Australian Integrated v FinleaseFinlease v Australian Integrated

COUNSEL : Mr M Cashion SC & M Walsh for AIF Mr J Stevenson SC & Ms VE Whitaker for Finlease

SOLICITORS : Kemp Strang for AIF MWA Lawyers for Finlease

• 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

50124 of 2006 Australian Integrated Finance Pty Limited v Finlease Pty Ltd 50131 of 2006 Finlease Pty Limited & Anor v Australian Integrated Finance Pty Limited JUDGMENT 1 His Honour: This is the hearing of these two proceedings that have been heard together with the evidence in one to be evidence in the other. Australian Integrated Finance Pty Ltd (herein referred to as AIF) carries on business as a financier. Finlease Pty Ltd and Shavel Loren Pty Ltd are finance brokers who trade under the name Finlease Equipment Rentals (herein referred to as Finlease). 2 The dispute concerns their contractual arrangements for profit sharing resulting from their mutual business dealings. Background facts. 3 These are helpfully set out in submissions, which I will incorporate with some amendment. 4 AIF's business includes renting equipment to customers for a fixed term pursuant to rental agreements. Finlease's business is that of a finance broker. It introduces customers to companies such as AIF for the purpose of entry into rental agreements for equipment. In the usual course, Finlease is paid a commission for its role as broker.

5 The rental agreements introduced by Finlease to AIF were for a fixed term and, upon expiry of that term, title to the equipment remained with AIF.

6 Often, customers who have entered into a rental agreement retain the rented equipment and continue to make rental payments after the expiry of the fixed term. This income is referred to within the industry as "inertia income" or "secondary income" or "back end profits". On occasion AIF may sell the rented equipment at or after the expiry of the rental agreement and thereby make "back end profits".

7 AIF on occasion "self-funds" the purchase of equipment the subject of rental agreements or guarantees the funds advanced by a third party funder. On other occasions, AIF assigns its income stream during the initial term of the rental agreement to a third party funder, without providing a guarantee for any losses incurred in relation to the rental agreement. It always retains the risk on the residual value as it retains title to the equipment. One practical effect of AIF "self funding" or guaranteeing the purchase of the equipment is that AIF is exposed to any loss which may arise from the rental agreement during the initial term (eg through default on rental payments). The extent to which Finlease was aware of these arrangements is in issue in the proceedings.

8 From about late 2000 until 8 March 2001, Finlease referred rental agreement proposals to AIF on an ad hoc basis and was paid brokerage on a "deal by deal basis" by AIF after each financing proposal was approved by AIF.

9 On 8 March 2001, AIF and Finlease entered into a Principal and Agency Agreement (herein referred to as the Principal and Agency Agreement).

10 The Principal and Agency Agreement provided (amongst other things) a formula for the sharing of any secondary income generated by the rental agreements introduced to AIF by Finlease. The specific terms of the Principal and Agency Agreement, which prescribe this formula, are set out below.

11 On 1 February 2002 a Deed of Variation (herein referred to as the Deed of Variation), which was drafted by AIF, was entered into between the parties.

12 There is a contest between the parties as to the conversations between their representatives about proposed amendments to the Principal and Agency Agreement, and the reasons for those amendments. 13 These proceedings concern the proper construction of the formula for the sharing of secondary income as set out in the Deed of Variation and whether the Deed of Variation should be rectified to reflect the parties' common intention in relation to that formula. The parties have agreed that questions of quantum will be determined separately once the outcome of the construction and other issues is known.

14 The agreement which was made on 8 March 2001, recited the parties basic agreement and then set out definitions, a number of which are important in the construction of the operative provisions. 15 The relevant clause as to profit sharing is clause 12 which is in these terms: 12. PROFIT SHARING 12.1 It is the intention of AIF to enable the Agent to increase the brokerage above the Standard Brokerage based upon a pre-agreed form as advised by AIF to the Agent from time to time based on the format shown in Appendices 2(a), 2(b), 2(c), 2(d) and 2(e). 12.2 AIF will advise the Agent of the Position based on a pre-approved matrix for specified Equipment costing $99,999 or less. For equipment costing $100,000, or more, the Agent will provide AIF with a detailed equipment description and accurate costings such as would appear on an invoice. 12.3 AIF will share 50% (less 15% administration fee) of all Secondary Profits with the Agent based on the calculation defined as Required Result (refer Definitions) provided that the Agent will achieve the minimum requirements as outlined in the attached schedule marked 'Annexure A'. 16 Clause 1.3 provides that a heading is for reference only and does not affect the meaning or interpretation of the agreement. 17 The Annexure A referred to in clause 12.3 contains 2 parts and is in this form: Annexure A' Any new applicant will only be approved on a profit sharing arrangement on the following basis: · Minimum monthly business volumes net of brokerage of $350K per month for first six months and $500K thereafter be written. · Incremental increase in NAF of 10% per annum for initial 3 years with a further review at that point in time. · Arrears are less than 2% as a measure of portfolio quality. All profit share arrangements are on the following basis: · Any inertia rental will amortise the position less 15% for administration fee. · Once the residual position is fully amortised we will split inertia income 50/50 (after administration fee) with the introducer. · At the time the equipment is sold and assuming residual position is fully amortised any profit on sale after allowing for selling & administration costs should be split 50/50 with the introducer. · If the position is partially amortised than the equipment is returned to the residual investor and the previous point will take precedent once goods sold. In the event that there is only a $1.00 position the equipment will come back to AIF either for collection of inertia or sale of equipment. Profit share will be 50/50 · (after administration fee) in case of inertia and net of selling & administration costs in case of goods being sold. · Reviews of the facility will continue on a quarterly basis. If the above criterion is not met we will revise the relationship after 6 months whereby a decision will be made if we in fact wish to continue under the existing arrangement or terminate the profit share arrangement. If termination was to occur at the 6 months point any business written to that point will be honoured as above from a profit sharing perspective. 18 The second set of bullet points do not seem to be given any operative effect by any provision of the agreement. The annexure appears to have been drawn up separately or taken from some other agreement. 19 The central definition, which has occupied the time in the hearing, is that of "Required Result". It is as follows: ""Required Result" means the cash flow return required by AIF as the means of assessing any Secondary Income share. It is calculated as follows: (a) the Aggregate Receipts; less (b) any costs of repair, refurbishment, servicing and selling costs incurred in selling equipment other than AIF employee costs; less (c) a monthly holding charge equal to 1% of the Residual Value Position for equipment held as stock from the return of the equipment to the date of sale; less (d) any losses arising from any Rental Agreement including contracted monies that AIF is entitled to receive under the Rental Agreements as well as costs incurred in its recovery; less (e) a 15% Administration Fee levied on all Secondary Income cash flows; less (f) any costs of repair, refurbishment, servicing and selling costs incurred in selling equipment other than AIF employee costs; less (g) the Residual Value Position" 20 It can be seen that there are a number of terms used, which require reference to their definitions. Relevant ones are: ""Aggregate Receipts" means in relation to a particular rental transaction the sum of all moneys received by AIF from the Customer, including: (a) all rentals. (b) sale of equipment. (c) insurance proceeds received in respect of the Equipment." "Residual Value Position" or "Position" means the value, as calculated by AIF, which represents the un-recouped capital cost of the goods at the expiration of Initial Rental Term on the assumption that the Customer makes all payments when due to AIF during the Initial Rental Term as referred to in the Australian Accounting Standard AAS17. "Rental Agreement" means any rental Agreement in a form approved by AIF entered into or to be entered into in accordance with the provisions of this Agreement as arranged by the Agent for approved Customers in respect of any equipment. "Secondary Income" means any monies received from the Customer after the Initial Rental Term. 21 There is no definition of secondary profits, a term referred to later in the agreement in clause 12.3. 22 It will be noted that clause 12.3 of the operative provision talks in terms of sharing of profits. However the definition of required result is framed in terms of cash flow. Important in that definition in subparagraph (d) is the reference to "any rental agreement". It was this factor, which led the parties to renegotiate their deal. 23 That renegotiation concerned the achievement of the targets in annexure A and the way in which losses would be taken into account in the calculation of Secondary profits. Finlease wished to have the taking into account of losses deleted from the agreement in accordance with what it saw as industry practice. 24 The renegotiation achieved a change to the provision of targets but what it achieved on the question of profits was said to be a compromise of each parties' position. The terms of the variation agreement of 1 February 2002 in its operative part were as follows: "1.VARIATION The parties vary the terms of the P&A Agreement as follows: (a) Clause 12 is deleted and the following inserted: " 12 PROFIT SHARING 12.1 Unless otherwise determined by AF, the Agent will be entitled to the Standard Brokerage. In determining the brokerage fees, AIF will not decrease the brokerage rated below the Standard Brokerage rates. AIF may issue the Agent with Rate Charts for particular Equipment and the Agent will be entitled to the brokerage fees as set out in the Rate Charts. 12.2 Where the cost of the Equipment is below $100,000, AIF, in its unfettered discretion, will advise the Agent of the Position for the purposes of the Rental Agreement. 12.3 Where the cost of the Equipment is $100,000 or more, the Agent will provide AIF with a detailed description of the Equipment including accurate costings in order that AIF, in its unfettered discretion, can determine the Position for the purposes of the Rental Agreement. 12.4 Subject to clause 12.5, 12.6 & 12.7, AIF and the Agent will each be entitled to 50% of all Secondary Income based on the calculation defined as Required Result. 12.5 Where the Agent is entitled to a brokerage fee which is at least double the brokerage fee in the relevant price category as set out in the Standard Brokerage chart, paragraph (e) in the Administration Fee described in the definition of Required Result will be deleted for the purposes of calculating the Required Result and the Secondary Income relevant to such Rental Agreement. 12.6 (a) Where AIF assigns its income stream during the initial term of the Rental Agreement to a third party funder and AIF is not required to provide the third party funder with a guarantee for such assignment then the paragraph (d) is limited to the residual value. (b) Where AIF has self funded the purchase of the Equipment, or is required to provide its guarantee to a third party funder then paragraph (d) in the definition of Required Result will be deleted for the purposes of calculating the Required Result and the Secondary Income relevant to such Rental Agreement and will be substituted for the following: "(d) losses arising from the Rental Agreement which will be agreed between the parties prior to the commencement of the Rental Agreement and will be equal to at least the residual value position. " 12.7 Prior to 30 June 2002, the Agent will not be required to meet a target. A target will be set on 1 July 2002 which will be no less than $5 million and which will be reviewed annually thereafter. In the event that the Agent does not meet the target then it shall not be entitled to the profit sharing provisions in accordance with clause 12.4. Operating leases written in the year 2001 and the first six months of 2002 will form part of the assessment for profit sharing. 12.8 Where a transaction is approved as a finance lease, or hire purchase then AIF and the Agent will share 50% each of the excess between the funds received from a financier less all disbursement including the cost of equipment and legal fees. " (b) Annexure A' is deleted." Issues in the proceedings 25 The following issues arose in the proceedings:

What is the proper construction of clause 12.6 (b) of the deed of variation?

Should the agreement be rectified to reflect the parties' common intention?

Is clause 12.6 (b) void for uncertainty and thus severable from the agreement?

On the proper construction of the agreement do the three St Stephens rental agreements settled in December 2000 and February 2001 fall within the definition of a "Rental Agreement" in the agreement?

On the proper construction of the Deed of Variation, does that Deed vary the Agreement so as to prevent the bringing to account of any losses from rental agreements settled before 1 February 2002?

Is Finlease estopped from denying that the terms of the legal relationship between the AIF and Finlease, as principal and agent, included that no agreement was required between AIF and Finlease as to a rental agreement being self-funded by AIF prior to the commencement of that rental agreement, where: (i) the application for the rental finance was for an amount less than $50,000 and it complied with AIF's Credit Matrix; or (ii) the application for the rental finance was for an amount of over $50,000 but less than $100,000 and AIF had authorised Finlease to issue a letter of approval to the applicant for the rental finance; or (iii) the application for the rental finance was for an amount greater than $100,000 but Finlease were already aware prior to settlement that AIF was self-funding or likely to self-fund the rental agreement. The proper construction of clause 12.6 (b) of the deed of variation 26 Immediately apparent from a perusal of the deed of variation is the change to accommodate the different result where AIF was not at risk compared to when the deal was self-funded. Also apparent is the change in the later alternative in subparagraph (d) of the definition of required result to delete the words "losses arising from any Rental Agreements" and substitute the words "losses arising from the Rental Agreement which will be agreed between the parties prior to the commencement of the Rental agreement". The subject of the words "which will be agreed" is also not immediately apparent. The subject plainly could not be the word "losses" as these are incapable of being agreed before the making of a rental agreement. 27 The preferred construction of the clause advanced by Finlease is: (a) In the case of Rental Agreements which are not self-funded or guaranteed by AIF, then paragraph (d) of the definition of the Required Result in the Principal and Agency Agreement is limited to the Residual Value of the equipment - that is losses are not deducted from the Aggregate Receipts to calculate Finlease's profit share entitlement to Secondary Income generated by the Rental Agreement - clause 12.6 (a); and (b) In the case of a Rental Agreement which is self-funded or guaranteed by AIF, part (d) of the definition of Required Result in the Principal and Agency Agreement is amended so that losses arising from the particular Rental Agreement are included in the definition - that is, losses from that Rental Agreement are deducted from Finlease's share of Secondary Income generated by that Rental Agreement - provided that prior to commencement of the relevant Rental Agreement, it was agreed that any losses would be included in the calculation of Required Result. 28 AIF for its part contended that the preferred construction was one where the new clause 12.6 (b) was to be understood as: "(d) losses arising from any Rental agreement: less" 29 According to Finlease this construction has the following effect: "(a) In the case of Rental Agreements which are not self-funded or guaranteed by AIF, then paragraph (d) of the definition of the Required Result in the Principal and Agency Agreement is limited to the Residual Value of the equipment - that is losses are not deducted from the Aggregate Receipts to calculate Finlease's profit share entitlement to Secondary Income generated by the Rental Agreement - clause 12.6 (a); and (b) In the case of a Rental Agreement which is self-funded or guaranteed by AIF, paragraph (d) of the definition of Required Result in the Principal and Agency Agreement is amended so that losses arising from the particular Rental Agreement and any other Rental Agreement referred under the Principal and Agency Agreement are included in the definition - that is, losses from that Rental Agreement and any other Rental Agreement are deducted from Finlease's share of Secondary Income generated by the deal." 30 It is necessary that I remind myself of the principles to apply in this construction process. They are well known and have recently been summarised in the Court of Appeal by reference to well known High court authority. In Waterways Authority of New South Wales v Coal and Allied (Operations) Pty Ltd [2007] NSWCA 276 Beazley JA said: "38 In Australian Broadcasting Commission v Australasian Performing Rights Association Limited, Gibbs J stated at 109 that, for the purposes of construction the whole instrument was to be considered as "the meaning of any one part of it may be revealed by other parts" and that, so far as possible, the individual clauses must be read harmoniously with the other clauses. However, the Court was required to give effect to unambiguous words. Stephen J, at 114-115, also emphasised the requirement to give effect to unambiguous words, noting in that case that the parties were large commercial entities who had agreed to enter into a formal contract governing their complex commercial arrangements for many years into the future. 39 In Pacific Carriers Ltd v PNB Paribas (2004) 218 CLR 451; [2004] HCA 35; the Court said of the documents under consideration in that case that their meaning was "… to be determined by what a reasonable person in the position of [the appellant] would have understood them to mean. That requires consideration, not only of the text of the documents, but also the surrounding circumstances known to [both parties] and the purpose and object of the transaction."

See also Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales at 350. " 31 In the same case McColl JA said: "215 The lease was to be interpreted at the date it was made. Its meaning was to be determined by what a reasonable person would have understood it to mean having regard to its text, the surrounding circumstances known to the parties and the purpose and object of the transaction: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd & Ors [2004] HCA 52; (2004) 219 CLR 165 at [40]. Being a commercial contract, the lease should be given a businesslike interpretation taking into consideration not only its language, but also the commercial circumstances it addressed and the objects it was intended to secure: McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579 at [22] per Gleeson CJ; Wilkie v Gordian Runoff [2005] HCA 17; (2005) 221 CLR 522 (at [15]) per Gleeson CJ, McHugh, Gummow and Kirby JJ.

216 In construing written contracts it should be presumed that the parties did not intend their terms to operate unreasonably. The more unreasonable the result a party's construction would produce, the more unlikely it is that the parties would have intended it. If the parties did intend an unreasonable result it is essential that that intention be made "abundantly clear": L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235 (at 251) per Lord Reid." 32 Usefully in Ryledar Pty Ltd & Anor v Euphoric Pty Ltd [2007] NSWCA 65 Tobias JA approved the comments of Palmer J (who was the trial judge) in that case which were in these terms: "107 The primary judge accepted (at [30]) that it was not necessary for him to find that the language of a contract was ambiguous before considering its meaning as may be revealed in the context and purpose of the transaction commonly known to its parties: Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (2005) 223 ALR 560 at 573-574 [78]. 108 His Honour then continued: "31. However, that does not mean that when the Court begins the task of construction it puts the words of the document aside and endeavours first to ascertain the commonly known factual context and purpose of the transaction, often only by resolving a strenuous contest between the parties. The Court does not, once it has found the commonly known factual context and purpose, then look at the words of the contract and, if they do not readily accommodate the context and purpose so found, force them to do so by a process of interpretation. 32. When the Court is construing a commercial contract, it begins with the words of the document: there it often finds expressed the factual context known to both parties and the common purpose and object of the transaction. But the court is alive to the possibility that what seems clear by reference only to the words on the printed page may not be so clear when one takes into account as well what was known to both parties but does not appear in the document. When that is taken into account, the words in the contract may legitimately have one or more of a number of possible meanings. It is then the Court's task to identify which of the possible meanings represents the parties' contractual intention. 33. However, when a party to a contract argues that the known context and common purpose of the transaction gives the words of the contract a meaning which, by no stretch of language or syntax they will bear then, in truth, one has a rectification suit, not a construction suit. 34. That is the case here. …" 109 In my opinion his Honour's approach articulated in the foregoing paragraphs of his judgment is unexceptionable." 33 Before considering the course of negotiation which led up to the variation agreement I will address the parties' arguments on construction having regard to such self evident facts as appear from the agreements and the factual context other than the negotiations. 34 One thing to be noticed about the original clause 12.3 and its incorporated definition of desired result is that it does not provide for when the parties shall calculate the secondary profits to be divided. What it does is give an entitlement and imposes a corresponding obligation. In practical reality it is likely to be resorted to on some periodic basis once sufficient secondary income is accrued and capable of determination. The other realities are that there will be many rental agreements where there is no secondary income and in many cases it will be some years before a rental agreement ends and thus the possibility of secondary income. The mix of results by the time one calculates the result up to the date of calculation will be quite varied. The targets referred to in Annexure A indicate an ongoing relationship over some years with many rental agreements. 35 Under clause 12.3 "all secondary profits" are based upon a particular calculation. The definition of that calculation is not clear as to whether it is generally speaking dealing with all rental agreements or is dealing with a singular rental agreement. Par (d) and par (e) contemplate multiplicity. Par (a) when one has regard to the definition of Aggregate Receipts is clearly directed to just one rental agreement. Para (g) also favours a single agreement and Par (a), par (b), par (c) and par (f) are neutral. 36 If one refers to the definition of aggregate receipts it will be noticed that it includes "all rentals received". This would include rentals during the term and after the term when they would be secondary income. Losses are taken into account by (d) including the total contractual entitlement to rental during the term. Thus the failure to make a payment during the term shows up in the calculation as a loss. If a multiple approach were adopted then it would include in the calculation income from many rental agreements where there was no secondary income. If in such a case there were a failure to make a payment such a resultant loss would be included and deducted from secondary income earned on other rental agreements. If there was no failure to make a payment in such a case the result would be neutral. 37 However the words of (d) in the original agreement are: "any losses arising from any Rental Agreement including contracted monies that AIF is entitled to receive under the Rental Agreements as well as costs incurred in its recovery; less" 38 Plurality is evident in two places namely "any" and "the rental agreements". These are quite clear and bearing this in mind it would require the reading of "the Aggregate Receipts" in (a) in the plural sense so that rentals from all "the Rental Agreements" are included in the calculation. It also would be necessary to read, "the Residual Value Position" in (g) as " the Residual Value Positions". Such a reading accommodates the plural in (e) and does not do as much force to the language as ignoring the clear words in (d). 39 The opening words of the definition in the first sentence are probably neutral on the point but certainly accommodate a multiple approach. Having regard to all these circumstances and the words in clause 12.3 "all secondary profits" I would incline to the view that the definition is to deal with a consideration of all agreements up to a particular point of time when it is necessary to determine a parties then entitlement or obligation. There would thus be aggregate receipts from multiple agreements and perhaps losses from multiple agreements that would be taken into account. Once the resultant profits are shared by payment that is an end to the consideration of such agreements. If at the time of determination there were no profits then there is nothing to share and next time there is a calculation it could take into account all agreements to that date to see whether there was by then any profits to share. 40 When one looks at the mechanism for textual variation in the variation deed in the 12.6 (a) case there is no direct substitution of a clause such as occurs in 2.6 (b) case. If one avoids the possibility of double counting which would not be intended and assumes that in clause 12.6 (a) it was intended to refer to "Residual Value Position" and not just "residual value" the definitions of required result after the variation deed could be expressed as follows: Where AIF are not at risk clause 12.6 (a)

41 "Required Result" means the cash flow return required by AIF as the means of assessing any Secondary Income share. It is calculated as follows: (a) the Aggregate Receipts; less (b) any costs of repair, refurbishment, servicing and selling costs incurred in selling equipment other than AIF employee costs; less (c) a monthly holding charge equal to 1% of the Residual Value Position for equipment held as stock from the return of the equipment to the date of sale; less (d) any losses arising from any rental agreement including contracted means that AIF is entitled to received under the rental agreements as well as costs incurred in its recovery (limited to the Residual Value Position) less (e) a 15% Administration Fee levied on all Secondary Income cash flows; less (f) any costs of repair, refurbishment, servicing and selling costs incurred in selling equipment other than AIF employee costs; less

42 "Required Result" means the cash flow return required by AIF as the means of assessing any secondary income share. It is calculated as follows:

(a) the Aggregate Receipts; less (b) any costs of repair, refurbishment, servicing and selling costs incurred in selling equipment other than AIF employee costs; less (c) a monthly holding charge equal to 1% of the Residual Value Position for equipment held as stock from the return of the equipment to the date of sale; less (d) losses arising from the Rental Agreement which will be agreed between the parties prior to the commencement of the Rental Agreement and will be equal to at least the residual value position.; less (e) a 15% Administration Fee levied on all Secondary Income cash flows; less (f) any costs of repair, refurbishment, servicing and selling costs incurred in selling equipment other than AIF employee costs; less (g) 43 Although Annexure A and its targets are removed, new targets are included in clause 12.7. The agreement is still, after the variation, open ended in the sense that it can continue indefinitely subject to the right of each party to terminate on notice. In such a case the rights to secondary income that accrue after termination survive. See clause 13.2. 44 Each of these new definitions operates in the context of the new clause 12.4 which is: "12.4 Subject to clause 12.5, 12.6 & 12.7, AIF and the Agent will each be entitled to 50% of all Secondary Income based on the calculation defined as Required Result." 45 The change of the word "Profits" to "Income" in my view is of no consequence as the required result is truly a cash flow matter not a profit matter. Once again, like the old clause 12.3, there is used the word "all". In this respect what has to be appreciated is that 12.4 unlike the old 12.3 has to govern two separate classes of secondary income with different definitions of required result. This reduces the force of "all" in 12.4 as an overall concept as it could just embrace secondary income under 12.6 (a) and secondary income under 12.6 (b). 46 In this context one has one difficulty with the use of the definition in the clause 12.6 (a) case where AIF is not at risk. This arises because of the change to the definition of losses and its relationship to the definition of aggregate receipts. Aggregate receipts include all rentals and this includes those paid during the term of the rental agreement. The new definition of losses because of the limitation does not include any contracted monies that AIF is entitled to receive. The problem is solved by reading rentals in the definition of aggregate receipts to mean those received after the initial rental term. This construction is consistent with the changes to reflect two different positions, namely where AIF is not at risk and those where it is at risk. In the first case it does not have the risk on the assigned cash flow. 47 There can be a difference in result depending upon whether one views the definition as requiring a consideration of all the agreements or one by one. For example if there is a loss on one agreement can that be set off against secondary income earned on another agreement or does one only have regard to the total of those cases where there is secondary income. Having regard to my earlier reasoning, but noting the reduced effect of the word "all" I conclude that this part of the definition properly construed is to deal with a consideration of all agreements up to a particular point of time when it is necessary to determine a parties entitlement or obligation under clause 12.4 48 When one turns to the at risk definition there are a few things to be noted. What is to be agreed cannot be the quantum of any relevant losses. If that was meant then there is no work for the words "prior to the commencement of the rental agreement" to do. The use of the word "parties" is in the ordinary use of the word the parties to the agreement not the parties to the rental agreement. The customer in the rental agreement has no interest in the subject matter of the clause. 49 There is a problem once again with the definition of losses and the definition of aggregate receipts, which includes all rentals received. The losses are not defined and all we are told from this text replacement paragraph is that they will be equal to at least the residual value position. How they are to be determined is not explained. Is it to be by including the contracted monies and setting them off against all rentals received? That provision has been deleted by the amendment. 50 The construction advanced by Finlease set out at paragraph 23 above is one which requires each rental agreement to be considered separately with losses only appropriated to secondary income earned on that agreement. Another construction might be that in respect of all rental agreements where the parties had agreed prior to entry that they would be ones where losses were taken into account that there would be an aggregation of all losses and all secondary income. There might be a case where although the parties agreed that the rental agreement was one where losses could be taken into account there was no loss but instead secondary income which could be set off against other, previously agreed, loss producing rental agreements. This is the multiple approach I have referred to above. 51 In submissions Finlease suggested the following reasons as to why AIF's construction should not be adopted: "(a) It involves ignoring words in part (d) which are unambiguous and should be given proper effect. (b) It requires the word "the" to be read as "any" which is impermissible when the meaning of "the" in the context of the clause is unambiguous and has a reasonable effect in the context of the Deed. (c) It effects no change whatsoever to part (d) of the definition of Required Result in the Principal and Agency Agreement in relation to deals which are self funded or guaranteed by AIF. It requires the Court to find that a clause of the complexity of clause 12.6(b) in the Deed of Variation was entered into to no desired end. (d) The evidence showed that it did not accord with the commercial objects of the parties in entering into the Deed of Variation - that is, to effect a change to the definition of Required Result. Mr Hughes agreed that part of what was agreed was there was to be a change in the wording of subclause (d) in the case of self funded deals. 52 The problems in point (c) above were referred to by AIF in its latest submissions in this manner. "4. The arrangement for the calculation of Required Result which existed under the P&A Agreement remained in place, save to the extent that it was altered by the Deed of Variation. In the P&A Agreement there was no change to the wording of (d) of "Required Result" for "not at risk" rental agreements arising from the Deed of Variation. Clause 12.6(a) merely capped the amount of that component of the Required Result calculation to the Residual Value, but did not remove the word "any" which appears twice. 5. In relation to clause 12.6(b), it effected no change other than to identify the sub-clause (d) losses in circumstances where AIF was "at risk". 6. The purpose of clause 12.6 was to differentiate for the first time between "at risk" and "not at risk" transactions so as to identify the paragraph (d) losses in the Required Result calculation which were to be taken into account in each instance. 7. Clause 12.6 did not alter the fundamental pooling approach which was, and remains, at the very heart of the P&A Agreement. 8. When the limited effect of the Deed of Variation is understood, it rendered untenable the construction advanced by Finlease that the word "the" in the substituted sub-clause (d) in the Required Result needed to be read in the singular. 9. Finlease's submissions as to the meaning of the words "losses … which will be agreed between the parties prior to the commencement of the Rental Agreement" ignore the distinction in clause 12.6(b) between AIF self funding the purchase of the equipment on the one hand and AIF being required to provide its guarantee to a third party funder on the other. Nothing in the evidence suggests that the operation of the credit matrix system was to be affected by the compromise. It was not discussed. 10. It would be uncommercial and unrealistic to conclude that the parties intended to impose a prior notification obligation on AIF in the context of the credit matrix system whereby Finlease could commit AIF to a credit matrix compliant transaction without its knowledge. Therefore, the compromise reflected in clause 12.6(b) must be understood as imposing an obligation for prior notice and agreement only where AIF was self funding a Rental Agreement eg Global Network Services." 53 In par 4 the submissions would read (d) in the not at risk case as "any losses arising from any rental agreement limited to the residual value position". In my view this is similar to the approach I have set out above in paragraph 40. Losses are taken into account as the residual value position in (d) is deducted from the sales proceeds in the aggregate receipts. If there are no sales proceeds the loss on the cash flow return equals the residual value position. 54 These submissions make reference to that part of the commercial arrangement between the parties adopted in the period between the first agreement and the variation. That was a practice of authorising Finlease to approve, without reference to AIF, certain transactions. These were matters where the amount was under $50,000 and complied with a set of credit matrix guidelines. In respect of these matters AIF frequently collected a number of them together and sold the income stream off to another financier. Although initially self-funded in truth they were mostly not self-funded after a very short time unless the purchaser asked for a guarantee. 55 In practical terms this practice meant that Finlease had already signed up a customer before AIF was notified of a transaction. It was submitted that there was therefore no opportunity to agree before hand about whether the particular agreement would be one where losses would be taken into account. By this means it was earlier submitted that Finlease was trying to eliminate all credit matrix compliant rental agreements from subclause (d) by a back door approach. 56 The difficulty with clause (d) in the at risk situation is that the language cannot be stretched to fit either parties position without a recast of the whole definition. In the Finlease case it would have to read: 57 "Required Result" means the cash flow return required by AIF as the means of assessing any Secondary Income share. It is the total of the individual amounts of secondary income for each of the rental agreements referred to in (d) below calculated as follows:

(a) the Aggregate Receipts; less (b) any costs of repair, refurbishment, servicing and selling costs incurred in selling equipment other than AIF employee costs; less (c) a monthly holding charge equal to 1% of the Residual Value Position for equipment held as stock from the return of the equipment to the date of sale; less (d) losses arising from the Rental Agreement in respect of which will be the parties have agreed between the parties prior to the commencement of the Rental Agreement that losses may be taken into account including contracted monies that AIF is entitled to receive under such rental agreement and will be equal to at least the residual value position.; less (e) a 15% Administration Fee levied on all the Secondary Income cash flow s ; less (f) any costs of repair, refurbishment, servicing and selling costs incurred in selling equipment other than AIF employee costs; less (g) 58 In the AIF case it would have to read according to their rectification case:

"Required Result" means the cash flow return required by AIF as the means of assessing any Secondary Income share. It is calculated as follows:

(a) the Aggregate Receipts; less (b) any costs of repair, refurbishment, servicing and selling costs incurred in selling equipment other than AIF employee costs; less (c) a monthly holding charge equal to 1% of the Residual Value Position for equipment held as stock from the return of the equipment to the date of sale; less (d) losses arising from the any Rental Agreement which will be agreed between the parties prior to the commencement of the Rental Agreement and will be equal to at least the residual value position.; less (e) a 15% Administration Fee levied on all Secondary Income cash flows; less (f) any costs of repair, refurbishment, servicing and selling costs incurred in selling equipment other than AIF employee costs; less (g) the Residual Value Position" 59 What it would be on the case they argue for on construction was not put forward. I will turn to the rectification aspects before attempting to construe the at risk situation. Rectification 60 As submitted by Finlease the authorities support the proposition that rectification on the basis of the parties' common intention requires proof that, at the time when the contract was executed, both parties had an intention to include in their agreement a term which by mutual mistake was omitted from the agreement or not properly expressed in it: Muriti v Prendergast [2005] NSWSC 281 per White J at [105] referring to Pukallus v Cameron (1982) 180 CLR 447 at 452, 456; Maralinga Pty Limited v Major Enterprises Pty Limited (1973) 128 CLR 336 at 350-351. The fundamental requirement for granting rectification is a continuing common intention of the parties: Ryledar Pty Limited & Anor. v Euphoric Pty Limited [2007] NSWCA 65 per Campbell JA at [281] (with whom Tobias JA and Mason P agreed). Importantly Campbell JA after an extensive review of the authorities concluded: "Conclusion 316 For the reasons I have given, the common intention that is required to grant rectification is subjective. Even though there is a requirement for the intention to be disclosed before it can count as a common intention, that disclosure need not be by words that say in substance "this is my intention" . The need for disclosure fills the role of being a limitation on the types of subjective intention that can be enforced through the remedy of rectification, or a limitation on the circumstances in which a subjective intention must exist before it can be enforced through the remedy of rectification. It still remains that proof of the subjective intention of the parties to the contract is fundamental to the grant of rectification. Hence it is not possible to ignore a factual finding by the trial judge, to the effect that he was not satisfied that the plaintiff intended the rebate to apply in relation to deliveries to any location within New South Wales outside the Sydney Metro locations, and look only to the correspondence for the purpose of finding a "common intention". " 61 There have been many cases referring to the standard of proof. It is normally said that the common intention must be established in "the clearest and most satisfactory manner". See White J in Muriti v Prendergast at [105] referring to Fowler v Fowler (1859) 45 ER 97 at 103; Australian Gypsum Ltd & Australia Plaster Co Ltd v Hume Steel Ltd (1930) 45 CLR 54 at 65; Crane v Hegeman-Harris Co Inc [1939] 1 All ER 662 at 669; Joscelyne v Nissen [1970] 2 QB 86 at 98; The Olympic Pride [1980] 2 Lloyds Rep 67 at 73; Pukallus v Cameron (1982) 180 CLR 447 at 452. 62 Finlease submitted that rectification of the Deed of Variation requires it to be established, by clear and convincing proof, that at the time of that Deed's execution both Finlease and AIF had an actual common intention as to the effect of clause 12.6(b) as set out in the Principal and Agency Agreement which was: (a) Inconsistent with the effect of that clause as it was expressed in the Deed of Variation, and (b) Capable of proof in clear and precise terms, both as to substance and detail of the precise variation which needed to be made. 63 It referred to Australian Hardboards Limited & Ors. v Hudson Investment Group Limited [2006] NSWCA 146 per Santow JA at [73] (with whom Giles JA and Bryson JA agreed). 64 The main discussion on the question of rectification was between Mr Paul Hughes of AIF and Mr Valerio Lorenzelli of Finlease. The discussions began before 22 November 2001 and at that stage they concerned the targets to be achieved which were set out in Annexure A to the Principal and Agency Agreement. Mr Hughes called in his company's in-house counsel, Mr Mason to draft an alteration to the deed to reflect some changes to the targets. A draft deed was prepared but not executed. 65 On 13 December 2001 Mr Lorenzelli sent an email to Mr Hughes in which he asked that AIF remove clause (d) under "Required Result". He gave reasons for seeking that change. On 17 December there was a reply to the email in which Mr Hughes set out his position. In the email he set out six different alternatives. He then offered to meet Mr Lorenzelli to discuss the matter. 66 It appears that a meeting took place on 20 December 2001 at the office of Finlease between Mr Hughes, Mr Lorenzelli and Mr Peter Panagaris also from Finlease and Mr Vatsaklis from AIF. Mr Vatsaklis and Mr Lorenzelli had previously worked together at AGC. According to Mr Vatsaklis a conversation took place in these terms: Lorenzelli: "In relation to Secondary Income I am concerned that the profit share clauses allow for the deduction of all credit losses from future profits, not just credit losses borne by AIF. I want this clause removed, as I believe it impacts on my ability to earn secondary profits." Vatsaklis: "Val, we negotiated this document on day one. I understand your concerns, but AIF could incur losses that could ultimately wipe out any profit received at the end of the lease. Why should we turn around and pay profits on individual deals when we have suffered a loss across the portfolio of Finlease introduced deals. Val, you will remember from our A G C days when I introduced the same clause in its P&A Agreement and you thought it was a great idea. Well this clause is basically the same." Lorenzelli: "Well, I was on the other side of the fence then." 67 Mr Lorenzelli substantially agreed with Mr Vatsaklis. However he says Mr Vatsaklis' response was, "We will see what we can do." 68 In November or December 2001 Mr Hughes had a conversation with Mr Lorenzelli in these terms: "I: Val, as you know we are only prepared to share nett profits. I remind you of our earlier discussions about our funders and our abiding principle of only sharing nett profits. However, I understand where there is no recourse to us we will remove that aspect of loss where we have credit loss recourse. Lorenzelli: It was better at AGC but I would like this change to go through to remove any double dipping." 69 Mr Lorenzelli could not remember that discussion but I accept that it occurred. 70 There was a further discussion between Mr Hughes and Mr Lorenzelli in January and Mr Lorenzelli' evidence is in these terms: NH: What do we need to do so as to write more business under the Principal & Agency Agreement? VL: Nick as discussed many times before my real concern is that I do not want any loss factor under clause "d" of the formula. The ability of FER to write any meaningful volume of business with AIF is impeded by the retention of clause (d) in the agreement. I have raised this with you many times in the past. We also need to ensure that any variation is fully retrospective to the date of the original P & A. NH: I do not know if I can remove clause "d" totally however I will see what I can do and I will see what can be done about a revised volume target. 71 Mr Hughes denied that the question of retrospectivity was mentioned but he otherwise agreed with the conversation. 72 Mr. Lorenzelli's evidence was that some time between 17 December 2001 and 25 January 2002 he had a conversation to the following effect: Mr Hughes: "I am getting the variation document drafted. I can't take out the losses from the calculations completely. What we could possibly do however, in order to address your concerns as to when and how losses are to be taken into account, is to look at cases where AIF is self-funded or guaranteeing the deal. We could look at AIF seeking your approval to take losses into account in those cases." Mr Lorenzelli: "I would consider such a compromise but I will need to see the wording. Please send me the document so I can review it." 73 The matters were obviously discussed between Mr Hughes and Mr Mason and on 24 January Mr Mason sent Mr Hughes an email attaching a deed, which incorporated the changes. That was forwarded on without comment to Mr Lorenzelli at Finlease. The deed, which was attached to those two emails, was in the form that was ultimately signed without any further discussion by the parties. 74 After the variation agreement was signed there was one agreement with Global Network Services where the parties appeared to put into operation a mechanism for agreeing that the agreement should be one in respect of which losses should be shared. In an email from Mr Hughes to Mr Lorenzelli of 15 May 2002 reference was made to two of the advances to be provided to GNS. Mr Hughes drew attention to clause 12.6 of the Deed of Variation and went on to say: "Accordingly, I wish to advise you that this transaction will be funded by AIF. I believe that the security will cover us for any potential losses, however, I would like you to acknowledge by letter before the commencement of the rental agreement that any losses from the rental agreements only (ie the $490,000) will be applied to any future and secondary profits." 75 Mr Lorenzelli accepted that and gave the acknowledgement. Plainly this was putting into effect the procedure that the parties had agreed. 76 Mr Lorenzelli gave evidence that he understood that the variation agreement which had been submitted to him provided that Finlease would only be obliged to take losses on a deal into account for the profit share calculations relating to that particular deal, in circumstances where:

(i) AIF had self funded or guaranteed the deal: and

(ii) AIF had sought the prior approval of Finlease. 77 In an earlier affidavit he also said that he believed that the variation was to be looked at on a contract by contract or deal by deal basis and would be of a non-cumulative nature. In other words each deal was to be considered separately. 78 In cross-examination Mr Hughes expressed his view of how he saw the variation operating. At page 33 and 34 of the transcript the following evidence was given. Q. The way you saw the deal operating if this proposal was accepted by Mr Lorenzelli was in the case of externally funded deals where there was no recourse to AIF there would be no loss shared at all? A. Correct. Q. Any self funded losses would only be shared if it was agreed before being entered into between AIF and the lessee that that would be an event in which there was loss sharing? A. Correct. 79 Mr. Hughes was taken to the GNS correspondence and he agreed that it reflected his understanding of the new sub clause (d) and how it would apply in practice. Mr. Hughes was re-examined on this topic as follows: Q. You were asked some questions about the three facsimile messages at page 230 and you said in answer to my learned friend when you were asked the question that you wanted to give Val opportunity to back out of this particular Global Network Services deal? A. Yes.

Q. If he had informed you that he was not prepared to loss share in respect of that deal would you have proceeded with the deal? OBJECTION ALLOWED A. We would have had to go back as a creditor committee to decide we wished to proceed with the deals and not have any offset for losses should they arise and that would have been only a committee decision."

80 There does not seem to be disagreement on this evidence that each party intended that in situations where AIF was at risk the losses would be taken into account if the parties agreed before entering into a particular agreement that it was one in respect of which that would be the case. What is not clear is the mechanism whereby that would be achieved, whether it would be on a deal by deal basis or a global approach and whether the secondary profits from at risk deals where there were no losses should be taken into account. On the evidence before me they did not discuss that aspect. 81 There is thus a clear basis for rectifying the variation to at least provide for the missing object for the expression "which will be agreed.." This could be done in this way: "(d) losses arising from the Rental Agreement in respect of which will be the parties have agreed between the parties prior to the commencement of the Rental Agreement that losses may be taken into account and will be equal to at least the residual value position.; less" 82 This rectified clause has to be seen in the context of what the parties in fact agreed up until that time about the mechanism for calculation of losses and the context of what they had agreed in respect of the not at risk losses. I refer to the need to take into account in the formulae the receipt of the contracted rentals where losses from an income stream were concerned. They did not discuss any change on this aspect and a construction which accommodates this aspect would have the clause read as follows: "(d) any losses arising from the Rental Agreement in respect of which will be the parties have agreed between the parties prior to the commencement of the Rental Agreement that losses may be taken into account including contracted monies that AIF is entitled to receive under such rental agreement and will be equal to at least the residual value position.; less" 83 Putting this into the existing definition of required result in the at risk case under clause 12.6(b) produces the following: "Required Result" means the cash flow return required by AIF as the means of assessing any Secondary Income share. It is calculated as follows: (a) the Aggregate Receipts; less (b) any costs of repair, refurbishment, servicing and selling costs incurred in selling equipment other than AIF employee costs; less (c) a monthly holding charge equal to 1% of the Residual Value Position for equipment held as stock from the return of the equipment to the date of sale; less (d) any losses arising from the Rental Agreement in respect of which the parties have agreed prior to the commencement of the Rental Agreement that losses may be taken into account including contracted monies that AIF is entitled to receive under such rental agreement and will be equal to at least the residual value position.; less (e) a 15% Administration Fee levied on all Secondary Income cash flows; less (f) any costs of repair, refurbishment, servicing and selling costs incurred in selling equipment other than AIF employee costs; less (g) the Residual Value Position" 84 Once again it is to be remembered that this definition operates in the context of the new clause 12.4 which is: "12.4 Subject to clause 12.5, 12.6 & 12.7, AIF and the Agent will each be entitled to 50% of all Secondary Income based on the calculation defined as Required Result." 85 Although the use of the word "all" connotes income from a number of agreements which is to be determined by "the calculation" its meaning as I have pointed out above in paragraph 44 has a reduced effect. 86 This clause and the definition could mean the entitlement to either:

(a) Secondary income from all at risk deals less losses from those agreements where there was prior agreement,

(b) The total of any net secondary income from each of those at risk deals where there was prior agreement and the secondary income from all other at risk deals, or

(c) The total of any net secondary income from each of those at risk deals where there was prior agreement. 87 The first approach is a truly global approach as no losses are quarantined. The second was advocated by Finlease and gave it the best of both worlds. It got a share of all secondary income with losses being quarantined within each particular agreement within the rubric of deals where there was prior agreement. The third was not advocated by any party. 88 Clause 12.6 (b) uses the words "for the purposes of calculating the required result and the secondary income relevant to such rental agreement". It does not say "such rental agreements" and reads as if it were "such a rental agreement". As 12.6 (b) is only defining a class of agreements it probably does not matter. 89 The definition has to accommodate cases where in respect of prior agreed rental agreements there are some where there will be losses and some where there will be no losses. 90 Clause 12.4 gives the entitlement and 12.6 is merely the mechanism for applying different rules to the two classes of agreement. There are only two classes of agreement not three with one of them being left out in 12.6. Thus "all" in 12.4 still has some role to play and for this reason I would reject the third approach in 82 (c) above. 91 In choosing between the remaining alternatives the difficulty is that the drafting of (d) in the required result is done from the perspective of the object to be achieved rather than the mechanism by which it is achieved in the context of the remaining parts of the definition. Applying the purpose that is expressed and the hierarchical structure of the definition I would construe it in accordance with the first approach in paragraph 82 (a) above. Where there are no losses the aggregate receipts in such case would be limited to the secondary income. 92 This construction gives sufficient content to the definition and the clause is not void for uncertainty. On the proper construction of the agreement do the three St Stephens rental agreements settled in December 2000 and February 2001 fall within the definition of a "Rental Agreement" in the agreement? 93 AIF alleges that losses arising from its rental agreements with St Stephen's College form part of the calculation of the profit share entitlements of Finlease pursuant to the Principal and Agency Agreement. AIF calculates these losses to be in the sum of $478,608.28 and asserts that these losses exceed Finlease's claim to secondary income. The rental agreements between AIF and St Stephen's College were entered into prior to the commencement of the Principal and Agency Agreement, and without any reference to secondary income share being governed by the Principal and Agency Agreement or being otherwise in accordance with the provisions of the Principal and Agency Agreement. 94 The definition of "Rental Agreement" in clause 1.1 of the Principal and Agency Agreement reads as follows: " "Rental Agreement" means any rental Agreement in a form approved by AIF entered into or to be entered into in accordance with the provisions of this Agreement as arranged by the Agent for approved Customers in respect of any equipment". 95 It was Finlease's submission that a rental agreement entered into prior to the date of the Principal and Agency Agreement could only fall within the definition set out above if it were none the less "in accordance with the provisions of" the Principal and Agency Agreement. That is, if it were in terms entered into in anticipation of that agreement and expressly stated that it was to be governed by the terms of the Principal and Agency Agreement when executed. 96 In a facsimile of 7 December 2000 Mr Lorenzelli said to Mr Vatsaklis when talking of this deal: "In addition because this transaction would be completed on a fully amortised basis we will needed to have in place a 50/50 back end split. This would be required before settlement." 97 This lead to a letter in late 2000 from Finlease to AIF which was signed by both in these terms: "Australian Integrated Finance Attention: Sam Vatsaklis Level 12, 9-11 Castlereagh Street Sydney NSW 2000 Dear Sam, Firstly thank you for your co-operation in getting the Saint Stephens College transaction across the line for us and secondly attached are the two settlements for the transaction. In reference to our earlier discussion regarding this transaction can you please confirm by signing a copy of this letter the following: · Transaction written to a one dollar residual. · Your company will share with Finlease 50/50 any inertia and profit on sale of any of the equipment associated with this deal. · Your company will take out 15% of any inertia payment for administrative purposes before profit splitting Wishing you all the best for the festive season and hope that 2001 is an extremely successful year for you." 98 This letter comprised all the arrangements about the matter and resulted from a conversation that Mr Vatsaklis put in these terms. "Lorenzelli: "There are huge inertia prospects and a lot of secondary income to be derived on this deal, because mobile buildings are long-term assets. I want it to be specifically understood that for this transaction AIF will share all inertia income equally with Finlease including any profit from sale of the buildings, that is after your 15% administration fee." I: "Val, we have agreed to that. I am happy to give you a letter confirming this arrangement and that these deals will be included in the Principal and Agency Agreement once it is finally signed." Lorenzelli: "No, l can't be sure that it won't be missed and there is a huge upside. I will draft the letter and you can acknowledge receipt." 99 Mr Lorenzelli denied that Mr Vatsaklis said "these deals will be included in the Principal and agency agreement once it is signed". That difference does not have to be resolved as immediately after the conversation both parties signed the above letter drafted by Mr Lorenzelli which set out the relevant terms of the profit sharing. Notably it did not make reference to such a matter. 100 In my view it was a separate arrangement and did not fall within the definition of rental agreement in the Principal and agency agreement. On the proper construction of the Deed of Variation, does that Deed vary the Agreement so as to prevent the bringing to account of any losses from Rental Agreements settled before 1 February 2002? 101 This is raised by AIF to preserve the pooling approach they say is evident from the arrangement before variation and take that result into the final determination of the present entitlement if any to a share of secondary income rather than applying the Finlease construction of the variation to the whole of the period since the Principal and Agency Agreement was signed on 8 March 2001 102 In the context of my present findings and the fact that the present varied clauses do no more than provide present entitlement and impose a corresponding obligation it must take account of relevant matters back to the Principal and Agency Agreement. Estoppel 103 The issue here according to AIF is whether Finlease is estopped from denying that the terms of the legal relationship between the AIF and Finlease, as principal and agent, included that no prior agreement was required between AIF and Finlease to take into account losses for a self-funded Rental Agreement, where: (i) the application for the rental finance was for an amount less than $50,000 and it complied with AIF's Credit Matrix; or (ii) the application for the rental finance was for an amount of over $50,000 but less than $100,000 and AIF had authorised Finlease to issue a letter of approval to the applicant for the rental finance; or (iii) the application for the rental finance was for an amount greater than $100,000.00 but Finlease were already aware prior to settlement that AIF was self-funding or likely to self-fund the Rental Agreement. 104 Paragraph (i) was to cover the credit matrix approvals, (ii) is not relevant as there were no such agreements and (iii) was intended to cover the St Stephens agreements. The claim is predicated on AIF's construction of the variation agreement not being adopted by the court. 105 It does not arise on my present findings but if it did there would be a strong case to suggest that there was no such estoppel. This is because there does not seem to be any evidence that either, let alone both, parties adopted the assumption. There has been no sharing of secondary profits before this dispute arose. 106 I direct the parties to bring in short minutes to reflect these reasons and to give effect to any necessary accounting. **********

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