services Agreement and refund the Initial Advance, as it was thought that Binningup would not want the land sold after a deadlock. Binningup asserted that Mirvac provisioned for this loss because it recognised that Binningup was not going to agree to vary the Services Agreement. Binningup submitted that, in September 2013, Mirvac realised it was going to make a loss if the Services Agreement was not varied, even if the golf course was developed. Binningup asserted that, as a result, an ACC would never have been issued.
Fourth, Binningup alleged that Mirvac WA abandoned 'built form' work when, Binningup asserted, Mirvac WA was obliged to do that work under the Services Agreement.[34] 'Built form' work means, in effect, constructing a building on a lot before selling it.
Fifth, the 'AAC document'[35] was alleged to have concealed from Mr Draffen the extent of the fall in the internal rate of return (IRR) since the Approval to Purchase was prepared.[36]
Sixth, Binningup alleged that Mirvac WA deliberately delayed progress[37] by its handling of the issue relating to a second access road[38] and pursuing the development of the golf course.[39]
Seventh, Mirvac WA refused to attend further PCG meetings if they were recorded.[40] As will be seen, in mid‑2014, Binningup advised it intended to record all future PCG meetings. Mirvac WA refused to agree to the meetings being recorded and suggested instead an independent minute‑taker. Neither party budged from that position and Binningup then sent its Termination Notice.
As against Mirvac Ltd, Binningup alleges[41] that Mirvac Ltd breached a performance undertaking, under which it had promised to ensure the due performance of Mirvac WA's obligations under the Services Agreement (Performance Undertaking).
Binningup further alleges[42] that, by no later than December 2012, Mirvac Ltd determined that it would cause Mirvac WA not to proceed with the Project unless the Services Agreement was materially amended to improve the return to the Mirvac parties and determined that it would direct Mirvac WA to trigger the deadlock provisions of the Services Agreement if Binningup refused to agree to a variation. Binningup alleges that, as a consequence of that direction, Mirvac WA committed the alleged breaches and repudiated the Services Agreement. Binningup alleges that, by reason of these matters, Mirvac Ltd committed the tort of unlawful interference with the Services Agreement.

[172]

In October 2007, the Shire initiated Amendment 63 to its Town Planning Scheme to rezone Binningup South to a 'Residential Development Zone' from 'Residential', 'General Farming' and 'Recreation' (Scheme Amendment). The Shire referred the Scheme Amendment to the EPA under s 38 of the Environmental Protection Act 1986 (WA). Ultimately,[45] the EPA decided that the Scheme Amendment was required to be advertised and that an environmental review was required.
On 11 January 2008, the parties executed a development services agreement, the Loan Agreement, the Charge, the Performance Undertaking and a mortgage. Mirvac WA also made the Initial Advance to Binningup of $25 million under the Loan Agreement on that date (and then made various periodic advances to Binningup between 31 January 2008 and 30 September 2014).
At that time, Adam Davidson, a senior development manager for Mirvac WA, had the day‑to‑day responsibility for the Project.
In 2008, among other things, Mirvac WA held an 'engagement forum'. It was attended by representatives from Mirvac WA, Binningup, the local authorities and the relevant consultants. The urban planning consultants appointed by Mirvac WA, Roberts Day, ran the forum with a view to coordinating the consultant teams, authorities, the Shire, the golf course and other representative groups.[46]
With its consultants, Mirvac WA worked with the Shire in relation to the drafting of the provisions of the Plan. Mirvac WA also worked with the EPA, including arranging a visit to the site.[47]
At the beginning of 2009, the development services agreement was varied by the execution of a variation agreement. I refer to it in its varied form as the 'Services Agreement'.
On 5 February 2009, Mirvac submitted Revision A of the Plan to the Shire.
Mirvac WA continued to work with the Shire.[48] One of the issues under discussion was secondary access to the site. The details surrounding this issue are set out in a separate section below, as Binningup relies on this issue in support of its primary contention.
At some point prior to 15 September 2009, Mirvac submitted a referral to the Commonwealth Department under the Environment Protection and Biodiversity Conservation Act 1999 (Cth).
On 9 November 2009, the EPA produced a report to the Minister for Environment recommending that no development be allowed on the southern part of the Binningup South site, comprising nearly half of that area. The recommendation was appealed by Mirvac WA on behalf of Binningup on 23 November 2009.[49] Mirvac WA met with the Appeals Convenor several times between December 2009 and March 2010.[50] Mirvac WA then submitted a draft conservation corridor plan, and later a revised concept plan with a separate analysis prepared by RPS,[51] to the Appeals Convenor.[52] The Minister partially allowed Mirvac WA's appeal on 1 July 2010.[53] The outcome was seen to be an excellent one by Mirvac WA and Binningup.[54]
In May 2010, Mr Aleksovski replaced Mr Davidson as the person responsible for the Project.
Mirvac WA sent a copy of the Minister's decision to the Commonwealth Department on 19 July 2010, asking to revive previous discussions about the two issues that remained of concern. These were the presence of the Graceful Sun Moth on the land and the changes to the scheme brought about by the appeal outcome.[55] The following month, Mirvac WA provided further information, and continued to do so as required.[56]
On 16 September 2010, a ministerial statement was issued indicating that the Scheme Amendment could be implemented. This was the final step in the EPA appeal.
Mirvac WA commissioned market research, to commence in November 2010 and finish mid‑December 2010.[57]
In February 2011, Mirvac WA held a design workshop for the Project.[58] From that time onwards, many meetings and discussions occurred in relation to the design and other issues relating to the Project.[59]
On 22 March 2011, the Commonwealth Department advised Mirvac WA that the development would be a 'controlled action' that would require assessment under the Environment Protection and Biodiversity Conservation Act. On 21 June 2011, Mirvac WA sent an email to the Commonwealth Department reminding them that the statutory time frame for deciding on the development expired the following day. The next day, the Commonwealth Department wrote to inform Mirvac WA that it intended to approve the development subject to stated conditions. The letter gave Mirvac WA 10 business days in which to comment on the conditions. It also said that the time for making the final decision had been extended to 13 July 2011.[60] Mirvac WA then worked to have the conditions varied.[61] On 21 July 2011, the Commonwealth Minister approved the Project subject to conditions.[62] The conditions related to, among other things, protecting the Graceful Sun Moth.
Meanwhile, on 17 June 2011, Mirvac WA lodged Revision B of the Plan with the Shire. The Shire then lodged that revised Plan with the WAPC.
On 6 September 2011, the Shire recommended that the Shire Council adopt the amendment text of the Plan subject to the modification as requested by the Minister of Environment and Youth[63] for final approval and recommended that the Council forward it to the WAPC for endorsement.
On 13 September 2011, the Shire adopted the Scheme Amendment. This was subsequently supported by the WAPC.
Two days later, on 15 September 2011, Mirvac submitted Revision C of the Plan to the Shire.
On 14 February 2012, the Shire approved advertising of the Plan and required further information to be provided by Mirvac WA prior to final approval of the Plan, including in relation to a second access road.
Throughout 2012, Mirvac WA and the Shire continued to discuss various issues, in particular the second access road.
On about 20 May 2013, the Commonwealth Department removed the Graceful Sun Moth from its list of species protected on the basis of national environmental significance. In light of that, Mirvac WA asked for the removal of the conditions relating to the Graceful Sun Moth. The Commonwealth Department agreed to this and, on 11 June 2013, the conditions were varied.
Further revisions of the Plan, Revision D and Revision E, were submitted by Mirvac WA to the Shire in August and November 2013 respectively. On 3 December 2013, the Council by resolution adopted Revision E of the Plan.
On 18 December 2013, the WAPC advised that it supported Revision E of the Plan, subject to the endorsement of the Local Water Management Strategy by the Department of Water. This endorsement was obtained on 10 February 2014. The following day, the Plan was approved.
On about 24 April 2014, Binningup sent a notice to Mirvac WA requiring it to provide a report on various matters.[64]
On 9 May 2014, Binningup sent another notice.[65]
By July 2014, the relationship between Binningup and Mirvac WA was poor. Among other things, a dispute had arisen over the minutes of the July 2014 PCG meeting, which led to a protracted and at times hostile exchange between the parties.[66]
Then, on 9 September 2014, Binningup advised that it would be recording all future meetings of the PCG. Mirvac WA said it would not agree to the meetings being recorded, but suggested instead that an independent minute‑taker be appointed. Binningup refused, insisting the meetings be recorded.[67]
Mirvac WA decided that, due to the serious deterioration in the relationship between Mirvac WA and Binningup, it should replace its representatives on the PCG. It notified Binningup of this on 15 September 2014.[68]
The parties continued to engage in correspondence in relation to the recording of the PCG meeting. Neither side would shift its position. As a result, no further PCG meeting was ever held.[69]
On 2 October 2014, Binningup's Termination Notice was sent, alleging Mirvac WA had repudiated the Services Agreement and purporting to accept the repudiation.
On 24 October 2014, Mirvac's Termination Notice was sent, alleging Binningup had repudiated the Services Agreement and purporting to accept the repudiation.

[177]

As I will explain, I do not accept that the evidence establishes Binningup's first contention that Mirvac WA sought to avoid the imposition of a condition to avoid expenditure unless and until there was internal approval.
Almost all of the evidence relied upon by Binningup in support of this first contention related to events that occurred prior to Mr Davidson's departure in 2010.[73] Binningup sought to discredit Mr Davidson's evidence. As I explain in a later section,[74] I found Mr Davidson to be a reliable and truthful witness and accept his evidence entirely.
Mr Davidson explained why Mirvac WA sought to avoid the imposition of a condition for a second access road. It had nothing to do with internal approval for expenditure. There were two main reasons. First, he was trying to avoid, for the benefit of both Mirvac WA and Binningup, incurring costs earlier than required (and indeed that may not be required at all). Second, he was trying to avoid the EPA approval process being derailed just when it seemed approval was about to be granted. Both goals were valid and appropriate goals to pursue, and were entirely consistent with Mirvac WA's obligations under the Services Agreement. The evidence shows that he acted consistently with those goals.
In an effort to achieve those goals, Mr Davidson tried to ensure that traffic needs and fire safety needs were addressed independently. He explained that he wanted the Shire to understand that the two needs were distinct and may require different responses at different times.
For example, fire safety may require secondary access into the site but may not need a fully sealed road or indeed any road at all. Instead, access may be able to be achieved by installing a gate at the boundary of the site from which emergency vehicles can access the site and then follow a path identified on a map but that is not physically formed. By contrast, if the traffic demands would exceed the capacity of the existing access road, a bituminised road would have to be built. Of course, a road to accommodate additional traffic would only be required if and when there was going to be such additional traffic. Accordingly, both the type and timing of access could be different depending on whether the purpose was fire safety or traffic.
Mr Davidson pointed out that there was a difference between secondary access and a secondary (or a second) access road. He pointed out that, if a need for secondary access was established, this did not mean that a second access road was inevitably required. He was required to repeat this on multiple occasions, as the difference did not seem to be appreciated by the cross‑examiner.[75]
Mr Maiorana, the planning expert called by Binningup in the trial, agreed there was a difference and agreed that, if there was a need for secondary access for emergency purposes, this did not mean that a second access road would be required. Mr Maiorana agreed that the need for a second access road would primarily be driven by traffic requirements, and that whether a constructed road was required would depend on the volume of traffic.[76]
Mr Davidson also did not want the Shire to reason that, because it appeared that a second access road might be needed for fire safety reasons and might be needed for traffic, a second access road was definitely required, and required from the start.
As will be seen, numerous documents show that Mirvac WA consistently distinguished between fire safety requirements and traffic requirements. The potential benefit to both Mirvac WA and Binningup is obvious. If it transpired that a secondary access road was not required for traffic, and emergency access could be provided without a bituminised road, the expense of building a road would be wasted. Further, even if a bituminised road was eventually needed to deal with the traffic generated as the Project progressed, it would not be sensible to incur the expense of constructing the road before that traffic was generated. It would require Mirvac WA to outlay the funds, and would start the clock running on Binningup's obligation to repay them, earlier than necessary.
It was not only Mirvac WA who distinguished between fire safety requirements and traffic requirements. Its planning consultants did too.[77] As I have noted, so too did Mr Maiorana, the planning expert called by Binningup in the trial.
Mirvac were projecting that there would not be a need for a second access road for traffic reasons for nearly 10 years. A second access road may not have been needed at all, depending on the final yield.[78]
In his evidence, Mr Waller, director of Binningup, agreed he was aware that Mirvac was concerned to not have a requirement to construct the second access road before it was necessary. He added 'that's just prudent'.[79]
The evidence also shows Mr Davidson's efforts to achieve the second goal - that of preventing the EPA approval process being derailed. Mr Davidson knew that, if the construction of a second access road was a condition of granting approval, this would cause significant delay.

[251]

Adam Davidson's understated response showed remarkable restraint, but was consistent with his patience and courtesy throughout his evidence and in particular the cross‑examination. There was no foundation in the evidence for this allegation. On the contrary, the documentary evidence supports Adam Davidson's view that there had been an agreement with the Shire officers, and in the terms he set out in the handover notes. Indeed, the documentary evidence compels this conclusion - the terms Adam Davidson set out in the handover notes reproduced the 2009 Trigger Provisions as amended by Jake Davidson. In addition, the Shire's EPA Letter, drafted by Adam Davidson and settled and sent by Jake Davidson, setting out the Shire's position, shows an agreed position more generally. Binningup did not assert that anything had occurred between the date on which those documents were settled and the date on which Adam Davidson emailed his handover notes that worked any change to that position.[128]
Further, the proposition was inherently improbable. It would have first required Adam Davidson, a planning manager, to determine that there could be some value in creating a document in 2010 falsely asserting an agreement. This would require quite some foresight. It would have also required him to be dishonest and willing to be dishonest despite the fact that he was leaving Mirvac WA for a job elsewhere. Further, if he wanted to create a document alleging an agreement that went beyond documents common to the Shire and Mirvac WA, one might expect he would refer to fictitious oral conversations. He did not. He reproduced in the handover notes the 2009 Trigger Provisions.
I entirely accept Adam Davidson's evidence.
Counsel for Binningup sought to bolster the allegation by referring to an email exchange between Jake Davidson's replacement at the Shire, Mr Hall, and Adam Davidson's replacement at Mirvac WA, Mr Aleksovski. Counsel for Binningup also put the allegation to Mr Aleksovski.
The email exchange between Mr Hall and Mr Aleksovski occurred in September 2011. By that time, Mr Hall had replaced Jake Davidson as the Shire's manager of planning services. On 1 September 2011, Mr Hall wrote that he could not find the resolution of the Council confirming the trigger points for the second access way. Mr Aleksovski replied on Monday, 5 September 2011:[129]

[256]

Binningup also submitted that the evidence of its planning expert, Mr Maiorana, supported its position, in that it 'established that, in 2009, it was not possible for such a concluded agreement [concerning the timing of construction of a second access[138]] to have been made'.[139] Binningup referred to Mr Maiorana's report pt 3 pages 3 ‑ 4 and his oral evidence at page 1418 of the transcript.
In those pages of his report, Mr Maiorana simply set out the minutes of the Shire's meeting on 14 July 2009 and the provisions in the endorsed Plan (in 2014) in relation to the second access road. The endorsed Plan said that, as conditions of the first stage of subdivision, Binningup had to secure the land required on an alignment generally in accordance with that depicted on the Plan, construct the second access road to a specified standard, and transfer the land to the Shire. On the cited transcript page, Mr Maiorana was asked whether the details of what had been endorsed in 2014 were more specific than what could have been contemplated in 2009. He was not asked whether it would have been possible to reach a more general agreement as to the timing of construction of a second access in 2009. What he was asked was whether he agreed that the timing of construction in the provision as endorsed in 2014 could not have been known in 2009.
Interestingly, Mr Maiorana's answer was that he would expect that the timing of a second access would have been tied to the first stage of subdivision in 2009, but that, by that, he did not mean a fully constructed road. He said there may have been an alternative means to provide a second access if traffic numbers did not require a fully constructed road.[140] This was entirely consistent with Adam Davidson's evidence and supportive of his approach.
When I tested with counsel for Binningup whether Mr Maiorana's evidence actually did support Binningup's proposition, counsel said it did not matter whether it did or not because the Council resolution in July 2009 showed that there was not a concluded agreement.[141]
I accept there is no evidence of a Council resolution approving the agreement reached between Jake Davidson and Adam Davidson in September 2009. However, the documentary evidence supports Adam Davidson's evidence that the Shire officers had agreed that the road would not need to be constructed until trigger points had been reached.

[264]

On 13 August 2012, Mr Aleksovski and Mr Pearce met with the Shire. On 16 August 2012, Mr Pearce sent an email to the CEO of the Shire, copied to Mr Aleksovski, setting out a 'summary of actions' from that meeting. The email relevantly recorded the following:[149]
1. [Binningup] to contact Coast Pastoral Company to secure agreement to providing the required extension to Springhill Road prior to consideration of [the Plan] by Council. Proposed timing: 15 August 2012.
2. [Binningup] to revise draft Second Access Road Strategy (SARS) to include commitment to securing the route up-front and any necessary amendments. Proposed timing: 22 August 2012.
3. SARS to be agreed with Shire as part of [Plan] approval but acknowledging that actions to create the second access road will be associated with subdivision in accordance with the SARS. Proposed timing: Prior to [Plan] approval.
4. Council will not agree to providing any form of compensation for the road.
5. Council will assist [Binningup] with securing any necessary environment approvals, should these be required to facilitate the provision of the road when this becomes necessary - [Binningup] will commence investigations as to what approvals will be required. Proposed timing: As required.
Mr Aleksovski forwarded that email to Mr Waller the same day and advised he was available (presumably for a meeting) the following Wednesday or two other dates in the week after.[150]
It will be recalled that, in the June 2012 Strategy, Mirvac WA was proposing that it would obtain an easement over the land for the purposes of the temporary road, and said that the Shire may agree to pay compensation for the land to Coast Pastoral Company. Mr Pearce's email indicates that, in the 13 August 2012 meeting, the Shire said it would not pay any compensation. Mr Aleksovski agreed in cross‑examination that, after the meeting, he knew the Shire's then position was that it would not provide any form of compensation for the road. He said that was the main sticking point between the Shire and Mirvac WA - '[o]n who should actually acquire the land for a public road'.[151] As will be seen, who should actually acquire the land continued to be an issue.
Another live issue was the timing of the construction of the second access road. By point 3 of the summary of actions, it appears that the Shire had accepted that the timing would be the subject of further discussion. That this was so was demonstrated in a meeting on 28 August 2012 between Mr Aleksovski, Mr Waller and Linton Scott of Binningup,[152] and Michael Parker of the Shire of Harvey. It was there agreed that the second access road would be provided on settlement of 500 lots and 'capped at up to $2 million which was the cost assumed in the feasibility to construct the road and this money would be provided to the Shire of Harvey to be held by them'.[153]

[267]

It proposed that Coast Pastoral Company would provide an undertaking to the Shire 'confirming its intention to cede [the required land] free of cost'. It proposed, in effect, that a temporary road (for fire emergency access and construction vehicles) would be constructed prior to the issue of clearances for the first stage of the subdivision. It said that Binningup would pay the Shire $4,000 per lot for the first 500 lots for the later upgrade of the temporary road (so that when the time came at which the road had to be built, the money would be there[156]). It proposed that, upon the issue of titles to facilitate the development of 500 dwellings, the Shire would upgrade/construct the road to the standard of a public road, using those funds.
The December 2012 Strategy, consistently with the June 2012 Strategy, involved Coast Pastoral Company giving up the land without any payment from Mirvac WA. It recognised, however, that the Shire had said, in the 13 August 2012 meeting, that it would not compensate Coast Pastoral Company.
The December 2012 Strategy, consistently with the June 2012 Strategy and the meeting on 28 August 2012, proposed that the temporary road would be upgraded upon the issue of 500 titles. It differed from the June 2012 Strategy, however, in proposing that the Shire construct the public road, while Binningup would simply fund the construction. It was put to Mr Aleksovski that this was a proposal that Binningup would pay the cost, rather than Mirvac WA. Mr Aleksovski disagreed, and said that Binningup was named as it was the owner of the land and it was always intended that this would be a project cost (ie. paid, in the first instance, by Mirvac WA).[157] I accept his evidence on this point. It is consistent with the manner in which he communicated with the Shire over time.
At the 20 December 2012 PCG meeting, it was agreed that a project workshop would occur by March 2013 to review the subdivision plan (given the downgrading of the environmental significance of the Graceful Sun Moth). The attendees were to include Binningup, Mirvac WA and two of Mirvac WA's consultants.[158]

[297]

It was put to Mr Aleksovski that he did not mention in this email what he had said in the May 2013 Strategy because he realised that Mr Hall knew it was not correct. Mr Aleksovski denied that.[179] In my view, it is more likely that Mr Aleksovski did not mention what he had said earlier because in this email he was directly responding to Mr Hall's statement in his 2 June 2013 email that the matter had 'not been fully explored and that written correspondence between both parties should really be submitted'.
On 7 June 2013, Mr Cuthbert responded to Mr Aleksovski's email, saying 'Richard has indicated that he is prepared to sell the necessary land. I think we can use this as the basis for finalising the road strategy and move on now'.[180]
It is clear that, at this point, the Shire considered the issue had been resolved. However, Mirvac WA still wanted to argue that it should not have to acquire the land. Mr Aleksovski believed that the Project should not have been 'held to ransom by the Shire of Harvey to acquire land from a private third party individual for a public road'. He believed that 'the best entity in place to acquire land for public use was the shire itself, under the relevant powers of the Act. It had the ability to compulsorily acquire land for a road if it wanted'.[181]
Interestingly, Mr Maiorana, the planning expert called by Binningup in the trial, said that details such as the route and timing of a second access road would not typically be finalised prior to the approval of a local structure plan. He thought they would typically be finalised later, as a condition of subdivision approval. He also said he would have expected that the timing of a second access would have been tied to the first stage of subdivision, but that whether the second access would need to be a fully constructed road would depend on traffic numbers.[182] His evidence suggests that the Shire's position was unusual, and that it was not unreasonable for Mr Aleksovski to try to obtain a different outcome.

[310]

I accept this explanation and do not consider Mr Aleksovski intended any inaccuracy by using these words.
It was also put to Mr Aleksovski that he knew, at the time of this PCG meeting, that Coast Pastoral Company did not consider it was subject to any possible capital gains tax issue in selling the land for the second access road. He agreed that Mr Payton had said that this was their position but said that Mr Payton had never provided the formal advice which Mr Payton said they had to confirm that. He said that it was a matter for the Shire and the WAPC whether they accepted Coast Pastoral Company's position, but that he had requested a copy of the written advice that Mr Payton had said that he had.[198]
It was also put to Mr Aleksovski that he attempted to mislead Binningup by writing the minutes so as to create a false impression that the delays had been caused by the Shire changing its position. He denied this.[199]
Binningup submitted that Mr Aleksovski admitted that he had never provided Binningup with a copy of either the December 2012 Strategy or the May 2013 Strategy, citing page 879 of the transcript.[200] On that page, Mr Aleksovski said he could not recall if he had. When the same question was put to him later, he again said he could not recall.[201]
Binningup also submitted that Mr Doyle's evidence was that neither he nor Mr Waller had ever been provided with either of the strategy documents at a PCG meeting or at any other time, citing page 1379 of the transcript.[202] On that page, Mr Doyle said only that he had never seen any strategy.
In any event, Mr Aleksovski was in regular contact with Mr Waller. Mr Waller admitted this, and said each would tell the other what each was doing.[203] In addition, as indicated in the above account of events, Mr Aleksovski copied particular documents to Mr Waller or forwarded them to him.
At the PCG meeting on 13 June 2014, Mr Waller complained about delays and waste. However, he admitted saying in the meeting that his complaints were not directed at Mr Aleksovski, but were directed at previous Mirvac personnel.[204] In cross‑examination, Mr Waller said what he had said in the meeting was true and he had no complaint about Mr Aleksovski's work on the Project.[205]
As I will discuss later, I do have some concerns about Mr Aleksovski's evidence.[206] In particular, his explanation for raising tax issues was unconvincing. However, I am not satisfied he was attempting to mislead Binningup. The evidence shows that both Mirvac WA and the Shire had changed their positions over time.[207]
Mr Aleksovski's grievance was with the Shire, not Binningup. He was trying to get the Shire to acquire the land, as he thought it should. He was not seeking to delay the Project by the Deemed Refusal Notice. Had he been seeking to delay the Project, he would not have reiterated in the Deemed Refusal Notice the commitments to provide emergency access to the site and to provide a monetary contribution to the future construction of a second access road and that Binningup was willing to enter into a legal agreement confirming those commitments.[208]

[324]

Mr Waller said he did not remember all of this conversation, but did not deny it. He did remember, however, telling Mr Aleksovski that he knew the Paytons pretty well and that he would deal with the acquisition.[215]
From this time onwards, Mirvac WA cannot be criticised in relation to the second access road. Mr Waller had taken on the task of acquiring the land.
On 28 October 2013, Mr Aleksovski forwarded Mr Waller's email to Mr Lawrance (of Mirvac WA), writing that '[t]he delivery of the second access road or the acquisition of the land has not been discussed or ratified at PCG level nor agreed to by Mirvac'.[216] Binningup submitted that Mr Aleksovski had been asked to report about Mr Waller's commitment,[217] but this submission is contrary to the evidence.[218]
Mr Doyle said that he thought Mr Waller had announced at the PCG meeting prior to the meeting with the Shire on 17 October 2013 that they would go and see the Shire, and that no one had said they could not go. He did not, however, suggest, that the PCG had agreed to Mr Waller reaching a deal with the Shire without any input from Mirvac WA.[219]
In November 2013, Revision E of the Plan was released.[220] On 11 February 2014, the WAPC sent a letter to Mr Hall, copied to Mr Pearce, advising that the Plan had been endorsed by the WAPC.[221]
By 6 May 2014, Mr Waller had not yet reached an agreement with Mr Payton as to the price of the land for the second access road.[222] At the PCG meeting on that day, it was agreed that Binningup would 'follow up with the Landowner/Council as required to achieve acquisition' of the second access road.[223]
On 9 May 2014, Binningup sent a Notice to Mirvac WA (May 2014 Notice) advising, among other things, that Binningup 'has successfully negotiated with the Paytons to purchase the land required for the second access road, so that no delay on that account is required'.[224] It appears this was not an accurate statement. Other documents show that, as late as 23 September 2014, the Paytons and Binningup had still not reached an agreement on terms.[225] Indeed, Binningup had not acquired the land for the second access road as at the date of the hearing.[226]
Mr Waller's oral evidence was that, after the price was agreed, Binningup had sent a legal agreement and a deposit cheque to the vendor, but 'a tax matter came up ... and something else came up and ... they had to send the cheque back to say that ... they can't do the transaction at the time'. He said this was sometime after his meeting with the Shire in October 2013.[227] Later in his evidence, Mr Waller said he was not sure what the issue had been but thought it was a tax issue.[228]
In view of my concerns about Mr Waller's evidence generally,[229] I do not place much weight on this evidence, other than to note that, if true, it would support Mr Aleksovski's evidence.

[332]

These documents are inconsistent with a desire to delay. They support a desire to persuade the Shire to agree with Mirvac WA's proposal and to persuade it to compulsorily acquire the land.
Further, the fact of utilising the deemed refusal process is itself inconsistent with a desire to delay. By using this process, Mr Aleksovski sought to have the WAPC resolve the impasse between the Shire and Mirvac WA, rather than the impasse continuing (unless Mirvac WA capitulated). Mr Aleksovski also chose the WAPC rather than the State Administrative Tribunal as he thought it would be faster.
I do accept that the May 2013 Strategy inaccurately stated that investigation by Coast Pastoral Company had revealed significant tax implications. This was not an innocent mistake. The inaccuracy is too detailed, and is, in effect, repeated in Mr Pearce's email to Mr Hall on 30 May 2013. The inaccuracy troubled me. However, in all of the circumstances, I am not satisfied that the misstatement was made as part of a larger plan to delay or impede implementation of the Project. Nor am I satisfied that it was made because the Alleged Decision had been made. While I accept that Mr Aleksovski was trying to avoid incurring costs, I do not accept that this was because the Alleged Decision had been made. It is much more likely to have been written as part of Mirvac WA's ongoing efforts to try to reduce unnecessary expenditure, by seeking to secure the Shire's agreement to acquire the land itself.
Mr Aleksovski believed that the Project should not have been 'held to ransom by the Shire of Harvey to acquire land from a private third party individual for a public road'.[237] Mr Aleksovski was also clearly unhappy that the Shire had changed its position, after agreeing what the triggers would be for the road construction.[238] Neither matter would justify misstating the position to the Shire. However, I do not accept that he did it to delay the Project or because the Alleged Decision had been made. In my view, it is more likely that Mr Aleksovski was simply trying to persuade the Shire to acquire the land itself, in an effort to save costs.

[337]

Another matter said to manifest the Alleged Decision was Binningup's allegation that Mirvac WA deliberately delayed progress on the Project by proposing to the PCG a program and budget for approval to vary the Plan and rezone the golf course to residential land before commencing subdivision works.[246] Binningup alleged that Mirvac WA used the golf course as a 'ruse'.[247]
Binningup conceded that the possibility of the golf course being developed was discussed at PCG meetings. However, it submitted that it had never agreed to this delaying the Project and had instead been pressing for progress.
Binningup further submitted that the evidence shows it would not have agreed to vary the Services Agreement to permit the development of the golf course until a first stage of the Project was underway. Due to the definition of 'Project' in the Services Agreement, a variation would be required before the golf course could be developed.[248]
Binningup submitted that, despite these matters, Mirvac WA proposed in its report for the PCG meeting scheduled for 25 September 2014 (September 2014 Report)[249] that steps would be taken to obtain a major amendment to the Plan to convert the golf course land to residential lots before any work on carrying out any stage of the Project commenced. That proposal was going to require planning work estimated to take 12 ‑ 15 months.
Binningup submitted that, because the PCG did not have the power to approve such a budget without varying the Services Agreement, the budget and program proposed in the September 2014 Report were not a 'Budget' and 'Programme' (as defined) because they were not for the purpose of carrying out the Project.
Binningup submitted that the September 2014 Report demonstrated that the intention of Mirvac WA was either to terminate the Services Agreement through deadlock at a PCG meeting over a program or budget or to delay commencement of site works until January 2018 (or close to that time) so as to put pressure on Binningup because of the effect of cl 5.6 of the Loan Agreement.[250]
Mirvac WA denied this was why it proposed the program and budget for approval to vary the Plan and rezone the golf course to permit its development into residential lots. Mirvac WA said, in effect, it was because Binningup had raised and pursued the suggestion that the golf course should be developed.

[345]

Mr Waller also said that, while the golf course was inevitably going to close, he told Mr Aleksovski not to talk about it because he did not want to 'worry people' that it might be closed down.[262]
Mr Waller continued to be interested in developing the golf course. In a meeting with Mr Draffen on 3 April 2014,[263] Mr Waller raised the prospect of increasing yield by developing the golf course.
At the 6 May 2014 PCG meeting, Mr Waller referred to legal advice Binningup had obtained from Mr Solomon (counsel for Binningup in these proceedings) with respect to the closure of the golf course. Mr Waller said in the meeting that the legal advice was that there were 'no issues' with converting the golf course into residential lots.[264] At the meeting, it was agreed that Mirvac WA would 'prepare feasibility assessing financial and lot yield impact of developing golf course land for consideration at [the] next PCG [meeting]' and that Mr Waller would provide the legal advice. It was agreed that Mirvac WA would prepare a budget and program for approval, and that this would be provided at the PCG meeting in the third quarter of the year, likely to be in September 2014.[265]
On 9 May 2014, Binningup sent the May 2014 Notice to Mirvac WA requesting information about when a budget and program would be prepared and said that 'for the purpose of preparation of the Budget and the Programme for the Next Stage', Binningup 'accepts that the Project is to be developed with the golf course continuing as is'.[266]
The request in the May 2014 Notice for information about when a budget and program would be prepared was odd. Binningup had already been told in the PCG meeting three days earlier that a budget and program would be presented at the PCG meeting in September. Mr Waller admitted this.[267]
In any event, Binningup's 'acceptance' that 'the Project is to be developed with the golf course continuing as is' could not unilaterally change what had been discussed and agreed at the earlier PCG meetings. However, it was an indication that, as at May 2014, Binningup did not want the golf course to slow down progress.
There is a dispute as to what was said at the 13 June 2014 PCG meeting.[268] However, both parties agree that the golf course was discussed. It is agreed that Mr Waller said the golf course would need to be closed when construction started. It is agreed that the parties discussed the immediate future of the golf course, including the issue of market representation and impact on sale prices. The minutes do not record a decision to abandon the possibility that the golf course would be developed at some point in the future. However, nor do they record a decision or common view that it would be.
Mr Aleksovski said that, during the meeting, Mirvac WA reiterated that the closure and development of the golf course was not a simple thing, and would require an amendment to the Plan. He said:[269]

[348]

The May 2014 Notice and the discussion during the June 2014 PCG meeting indicated that Binningup did not want to delay the Project by seeking to amend the Plan to allow for the golf course to be developed. The September 2014 Report did not acknowledge that, and instead set out what would be required to progress the amendment. However, I am satisfied that this was not done to deliberately delay progress.
First, Mirvac WA and Binningup continued to disagree about whether an amendment to the Plan was necessary at the outset if the golf course was to be developed in the future. Mirvac WA's concerns were legitimate.
Second, while the May 2014 Notice said that Binningup 'accepts that the Project is to be developed with the golf course continuing as is', this was ambiguous, given the history. It was not inconsistent with Binningup simply reiterating its view that the work could begin under the existing Plan, that approval could later be sought for the development of the golf course, and that Binningup would buy back any houses whose purchasers complained about being misled. This interpretation of the May 2014 Notice is supported by Mr Aleksovski's recollection of what was discussed in the June 2014 PCG meeting.
Third, Mirvac WA would have been entitled to have concerns about Mr Waller's intentions and the accuracy of the May 2014 Notice. Mr Waller had requested that the PCG minutes not record the discussion about the closure of the golf course or the discussion about the possible development of the golf course and told Mr Aleksovski not to talk about it because he did not want to 'worry people' that it might be closed down. This was in the context where, according to Mr Waller, it was inevitable that the golf course would be permanently closed.[272]
Fourth, contrary to Binningup's submission, the evidence does not show that Binningup would not have agreed to vary the Services Agreement to permit the golf course to be developed until a first stage of the Project was underway. Binningup did not cite any reference for its submission, but elsewhere I have set out Mr Waller's evidence in relation to variations to the Services Agreement.[273] His evidence was to the effect that he would not have agreed to vary the waterfall provisions and financial outcomes provided for as between Binningup and Mirvac WA under the Services Agreement until some work had been done and the Project was underway. His evidence in relation to the golf course was, in effect, simply that he would not have agreed to it causing a delay.
Fifth, Binningup would have had the right to disapprove the September Budget at the next PCG meeting. It could not be compelled to accept a further delay to amend the Plan if it did not want to.
Sixth, Mr Aleksovski's sworn evidence was that he did not prepare the September Budget for the purpose of delay. The September Program supported this evidence. I accept his evidence on this point.
Seventh, nothing in the evidence as a whole causes me to doubt this conclusion.[274]

[356]

Although not entirely clear, it appears that Binningup was submitting that, because Mirvac knew it was going to make a loss, it would never have issued an ACC, regardless of its contractual obligations.
In this section I will examine the documents and evidence which are potentially relevant to these submissions. These are primarily those documents in Binningup's Chronology said to be relevant to 'Repudiatory Conduct' generally.[279]
These documents show, among other things, that Mirvac became concerned about the feasibility of the Project. Mirvac decided to engage in negotiations with Binningup about varying the Services Agreement. In various financial documents it was assumed that the negotiations would be successful.
A number of documents also show that Mirvac WA was exploring its rights under the Services Agreement in relation to the deadlock provisions. As noted earlier,[280] Mirvac WA had the right to vote against a budget as a member of the PCG and, if a budget dispute arose, the provisions dealing with the deadlock could lead to the land being sold, Binningup having to repay to Mirvac WA all moneys owed, and the termination of the Services Agreement. Some of the documents relied upon are said to record a decision by Mirvac to use the deadlock provisions in the Services Agreement if Binningup did not agree to vary the Services Agreement.
In considering these documents, I have also taken into account the other evidence that shows what else was happening at particular times.[281]
I will also discuss in this section the statements alleged to have been made by Mr Draffen and Mr Lawrance in 2014. On Binningup's case, those statements included statements that Mirvac Ltd was unlikely to decide to carry out the Project and, in addition to PCG approval, Mirvac would need internal Mirvac approval prior to commencing Stage 1.
I accept that Mirvac reached the view that Mirvac WA would suffer a loss under the Project and that they were looking for ways to improve the financial position. I accept that this included seeking to renegotiate the Services Agreement and exploring the options under the Services Agreement.
I do not accept that Mirvac decided Mirvac WA would breach the Services Agreement. In my view, the evidence shows that Mirvac was seeking to advance its position in a way that recognised, and was consistent with, the contractual framework. This included seeking to reach a new agreement outside of the Services Agreement on the understanding that the existing agreement could not be exited, or varied, unilaterally. It included noting the need to get further legal advice to ensure that any use of the deadlock provisions was supported by the Services Agreement.
In addition, I am not satisfied that any decisions were made, or directions given, to stop work on the Project pending the negotiations or the use of the deadlock provisions.

[375]

In cross‑examination, Mr Aleksovski was asked if he was aware that the position was to progress to Plan approval 'to protect Mirvac's position'. He said he was not aware of that. He said his role was to perform the role of contractor and to get the Plan approved and that is what he did.[301] I also observe that the reference in Mr Crockett's email is to protecting our position. Whether or not 'our' meant only Mirvac or meant both of the Project parties, the words that follow state that this was endorsed by the PCG. This is inconsistent with a supposed secret Mirvac plan. In any event, it was in the interests of both parties that the Plan be approved.
Under cross‑examination, Mr Aleksovski said he had not known at the time of this email that Mr Waller had said he was not interested in varying the Services Agreement and said that he only became aware of that on reading Mr Crockett's email in court.[302] The email itself only asserted that Mr Waller was not agreeable to any of the options discussed to date, and wanted the issue escalated to the decision makers at Mirvac. Other evidence, including Mr Waller's own evidence, showed that Mr Waller never disavowed the possibility of negotiations.
I further observe that Mr Crockett's opinion that 'at this point Mirvac DAM would not give this approval and the shareholders PCG will then be at a potential deadlock' does not suggest that he believed Mirvac intended to breach the Services Agreement. From the overall context, it appears that he believed that Mirvac would consider a budget for subdivision works to be infeasible, given the then market conditions and forecast, and that therefore Mirvac would not approve such a budget, which could lead to a deadlock. As later explained, Mirvac had the right under the Services Agreement to disapprove a budget it considered to be infeasible.
A June 2012 document titled 'Master Planned Communities Western Australia, New Business 5 Year Strategy - 2013 to 2018 June 2012' addressed, among other things, the 'Current Development Pipeline' of 'Master Planned Communities WA'.[303] It excluded the Binningup Project 'from the current development pipeline as the project is a non‑core asset for MPC [Master Planned Communities] due to the commercial viability of market conditions and regional location'.
Counsel for Binningup put to Mr Draffen, in effect, that the exclusion in this document showed that a decision had been made that Mirvac WA would not carry out the Project. Mr Draffen rejected this.
Mr Draffen said that the document was dealing with where the team should focus in terms of new business in the forecast period. He said the team would have been looking at the reality of what settlements were likely to occur in the forecast period. He said that he thought the exclusion of the Project reflected the team's view that the Project was effectively stalled until a solution to move forward was found, given the status of the environmental approvals and the market. He said that, because of the uncertainty around the Plan approval and a scenario to move forward with the Project, it was impossible to forecast an annual settlement figure.[304]
Mr Draffen's evidence in relation to this document is consistent with its terms. Its title was 'New Business 5 Year Strategy - 2013 to 2018 June 2012' and the words in issue were contained in the section headed 'Current Development Pipeline'. That same section set out the 'Anticipated Annual Settlements' for those financial years.
Further, as will be seen, Mr Draffen's evidence was that he never reached the view, or was told, that there was no prospect that Binningup would agree to vary the Services Agreement. I accept this evidence. It was supported by Mr Waller's own evidence of his ongoing willingness to talk and that Mirvac sought to discuss varying the Services Agreement with him every six months.[305] This is inconsistent with a decision to not proceed.
In my view, the document reflected Mirvac's view that it was unlikely there would be any sales (at least not of significance) in the five‑year period. This is not surprising given the length of the Project (anticipated to exceed 20 years[306]), the stage of the Project and Mirvac's view of the market conditions at that time and in the near future. The document does not show that a decision had been made never to proceed (or not to proceed unless the Services Agreement was varied). It recognised the current reality.
Counsel for Binningup put to Mr Draffen that 'the position is that you knew in June 2012 that Mirvac had made a decision - and you in particular on its behalf had made a decision - that Mirvac would not be proceeding to carry out the subdivision project at Binningup'. Mr Draffen said:[307]

[380]

This does not show the Alleged Decision had been made. On the contrary, it refers to negotiations 'to attempt to mitigate' the impact of certain matters. Further, in stating 'Current assumptions are predicated on a satisfactory renegotiation of pertinent elements of the Services Agreement', it merely records that Mirvac believed the Services Agreement would be varied and the development would proceed under a varied Services Agreement. It does not suggest that Mirvac had decided not to proceed unless the Services Agreement was varied.
The June 2012 Report also noted management's recommendation to include all projects with an IRR less than 10%, or at risk of falling below 10%, on a 'watch list' as set out in the report. The list included the Binningup Project.[309]
A 'Mirvac Project Watch List' dated 2 August 2012[310] repeated language used in the June 2012 Report. It added that these projects were 'at risk with the potential for material impairment on those not currently impaired or at risk of further impairment on currently provisioned projects. These projects are constantly monitored and reported on a "watch list" '.
Mr Aleksovski said he did not have any involvement in the June 2012 Report and was not aware that the Project was monitored and reported on a watch list.[311] It is, of course, not surprising that Mirvac would have a watch list for its marginal projects. The Project's presence on this list says nothing about whether the Alleged Decision had been made. Later, I will set out the evidence that shows Mirvac made a provision in relation to the Binningup Project, to reflect the risk that the loan would not be fully repaid. As will be seen, Mr Aleksovski said that '[t]here were other projects with larger provisions that were eventually developed and that are still being sold now'.[312]
A document titled 'Draft Scenario HY13'[313] is undated, but is said by Binningup to have been produced on 1 July 2012.[314] In the document, the 'action' recorded for Binningup was 'englobo/super lot' with a tick. Mr Draffen did not accept this set out a 'strategy' to move towards an englobo sale. Rather, he said the documents showed the assumptions adopted for provision purposes, being the negotiated exit, for the purposes of adopting a value for the carrying value of inventory, which was the subject of that report.[315] Mr Draffen's evidence in relation to this document is consistent with its terms and I accept it.
A Mirvac spreadsheet titled 'Collated Development Risk Tolerance 5% movement in IRR June 2012' was emailed for review within, it seems, the Mirvac finance team, on 30 August 2012.[316] The spreadsheet stated:[317]

[384]

This evidence is supported by Mr Waller's own evidence of his ongoing willingness to talk, but of wanting some progress to be made before any agreement was reached.[321] I accept Mr Draffen's evidence on this point.
A Mirvac spreadsheet titled 'Monthly Update' for the WA - Development Division, dated 31 August 2012 (second August spreadsheet),[322] said, similarly to the previous document, that the 'land owner has not been willing to re‑negotiate, therefore, the Q1 forecast is anticipated to be based on the current Services Agreement'.
Mr Draffen said that he thought the reason the forecast was anticipated to be based on the current Services Agreement was because, as at that time, it had not been agreed that the Services Agreement would be renegotiated.[323] This explanation is consistent with the terms of the document and I accept it. The statement in the document, that the forecast is anticipated to be based on the current Services Agreement, is not consistent with the Alleged Decision.
The second August spreadsheet also said '[f]ollowing the unwillingness of the land owner to re‑negotiate the [Services Agreement], development expenditures on the project have been deferred'.
When asked if he knew that significant development expenditures had been deferred, Mr Aleksovski said no. He said he was never told to defer any expenditure and he did not defer any expenditure. He said he continued to incur costs to obtain the approval of the Plan, to maintain and manage various aspects of the Project and other miscellaneous costs. In relation to costs that would be incurred after Plan approval, he said that the Project had not reached that point, but said he was not aware of any decision to defer those costs.[324] Mr Aleksovski said he was performing his duties.[325]
Mr Draffen was not asked about this part of the document, or about similar statements in three other spreadsheets.
The first of these was a spreadsheet titled 'Summary of Templates - Q1FY13 Forecast - R1', dated 14 September 2012 (September spreadsheet).[326] It said that 'Significant development expenditures have been deferred following an unwillingness by [Binningup] to re‑negotiate the [Services Agreement]. Therefore, the interest income has decreased consistent with a lower loan balance'.
The second and third of these spreadsheets were both dated 18 December 2012 (December spreadsheets).[327] They were not put to any witness, and were not mentioned in Binningup's Closing Submissions. However, they were on Binningup's Chronology.
The December spreadsheets gave more detailed reasons than the August and September spreadsheets. One said that 'Significant development expenditures have been deferred due to planning approval delays coupled with the re‑negotiations of [the Services Agreement]. Therefore, the interest income has decreased consistent with a lower loan balance'.[328]
Both of the December spreadsheets stated:[329]

[387]

From the context given by the entirety of these documents, it appears that 'deferred' was being used in an accounting sense, in that anticipated (and budgeted) estimated expenditure was now likely to occur later in time. In any event, finance personnel had no authority to direct what was done by the Project team with respect to the Project.[330]
I accept Mr Aleksovski's evidence that he had not deferred any expenditure. His evidence was consistent with the evidence that showed the work Mirvac was doing throughout the period when the Project was on foot. Further, as I later discuss, I found him to be a truthful witness.[331]
Mr Aleksovski's evidence is also supported by Mr Draffen's evidence. Although Mr Draffen was not asked about the statements that expenditure had been deferred, he gave evidence as to the purpose of various financial records. He explained, for example, that the purpose of the June 2012 Report[332] was to enable Mirvac to calculate the carrying value of its inventory in its statutory accounts. He also explained why the Board had taken a provision in relation to the Project, discussed later,[333] and what that implied (and did not imply) about decisions Mirvac had made. Mr Draffen gave evidence about the interaction between Mirvac's development personnel and their finance personnel, saying that finance personnel had no authority to direct what was done by the Project team with respect to the Project.[334]
Mr Draffen also gave evidence that Mirvac had not, at any time, decided to exit the Project.[335] The statements in the spreadsheets to the effect that the forecast had been based on the Services Agreement are consistent with this evidence[336] and inconsistent with the Alleged Decision. I accept Mr Draffen's evidence.
The September spreadsheet[337] also said 'The landowner is unwilling to review the present [Services Agreement] which may lead to a threat in the viability of the project'. Mr Draffen was asked about this. He said that, at that time, Mirvac knew the Project 'was challenged'. However, he said Mirvac did not believe that the Transaction Documents said that the Project would have to be developed irrespective of the market, as there were provisions in the Services Agreement that permitted Mirvac WA to approve (or disapprove) a budget and program. He was asked if he was thinking along those lines at that time and he said 'we were just trying to find a viable way to move the project forward at this stage. You have to remember that at that time we didn't even have a structure plan approval'.[338]
Mr Draffen's evidence that Mirvac did not believe that it was contractually bound to complete the Project under the Services Agreement is supported by a number of documents, and I accept this was Mirvac's belief. As I explain later, the belief was correct.[339]
In the context of the spreadsheets as a whole,[340] and the evidence as a whole, I am not satisfied that Mirvac did not spend money that it would have spent if it did not have concerns about the Project's viability. At the time these spreadsheets were produced, the Plan had not been approved. Mr Aleksovski was working on obtaining the approval and was not deferring (and had not been told to defer) any expenses to achieve that. Perhaps in recognition of that, although these spreadsheets were in Binningup's Chronology, none were cited by Binningup in its written or oral closing submissions.
A 'Project Risk Assessment' was attached to the agenda for a meeting of the 'MPC[341] WA Monthly Project Review' on 25 October 2012.[342] It included a risk said to arise from the fact that the current feasibility assumptions were based on the perceived outcome of the 'renegotiations currently underway' with Binningup. The 'Plan Description' associated with this risk said:

[414]

Under the heading 'Impact on new Position', a table was set out proposing a provision of $18 million. It was said that the 'adoption of the revised assumptions' indicated this provision should be made.
There is nothing in the Board Paper that manifests a decision to stop performing under the Services Agreement. Nor do I accept that it shows there was no possibility that an ACC would ever be given in the future.[349] The recommended option was subject to Binningup agreeing to release Mirvac from its obligations. One of the identified alternatives was to continue development under the current agreement.
Further, inconsistent with any decision to breach the Services Agreement is the statement that further detailed legal advice was required in relation to how best to enact the deadlock provisions 'to ensure our actions are fully supported by the agreement'. Although the Board Paper acknowledged that 'there is no scope for Mirvac to exit the Services Agreement as a result of the agreement not being financially viable', it clearly recognised that this did not mean that the deadlock provisions were inoperative.
It appears to be common ground that, around this time, the Board made a provision for $18 million in accordance with the Board Paper.
Mr Draffen said that the decision to take an $18 million provision in relation to the Binningup Project was based on a risk assessment that a deadlock leading to a negotiated termination of the Project was the most likely scenario based on the information they had at the time. He said it was not a decision to actually set out to bring about a deadlock or to exit the Project.[350]
Mr Draffen denied that all Mirvac was doing was taking steps to force the Project into deadlock. He said that the team continued to work through the necessary works to prove up Stage 1.[351] He said the project team continued to work on the Project irrespective of the provision.[352]
Mr Aleksovski said that the fact that the Binningup Project had been provisioned did not affect his work. He said that '[t]here were other projects with larger provisions that were eventually developed and that are still being sold now. We were still working on the basis of delivering a residential estate'.[353]
The Board Paper is not inconsistent with any of this evidence and I accept it.
Mr Draffen also said that any decision to exit the Project would need to have been made at a level within Mirvac that involved him. He said that no position for exit was ever tabled for approval. He said that no decision to exit the Services Agreement had been made prior to 31 December 2012, nor was such a decision made subsequently.[354]
I accept this evidence in its limited terms. That is, I accept that no decision to exit was actually made. However, I find that Mirvac was contemplating using the deadlock provisions to cause Binningup to make a deal, but was first going to obtain legal advice to ensure that whatever it did was contractually permissible.
I earlier noted that, in considering the internal Mirvac documents, I have taken into account the other evidence that shows what else was happening at particular times. In relation to the Board Paper, for example, I considered the fact that, less than two months after it was produced, Mr Aleksovski first asked Mr Payton about possible tax issues.[355] However, having considered the evidence as a whole, I remain of the view that Mirvac did not, at any time prior to the termination of the Services Agreement, make a decision to exit the Project.

[422]

It is evident from the context of the document that the statement that Mirvac had decided to exit the Services Agreement via the deadlock provisions was not intended to mean that Mirvac had decided to trigger the deadlock provisions, leading to a sale of the land, the requirement on Binningup to repay the moneys owing and the termination of the Services Agreement. This can be seen from the fact that the Board was not provisioning for the worst case scenario (that the land would be sold following a deadlock) and PWC's statement that Mirvac was assuming the land would not be sold following a deadlock.
Rather, PWC was asserting that Mirvac intended to achieve an agreement with Binningup that it would be released from its obligations under the Services Agreement and Binningup would repay the Initial Advance. PWC was asserting that Mirvac believed that it would be able to achieve that agreement due to its power to trigger a deadlock and its belief that Binningup would not want the land to be sold following the operation of the deadlock provisions.
Further, the two underlined references to legal advice in the above extract support a conclusion that Mirvac intended to act in accordance with its contractual obligations, and was still waiting on further legal advice.
Taken as a whole, the PWC Report does not evidence a decision to stop performing under the Services Agreement.
As with earlier documents, it shows that Mirvac intended to try to negotiate with Binningup in a contractually permissible way. Mirvac believed, correctly, that there were deadlock provisions in the Services Agreement that could lead to the land being sold. It believed, rightly or wrongly, that Binningup would prefer the land was not sold and would be willing to negotiate outside of the Services Agreement to release Mirvac WA from its obligations and repay the Initial Advance or to renegotiate the Services Agreement.
It is unclear what Mirvac understood about the circumstances in which a deadlock could be triggered. The documents suggest Mirvac was aware it could disapprove a budget, but that it did not understand the contractual limitations on that power. Mirvac appeared to consider that it could decide to disapprove a budget solely for the purpose of triggering the deadlock provisions which would cause Binningup to make a deal. However, Mirvac also consistently expressed an intention to act in a way that was contractually permissible and to obtain legal advice to ensure that it did. Taken as a whole, the documents show that Mirvac was contemplating using the deadlock provisions to cause Binningup to make a deal, but was first going to obtain legal advice to ensure that whatever it did was contractually permissible. Having this intention was not a breach of its contractual obligations.
There is no suggestion that, if contractually permissible options failed, Mirvac would cease to work on the Project. Further, I do not accept that Mirvac made any decision to delay or stop work on the Project pending the anticipated deal being made. In addition, later documents are inconsistent with such a decision.

[424]

Between 14 February 2013 and 19 February 2013, an email exchange occurred,[358] triggered by an email from Mr Cross to others in Mirvac Ltd's finance team. Mr Cross wrote that, within their discussions around 'provisions and pre‑Q3 we'll need to have a good plan (and contingency) around the englobo sales which will be a focus of the market and the board'. He then listed a number of projects, including Binningup. Mr Cross wrote that the developers of some of those projects had forecasted sales before June, and that this needed to be managed closely.
It is difficult to understand why Mr Cross was referring to Binningup in the context of an englobo sale. The financial documents before and after this date that referred to an outcome other than Project completion did so on the basis that the most likely outcome was that Binningup would retain the land and repay the $25 million Initial Advance, not that the land would be sold englobo. The provision of $18 million had also been made on the basis that this was the most likely outcome. Given this context, I do not accept that Mr Cross' email should be treated as supporting the proposition that Mirvac had decided that the land would be sold englobo or that they should seek to achieve that outcome.
A recipient of that email, Mr Vandermeyde, forwarded it to Mr Wiese and Mr Lawrance. Mr Vandermeyde did so as a 'heads up' and wrote that '[g]oing into Q3 meetings please ensure you document and discuss you [sic] exit strategy(ies) on Binningup. If possible start the process'.
Mr Lawrance forwarded the email to Mr Aleksovski. On 18 February 2013, Mr Aleksovski replied to Mr Lawrance and Mr Wiese, asking to meet them the next day. He wrote 'we are far from an englobo sale position occurring prior to June 30. We will need to go through our strategy to exit'. In other words, unlike the developers on some of the other projects referred to by Mr Cross, Mr Aleksovski was saying that the Binningup land was not going to be sold englobo by 30 June. Indeed, if the scenario predicted by Mirvac occurred, the land would never be sold englobo - rather, Binningup would keep the land and repay the $25 million Initial Advance.
Mr Aleksovski's evidence was that, in referring to 'our strategy to exit', he was just reciprocating the language of the email he had received.[359] Mr Aleksovski said:[360]

[436]

Mr Draffen said that he understood the document to be addressing how the provision would be released, rather than a strategy as such. (Mr Draffen used 'released' to describe a provisional loss becoming an actual loss.) Mr Draffen said it looked like they were setting out potential ways in which the provision could be released over time, and noted that the document referred to further negotiations to be had.[362]
This explanation is consistent with the email that prompted the drafting of this document and I accept it. Further, the finance team were not responsible for making decisions as to the progress of projects. Even if the email had reflected a decision made by Mr Wiese, he had no authority to direct Mr Aleksovski.[363] In any event, there is no direction in this email that work on the Project should or would be stopped.
The document does record what Mr Wiese believed had been decided or what he was himself proposing - namely that it should be determined how a budget deadlock could be initiated. This is unremarkable.
Of more interest is the statement 'Once this has been carried out it is proposed that an ACC will be submitted with the view of it being knocked back'. This suggests that Mr Wiese was assuming that an ACC[364] would be submitted for the sole purpose of being rejected, which would mean that the Mirvac representatives would then vote against the budget in the PCG meeting, which may then lead to a deadlock (or at least he was proposing that this be done).
If in fact Mirvac WA had submitted an ACC on the basis that it would be disapproved which would lead to a deadlock, and had then put up a budget as a step in that plan, Binningup's case would be quite different. However, that was not done and that would explain why Binningup did not rely on this statement.[365]
I accept Mirvac WA's submissions that this email exchange shows no intention to act contrary to contractual obligations. This is most easily seen from the first two italicised phrases. As with earlier documents, it records the prospect of using the deadlock provisions in a way that was contractually permissible and does not suggest any intention to delay or stop work on the Project pending the anticipated negotiated outcome.

[457]

Binningup alleged that Mr Draffen made various statements in a meeting with Mr Waller on 3 April 2014. To the extent that there is a dispute between the parties as to what was said, Binningup largely relies on a document written by Mr Waller purporting to be minutes of the meeting (purported minutes).[380]
Mr Waller emailed the purported minutes to Mr Draffen on 11 April 2014, asking Mr Draffen to confirm they were an accurate record of their meeting.[381] Mr Draffen replied that he was a little surprised to receive minutes of their informal meeting and said he disputed the accuracy. Mr Draffen then set out what he considered to have been the agreed outcomes. Mr Waller disputed Mr Draffen's version.[382]
In his witness statement, Mr Waller said he prepared the purported minutes '[i]n the days following the meeting'.[383] In his oral evidence, Mr Waller said he wrote the minutes straight after the meeting, that night or early the next day. He then said it was within 24 hours.[384] I do not accept this. If he had done so, it is unlikely he would have waited another seven days to send them to Mr Draffen for his agreement.
As will be discussed later,[385] Mr Waller has a very poor memory. He was also acting as an advocate for Binningup when giving evidence. I would not accept his evidence without independent confirmation. His own document purporting to record what occurred in the meeting is obviously not independent of him and was written at a time when the parties' relationship had deteriorated. Its accuracy was also disputed immediately by Mr Draffen.
Further, Mr Waller's oral evidence largely supported Mr Draffen's evidence of what had occurred during their meeting.
Mr Waller's purported minutes stated that Mr Draffen had said that Mirvac's Board had not yet decided whether or not to commence work on the Project and it was unlikely that the Board would approve the estimated Stage 1 costs.
In his oral evidence, Mr Draffen said, consistently with what he wrote at the time, that the purported minutes were not an accurate record of their meeting.[386] He said:[387]

[469]

So what did you say with respect to the second option, renegotiate the deal to make it more equitable for both parties? ‑ Well, if you want to know, I will tell you. In all my life I've never seen such a mess of a program to bring this land on for a development. I have seen incompetence, stupidity, the dumbest things that have ever happened on this - on this project. I just cannot believe how anybody could make this project take this long without actually getting a shovel in the ground. First up, why? It was announced as $1 billion project all over the newspapers, and with that comes the people that don't want it to happen. So without even trying, Mirvac had this army of people desperate to stop the project without even knowing what it was. That was the first - I thought that was just a huge mistake, and then that taints everything that you go on to do with that project, and it's very hard to make people see really what the position is once they get a picture in their mind of $1 billion. So we were fighting uphill from day 1, and we - and - and I - I appreciate that some of the guys in Mirvac are really - some of the people in Mirvac are really smart. I - I know that, and they've got money behind them and they can do these things, but it just seems that we - we had a team of people that could get approvals through easily, could do the engineering easily. We could do all these things but, no, they aren't good enough for Mirvac, so they tipped all these people out, brought in a new team who had to start off from square one, so we delayed - we - we - it caused - it caused enormous grief in the first - well, it caused enormous grief which is still going through today, instead of, you know, quietly, quietly. You go - there was a problem with aligning the entry road. It was - it was going to require - it wasn't a big issue. It wasn't a big - big mistake, but it was going to require that the EPA agree to this realignment, which meant an application. Preparing an application, putting it in. It would probably end up in Sydney or - or in the eastern states. I don't know. And Tony will - Tony Aleksovski will tell you, it - it was a problem. It was going to delay us. I said to the at the meeting, 'Tell me exactly what the problem is and - and I know somebody that I can take with me to talk to - to the EPA people in Bunbury'. And the person I could take was the guy that was doing all of our planning work, who Mirvac thought wasn't good enough for them. We drove down to Bunbury one day. We met with the senior people - the EPA people in Bunbury. We talked to this man, said, 'Look, this is what we need to do. We've only got to move this road so far. We don't want to go through the process of making an application to the EPA because it's going to delay us. Can you help us?' And he looked at it and he said, 'Yes. Well, you're not moving the road that far. Yes. Yes. Yes, I - I can do that. So, yes, that's okay. Go away'. He approved that EPA thing without any trouble at all. We had the - we had the respect of the people we were dealing with. We had been dealing with them for 20, 30 years. They knew all of the people they had to know, but they weren't good enough for Mirvac. They just got tossed out, and here we are, we're still there trying to get more approvals from the EPA. Goes on forever. That's why I - I am really anti on all of a sudden somebody says to me, 'Well, here's three options. We will do this, this or this'. And I'm thinking, 'I don't believe this'. This is a beautiful land, and here we are making a mess of it, and - and because - because it hasn't gone quite like you wanted - they wanted it to go, 'Well, you better buy us out'. I mean, we - we stood by - we have stood by this whole deal - Binningup Nominees has stood by this deal and we have gone out of our way to help. We - we - we respect the people that are - we respect the people that are doing this deal or doing the work but it's so frustrating. It's just unbelievable, and I've been around a long time, and I've never seen anything so convoluted and complicated when it is so easy.

[482]

In relation to Binningup's first proposition, the absence of oral evidence of particular negotiations referred to in the documents is not inconsistent with those negotiations having occurred. Mirvac did not call every witness who had, or may have had, discussions with Mr Waller about renegotiating the Services Agreement. Mr Waller himself gave evidence that some eight Mirvac personnel had attempted to negotiate with him, including a Mr Carfi, who was the Chief Executive Officer, Residential, of Mirvac Ltd at the time.[403] Mr Waller said Mirvac tried to renegotiate the Services Agreement about every six months.[404] He said he was not willing to negotiate with just anybody, but that he was always willing to talk to someone 'from the top'.[405] He demonstrated that willingness in his meeting with Mr Draffen.
In addition, Mr Waller gave evidence that he had said 'on a number of occasions that [the Project] must work for both parties'.[406] Binningup's position was that it 'wouldn't agree to any changes until they had done some work and got ... the project going'.[407] That is, Binningup was never unwilling to renegotiate, but did not want to agree to changes until there had been some progress. Given this, negotiations could not meaningfully progress until after the environmental and Plan approvals had been obtained.
In relation to the second proposition, the '[o]ther documents and evidence' were not identified. However, having analysed the documents and evidence cited by Binningup in its closing submissions and in the Chronology, I do not accept that the documents and evidence show this. Further, even the purported minutes do not support the second proposition.[408]
In relation to the third proposition, I do not accept that the Board Paper, and the provision that followed, show that the Board adopted any 'policy concerning the Project' beyond identifying what the Board considered the most likely scenario to be, and indicating the Board was contemplating the use of the deadlock provisions to cause Binningup to make a deal, but was first going to obtain legal advice to ensure that whatever it did was contractually permissible.
I accept Mr Draffen's account of the meeting. As at 3 April 2014, Mirvac's position, with which Mr Waller agreed, was that Mirvac would do some more work around the potential for a Stage 1 that would present the Project in its best light. The prospect of renegotiating the Services Agreement was left open.
I do not accept that anything Mr Draffen said in the meeting manifested the intention alleged by Binningup.[409] Indeed, even Mr Waller's purported minutes do not assert that Mr Draffen said that Mirvac had decided not to proceed.[410]

[496]

Mr Aleksovski said he was acting to fulfil his role as a contractor to the Services Agreement, and not to impede progress. He denied knowing Mirvac had decided not to proceed with the Project or that Mirvac was seeking to impede progress.[440] He denied being instructed at a meeting on 25 October 2012 that there was no possibility of an ACC being issued for infrastructure works on the Project.[441]
Mr Cooper denied being informed in October 2013 of any decision by Mirvac to withdraw from the Services Agreement. He denied that he was the senior person assigned to be responsible for implementing such a process of withdrawal.[442] He denied being assigned to the PCG to drive it to a deadlock.[443] Mr Cooper said he was appointed to the PCG to 'reinforce Mirvac's representation' after the June 2014 PCG meeting gave rise to concerns among senior management.[444]
Mr Cooper denied knowing that Mirvac never intended to commence development works[445] and denied that the September 2014 Report proposed the development of the golf course to cause delay.[446] Mr Cooper said that, on the contrary, Mirvac was 'ready, willing and able to proceed'.[447] Mr Cooper said that he understood that the proposed budget for works included the amending of the Plan to accommodate development of the golf course because that was Mr Waller's wish.[448] He said it was after discussion with Mr Waller and what 'grew out of' the June 2014 PCG meeting.[449]
As will be seen later,[450] consistently with his evidence of willingness to proceed, Mr Cooper sought to find a solution to the issue that had arisen in relation to the September 2014 PCG meeting.
Mr Draffen said that, although some of the financial forecasts referred to trying to renegotiate or exit the Services Agreement, there was no such decision or position adopted in relation to the Project. Mr Draffen said that any decision to exit the Project would need to have been made at a level within Mirvac that involved him. He said that no position for exit was ever tabled for approval. He said that no decision to exit the Services Agreement had been made prior to 31 December 2012 nor was such a decision made subsequently.[451]
Mr Draffen said that he never instructed anyone to delay the Project or to seek to bring about a contractual deadlock, nor did he ever receive or become aware of instructions to that effect.[452]
I accept the evidence given by these witnesses on these topics. The documentary evidence[453] does not contradict this evidence. I also later explain why I accept the evidence of each of these witnesses generally.[454]
This evidence supports the conclusions I have reached as to what is to be inferred (and not inferred) from the documents themselves.

[497]

I find that, at least at times during 2013, Mirvac was contemplating using the deadlock provisions to try to persuade Binningup to agree to vary the Services Agreement, but was first going to obtain legal advice to ensure that whatever it did was contractually permissible. However, I am not satisfied that Mirvac ever had any intention of using the deadlock provisions unless and until it received legal advice confirming its intended use was contractually permissible. There is nothing repudiatory about such conduct.
Further, while Mirvac was contemplating using the deadlock provisions in the future subject to that advice, I find that Mirvac WA did not actually decide to trigger the deadlock provisions and Mirvac Ltd did not direct Mirvac WA to do that, either outright or provisionally if Binningup did not agree to renegotiate. In particular, in April 2014, Mr Draffen and Mr Waller reached an agreement as to the next steps. Mirvac WA was to do some more work around the potential for Stage 1 that would present the Project in its best light. Discussions would continue after that work had been done, with the possibility of renegotiation left open.[455] Although Mr Draffen clearly believed the best outcome would have been to renegotiate the Services Agreement after that work had been done, the overall effect of his evidence, which I accept, was that this was not the only way forward.[456] Consistently with that agreement, Mirvac WA prepared a program and budget.[457]
Similarly, I am not satisfied that there was no possibility that an ACC would be issued. On the contrary, Mirvac WA was exploring ways in which the Project could viably proceed.
I accept that Mirvac WA did repeatedly try to get Binningup to agree to amend the Services Agreement. However, in all of the circumstances, I do not consider it did this because the Alleged Decision had been made. Rather, in my view, Mirvac WA was simply seeking to improve its position in the face of developments that threatened the commercial viability of the Project.
I find that Mirvac WA did not decide not to proceed with the Project unless or until the Services Agreement was varied, nor did Mirvac Ltd decide that it would cause Mirvac WA not to proceed. The documentary evidence does not show any such decisions were made or that any directions to do this were ever given or acted upon. The witnesses called by Mirvac, whose evidence I accept, deny any such decisions or directions.
In addition, I am not satisfied that Mirvac WA decided to delay carrying out the Project until the Initial Advance became repayable under cl 5.6(a) of the Loan Agreement in January 2018, so as to create pressure on Binningup to either agree to terminate the Services Agreement or to vary the Services Agreement favourably to Mirvac WA. Binningup did not identify a single document which referred, in this context, to this clause in its terms or effect or to this date. Nor can such an intention be inferred from the evidence.
I find that neither Adam Davidson nor Mr Aleksovski sought to delay progress. The evidence establishes, in my view, that Mirvac WA was continuing to progress the Project, independently of its feasibility concerns and its consideration of using the deadlock provisions in the future subject to obtaining legal advice.
Further, there was nothing covert about Mirvac's conduct. As early as the PCG meeting in October 2010, Mirvac noted that detailed feasibility analyses would soon be done to determine the financial position of the Project. It was understood by the parties at the time that the financial position would be relevant to the PCG's decisions to approve budgets and that detailed feasibility analyses would be relevant to both Binningup's and Mirvac WA's vote at PCG meetings.[458] In meetings with Mr Waller, Mirvac was openly discussing its concerns. Mr Doyle, Binningup's witness, said that Mirvac had told Binningup at the PCG meeting in October 2013 the level of return it required and that the viability of the Project was questionable.[459] Mirvac also sought to discuss varying the Services Agreement with Mr Waller on a regular basis.
I am also not satisfied that the assumptions that the Services Agreement would be renegotiated in numerous feasibility analyses were baseless or that this indicated that Mirvac WA had decided to exit the Services Agreement unless there were significant changes made to the Services Agreement. On the contrary, as described earlier, Mr Waller gave evidence that he had said on a number of occasions that the Project must work for both parties. Mr Waller said that he was always ready to talk, but would not agree to any changes until Mirvac had done some work.[460] Given this, renegotiations could not meaningfully progress until after the environmental and Plan approvals had been obtained.

[503]

Another matter said to manifest the Alleged Decision was Mirvac WA's refusal to attend any further PCG meetings if they were going to be recorded.[468]
On 9 September 2014, leading up to the September 2014 PCG meeting, Mr Waller wrote to Mr Aleksovski to advise that he intended to record the meeting and all subsequent PCG meetings.[469] Mirvac WA said it would not agree to the meeting being recorded, but referred to a suggestion it had made previously that an independent minute‑taker be appointed. Mirvac WA advised it had contacted the Western Australian State Director of the Governance Institute of Australia Ltd and had been advised that he had fully qualified members who could do this.[470] Binningup replied that it would not consent to an independent minute‑taker being present at a PCG meeting and that, because the meetings could lawfully be recorded, an independent minute‑taker was not required.[471] Mirvac WA responded it was prepared to pay for the costs of the independent minute-taker.[472] Binningup repeated it was entitled to record the meetings and that it would not consent to an independent minute‑taker being present.[473]
The parties continued to exchange correspondence refusing to shift from their respective positions. On 24 September 2014, Mr Cooper got involved in the dispute, writing to reiterate Mirvac WA's position and confirming that, if the meeting was not recorded, Mirvac WA remained willing to attend.[474] In his evidence, Mr Cooper explained that he thought that recording the meeting would cause the parties to focus more on what they said for the recording rather than on discussing the issues openly. He thought it would hinder the management of what was a challenging project.[475]
Mr Cooper also reiterated to Binningup that Mirvac WA would have an independent minute‑taker present in case the parties wished to take advantage of that. Mirvac WA had arranged for an independent minute‑taker to be present for the meeting and that person was actually at Mirvac WA's office at the time proposed for the PCG meeting on 25 September 2014.[476]
The impasse continued. The PCG meeting did not take place. However, on the day the PCG meeting was supposed to have occurred, Mr Cooper and Mr Long (Mirvac WA's other representative on the PCG) met with Mr Waller and Mr Doyle. Both Mr Waller and Mr Doyle telephoned Mr Cooper later that day. It appeared that Binningup might agree to an independent minute‑taker instead of recording the meeting.[477] However, by 26 September 2014, Binningup was once again insisting on recording any future meetings.[478]
Neither party budged. A week after the scheduled PCG meeting, on 2 October 2014, Binningup's Termination Notice was sent purporting to accept Mirvac WA's repudiation. On 24 October 2014, Mirvac's Termination Notice was sent, purporting to accept Binningup's repudiation.

[513]

Mr Aleksovski has a Bachelor of Commerce, majoring in property development. He has worked in the property industry since 2003. Before joining Mirvac in 2010,[492] he was an Assistant Development Manager with State Development Company, and prior to that he was the financial analyst for the Peram Group.[493]
Mr Aleksovski joined Mirvac as a Development Manager on 31 May 2010. He took over the day‑to‑day responsibility for the Project after Adam Davidson left Mirvac. Apart from six months in 2015, he has continued to work for Mirvac.
At times, Mr Aleksovski had difficulties in understanding the question he was being asked. While this could usually be attributed to the complexity or length of the question itself, this was not always so. In addition, there were times when I felt he had agreed with a proposition without having understood it.[494] Both of these matters were likely to have been due to the length of time over which he was cross‑examined, being nearly three days. I am satisfied that, overall, Mr Aleksovski was endeavouring to answer questions honestly and accurately. I do not consider he was seeking to act as an advocate for Mirvac.
In dealing with the second access road and the golf course issues, I referred extensively to Mr Aleksovski's evidence, and explained why I accepted it,[495] with one exception.
The exception was his explanation as to why he raised tax issues with Mr Payton. While I reject his explanation, it does not cause me to conclude that he was overall an untruthful witness. It was one answer in three days of cross‑examination. It is more likely that he was too embarrassed to admit that he was trying to manipulate the Shire.
I also previously dealt with what he wrote in the May 2013 Strategy, being the untrue statement that Coast Pastoral Company had discovered a CGT issue after conducting further investigation. I explained that, while this was troubling, I was not satisfied it was written as part of a larger plan to delay or impede implementation of the Project or because the Alleged Decision had been made. It does not cause me to conclude he was an untruthful or unreliable witness.
I find him to have been an honest witness overall and, for the most part, reliable. I accept his evidence entirely, subject to the single exception I have mentioned.

[581]

'Termination Fee' is defined in cl 1.1. It would be nil if, at the time of the Termination Date, the Scheme Amendment[524] had not been submitted by the Shire of Harvey to the relevant Minister. If the termination occurred after that date, Mirvac WA would be entitled to a percentage of the sale price of the Project Assets, including the land, when sold. The percentage depended on how long after that date the termination occurred, commencing at 5% and increasing over time to a maximum of 15%. Clearly, the parties intended that, if a deadlock occurred and if there had been sufficient advancement of the Project such that the Scheme Amendment had been submitted to the Minister, Mirvac WA would get a share of the sale proceeds.
I will refer to these provisions collectively as the 'Budget Provisions'. They can be summarised as follows.
After Mirvac WA prepared and submitted a budget to the PCG, the PCG, comprising equal representatives of Binningup and Mirvac WA, was required to approve or disapprove that budget. The parties expressly chose to provide that it would be the PCG, not Binningup, who would approve or disprove budgets. There are repeated references to the PCG approving a budget, as distinct from Binningup.[525]
If the PCG could not agree, there was a mechanism for referring the dispute to an expert. An expert determination would ordinarily be final and binding. The only exception was expressly where the dispute arose in relation to a decision of the PCG to disapprove a budget or a program under cl 5.2(a)(ii). In that case, if either Mirvac WA or Binningup did not accept the expert's determination, the provisions of cl 15.5 would apply: the Project Assets had to be sold and, without affecting accrued rights, the Services Agreement would be terminated once the sale was completed.
The plain meaning of cl 5.2 is that Mirvac WA had the right to disapprove a budget. The context of the Budget Provisions as a whole supports that construction. Further, there is nothing in the Transaction Documents as a whole to cause me to alter my view that the proper construction of cl 5.2 is its plain meaning.[526]

[582]

Binningup submitted that the Services Agreement should not be read as permitting Mirvac WA to disapprove a budget (being, in my view, its plain meaning) for five reasons.
First, Binningup submitted that, because Mirvac WA as contractor must act in good faith[527] in preparing and submitting budgets to the PCG, it does not make commercial sense to construe cl 5 as entitling Mirvac WA to trigger a deadlock (and then to reject an expert determination and thereby terminate the Project under cl 15.5) on the basis of it disputing a budget it had prepared and submitted to the PCG in good faith.[528]
I accept that, at first blush, it would seem odd if Mirvac WA had the right to disapprove a budget it had itself prepared. That is, it would seem odd if Mirvac WA could, having prepared a budget in good faith, be contractually permitted to disapprove that budget in good faith. However, as I will explain, on closer examination, it is not surprising.
Preparing a budget requires an analysis of the costs involved of doing something in a particular way. Then, once the parties know how much it is going to cost, they consider if they are willing to incur those costs. The budget establishes what the costs would be. The decision is then whether to incur those costs. Both parties had a legitimate interest in that decision. For example, incurring large project costs to make lots ready for sale well before it could be reasonably expected that sales would occur would require Mirvac WA to outlay those sums, and would start the clock running on Binningup's obligation to repay them, earlier than necessary. Further, if the market did not improve, the costs, and Binningup's obligation to repay them, could be incurred for no benefit to either party.
Mirvac WA was required to prepare in good faith a budget that set out a proper analysis of the expenditure required to develop a stage of the Project. However, in my view, it would not be odd if Mirvac WA had the right to consider whether the expenditure under the budget was warranted in view of the expected revenue and the likelihood of such revenue being earned in the future, under the relevant market conditions. It would not be odd if Mirvac WA had the right to disapprove a budget if it considered the estimated expenditure should not be undertaken, in view of the likely return having regard to the market conditions.
Further, by cl 8, Mirvac WA was required to fund its obligations under the Services Agreement to carry out the Project. There was no right of recovery from Binningup except as otherwise provided by the Services Agreement. If Mirvac WA did not have the right to disapprove a budget, it would be as if Mirvac WA had agreed to provide an open chequebook for the Project regardless of its viability. The expenses would have been significant, with one estimate putting it at approximately $210 million.[529] Such a construction would be a commercial nonsense.
There is no reason why a reasonable person would have understood cl 5.2(a) to mean something other than its plain meaning, supported by the context of cl 5 as a whole, the Budget Provisions as a whole and the Transaction Documents as a whole.
Second, Binningup submitted that, if Mirvac WA was entitled to disapprove a budget, then the Services Agreement effectively included a provision entitling Mirvac WA to terminate the Project for its own commercial convenience.[530]
I do not accept this. Mirvac WA was required to provide a budget in good faith. It was required to provide a budget that set out a proper analysis of required expenditure to develop a stage of the Project. It was not entitled to put forward a budget that was absurd or wildly and deliberately inaccurate. It was also not entitled to disapprove a budget simply because it was commercially convenient to do so. However, it was entitled, having provided a budget in good faith, to consider whether the budget should be approved. And if, for example, having considered likely or projected revenue and profit, Mirvac WA concluded in good faith that the proposed expenditure was not feasible, it could disapprove the budget, consistent with its right to do so under the Services Agreement.
Third, Binningup pointed out that Mirvac WA did not have a third hat as 'owner/investor' at PCG meetings. Mirvac WA was only 'Contractor' and 'Financier' (and a Mortgagee and Chargee). Binningup also pointed out that the relevant clauses relating to the budget approval in the Services Agreement refer to Mirvac WA as the 'Contractor', not the 'Financier'.[531]
These matters are insufficient to overcome the plain meaning of cl 5.2(a), reinforced by the context of the provisions to which I have referred. If the parties had intended that only Binningup could disapprove a budget, it would have been simple to so provide. They did not.
Binningup further submitted that the PCG process is designed to limit the broad discretionary powers conferred on the contractor by cl 6.4, by giving Binningup the right to disapprove a budget at a PCG meeting.[532] I accept that the PCG process, among other things, limits Mirvac's cl 6.4 powers. In particular, it is not permitted to undertake the specified works without PCG approval. However, this is no reason to interpret cl 5.2(a) as meaning something other than its plain meaning. An intention to limit Mirvac's powers to take particular action without the approval of the PCG is not inconsistent with an intention to give both parties the right to disapprove a budget. Further, and again, if the parties had intended that only Binningup could disapprove a budget, it would have been simple to so provide. They did not.
Fourth, Binningup asserted that Mirvac WA's construction required the Services Agreement to be read as if it included a term, implied in fact, entitling Mirvac WA to cause its representatives on the PCG to disapprove a budget.[533] It is difficult to understand this submission when, on a plain reading of cl 5.2, it expressly gave Mirvac WA that right.
Fifth, Binningup relied on its construction of other provisions of the Services Agreement which, it submitted, demonstrate that Mirvac WA was obliged to ensure that the Project was completed.[534] This contention is the subject of the next construction issue I will discuss. As will be seen, I do not accept it.

[614]

Consistently with Probuild, it was common ground[543] that the operation of the principle may be modified or excluded by the contract.[544]
The parties did not entirely agree on the test to be applied in determining whether the principle had been modified or excluded by the contract.
Binningup submitted that the test for determining whether the principle operates in a particular contract is the same as the test for the exclusion of a term implied by law. Binningup submitted[545] that that test was set out by the plurality in Concut Pty Ltd v Worrell[546] at [23]. In that paragraph, the plurality said that such terms will be implied in the absence of an expression of a contrary intention. Binningup further submitted that 'clear words' are required to exclude an implied term, relying on what the plurality said in relation to what was required to exclude the presumption that a contracting party does not intend to abandon any remedies for breach of contract arising by operation of law.
Mirvac pointed out that the plurality in Concut had cited, in support of the proposition that terms implied by law will be implied in the absence of an expression of a contrary intention, Byrne v Australian Airlines Ltd at pages 449 ‑ 450.[547] In those pages, McHugh and Gummow JJ observed that a term implied by law may be excluded by 'express provision made by the parties and also as a result of inconsistency with the terms of the contract'.
Mirvac further pointed out that what was said in Concut about 'clear words' was directed to the presumption that a contracting party does not intend to abandon any remedies for breach of contract arising by operation of law, and was not laying down a new test for implied terms generally.
Mirvac submitted that whether the prevention principle applies depends on a proper construction of the Transaction Documents. Mirvac submitted that the principle was excluded because it was inconsistent with the express terms of cl 5.5(b) of the Loan Agreement, and incompatible with, and contrary to, the parties' manifest objective intention and their expressly agreed allocation of contractual risk.[548]
Mirvac submitted that various clauses in the Transaction Documents clearly excluded the prevention principle operating on cl 5.5(b). Mirvac said that the clauses expressly make the OLA repayable a year after termination, regardless of who was the repudiating party. If the repudiating party was Mirvac WA, Binningup would be entitled to damages, but the OLA would still be repayable by operation of the express clauses.
Binningup submitted that the prevention principle had not been excluded by the Transaction Documents because there were no clear words excluding it.[549]
In my view, the difference between the parties as to the proper test was more a matter of form than substance. In particular, despite Binningup's reference to 'clear words', Binningup was not suggesting that the contract must expressly state that 'the prevention principle does not apply' before it can be concluded that the principle has been excluded by the contract. Further, Binningup's submissions appeared to implicitly acknowledge that it could be excluded by substantive, as well as linguistic, inconsistency.[550]
It is, however, possible that Binningup was contending that the prevention principle would not be excluded unless there was a provision enabling Binningup to avoid cl 5.5(b) operating if the termination arose as a result of a default by Mirvac WA.[551] If Binningup was making this contention, I do not accept it. The principle will be excluded if the contrary intention is shown. The way in which such a contrary intention may be shown is not limited to the presence of another clause that would permit the innocent party to avoid the operation of the clause in issue.

[632]

By cl 5.5(b), the parties expressly agreed that, if the Services Agreement was terminated for any reason, the OLA must be repaid one year later. The parties expressly agreed that cl 5.5(b) applied 'despite any other provision' in the Loan Agreement, which would obviously include cl 5.1(a). The parties' objective intention could not have been clearer.
Reading cl 5.5(b) according to its plain words does not lead to a commercial nonsense. On the contrary, it would be odd if, after termination, Binningup was entitled to keep both the land and all of the money loaned to it, including the Initial Advance of $25 million, a sum advanced for no immediate return to Mirvac WA.[558] This would be a significant windfall. Under cl 5.5(b), Binningup was given a year after termination to repay what it had been lent, a period that appears to be reasonable. Binningup would also have the right to seek damages if the termination occurred due to the fault of Mirvac WA.
I also do not accept Binningup's submission that, if the prevention principle did not apply, Mirvac WA could breach the agreement with impunity.[559] If the repudiating party was Mirvac WA, while the OLA would still be repayable by operation of the express clause, Mirvac WA would be liable to pay damages.
There is no room for the operation of the prevention principle. The parties expressly agreed that the OLA would be repayable within a year if the Services Agreement was terminated, regardless of the reason. The parties' objective intention was that, even if the Project was terminated before Completion (and before the OLA was repaid from sale proceeds), and even if Mirvac WA was to blame for the termination, the OLA would be repayable a year after the termination. In the context of the whole of cl 5 and the other provisions of the Loan Agreement, the express terms of cl 5.5(b) of the Loan Agreement are clear words which demonstrate that the parties' objective intention was to exclude the prevention principle.
This conclusion is reinforced by cl 7.2 of the Loan Agreement. In contrast to the one year provided for in cl 5.5(b), it makes the OLA immediately repayable if Binningup repudiated the Services Agreement and it was terminated, and notice was given that the OLA was immediately repayable.
This conclusion is also supported by the Services Agreement, which is part of the suite of agreements making up the Transaction Documents. As has been seen,[560] the Services Agreement expressly acknowledged that the Project might not reach completion if a deadlock occurred, and provided for what should occur in such a case.

[633]

Binningup also relied[561] on a case cited by Mirvac WA in its closing submissions, Ruthol Pty Ltd v Tricon (Australia) Pty Ltd.[562] In issue was whether a vendor (who, in breach, had not completed a contract for the sale of land on time) could recover arrears of rent from the purchaser that the purchaser, as tenant of the vendor, was obliged to pay for holding over as a monthly tenant. It was argued that the tenant could not be liable for the arrears of rent because it was holding over only because the vendor had failed to complete the contract of sale on time. The tenant relied upon a principle that a wrongdoer may not take advantage of its own wrong.
The court[563] said, in effect, that the principle was a rule of construction, which would apply in the absence of clear words.[564]
For the same reasons that I gave in relation to the prevention principle, the principle expressed in Ruthol is excluded by the clear words of the Transaction Documents.
Even if I am wrong about that, I doubt that the principle would assist Binningup.
The court in Ruthol endorsed a statement that the principle was that no one shall gain by their own wrong, and the principle was not that if they have a right, they shall lose it, or the power of exercising it, by a wrong done in connection with it.[565] The court held that a contracting party is entitled to rely on its contractual entitlement if the contractual entitlement does not arise because of its breach, but arises in any event.[566]
In Ruthol, although the vendor's breach was connected to its right to recover arrears (in that there would have been no such right to recover the claimed arrears had it not breached the contract), its entitlement to rent existed independently of its breach and arose simply because the purchaser remained a tenant. The court held that the vendor was entitled to recover the arrears.[567]
Mirvac submitted that Mirvac WA's contractual entitlement to the OLA similarly arose simply because the Services Agreement had been terminated.[568]
Similarly to the landlord in Ruthol, if Mirvac WA did repudiate the Services Agreement, that breach would have been connected to its right to have the OLA repaid by October 2015. If Mirvac WA had not repudiated the Services Agreement, there would not have been such a right; there would not have been a repudiation for Binningup to accept in October 2014 thereby terminating the Services Agreement and creating a Trigger Event, making the OLA repayable by October 2015. However, Mirvac submitted that Mirvac WA's right existed independently of the alleged repudiation, as it arose simply because a Trigger Event had occurred. Mirvac WA's entitlement arose on the happening of a Trigger Event, regardless of what led to the Trigger Event.
In my view, there is a difference between Mirvac WA's position and the position of the landlord in Ruthol. The tenant in Ruthol was liable to pay rent under a different contract to the contract breached by the landlord. This obviously supported a conclusion that the right to rent existed independently of the breach.
However, there is another difference.
Once the landlord breached the contract for sale, it followed that the purchaser remained a tenant, and continued to be obliged to pay rent.
In this case, if Mirvac WA did repudiate the Services Agreement, Binningup's liability to pay the OLA under cl 5.5 would not have simply followed. The repudiation would not have been a Trigger Event. The Trigger Event would have been the termination of the Services Agreement. It occurred, on Binningup's case, when Binningup accepted the repudiation. If Mirvac did repudiate, accepting the repudiation was not the only realistic option open to Binningup. If Mirvac repudiated, Binningup's acceptance of the repudiation was the cause of the Trigger Event.

[652]

I do not accept that any of the Three Obligations required Mirvac WA to endeavour to ensure that the Project was sufficiently progressed within 10 years of the Initial Advance so that Binningup's repayment obligation would be wholly or substantially satisfied from the proceeds of sales. There are a number of factors that weigh against such a construction.
First, under the Transaction Documents, Mirvac WA had the right to disapprove a budget, which could lead to a deadlock and ultimately the sale of the land.[578] It would be incongruous with this right to construe the Three Obligations as requiring Mirvac WA to try to ensure that the Initial Advance would be substantially paid off within 10 years.
Second, cl 6.4 gave Mirvac WA absolute discretion as to the manner in which the Project would be implemented, which would include good faith judgments about timing.[579] This discretion informs the content of the Three Obligations. There is no reason to construe cl 6.4 as being fettered by an obligation to try to ensure that the Initial Advance would be substantially paid off within 10 years.
Third, cl 5.6(a) itself does not support Binningup's construction. Clause 5.6(a) was an express recognition by the parties that the advances may not be repaid by their Anniversary Dates. It provided a cut‑off date by which Binningup would have to repay each advance regardless of anything else. It was a clause entirely for the benefit of Mirvac WA and was to operate despite any other provision.
Fourth, the Procure Completion Obligation was subject to PCG approval of expenditure. I have already noted that Mirvac WA's right to disapprove a budget could lead to a deadlock and ultimately the sale of the land.
Fifth, neither the Good Faith Obligation nor the No Hindering Obligation required Mirvac WA to act so as to ensure that Binningup got what it hoped to get, as distinct from what Binningup was contractually entitled to get.
Considering the text, context and purpose of cl 3 and cl 6.2 of the Services Agreement (the Good Faith and Procure Completion Obligations) and cl 5.6(a) of the Loan Agreement, and taking into account the No Hindering Obligation, I do not accept that Mirvac WA was obliged to endeavour to ensure that sale proceeds would satisfy, or at least substantially satisfy, Binningup's obligation to repay each advance by its Anniversary Date.

[660]

As noted in Black Box,[585] definitions do not have substantive effect. A definition is not to be construed in isolation from the operative provisions in which the defined term is used. Rather, the operative provision is ordinarily to be read by inserting the definition into it.
The phrase 'Built Form Lot' appears only in the definitions of 'Principal's Amount', 'Additional Loan Repayment Amount' and 'Stage 6 Principal's Amount'.
The Principal's Amount is defined as being 5% of the sale price of a Built Form Lot and 10% of the sale price of a Subdivision Lot. It is, in effect, Binningup's waterfall entitlement under cl 11.2 in relation to lots other than Lakewood Shore lots. In short, Binningup would get more if Mirvac WA did not build on a lot.
Similarly, the 'Additional Loan Repayment Amount' is defined as being 5% of the sale price of a Built Form Lot and 10% of the sale price of a Subdivision Lot. Under cl 11.8 (a clawback provision relating to Lakewood Shores), Binningup would not receive the Principal's Amount of the sale price of Original Sale Lots in certain circumstances, while Mirvac WA would receive the Additional Loan Repayment Amount. In effect, in those certain circumstances, Mirvac WA, not Binningup, would receive the Principal's Amount.
The 'Stage 6 Principal's Amount' is a reference to Lakewood Shores Stage 6. It is defined as being 50% of the sale price, regardless of whether the lot sold was a Built Form Lot or a Subdivision Lot. Lakewood Shores Stage 6 was treated differently because Binningup had spent money on it.
The provisions say nothing about any required amount of Built Form Lots or Subdivision Lots. They simply provide for the parties' entitlements under the waterfall provisions depending on whether the lot was a Built Form Lot or a Subdivision Lot.
The definitions of 'Built Form Lot', 'Sale Lot', 'Subdivision Lot' and 'Project' did not require Mirvac WA to develop Built Form Lots as part of the Project.
Further, Mirvac WA was appointed to carry out the 'Services', which are defined as all services which, subject to required approvals, Mirvac WA 'determines are necessary or desirable for the carrying out of the Project'.[586] Mirvac WA was permitted, by cl 6.4, 'in its absolute discretion' to do all things necessary or desirable, including to determine the nature and extent of the Services. It is entirely inconsistent with these provisions to construe the Transaction Documents as requiring Mirvac WA to develop Built Form Lots.
Further support that it was not the parties' objective intention to require Built Form Lots comes from cl 6.5(b)(ii).[587] That clause requires Mirvac WA to prepare a budget and a program in advance of the commencement of (emphasis added):

[674]

The Services Agreement relevantly defines 'Project Assets' as all of Binningup's assets relating to the Project, including the land as defined, but not including the 'Excluded Assets'. The Services Agreement relevantly defines 'Excluded Assets' as meaning the Initial Advance of the $25 million and the various amounts to which Binningup was entitled from proceeds of sales under cl 11. 'Project Securities' means the Charge and the mortgage.
In a practical sense, cl 1.5(a) limits Mirvac WA's right to recover to taking action to enforce a judgment against Binningup against the land. However, that sub‑clause is expressly subject to cl 1.5(b). Clause 1.5(b) provides that Binningup 'remains liable' to pay all amounts which may from time to time be payable by it under the Services Agreement. Further, cl 1.5(a) is also subject to cl 1.5(c). Clause 1.5(c) provides that nothing in cl 1.5(a) prevents Mirvac WA from seeking or obtaining equitable relief (such as equitable set‑off).
Clause 1.5 of the Loan Agreement is in similar terms in relation to amounts owing under the Loan Agreement, describing Mirvac WA as the 'Financier' rather than the 'Contractor'.
Clauses 1.5 of the Services Agreement and the Loan Agreement do not limit Binningup's liability. By cl 1.5(b), Binningup remains liable to repay all amounts which are payable.
By cl 5.5 of the Loan Agreement, the OLA was repayable on the earlier of five business days after completion of the Project or a year after a Trigger Event. By cl 7.2, the OLA was immediately repayable if there was an Event of Default and notice was given. In short, regardless of whether the Project was completed or whether the Services Agreement was terminated (and regardless of why), Binningup was required to repay the OLA.
The objective intention of the parties is clear. If the Project was completed and the OLA had not been completely repaid by that time, the remaining OLA would be repayable within five days of completion. If the Services Agreement was terminated, for any reason, Binningup would have to repay the OLA within a year (or immediately if cl 7.2 applied).
Considering the text in the overall context, it is plain that the parties intended to distinguish between Mirvac WA's right of enforcement and Binningup's liability. While Mirvac WA's right of enforcement was to be limited to the Project Assets, Binningup's liability to repay the OLA remained.
Construing the provisions according to the plain words in this way does not lead to a commercial nonsense. On the contrary, it is entirely unremarkable.
I have already explained why there is no room for the operation of the prevention principle in relation to Binningup's liability to repay the OLA.[589]

[692]

In Binningup's closing submissions, it did not advance any argument in support of the proposition that, even if the above findings were made, Mirvac WA had not given notice that the OLA was immediately repayable because Mirvac's Termination Notice was sent before a Trigger Event occurred.[598] Nor had it pleaded anything to that effect.[599] However, on a list of construction issues produced by the parties during the trial (at my request), Binningup said an issue was whether Mirvac WA was entitled to give notice under cl 7.2 before a Trigger Event had occurred. Mirvac WA disputed, understandably, that this was an issue.
Given the failure of Binningup to make any submissions on this issue, I consider I should treat the issue as having been abandoned, even if it was open to Binningup to raise this issue on the pleadings. However, in case I am wrong about that, it can be shortly disposed of.
A default under the Services Agreement, and repudiation, occurred when Binningup sent its Termination Notice on 2 October 2014. Mirvac WA accepted Binningup's repudiation, as manifested by its Termination Notice of 24 October 2014. This terminated the Services Agreement as at that date. The termination was a Trigger Event. The Trigger Event therefore occurred on 24 October 2014.
Once the Trigger Event occurred, the default under the Services Agreement was an 'Event of Default'.[600] Clause 7.1 of the Loan Agreement expressly provides that an Event of Default may have occurred before or after the Trigger Event. Mirvac WA was, at that point, entitled to give notice that the OLA was immediately due for payment.[601]
Mirvac's Termination Notice first pointed out that Mirvac WA had elected to accept Binningup's repudiation, and that the Services Agreement was therefore terminated. It then explained why this meant that a Trigger Event had occurred and that an Event of Default had occurred and subsisted. It then gave notice under cl 7.2(a)(ii)(B) of the Loan Agreement that the OLA was immediately due for payment.[602]
Factually, while contained in the same document, the notice under cl 7.2(a)(ii)(B) was given after Binningup was notified of the acceptance, and therefore after the Services Agreement was terminated. I would not interpret cl 7.2(a)(ii)(B) as requiring two separate letters to be sent in these circumstances. Clause 7.2 provides a mechanism by which Mirvac WA was entitled to make the OLA immediately due for payment in circumstances including where Binningup had defaulted and the Services Agreement was terminated. Given its purpose, and the express provision in cl 7.1 that the Event of Default need not have occurred after the Trigger Event, I would not construe cl 7.2(a)(ii)(B) as requiring the notice to be given in a separate and subsequent letter to a letter accepting a repudiation. Further, Mirvac's Termination Notice could not have been misunderstood.
Accordingly, I find that Mirvac's Termination Notice, sent on 24 October 2014, validly gave the notice required under cl 7.2(a)(ii)(B) and made the OLA immediately due for payment.
If I am wrong about that, Mirvac WA would be entitled to the OLA under its First Pathway, by which the OLA was due for payment in October 2015.[603]

[697]

Binningup further pleads[609] that Mirvac Ltd determined that it would cause Mirvac WA not to proceed with the Project unless the Services Agreement was amended to improve the return to the Mirvac parties and that it would direct Mirvac WA to trigger the deadlock provisions of the Services Agreement if Binningup refused to agree to such an amendment. Binningup pleads that Mirvac Ltd did give that direction and, as a result of that direction, Mirvac WA committed some of the alleged breaches[610] and repudiated the Services Agreement. Binningup pleads that, by reason of these matters, Mirvac Ltd committed the tort of unlawful interference with the Services Agreement.[611]
As Binningup has failed to establish that Mirvac WA committed the alleged breaches and repudiated the Services Agreement, this allegation fails. However, I make the following observations about Binningup's submissions on this issue.
'The gravamen of the tort [of unlawful interference] is the defendant's intention to induce or procure the breach in the knowledge that such a breach will interfere with the plaintiff's contractual rights'.[612]
In its written submissions, Binningup alleged that Mirvac Ltd committed the tort of unlawful interference by engaging in effective advice, persuasion or inducement in relation to Mirvac WA's employees with actual or ostensible authority to make contracts on its behalf, in order to terminate the Project.[613]
Binningup asserted that '[t]his approach taken by Mirvac Ltd was widely known among' Mirvac Ltd and Mirvac WA.[614] It referred to the PWC Report and the loss provision made by the Board. It submitted 'Consequently, although Mirvac Ltd may not have formally directed [Mirvac WA] not to submit an ACC,[615] there was absolutely no need for it; it was common ground within both entities that Mirvac Ltd did not wish to proceed with the Project and would never have even considered approving an ACC after December 2012'.[616]
In the fact finding section,[617] I dealt with the PWC Report and the loss provision made by the Board. My findings do not support Binningup's contention.
In particular, I there explained why I found that there is nothing in the Board Paper that manifested a decision to stop performing under the Services Agreement and why I did not accept that it showed there was no possibility that an ACC would ever be given in the future.
I explained why I found that the decision to make an $18 million provision did not reflect a decision to actually set out to bring about a deadlock or to exit the Project.
I explained why, taken as a whole, the PWC Report did not evidence a decision to stop performing under the Services Agreement.
Binningup further submitted that Mr Draffen's evidence supported its contention. Binningup quoted Mr Draffen as saying that 'for the Project "to proceed further [past Stage 1] ... our view at the time was that some form of renegotiation would be required for that to happen" '.[618]
This took Mr Draffen's evidence out of context. The full extract is set out in the fact finding section.[619] It is sufficient to note here that his very next sentence was 'But, no, we hadn't made - we had absolutely not made a decision not to proceed'.[620]
Binningup also refers to Mr Draffen's evidence 'that, in April 2014, Mirvac considered it had three options with respect to the Project, which included Binningup buying Mirvac out, and also selling the land'.[621] However, the other option was 'to come up with a viable plan to progress stage 1 and then flow through the project and ideally, renegotiate some aspects of the [Services Agreement] to make it more equitable for both parties'.[622] Mr Draffen also explained that his statements were setting out the potential options and that some were consistent with the Services Agreement, but that[623]

[700]

I have found that Mirvac WA did not repudiate the Services Agreement and Binningup is therefore not entitled to damages. In case I am wrong about that, I will say as much as I sensibly can about the damages claim.
If Mirvac WA had repudiated the Services Agreement, Binningup would be entitled to an award of damages that, so far as money can do, would put it in the position it would have been in if the Services Agreement had been performed.[626]
It will be recalled that Binningup submitted that the completion of the Project was a contractual benefit. If it was a contractual benefit, then the Project would have been completed if the Services Agreement had been performed. Binningup therefore claimed damages on the basis of what it would have received had the Project been completed.
As explained earlier,[627] I do not accept that the completion of the Project was a contractual benefit. Among other things, Mirvac WA had the right to disapprove an infeasible budget.
Binningup did not seek to argue that, even if the completion of the Project was not a contractual benefit, the Project would have been completed but for Mirvac WA's alleged breaches and repudiation. Presumably this was because it accepted that, if Mirvac WA did have the right to disapprove a budget, it was improbable that the Project would have been completed.
Mirvac's view was that the market had undergone a significant deterioration.[628] Mirvac's analyses, over a substantial period of time, showed that the Project was becoming increasingly infeasible from Mirvac's perspective. Mirvac knew that, if it approved the budgets for the substantial expenditure[629] that would be required to complete the Project, it was likely that a significant proportion would not be recovered under the waterfall provisions. In my view, if Mirvac WA was not contractually obliged to approve budgets for the substantial expenditure that would be required to complete the Project, it is unlikely that it would have, unless there was a significant improvement in the market. It is likely that, at some point, a deadlock would have been reached.
Binningup also did not seek damages on the basis that it lost a chance that the Project would have been completed.[630] This was despite the fact that it was a central plank of Mirvac's case that the completion of the Project was not a contractual benefit and that it could not be assumed that the Project would have been completed in light of Mirvac's viability concerns.[631]
In those circumstances, it would be inappropriate to attempt to assess damages on a basis not claimed and not the subject of any submissions by Binningup. I will, however, make observations about the claim that has been made.

[703]

Mr Maiorana was instructed to prepare a draft concept plan for the Binningup development that reflected the most effective use of the land with respect to the maximum commercial lot yield and mix. He was also instructed that the concept plan must not require any amendment to the Plan and must meet any condition of the Plan.[636]
Part 4 of Mr Maiorana's report dealt with the concept plan. In that part, Mr Maiorana said that there were various matters potentially affecting the concept plan that were outside his area of expertise. He recommended that the concept plan 'be reviewed by suitably qualified specialists to inform the final design used for the purpose of valuation'.[637] In other words, Mr Maiorana himself disclaimed the necessary expertise to create a concept plan for valuation purposes.
Prior to the trial, the parties filed respective tables of objections to their opponent's experts' reports. I made provisional rulings prior to the trial on the basis that the rulings would become final unless either party wished to be heard. Among other things, Mirvac objected to pt 4 of Mr Maiorana's report on the basis that he did not have the necessary expertise. I made a provisional ruling upholding this objection, ruling that pt 4 was inadmissible. Binningup advised that it wished to be heard on this provisional ruling. However, on 26 April 2019, the parties advised that they had agreed that the objections of both parties, to all of the expert evidence, should be treated as submissions as to weight.[638]
Binningup submitted it was unnecessary, and would have been disproportionate, to have required Mr Maiorana to undertake a granular exploration of the hypothetical subdivision plan to the level of the 'detailed design and documentation work' referred to in Mirvac WA's September Budget, which Binningup submitted would cost over $5 million.[639] I agree that that level of exploration would have been utterly disproportionate. However, I did not understand Mirvac to be submitting that that was what was required. Rather, Mirvac simply referred to Mr Maiorana's statement that various factors outside of his expertise could affect the concept plan, and to his recommendation that the concept plan 'be reviewed by suitably qualified specialists to inform the final design used for the purpose of valuation'. Having the concept plan reviewed by suitably qualified specialists would not have involved prohibitive or disproportionate costs.
Binningup submitted that it 'simply relies on that concept plan as one that represented the theoretical maximum commercial lot and yield mix taking into account and complying with the requirements of the approved [Plan]. In that limited capacity, the Report should be of significant assistance to the Court'.[640] Binningup pointed out that the Plan had been the subject of input from various expert consultants. It pointed out that Mr Maiorana himself had received some input from Binningup's engineering expert and its valuation expert.[641] Nevertheless, after having received that input, Mr Maiorana noted his lack of expertise outside the planning field and recommended that the concept plan 'be reviewed by suitably qualified specialists to inform the final design used for the purpose of valuation'.
I accept that Mr Maiorana's concept plan is an indication of the theoretical maximum commercial lot and yield mix that might be achieved consistently with the Plan, based on planning considerations. I accept that Mr Maiorana's concept plan was consistent with the Plan, and that the Plan had been the subject of input from various expert consultants. I accept that there had been some input into the concept plan by Binningup's engineer and valuer as it evolved. However, in view of Mr Maiorana's own disclaimer, and Binningup's failure to act in accordance with Mr Maiorana's recommendation, his concept plan provides a shaky foundation for the valuers.

[709]

I assume that, by 'conservative', Binningup meant that Mr Maiorana's concept plan would result in a lower return to Binningup than could be achieved by other possible plans. I do not accept that any of those factors support the proposition that the plan was conservative in this sense.
In relation to the first factor, simply because Mr Maiorana's concept plan provided for less lots than the Plan does not mean it was conservative. It was not suggested that the number of lots in a Plan governs the number of lots that are eventually created (and the fact that Mr Maiorana, a planning expert, postulated a plan with a different number implies it does not). Further, even if Mr Maiorana's concept plan may be described as more conservative than the Plan, this would not assist Binningup if his plan was not a plan that might actually have been implemented.
In relation to Binningup's second factor, smaller lots will obviously lead to a higher lot yield. This is likely to mean an increased gross revenue.[648] This does not, however, necessarily mean a higher damages figure.
Both experts said that increased gross revenue did not equate with increased profitability. In particular, increased yield generally leads to increased costs and a longer project life.[649] This would increase the OLA. It would also extend the time over which proceeds of sale would be received, extending the time over which the OLA would be repaid and Binningup would receive its share of the proceeds of sale.
Binningup would have been liable to repay any OLA that had not been met by the waterfall provisions when the Project was completed. Even if I was to accept Binningup's argument that its liability was limited because of Mirvac WA's limited recourse, Binningup was obliged to repay advances by their Anniversary Dates to the extent that they were not paid by proceeds of sales. The longer the Project continued, the more advances Binningup would have had to pay, if not paid by the proceeds of sales, prior to Completion to prevent the termination of the Services Agreement.
In relation to the third factor, Binningup cited exhibit 17.620, said to be 'a residential density strategy prepared by [Mirvac WA] that provided for 1,009 Sale Lots'.[650] Exhibit 17.620 is a 48 page document, 47 pages of which comprise Revision E of the Plan. Binningup did not identify a page number, and I was unable to find a reference to 1,009 in the document. The document includes a 'Residential Density Strategy Plan' showing a proposed layout,[651] but the plan does not include any numbers to indicate the number of lots shown on that plan. It is unlikely Binningup counted the number of lots to reach the figure of 1,009 or was proposing that the court do this. I suspect, therefore, that the reference was in error. In any event, it is not obvious how any such document could support Binningup's proposition without knowing the time at which the strategy was prepared and the extent to which it would dictate the number and size of lots that were ultimately developed or whether, for example, market considerations would be reviewed closer to implementation.

[723]

In his oral reply, counsel for Binningup also relied[670] on a discussion in Ruthol in relation to the principles of mitigation and, in particular, the 'avoidable loss principle' and the 'avoided loss principle'. The avoidable loss principle was described in Ruthol as being that the 'innocent party must take all reasonable action to mitigate the loss to it consequent on the guilty party's wrong, and cannot recover damages for any loss which it could have avoided but unreasonably failed to avoid'. The 'avoided loss principle' was described as being that '[i]f the innocent party does take action to mitigate the loss to it consequent on the guilty party's wrong, even if the action goes beyond reasonable action, in general the guilty party is entitled to an allowance for the benefit to the innocent party from that action'.[671]
Binningup referred to Giles JA's statement that the avoided loss principle only applied 'so far as the innocent party in fact gained a compensating advantage. The guilty party bears the burden of proving that loss had been avoided and the extent to which it had been avoided'.[672] Binningup submitted that Mirvac could not prove Binningup would gain a compensating advantage if it retained the land because it was not known what Binningup would have received if the Project had been completed.
The first point to note is that Mirvac did not seek to rely on the avoided loss principle, nor could it have any application. Mirvac did not seek to claim a benefit Binningup had obtained in mitigating its loss as a result of the termination of the Services Agreement. Binningup did not obtain the land by taking action to mitigate its loss. Binningup did not do anything to mitigate its loss. Mirvac simply submitted that the proper assessment of Binningup's damages was an amount that, so far as money can do, would put Binningup in the position it would have been in if the Services Agreement had been performed. If, as Binningup claimed, this meant the position it would have been in if the Project had been completed, Binningup would not own the land: the land would have been sold and Binningup would have its share of the proceeds of sale.
Second, and in any event, the assessment of Binningup's damages claim involves assessing what Binningup's position would have been if the Services Agreement had been performed. On Binningup's case, the land would have been sold and it would have its share of the sale proceeds. Any uncertainty in knowing exactly what its share would have been does not alter the nature of the assessment. If, as Binningup urges, it should also keep the land, and if this could conceivably be said to fall within the avoided loss principle, its 'advantage' would plainly be the value of the land.
This is sufficient to dispose of Binningup's submissions in relation to this principle, and makes it unnecessary to explain why I do not accept Binningup's other submissions on this point.

[725]

Binningup's primary claim did not make an allowance for the fact that, had the Project been completed, it would have had to repay each advance by its Anniversary Date, to the extent each had not been paid by proceeds of sales. This is because Binningup submitted that the Procure Completion Obligation required Mirvac WA to progress the development in such a way that the Initial Advance of $25 million to Binningup would be wholly or substantially repaid by the Anniversary Date of 10 January 2018 from the proceeds of sale.[675] As noted earlier,[676] I do not accept that the Procure Completion Obligation required this.
Binningup also appeared to rely on its assertion that it was not liable for any shortfall because Mirvac WA's right of recourse was limited.[677] Again as noted earlier,[678] I do not accept this assertion.
In anticipation that these findings might be made, Binningup proposed an alternative damages scenario, on the basis that it would have been obliged to repay the Initial Advance by the Anniversary Date on 10 January 2018. Binningup sought to demonstrate what amount of the Initial Advance would have remained unpaid from the proceeds of sales.
Taking the mid‑point of the agreed rate of sale range (45 lots per annum), and averaging the likely sales per annum across 12 months (3.75 sales per month), and averaging the sale price of each Sale Lot ($188,800), gives an average total monthly income from sales of $707,998.[679]
Binningup submitted that approximately 75% of that would be apportioned to the OLA under the waterfall mechanism, being $530,335 per month. Binningup submitted that the evidence showed that the sales would have commenced by August 2014, being 42 months before the Anniversary Date. Therefore, as at the Anniversary Date, $22,274,070 would have been repaid, leaving only $2,725,930 to be repaid.[680]
Subtracting that from the Principal's Amount leaves $13,015,799.[681]
There are two immediate issues with Binningup's calculation.
First, Binningup estimated that 75% of the sale proceeds would be allocated to the OLA with no explanation as to how that percentage was reached. Calculating the percentage is certainly not simply a matter of adding up the payments that have priority under the waterfall.[682] However, if I had had to assess damages, then, being required to do the best that I could, I would have accepted this percentage in the absence of any other suggested percentage.
Second, Binningup's calculation is based on an assertion that the sales would have commenced by August 2014. This is based on the evidence of Mr Maiorana as to how long it would take to get to the stage where the final documentation would be lodged. This issue requires some analysis.

[734]

In its written submissions, Binningup asserted that, as the innocent party to the breach, it is 'entitled to a presumption based on Amann that, aside from the ad hoc payment in January 2018, no further ad hoc repayments would be required'.[694] The written submissions did not develop this proposition, and it was not mentioned in oral submissions.
I can only assume that 'a presumption based on Amann' was a reference to the presumption that an innocent party would not have entered into a contract unless it would at least have recovered its reliance expenditure under the contract had it been performed.
Further, I can only assume that Binningup was asserting that it should be presumed that the properties would have been sold from such a date and at such a rate that each of the other advances (and interest[695]) would have been repaid by the proceeds of sales before its Anniversary Date.
In the absence of any explanation as to why that would be so, it is difficult to understand the submission. The Amann presumption may have operated such that it would be presumed that, had the Project been completed, Binningup would have received a net profit, even after paying advances as they became due. It is quite another thing to assert it should be presumed that the properties would have been sold from such a date and at such a rate that each advance (and interest) would have been repaid from the proceeds of sales before its Anniversary Date.
Nor is it possible to sensibly assess whether the further advances would have been repaid from proceeds of sales, even if the same assumptions were adopted as were adopted in relation to the Initial Advance. This is because Binningup did not lead any evidence as to what the likely costs would have been if the Project had proceeded to completion. Further, even in relation to those advances that were actually made before the Project was terminated, it would be necessary to calculate the interest that would have been repayable in relation to those advances. It may be possible to make that calculation, at least up to the date of the hearing, in view of the evidence adduced by Mirvac WA in proof of the quantum of the OLA.[696] However, it would not be simple.
Binningup did not suggest that there was a basis upon which it could be determined that each advance (and the interest) would be repaid by the proceeds of sale before it fell due, other than its apparent assertion that this should be presumed. For that reason, I do not intend to explore this further.

[810]

Binningup points out that the Calderbank offer did not merely seek judgment for $25 million; it sought payment of that sum. While the judgment (for more than $54 million) obtained is for an amount well in excess of $25 million, Mirvac may only enforce a judgment against the Project Assets and Project Securities, by cl 1.5 of the Loan Agreement. In a practical sense, that clause limits Mirvac's right to enforce the judgment to the land.
Binningup submits that, as a result, the rejection of the offer was not unreasonable. The offer required payment of $10 million more than the $15 million that was recoverable under the judgment, based on the value of the land estimated by the court. It says that it was not unreasonable to refuse this.
Mirvac points out that Binningup's argument starts from the premise that it will not pay the judgment sum; that is, Binningup asserts that it is better off under the judgment because it will not satisfy it. Mirvac submits that this was an 'unpromising position' for Binningup to adopt. Mirvac submits there are many litigants who could argue that they would be better off not settling litigation because they have limited assets against which an adverse judgment could be enforced and therefore have nothing to lose by proceeding to trial. Mirvac submits that the court should not encourage such an attitude to settlement. Mirvac submits that Binningup's position raised the 'same moral hazard' as the impecunious litigant. Mirvac adds that, in this case, it is not even that Binningup cannot pay the judgment. It is that it has simply decided not to.
I agree that the court should not encourage an attitude that settlement offers can be rejected simply because the offeree has nothing to lose from the litigation. However, I do not accept that the moral position of Binningup is analogous to the impecunious litigant who rejects an offer knowing he or she has nothing to lose. Binningup did not and does not rely on any factual limitation in its assets. It relies on the contractual agreement it reached with Mirvac, before the Project commenced; namely, that Mirvac's right of recovery would be limited to the land.
I am evaluating whether it was unreasonable for Binningup to reject the offer at the time it was made. At that time, Binningup knew that the parties had agreed that Mirvac's right of recovery would be limited to the land. It was entitled to have regard to that in considering whether it should accept the offer. In my view, it was entirely reasonable for Binningup to assess the offer in the context of Mirvac's limited recovery right. Binningup was not required to feel any moral inhibition in relying on that clause to its full extent.

[811]

In my judgment, I estimated, 'doing the best I can', the value of the land to be $15 million for the purpose of assessing Binningup's damages claim. In its written submissions,[725] Mirvac submitted that it does not follow that the extent of the compromise offered should be assessed against that same estimate. It submitted that Binningup has not shown that the compromise offered was not valuable to it.
The parties disagree as to who should have proved the value of the land during the trial. In my view, it should have been Binningup, for the reasons set out in my judgment at [834] ‑ [852]. Contrary to Binningup's submission in this costs application, Mirvac did not have to prove the value of the land retained by Binningup at the time of termination of the Services Agreement 'in order for Mirvac to successfully contend that the value of the land should be deducted from the damages claimed by [Binningup]'.[726] Mirvac simply had to prove that the value of the land should be deducted from Binningup's damages claim. Acceptance of this proposition did not depend on the value of the land. It depended on the proper basis upon which damages are to be assessed as a matter of principle. If the proposition was accepted, it would be yet another deficiency in Binningup's proof of damages. Having said that, in my view, the question of who should have proved it at trial is beside the point.
It is not for Binningup to prove that the offer had no value. It is for Mirvac to prove it was unreasonable for Binningup to reject it. If Mirvac wanted to submit that it was unreasonable because the land was worth more than the amount I estimated it to be worth for the purposes of Binningup's damages claim, Mirvac needed to prove the value of the land.
During today's hearing, counsel for Mirvac clarified that he was not suggesting that Binningup had the burden of proving the value of the land in this application. Nor was he seeking to assert that the value of the land exceeded $15 million, or saying that I should make that assumption. Rather, he simply sought to make the point that I should take into account, in assessing the reasonableness of Binningup's rejection of the offer, that it was an unproven assumption that the land is worth $15 million. With respect, I do not accept this. In my judgment, I assessed the value of the land. I accept this was merely my best effort estimate, on the evidence before me. I accept it was for the purpose of assessing Binningup's damages claim if I was wrong on liability. Nevertheless, it was a factual finding.
My best effort estimate, on the evidence before me, was that the land was worth $15 million. Mirvac has not adduced any evidence to suggest it was worth more. In my view, I am therefore required to assess the reasonableness of the rejection of the offer in that context. Accordingly, I am assessing the rejection of an offer that would have required Binningup to pay $10 million more than the maximum amount Mirvac could recover.

[823]

As set out in the above extract, before a special costs order may be made, the court must form an opinion that there is a fairly arguable case that, on taxation, costs may properly be allowed in an amount greater than the limit imposed by the relevant costs determination, and that that is because of the unusual difficulty, complexity or importance of the matter.
In its written submissions, Binningup submitted that it was not possible for me to form such an opinion because Mirvac failed to produce material establishing the relevant scale items that may properly be taxed at an amount greater than the relevant limit that would otherwise be imposed.[729] Although Binningup's submissions were filed the same day as an affidavit filed on behalf of Mirvac, it appears that Binningup had not received that affidavit at the time of filing its submissions.
In oral submissions, Binningup said that it accepted the proceedings were unusually difficult, complex or important. It said it accepted that the items in relation to discovery and preparation should be lifted. Counsel submitted, however, that there was no justification for the amounts spent on the Writ and the Statement of Claim, for example, and no evidence that Mirvac could not find lawyers whose rates did not exceed scale rates.
I do not accept Binningup's submissions.
Mirvac filed an affidavit sworn on 6 April 2020 by Michael Hales. Mr Hales is a partner in Minter Ellison and had conduct of the matter on behalf of Mirvac. Mr Hales' affidavit set out the legal fees billed to Mirvac by the solicitors and the disbursements, including counsel fees. Mr Hales set out the hourly rates of counsel, himself and another solicitor, Ms Chappelow. He set out the nature of the work undertaken by the lawyers in various respects. Mr Hales also prepared a table setting out his estimate of which items the costs would be allocated to, and explained his methodology in detail. He did not, however, prepare a draft bill of costs. He said this was because it was not possible to do so in the time available, as it would be a lengthy and complex task. I accept this entirely.
The failure to produce a draft bill of costs is not fatal.[730] Indeed, in some cases, no evidence will be required at all.[731] The issues that arise in an application for a special costs order are to be addressed as matters of impression, rather than as matters of detailed evaluation, precision or science.[732] It would be undesirable to require a party to produce more evidence than was necessary to enable the court to address the issues. This would inevitably involve extra, and self‑evidently unnecessary, costs.[733] It should be remembered that the reasonableness of costs actually to be awarded will always remain within the discretion of the taxing officer.[734]
In my view, Mirvac has produced sufficient material to enable me to address the issues.
In [22] of Mr Hales' affidavit, Mr Hales identifies the various scale items that are relevant in this case.
In my view, on the facts in this case, no evidence is required before I could conclude that there is a fairly arguable case that Mirvac's bill would properly tax at an amount that is greater than the total amount allowable under those items that stipulate a capped sum for particular work. Further, no evidence is required before I could conclude that this would be because of the importance or the complexity of the proceedings.

[827]

In relation to the rates charged by Mirvac's lawyers, the affidavit of Mr Hales establishes that the rates charged by senior counsel and by Mr Hales himself exceeded the scale rates. I am also satisfied that the rates charged by some of the other lawyers within Minter Ellison working on the matter exceeded the scale rates. In particular, the evidence is sufficient to establish for these purposes that the rates for special counsel and partners within Minter Ellison exceeded the scale rates and that Ms Chappelow's rates exceeded the scale rates after 1 July 2018.[736]
Merely because the actual rates are higher than the scale rates is not a sufficient reason of itself to lift the scale rates.[737] I also accept that, in some cases, this issue may be better left with the taxing officer.[738] However, the nature and importance of the proceedings may permit the court to conclude that a party was justified in engaging counsel and solicitors with greater experience and expertise in commercial litigation than in the usual run of civil cases. It may permit the court to conclude that a party was justified in engaging lawyers who charged more than the scale rates.[739] I am satisfied that the importance and complexity of these proceedings fully justified this.
I am satisfied that there is a fairly arguable case that a taxing officer might properly allow costs for senior counsel and solicitors at a rate greater than the scale rates, due to the importance and complexity of the proceedings.
I have decided not to restrict the lifting of the rates to those lawyers in respect of whom there is direct proof that their individual rates exceeded the scale rates, for the following reasons.
First, the decision I am required to make involves impression rather than precision. Second, it would be undesirable to require successful litigants to spend time assembling evidence as to costs where that would be a complex exercise, and where sufficient general information can be provided to enable the court to make the assessment. Third, making the order in these terms could not cause unfairness. It would not mean that Mirvac could recover costs at a rate higher than the scale rates for the work done by lawyers whose rates did not in fact exceed the scale rates.

Atlas Tiles Ltd v Briers

At a glance

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Judgment (1238 paragraphs)

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Legislation Cited (5)

Cases Cited (23)