BBB Constructions v Aldi Foods [2010] NSWSC 1352 | Case summary

BBB Constructions v Aldi Foods [2010] NSWSC 1352 | Case summary | Zoe

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2007/266522 BBB CONSTRUCTIONS PTY LTD v ALDI FOODS PTY LIMITED JUDGMENT 1 HIS HONOUR: The plaintiff (BBB) owns land located on Botany Road, Alexandria (the land). It negotiated with the defendant (Aldi) for Aldi to take on lease a stratum in a building to be constructed on the land. Those negotiations proceeded to the point where there was consensus on the principal commercial terms of the lease; heads of agreement had been exchanged; and the drafting of the detailed terms of an agreement for lease, to be executed and exchanged, was finalised. Aldi withdrew from the negotiations, and declined to execute the agreement for lease. BBB says that, in so doing, Aldi acted in a way that was misleading or deceptive, or unconscionable (both under the general law and by statute). Alternatively, BBB says, Aldi is estopped from denying that it had agreed to lease the stratum "on terms as finally agreed". Aldi denies that it is liable in any of those ways. It says that the parties negotiated on the express basis that neither would be liable unless and until an agreement for lease, setting out all the terms of their bargain, was executed and exchanged. The real issues 2 The parties agreed on the real issues in dispute. I set out those issues: 1. Whether the defendant has, in trade or commerce, engaged in conduct which was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 and 51A of the Trade Practices Act 1974 (Cth). 2. Whether the defendant has engaged in unconscionable conduct in contravention of sections 51AA of 51AC of the Trade Practices Act 1974 (Cth). 3. Whether, by reason of equitable estoppel, the defendant is estopped from resiling from representations, or conduct, which induced an expectation or assumption in the plaintiff that the defendant would enter into a binding agreement for lease of the premises. 4. Whether, by reason of conventional estoppel, the defendant is estopped from resiling from a mutual or common assumption, adopted by the parties as a basis of their relations, to the effect that the defendant would enter into a binding agreement for lease of the premises. 5. Whether the plaintiff is entitled to payment, by way of quantum meruit or restitution, for work provided and costs incurred in connection with the proposed lease, the redesign and construction of the site and the premises to meet the defendant's requirements and the further redesign to meet the defendant's requirements and the further redesign and construction to enable the provision of reasonably lettable space in place of the premises. 6. What loss or damage the plaintiff has suffered by reason of the defendant's conduct. 7. Whether the plaintiff is entitled to damages from the defendant pursuant to s 82 of the Trade Practices Act 1974 (Cth) and, if so, in what amount. 8. What is the equity, if any, to which the plaintiff is entitled. 9. Whether the plaintiff is entitled to equitable compensation from the defendant and, if so, in what amount. 10. Whether the plaintiff is entitled to restitution from the defendant and, if so, in what amount. Parties and personnel 3 BBB is a joint venture company formed to undertake a development of the land. Its name is derived from its three principals: Mr Philip Bart, Mr Nicholas Bettar and Mr Paul Bettar. Mr Bart and Mr Paul Bettar gave evidence. Mr Nicholas Bettar did not. For convenience, I shall refer to Mr Paul Bettar simply as "Mr Bettar", and to his brother as "Mr Nicholas Bettar". 4 Mr Bart had had experience in property development. Mr Bettar had not. His business experience had been in the clothing industry. Mr Nicholas Bettar was the managing director of Baseline Constructions Pty Limited (Baseline). Baseline, a building company, was owned by the Bettar family. It contracted to undertake the construction work on the land. Mr Bettar managed the project on behalf of BBB, but reported to and took advice and instruction from Mr Bart. 5 Aldi is a subsidiary of the well known German-based supermarket chain. At the relevant time (from May 2006 until August 2007) its "managing director" for New South Wales was Mr Stefan Kopp, and its "managing director" for Australia was Mr Michael Kloeters. Aldi employed a number of "property directors", including Mr Joshua Brassington and Mr Jon Savell. It was part of their responsibilities to locate suitable sites for Aldi to establish a supermarket, and to negotiate the terms on which Aldi might acquire an interest in that site (either by way of purchase or by way of lease). However, the decision, as to whether Aldi should commit itself by the execution of a legally binding agreement, was one to be made by Mr Kloeters and Mr Kopp. Approach to the assessment of evidence 6 In my view, the relevant principles, in a case such as this, are set out in the judgment of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318-319. His Honour there described the approach that the court should take to the assessment of evidence relating to disputed allegations of misleading or deceptive conduct said to have been perpetrated by means of oral representations. As his Honour said, the party asserting misleading or deceptive conduct needed to show what the conduct was and why it was misleading. Where the conduct is said to have been found in oral representations, it is necessary, his Honour said, "that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances". The need for precision was important because the question of whether the words were misleading might depend upon "relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition". 7 Further, as his Honour pointed out, human memory is fallible. Common experience suggests that fallibility increases with the passage of time. That is particularly so, his Honour said, "where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said". 8 In summary, as his Honour said:

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All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. 9 His Honour pointed to the need for the court to feel some sense of actual persuasion of the existence of each element of the cause of action. That did not mean that proof is to be achieved other than on the balance of probabilities. It directs attention to the concept of proof, and the concept of satisfaction. (See, too, my judgment, with which McColl and Bell JJA agreed, in Nguyen v Cosmopolitan Homes [2008] NSWCA 246 at [44] to [55].) 10 The consequences of those considerations was, McLelland CJ in Eq said, that a party relying on spoken words as the foundation of a cause of action for misleading or deceptive conduct might face serious difficulties, "in the absence of some reliable contemporaneous record or other satisfactory corroboration". Credibility 11 Mr Bart and Mr Bettar gave evidence by affidavit, and were cross-examined. I had concerns with aspects of the evidence of each of them. Further, I think, the evidence of each was overlaid, unconsciously or otherwise, by perceptions of self-interest and by a serious - indeed, fixed - view that BBB had been wronged at the hands of Aldi. In those circumstances, I think, the evidence of each of them, in relation to the relatively small areas of factual dispute, needs more than usually close examination before it can be accepted. 12 Each of Mr Bart and Mr Bettar insisted, at every possible opportunity, that BBB had reached a "binding agreement" with Aldi, and that they acted (and caused BBB to act) on the faith of that binding agreement. However, it appears, each of them perceived this binding agreement to be something less than a "legally binding agreement". The distinction is one that is difficult to understand, and their evidence does not assist in this regard. Mr Bart's evidence in particular is difficult to accept on this point, coming as it did from an experienced, and apparently astute, capable and successful, businessman. He recognised that, in general, for an agreement involving the disposition of an interest in land to be enforceable, it should be in writing. Nonetheless, he maintained, it was his understanding that BBB had achieved a "binding" agreement with Aldi. 13 There were other aspects of Mr Bart's evidence that gave me concern: for example, his evidence that he believed that the parties were "wholly in agreement" by the end of September 2006. This was inconsistent with the facts, and no basis for such a belief was shown. Again, when questioned on BBB's negotiations with another supermarket operator to take a lease of the space that was the subject of the discussions with Aldi, Mr Bart denied that he sought to use this in his "negotiations with Aldi to try to get Aldi over the line… " (T176.30). That denial, which was clear and emphatic, was inconsistent with an email sent by Mr Bart to Mr Bettar on about 8 June 2007, instructing Mr Bettar to do that very thing in a meeting with Aldi to be held in a few days time. Even when confronted with this document, Mr Bart refused to acknowledge the obvious, and said that "[w]hat I was really doing was venting - venting my spleen and my frustration as much as anything else" (T177.25). 14 Further, as to Mr Bart, it became apparent during his cross-examination that he had no real recall of events. He relied very heavily on his affidavit, and I observed that whenever he was questioned about a matter of detail, he would refer to it carefully before giving an answer. I do not go so far as to say that Mr Bart did this to ensure that his evidence in cross-examination was consistent with his affidavit. I do however think that, as I have indicated, it shows that his recollection was otherwise defective. 15 Mr Bettar, too, was given to looking backwards and forwards through documents before answering questions. I noticed that, when he had a volume of the court book before him and was being questioned on a particular document, he would search back and forth through the court book either before answering or during his answer; and he would also do so while the next question was being formulated. He was requested to confine his attention to the particular document on which he was being questioned, but I noticed that he continued to look at other documents, although less frequently than before. 16 Further, as to Mr Bettar, it is clear that he is under some degree of financial strain. He said, more than once (and not always in response to the particular question that had been asked) that his family had mortgaged all of its assets to provide its share of the capital for the joint venture. I think that this is something that has contributed to - indeed, explains - the perception of self-interest and the view that BBB had been wronged by Aldi, to which I have referred. 17 Mr Bettar, too, was cross-examined about BBB's dealings with another supermarket operator referred to at [13] above. He claimed to have been told by a representative of that operator that it could not trade out of the basement. However, both contemporaneous documents and Mr Bettar's own affidavit (of 5 June 2009, para 13 read in conjunction with T144.5-.35) show otherwise. 18 Having said that, I acknowledge that many of the matters of which Mr Bettar gave evidence were consistent with his contemporaneous documents. It was not put to him that those documents were fabricated, or false, and I do not find that they were. Mr Watson submitted that the contemporaneous documents provide support for Mr Bettar's evidence; and to some extent, they do. This is not always of great significance, because the documents report on (for example) conversations as one might expect: in a conclusory, impressionistic or summary form. Further, there is a tendency in Mr Bettar's affidavit to overstate, or exaggerate, in a way beneficial to BBB, what is said in documents that he puts in evidence. I do not know whether this tendency is due to natural optimism, the factors of self-interest and grievance to which I have referred or a more general inclination to seek to improve BBB's case. If that tendency were due to innate factors rather than factors connected with the litigation, it might give some reason for questioning the accuracy of Mr Bettar's contemporaneous documents. However, notwithstanding those doubts, I am prepared to start with a predisposition in favour of accepting Mr Bettar's evidence to the extent that it is supported by his contemporaneous documents. 19 Where there is no such foundation for Mr Bettar's evidence, and as to Mr Bart's evidence generally, I think that it is necessary to scrutinise what they say with care, and to weigh it against contemporaneous documents to the extent that they assist, and the probabilities objectively ascertained, before relying on it. 20 For Aldi, Messrs Brassington, Savell and Kopp gave evidence. Messrs Brassington and Savell are no longer employed by Aldi. Indeed, Mr Brassington left Aldi's employ at the end of January 2007, whilst the negotiations were in progress; but he was retained thereafter to continue the negotiations as a consultant on behalf of Aldi. I do not know whether or not Mr Brassington has any ongoing business association with Aldi. Certainly, it was not put to him that he did; or that his evidence was influenced by any perception of self-interest arising out of whatever (if any) ongoing business association there may be. 21 I found Mr Brassington to be an impressive and reliable witness. He appeared to have a good recall of relevant events. His answers were straightforward and responsive. To the extent that his evidence can be tested against objective matters (such as contemporaneous documents), it appears to be accurate. I do not think that Mr Brassington was motivated by any desire to serve Aldi's cause. 22 Mr Savell is now working for another company in the property management industry. He does not appear to have any ongoing connection with Aldi. I think he can be regarded as an independent and reliable witness, to the extent of his memory. However, and perhaps not surprisingly, he did not appear to have a detailed recollection of relevant events, although I am satisfied that his evidence, at least in the relatively broad terms in which it was given, can be accepted as reliable. 23 Mr Kopp was an impressive witness. He is still employed by Aldi (although with a different title). It was not put to him that he had tailored his evidence to suit his employer's case. Nor do I think that he did so. On the contrary, I think, Mr Kopp's evidence was straightforward and reliable. He seemed to have a clear recollection of relevant events, and gave his evidence in a forthright fashion. 24 One other matter that disposes me to accept the evidence of Messrs Brassington and Kopp is that, where appropriate, they made concessions, even where the concessions might have been seen not to be in Aldi's interest. By contrast, Mr Bart to some extent and, more substantially, Mr Bettar were inclined to argue, and to seek to evade points of difficulty. Although I attribute that to the factors of self-interest and grievance to which I have referred, it diminishes my confidence in the reliability of their testimony. 25 In addition, BBB and Aldi called as witnesses the solicitors who had represented them in the transaction. BBB called Mr Robert Kalde, a principal of the firm then known as KQ Lawyers, and Mr Ben Rogers, then an employee of that firm. Aldi called Mr John Brophy, of Brophy Bridge and Mirow. 26 Mr Kalde was cross-examined, relatively briefly. Messrs Rogers and Brophy were not required for cross-examination. 27 Although I express no criticism of Mr Kalde's honesty or objectivity, I note, with some disquiet, that he is now a partner of the firm of solicitors acting for BBB in this litigation, and indeed was present for most of the hearing to instruct counsel. There were two aspects of Mr Kalde's evidence that were contentious. It is, in my view, undesirable for a lawyer both to act for a party to litigation and to give evidence on a contentious matter in the interest of that party. Having said that, I do not think that Mr Kalde sought to do other then give truthful evidence to the best of his ability. 28 Aldi also called an architect, Ms Gillian Donaldson, who had been engaged to prepare plans for its proposed supermarket. There was no attack on the credibility of Ms Donaldson's evidence (which did not in any event go to the relatively few disputed questions of fact). I accept it. 29 As I have said, the disputes of fact are relatively limited, both in number and in extent. They involve, as to some meetings, a conflict between the evidence of Mr Bettar and Mr Brassington; and, as to another meeting, a conflict between the evidence of those two gentleman and their respective legal advisers. More generally, they involve disputes as to representations said to have been made by Mr Brassington at various meetings; but the significance of those disputes (and of the alleged representations) is much diminished when one takes into account what Mr Bettar in particular said in cross-examination. 30 For the reasons I have given, in general I prefer the evidence of Mr Brassington to that of Mr Bettar to the extent that they are in conflict, except in the cases to which I refer where Mr Bettar's evidence is supported by contemporaneous documents. In respect of the meetings in which Mr Kalde was involved, I prefer the evidence of Mr Brassington to that of Mr Kalde. In this case, for reasons that I shall elaborate in dealing with the particular meetings (which took place on 8 November 2006 and 30 March 2007), I think that Mr Brassington's evidence is consistent with the probabilities, regarded objectively; and that the comments attributed to him by Messrs Bettar and Kalde are inconsistent with those probabilities. 31 There is a minor conflict between Mr Brophy and Mr Rogers as to another conversation on 30 March 2007. Since neither of them was required for cross-examination, the dispute can be left, as apparently the parties were content to do, unresolved. The expert evidence 32 The parties relied on the evidence of numerous experts. That evidence is relevant to BBB's claim for damages. Since I have concluded that BBB's claim must fail, and also because it was agreed in any event that if the question of damages arose, it should be dealt with (in the absence of agreement) once the question of liability had been decided, I shall not comment on that expert evidence. I do however note that the opposing experts conferred, and reduced the areas of disagreement between them in a very helpful way. The project 33 The land is a site bounded by Botany Road to the east, McEvoy Street to the north, Wyndham Street to the west and Retreat Street to the south. BBB bought the land with the benefit of an existing development consent. Work under that consent had been commenced. Demolition was complete. Some works of excavation and piling were also complete. 34 The project, as approved, comprised the construction of four mixed use buildings on the site. Those buildings were titled by reference to the street that they fronted: building B (which is the building with which these proceedings are concerned), building M, building W and building R. BBB's intention was to develop and sell building B and to retain buildings M, W and R in the longer term as investments. 35 The consent provided for a development (referred to in the evidence from time to time as "scheme A") that comprised 122 residential apartments, 177 square metres of retail or commercial space and 112 residential car spaces. The consent effectively utilised the full allowable floor space ratio. Accordingly, any modification of the approved development, to increase the area for retail or commercial use, would require, in effect, that floor space be "exchanged" between one form of use and another; and in addition, there may have been absolute limits on the extent to which the responsible authority, Sydney City Council (the Council), would countenance expansion of particular uses. 36 The development approved by the existing consent provided for the retail or commercial space to be aboveground (I think, at street level) with the residential apartments built over it, and for the basement to be used only for carparking. The excavation and piling works that had been performed were adapted to those purposes. The first stage of negotiations 37 The evidence traversed a vast number of meetings and discussions. I do not propose to refer to it all. What I will do is set out what seem to me to be the salient points, dealing in particular (but not only) with the discussions and letters which are particularised as giving rise to the representations alleged in para 8 of the contentions set out in BBB's further amended commercial list statement (FACLS). I set out that paragraph (although not the detailed particulars) at [242] below. The initial negotiations with Aldi 38 Once contracts for the purchase had been exchanged (the purchase was undertaken by a trustee for BBB, but nothing turns on this), Mr Bart instructed Mr Bettar to find tenants for the retail and commercial spaces. Mr Bettar approached a number of prospective tenants, some of whom expressed interest in taking a lease of the available retail or commercial space in building B. One of the perspective tenants that Mr Bettar approached was Aldi. He spoke to Mr Brassington. Mr Brassington was interested, because Aldi was looking to expand its operations into the inner southern and eastern area of Sydney. 39 On 31 May 2006, Mr Bettar, Mr Nicholas and Mr Brassington met at BBB's offices in Wyndam Street. Mr Bettar prepared "minutes" of that meeting, which I accept as substantially accurate. Mr Brassington confirmed that Aldi was interested in taking about 1,150 square metres to 1300 square metres. He specified certain basic requirements that Aldi would have, and undertook to forward a "Generic Lessor / Lessee scope of works". There was some discussion of a rental per square metre. However, Mr Brassington said, Aldi preferred to own rather than rent. 40 Mr Bettar's minutes include the following items: 12. PB asked if Aldi would be interested in a shop front with escalators down to the basement level and then they would be able to have on grade parking. Joshua stated that that would definitely be his preference as they are destination shopping and signage is all they would need on street level. He also stated that on ground level he could not offer what we could get in the market. 13. NB advised that this would be a problem as we would loose [sic] FSR if we look [sic] this option and a cost of about $3.3 million would be incurred to go down another level. 14. Joshua stated that ALDI would defeinatel [sic] be interested in buying the whole level as a stratum with a shop front and he believed he could make it worth while. 41 Item 13 needs some explanation. If Aldi were to take a lease of a basement, building B would need substantial redesign. As approved, it contained one basement level (B1) for residential carparking. If that level were to be, in effect, given over to Aldi for use as a supermarket, BBB would need to construct a lower basement level (B2) for residential parking. In addition, since the approved development utilised all the available floor space ratio for the land, there would need to be some "juggling" of floor space ratio between the different uses. All of this meant that:

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45 Mr Bettar discussed the offer with Mr Bart and Mr Nicholas Bettar. Mr Bart said that the offer was too low, and that in any event his preference was to lease rather than sell. The meeting of 28 June 2006 46 Messrs Bart, Bettar and Brassington met on 28 June 2006. According to Mr Bart, Mr Brassington said during that meeting that "Aldi is a very easy company to deal with". That is inconsistent with Mr Brassington's account of the conversation. According to Mr Brassington, he had pointed out that Aldi could be a difficult company to deal with. 47 Mr Bart also said that Mr Brassington said words to the effect that "board approval means the managing director looking at the site and giving it a tick". Mr Brassington denied that he said words to that effect. 48 I prefer Mr Brassington's account of the conversation. In part, that reflects my general preference for his evidence over that of Messrs Bart and Bettar to the extent of conflict. In addition, it seems to me that it is objectively more likely that Mr Brassington would have used words of the kind that he claimed to have uttered rather than words of the kind attributed to him by Mr Bart. That is because (as events proved) Aldi was anything but an easy company to deal with; and the requirement for "board approval" was anything but a formality. By June 2006, Mr Brassington had been working for Aldi, as a property director and in other roles, for about seven years. He impressed me as an intelligent and observant person. I cannot believe that he could have thought that Aldi was an easy company to deal with, or that it was inclined to regard "board approval" as, in effect, a formality. If Mr Brassington had used words of the kind attributed to him by Mr Bart, it would have been a serious and intentional misrepresentation of what, I think, was likely to have been his understanding at the time. It was not put to Mr Brassington that he had engaged in serious and intentional misrepresentation, and I am not prepared to find that he did so. Aldi's offer to lease of 29 June 2006 49 On 29 June 2006, Mr Brassington wrote to Mr Bettar. The letter referred to the meeting the previous day and stated: We note that your preferred position is now to negotiate a Lease with Aldi Stores… . With that in mind, we now propose an alternate offer to our previous proposal of 9 June 2006. Our offer to Lease is based on the following terms and conditions: … 50 There followed a statement of "terms and conditions," ranging from matters as basic as the area to be leased, the term of the lease and the price to be paid to matters of detail such as floor loadings, truck sizes and the like. The letter also stated, in relation to "Lease Documentation": ALDI's standard agreement for lease and lease documentation is to be adopted. Each party will be responsible for their own legal and consultant fees. ALDI will pay stamp duty and lease registration costs.

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(4) other, more detailed matters. 56 This is the first matter referred to in the particulars to para 8 of the FACLS. That paragraph of the particulars reads: (a) On or about 4 July 2006, Mr Brassington said to Mr Bettar that: the defendant's board approval process is far simpler than other organisations; it could be as fast and as simple as driving the managing director past the site and simply getting his approval to proceed; and the defendant's managing director of NSW and the managing director of Australia had given Mr Brassington approval to proceed with an agreement for lease. 57 The remarks attributed to Mr Brassington in this item of the particulars are not reflected in Mr Bettar's minutes or letter. Mr Bettar asserted, in his principal affidavit, that those words were said. Mr Brassington denied that he said that the two managing directors had given him approval to proceed with an agreement for lease. I prefer Mr Brassington's evidence to that of Mr Bettar, for the reasons that I have given. I do not think that Mr Brassington is a man who would make serious and intentional misrepresentations of fact in the course of business negotiations. 58 I should note that, in his affidavit, Mr Bettar said that by 4 July 2006, he understood from what Mr Brassington had said at the meeting of that date "that Aldi's board had given its approval for the entering of an agreement to lease the site". 59 Mr Brassington denied that he said words to that effect, and I find that no such words were said. Further, Mr Bettar effectively backed down on this somewhat extreme statement in his cross-examination. To my mind, Mr Bettar's preparedness to make such a strong statement, which he would not sustain in cross-examination, is another reminder of the need to scrutinise his evidence with extreme care. It is clear from Mr Bettar's evidence as a whole that he understood, as at 4 July 2006 and for some time thereafter, that the only "approval" Mr Brassington had was an approval to continue with negotiations. BBB's letter of 7 July 2006 60 BBB's letter of 7 July 2006 confirmed the matters discussed, and referred to the possibility of Aldi's being given an option to buy the stratum "recognising, in the price, the total income of the area divided by the appropriate yield". It then stated: Joshua, basically all the above points other than the payment of outgoings, are basically in line with the offer you made during our meeting on Tuesday, 4 th July. We are meeting with our architect on Tuesday 11 th and, as proposed Aldi layout has a significant impact on the rest of the building, we would appreciate your response sooner rather than later. The last point to note is that the number of pages of general terms and conditions that you forwarded with your last offer needs to be considered carefully. We propose that if we can come to an "in principle" agreement quickly, we will then address in detail, all other, what I would refer to as , mechanical issues. 61 Mr Bettar acknowledged, by reference to the last paragraph of the letter that I have just set out, that as at 7 July 2006 there was not even an "in principle" agreement. The meeting of 14 July 2006 62 The particulars next refer to a meeting between Messars Bettar and Brassington on 14 July 2006. The particulars are: (b) On or about 14 July 2006, Mr Brassington said to Mr Bettar that the defendant liked the Site; it was ready to make an immediate deal and to commit; and it wanted to be operating as soon as possible. 63 Mr Brassington denied that he said that Aldi was "ready to make an immediate deal and to commit". Although Mr Bettar's account of those words is supported by both a contemporaneous note in his diary and a contemporaneous email to Mr Bettar, Mr Brassington's position is confirmed by a letter that he wrote on 14 July 2006 to Mr Bettar. Omitting formal parts, that letter reads as follows: I refer to your correspondence of 7 July 2006, and our meetings of 12 and 14 July 2006 regarding the above. As per our most recent meeting of 14 July, I confirm ALDI's position as follows: 1. Our preferred position is to purchase the retail stratum with associated carparks. No other retailer to be located on the first level basement. Our price for the purchase of the first level basement is $9,100,000.00. 2. Our second preference is to Lease. Rental: As agreed at $425/m - however we will only require 1,100m2 to a maximum of 1,200m2. Term: TBC. We note your preference for a 15 year term. We concur with your 7 July correspondence and note that the above offer is based on the 'details' of any proposal being agreed between the parties. 64 There is no evidence of any protest from Mr Bettar to the effect that Mr Brassington had gone back on what he had said on 14 July 2006, or that Mr Brassington's letter misrepresented (by understating) the true position. 65 In those circumstances, I prefer Mr Brassington's denial to Mr Bettar's assertion. I find that the disputed words were not said. Aldi's letter of 18 August 2006 66 Aldi's letter is the third item referred to in the particulars. The particulars read as follows: (c) By letter dated 18 August 2006, the defendant confirmed its "strong interest in the site" and stated that its communication "provid[ed] a level of comfort regarding our commitment". 67 The letter did use the words stated in the particulars. However, those words were preceded by statements of Aldi's position on various matters (including outgoings) in terms that suggested continuing disagreement on important points. 68 It might also be noted that the letter of 18 August 2006, when read in its entirety, is consistent with position stated in Mr Brassington's letter of 14 July 2006, and inconsistent with the level of commitment attributed by Mr Bettar to Mr Brassington in their conversation that day. Further negotiations leading up to "heads of agreement" 69 I have set out in some detail the initial stages of the negotiations, in an attempt to set the scene. I do not propose to take the same approach in dealing with the negotiations thereafter. It is sufficient to say that, in the course of numerous meetings and correspondence, Messrs Bettar and Brassington sought to negotiate the essential commercial terms on which BBB and Aldi could proceed. 70 Mr Bettar's evidence was that he acknowledged that the negotiations, and consummation of the relationship, would involve three stages:

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(4) access to and from Retreat Street. 87 As to this last matter, Mr Bettar's note reads: As mentioned BBB construction will use our best endevours [sic] to obtain approval for right access / egress to retreat [sic] during limited times. Eg No Right Turn 6 - 10.00am 3 - 6.00pm 88 Mr Bettar's affidavit expanded on those notes. As to the last point (access to and from Retreat Street), it attributed to Mr Brassington (after Mr Bart had said that BBB would use its best endeavours but could not guarantee the outcome) the following comment: I understand, however I need to know that you will use your best endeavours and that you will provide me with all of the documentation in your DA application. If you don't get it, it will not be a deal breaker as long as you make an attempt. 89 According to Mr Bart, Mr Brassington said "[a]t the end of this meeting": As to Botany Road, we agree that you are to use your best endeavours to get a right hand turn into Botany Road from Retreat Street, but we recognise that this may not be possible. We are now in full agreement on all matters and you should expect to receive our lease document very soon. Let's get it signed. 90 Mr Bart referred to BBB's letter of 13 November 2006 to Aldi - the final version of the attempt to reach heads of agreement. In relation to access to and from Retreat Street, it says no more than that "[a]s mentioned", BBB would use its best endeavours. 91 Mr Kalde dealt with this meeting in his affidavit. He did not cover all the matters to which Mr Bettar had referred. However, as to the question of vehicular access, Mr Kalde set out the following (affidavit sworn 26 June 2008, para 4 (a)): (a) As to vehicular access: Mr Brassington said, "One of the issues of concern is ingress to and egress from Rawson Street. It is important to Aldi that there is adequate vehicular access to the store". Mr Bettar said: "We will submit to the council whatever you like, but you have to accept that they might not approve exactly what you want. You will of course have vehicular access approved, though perhaps not as good as you would like." Mr Brassington said, "Paul that's fine. Because it will still work for Aldi. I just want you to submit it the way Aldi prefers, and we will accept whatever the Council approves." Mr Bettar, "We will do the best we can." Mr Brassington said, "That will be fine." (b) As to signage: Mr Brassington said, "Please note the dimensions and location of the signage Aldi would like". Mr Bettar said, "We will submit it, no worries, but you have to be aware that Council might give you something less or change the location. We can't have you wiggling out of the deal just because council does not give you what you want." 92 Presumably, the reference to "Rawson Street" should be read as a reference to "Retreat Street". 93 Mr Kalde also dealt with the question of signage. According to him, Mr Brassington asked for Aldi's requirements to be noted, and Mr Bettar said that BBB would submit them to the Council, but that the Council might give something less. Mr Kalde said that Mr Brassington replied: Aldi are confident we will be happy with whatever we get from council. We will accept what we get. We just want you to apply for what we want. 94 Finally, according to Mr Kalde, Mr Brassington said at the conclusion of the meeting: That's it then, we are agreed. 95 Mr Brassington denied that he said the words attributed to him by Mr Kalde in relation to vehicular access and signage, and did not recall saying "That's it then, we are agreed". He denied saying, as alleged by Mr Bettar, that if BBB did not get right hand access to and from Retreat Street "it will not be a deal breaker" as long as BBB tried its best to obtain what Aldi required. As to Mr Bart's affidavit, Mr Brassington denied saying the words set out at [89] above. 96 There is not a great deal of consistency between the accounts given by Messrs Bart, Bettar and Kalde. Only Mr Bettar says that the expression "deal breaker" was used. That is a strong, indeed vivid, expression. If Mr Brassington had used those words, it might have been thought that the others at the meeting would remember that he had done so. 97 Mr Bettar does not say that, at the conclusion of the meeting, Mr Brassington said that "we had a deal" or that "we are now in full agreement on all matters". Again, they are strong and decisive words, and one would have thought that, if Mr Brassington had used them, the others would have remembered. I acknowledge, of course, that Mr Kalde said that Mr Brassington said "we are agreed", but without the additional flourishes contained in Mr Bart's account. 98 I also that Mr Brassington believed that Aldi and BBB had taken negotiations as far as they could at that stage, and had agreed on how the negotiations were to progress. I accept, also, that after Mr Brassington received the letter of 13 November 2006, he treated it as "heads of agreement", and sent it to Brophy Bridge and Mirow so that they could commence preparation of the documents. 99 However, it strikes me as highly unlikely that, in relation to signage, delivery hours or access to and from Retreat Street, Aldi would have committed itself to proceed on the basis of whatever the Council might permit, without having any indication of what might be permitted or how it would impact on Aldi's operations. 100 Signage was a matter of great importance, in circumstances where Aldi's store was to be located in a basement. Self-evidently, the ability to deliver stock in trade, and the hours in which that can happen, are matters of importance. It is clear that at all times up until November 2006 (and for some months thereafter), Aldi regarded the question of access to and from Retreat Street as important. I do not accept, as a matter of objective probability, that Mr Brassington would have agreed to have accept whatever it was that Aldi might be permitted under any of those heads. 101 I note also, in this context, that whilst Mr Bettar's notes apparently record what was said by or on behalf of BBB, they do not record the various comments that are in dispute between Messrs Bart, Bettar and Kalde on the one hand and Mr Brassington on the other. 102 I do accept that Mr Brassington may well have said words to the effect that the parties were agreed on how to take the negotiations forward, and that their negotiations had reached a point where work could commence on detailed drafting. But in circumstances where matters of considerable importance to Aldi had been left unresolved, I do not think that Mr Brassington would have concluded that there was full or complete agreement; let alone that he would have said so. 103 I accept also that the letter of 13 November 2006 set out the current state of the negotiations. It was prepared by Mr Bettar. Mr Brassington forwarded it, as the "Heads of Agreement", to Brophy Bridge and Mirow. But it does not follow that matters had gone beyond the stage described by Mr Bettar in his letter ("points… regarding the potential lease") or as described by Mr Brassington when he sent the document to Brophy Bridge and Mirow ("our Heads of Agreement"). Mr Brassington notifies his resignation from Aldi 104 After the meeting of 8 November 2006, but before the letter was sent on 13 November 2006, Mr Bettar received a letter from Mr Brassington notifying Mr Brassington's resignation from Aldi. Mr Bettar rang Mr Brassington. He said that he expressed his concern, not wanting "to go through all this again with the new representative", and that Mr Brassington replied: Don't worry mate, this will be exchanged and done well before I leave. We'll have it done by Christmas. All the hard work's been done. 105 Those words are the subject of the sixth item of the particulars: On or about 9 November 2006, Mr Brassington advised Mr Bettar that a formal agreement for lease would be exchanged before Christmas and that "[a]ll the hard work's been done" . 106 Mr Brassington did not deny that he said those words, but said that he could not recall saying them. They were not recorded in any contemporaneous note that was in evidence. On the contrary, when Mr Bettar wrote to Mr Brassington on 13 November 2006 (a few days after the conversation is said to have occurred), the letter made no reference to documents signed and in place at all, let alone by Christmas. Somewhat to the contrary, it referred merely to "the potential lease". 107 Where Mr Brassington does not agree that he said the words, where the words (or their import) were not referred to in a letter sent at about that time, and where Mr Bettar's evidence is not otherwise corroborated, I am not prepared to find that Mr Brassington did use the words attributed to him as set out above. The conversation of 27 November 2006 108 Mr Bettar says that on 27 November 2006, Mr Brassington told him that Aldi's solicitors were preparing a draft lease, which BBB should receive by the end of the week. This conversation forms the seventh item in the particulars: On or about 27 November 2006, Mr Brassington informed Mr Bettar that the defendant's solicitors were preparing a draft lease which should be received by the plaintiff that week. 109 Mr Brassington did not touch on this in his affidavit. In circumstances where Mr Brassington had instructed Brophy Bridge and Mirow to prepare the lease, it is possible that he did use the words attributed to him. Although Mr Bettar's evidence is uncorroborated, I am, in this instance, prepared to accept it. In fact, the draft lease was dispatched within a week of that conversation. Negotiation of the terms of the agreement for lease 110 I do not propose to deal in detail with the exchange of documents between the solicitors (Brophy, Bridge and Mirow for Aldi and KQ Lawyers for BBB). In the usual way, they sought to negotiate the detail of an agreement for lease (including, of course, the draft lease that the parties would execute if the various conditions precedent were satisfied). Nor do I propose to deal in detail with the various meetings and conversations that are said to have occurred in the months following 8 November 2006, up until the meeting held to thrash out the terms of the agreement for lease on 30 March 2007. The first draft is sent 111 Brophy Bridge and Mirow sent the first draft of the lease out, to Mr Bettar, on 1 December 2006. It described the document as being "in respect of this prospective project" and sent for "preliminary discussions". The letter stated: Please note that the document does not have the formal approval of our client and is submitted as a draft. 112 On 15 December 2006, Brophy Bridge and Mirow, having been informed that KQ Lawyers were acting for BBB, sent a copy of that letter and of the agreement for lease to KQ Lawyers. Comments on the first draft 113 On 10 January 2007, KQ Lawyers replied. They sent back a copy of the documents with changes marked up. The letter stated: Please note, although we understand that our proposed amendments reflect the heads of agreement reached by the parties, we have not yet had an opportunity to take our client's formal instruction thereto. As such, the enclosures are provided in draft form only. The conversation of 7 February 2007 114 Mr Bettar says that, on 7 February 2007, he had a telephone conversation with Mr Brassington. That conversation is the eighth item referred to in the particulars: On about 7 February 2007, Mr Brassington said to Mr Bettar words to the effect: "[E]verything will be ok. You are just going through the lease formalities. I wouldn't worry about it; everything is under control. … Don't worry, the lease is done. 115 Mr Brassington does not deal directly with this conversation. However, it is inconsistent with my observations of him that he would have expressed himself in the terms he did: particularly, in circumstances where he had just left the employ of Aldi. Mr Bettar's account of the conversation is uncorroborated. In the absence of corroboration, and bearing in mind the objective circumstances (including not only that Mr Brassington had just left Aldi's employ, and that the negotiations on the scope of works, which were an essential part of the overall transaction, were far from complete), I do not find that Mr Brassington used the words attributed to him. BBB's letter of 9 February 2007 116 On 9 February 2007, Mr Bettar wrote to Mr Francis (who by then had replaced Mr Brassington at Aldi). The letter stated: I have made several attempts over the past few weeks to contact you on your mobile and office. I have also faxed a letter requesting information and confirming discussions that took place on 22 nd January. Please confirm that all is still on track as per the Lease and Agreement. We are concerned, as we have spent an immense amount of money and time on this project for Aldi. … 117 Mr Francis was ill, and on extended sick leave. Mr Savell took over Mr Francis' responsibilities in relation to the negotiations with BBB. On Mr Savell's recommendation, Aldi then retained Milestone to provide Mr Brassington's services as a consultant. 118 On 27 February 2007, Messrs Bettar and Brassington met. According to Mr Bettar's diary note of the meeting, Mr Brassington "reassured me that the lease documents will be finalised and that Aldi are proceeding". Although Mr Brassington did not recall that conversation (to which Mr Bettar had deposed in his affidavit), I find, based on the existence of the diary note, that it occurred. 119 This is the ninth item referred to in the particulars: (i) On about 27 February 2007, Mr Brassington said to Mr Bettar words to the effect: "The lease documents will be finalised. Don't worry. Aldi are proceeding." The s 96 application 120 While all this was happening, BBB proceeded with its application under s 96 of the EPA Act. The application did not, however, deal with the question of access to and from Retreat Street (which was covered by condition 97 of the original consent). 121 On 8 March 2007, the Council approved BBB's application under s 96 of the EPA Act. The amended development thus approved was returned to from time to time as "scheme B". BBB's letter of 8 March 2007 122 On 12 March 2007, Mr Bettar, apparently frustrated at the delays in proceeding to a signed agreement for lease, wrote to Mr Brassington. The letter started: It seems as though unless you and I finalise the outstanding points in the negotiation we will never finalise the lease document. Pure and simply, we are fundamentally sticking to both the Heads of Agreement and any communication that took place leading up to the Aldi lease negotiation. 123 The letter then set out what Mr Bettar perceived to be the outstanding points. They included the question of outgoings and an issue relating to a goods lift. Messrs Bettar and Brassington met on 16 March 2007. Mr Brassington annotated the letter to indicate what had been discussed and agreed. In his affidavit, Mr Brassington said that he sought "an estimate of the costs associated with the shared facilities that formed the basis of the outgoings". I accept that evidence. 124 Mr Bettar said that, during the meeting, he asked Mr Brassington what was happening and Mr Brassington said: From our agreement of these outstanding issues today, it will be 2 weeks and you will have a signed Contract from Aldi. 125 That evidence was supported by a diary note. I accept it, notwithstanding that Mr Brassington did not recall saying the words attributed to him. That is the tenth item in the particulars: On or about 16 March 2007, Mr Brassington said to Mr Bettar words to the effect: "From our agreement of these outstanding issues today, it will be 2 weeks and you will have a signed Contract from Aldi".

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126 It is apparent, from an email that Mr Brassington sent to Mr Savell on 21 March 2007, that Mr Brassington thought "we are near to finalising our lease negotiations". Mr Brassington also confirmed that the scope of works had been resolved to his satisfaction. The meeting of 30 March 2007 127 A meeting was held on 30 March 2007. Messrs Bart and Bettar attended, with Mr Kalde. Mr Brassington and Mr Brophy attended. The purpose of the meeting was to work through the outstanding questions in relation to the draft documentation. According to Mr Bettar, Mr Brassington said, at the end of the meeting, that "John [Brophy] needs to amend the lease and then it will take two weeks maximum for the lease to be signed… and returned to you". That is recorded in a diary note made by Mr Bettar. Although neither Mr Brassington nor Mr Brophy could recall this comment, I accept this aspect of Mr Bettar's evidence. 128 This is the eleventh item referred to in the particulars: On or about 30 March 2007, Mr Brassington said to Mr Bettar that all lease issues had been resolved and that it would take two weeks maximum for the lease to be signed by the defendant and returned to the plaintiff. Negotiations over the scope of works 129 While all this was going on, Ms Donaldson had been dealing with BBB and Baseline: in particular, with Mr Allan McNamara and Mr Long Huynh, who were respectively Baseline's design manager and project manager; and with Mr Bettar. The purpose of those dealings was to ensure that Aldi's design and requirements could be accommodated within the shell that Baseline was to construct for BBB. It is apparent from Ms Donaldson's evidence (which was in substance unchallenged, and which as I have said I accept) that she changed aspects of her design many times to suit, and to meet changes of mind on the part of, BBB. In the result, between June 2006 and May 2007, Ms Donaldson had prepared drawings for ten options, some of which contained internal options. KQ Lawyers' letter of 27 April 2007 130 The process of drafting dragged on. On 27 April 2007, KQ Lawyers wrote to Brophy Bridge and Mirow enclosing "the lease documents for your consideration" and stating that those documents "have been forwarded to the lessor for approval". The letter then stated: Please note that the enclosures are submitted on the basis that neither party is bound and each party may withdraw from negotiations until the agreement to lease has been executed by both parties. The meeting of 16 May 2007 131 The next item in the particulars refers to a meeting of 16 May 2007: On or about 16 May 2007, Mr Brassington said to Mr Bettar words to the effect: "All the attachments to the Lease have been finalised and handed to our Solicitor yesterday. It is now in Aldi's hands to exchange. If all is ok, we will get a signed lease out of Aldi within a week to 10 days." 132 Mr Bettar gave evidence to that effect in his affidavit. Mr Brassington did not deal with the conversation. Mr Bettar's account is supported, to some extent, by a diary note. I find that Mr Brassington did use words to the effect of those attributed to him. I note, in passing, that there was a degree of caution conveyed by the words "if all is well". BBB commences work 133 On 1 May 2007, BBB commenced physical work on the site. It removed the existing piling, so that it could undertake the excavation for basement B2. KQ Lawyers' letter of 21 May 2007 134 On 21 May 2007, KQ Lawyers sent a letter to Brophy Bridge and Mirow. It enclosed "for your client's execution the lease and agreement to lease in final form". It concluded: Please attach the various annexures and schedules, have your client sign the documents and return them to us for our client's consideration. We note our client is not bound by the lease or agreement prior to formal exchange. 135 The proposition that the executed documents should be returned for BBB's "consideration" is difficult to reconcile with a stated view that the parties had negotiated to a point where each was bound to proceed. So too is the final sentence. The letters of 25 and 29 May 2007 136 On 25 May 2007, Brophy Bridge and Mirow sent a copy of the agreement for lease to Aldi for execution, and sent a copy to KQ Lawyers also. That letter is the next item referred to in the particulars: By letter dated 25 May 2007, the defendant's solicitors (Brophy Bridge & Mirow) advised the plaintiff's solicitors (KQ Lawyers) that a counterpart of the Agreement for Lase had been delivered to the defendant for execution. 137 Mr Kopp (and perhaps others) reviewed the agreement for lease and requested changes. Accordingly, on 29 May 2007, Brophy Bridge and Mirow wrote to KQ Lawyers requesting some three changes to the agreement for lease and some four changes to the lease itself. 138 KQ Lawyers replied that day. Two of the changes to the agreement for lease, and one of the changes to the lease, were "agreed"; the other changes (including in relation to a licence for a trolley bay) were "denied". The letter stated, among other things: We enclose herewith a revised final version of the lease documents which incorporate with the above amendments. We have reviewed the documents you provided under cover of your letter of 25 May 2007 and confirm that the plans attached to the draft lease appear acceptable. Nevertheless, no binding agreement or lease will be created until such time as our client has formally executes the documents. We note that our client requires receipt of the documents, duly executed by your client, by close of business tomorrow, 30 May 2007 . 139 The documents were not executed and returned by close of business on 30 May 2007. Mr Bettar's email of 8 June 2007 140 On 8 June 2007, Mr Bettar sent an email to Mr Bart, referring to a meeting that he was to have with Messrs Brassington and Savell the following Tuesday. He referred to the points that were to be raised: including access to and from Retreat Street, signage and other matters. Mr Bart replied on 11 June 2007 (the day before the meeting) stating: Paul - I don't like this renegotiating AFTER the event - tell them that on Friday we are giving another group a three week exclusive period - at a higher rent and longer term - We are not walking away from them, but will do so after Friday, with a clear conscience! [Emphasis in original.] 141 It may well be that the bold stance taken (by KQ Lawyers in their letters of 21 and 29 May 2007, and by Mr Bettar in the email of 11 June 2007) is referable to the state of negotiations between BBB and another prospective tenant for the basement. It was indeed the case that BBB was negotiating with another perspective tenant "at a higher rent and longer term".

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142 Mr Bettar gave evidence of an email from, and conversation with, Mr Brassington on 3 July 2007. The conversation is referred to in the fourteenth item of the particulars: On or about 3 July 2007, Mr Brassington said to Mr Bettar words to the effect: "All the documents have been sent from Aldi's solicitor to KQ Lawyers. We should wrap up within two weeks." 143 According to Mr Bettar (affidavit sworn 3 July 2008, para 194), the email from Mr Brassington indicated: … that all matters were finalised and that "Robert will have all information he needs today." 144 In fact, the email read (omitting formal parts): Have spoken to ALDI solicitor. There was a mistake with the documentation sent. This will be rectified this afternoon. Robert will have all info he needs today. 145 In my view, what Mr Bettar says in para 194 is indicative of the tendency to which I have drawn attention in his evidence to overstate (in a manner beneficial to BBB) the effect of documents or conversations. Whether that is due to the factors of self-interest and grievance to which I have already referred, or whether it is symptomatic of a more general tendency, in Mr Bettar, to add artistic verisimilitude to an otherwise bald (if not unconvincing) narrative is uncertain; but the effect is, as I have said, to give me cause to question not only the account of conversations that he gives in his affidavits but also the accuracy of some of his contemporaneous records. 146 Mr Bettar gave evidence of the conversation in terms that are reflected in para (n) of the particulars. Mr Brassington did not deal with this conversation. On balance, I think, it is likely that words to the effect of those set out in the email were said. Having said that, it is clear that, as at early July 2008, Mr Brassington did believe that the documents had been sent from Brophy Bridge and Mirow to KQ Lawyers, and did expect (as did KQ Lawyers) that the documents would shortly be forwarded to Mr Kopp for his consideration. I do not think that the conversation goes any further than this. Brophy Bridge and Mirow's letter of 16 July 2007 147 On 16 July 2007, Brophy Bridge and Mirow wrote to KQ Lawyers advising that the draft documents had been forwarded to Mr Brassington. This letter is the subject of the fifteenth item of the particulars: On or about 30 July 2007, Mr Brassington said to Mr Bettar words to the effect: "I would be very surprised if you don't get a signed lease back by Friday. … If I was a betting man, I would put money that you will have the lease by Friday." 148 The first paragraph of the letter reads: Since speaking with you last Thursday, we have forwarded the documents to Joshua Brassington and understand that they will be presented for signature within the next couple of days. [The letter then drew attention to some changes.] 149 It was the case that the documents had been sent to Mr Brassington, and it was the case that they would be sent to Aldi for Mr Kopp's consideration and, if approved, for signature. The conversation of 25 July 2007 150 However, the process of redrafting continued. On 25 July 2007, Mr Kalde called Mr Brophy and asked "do we have a deal or don't we". He said that Mr Brophy replied "as far as I'm concerned there is a deal". Mr Brophy said that he said he "thought there was a deal". 151 Mr Kalde made a diary note of the conversation. It reads: Asked him whether in his view we have "deal or no deal"? He thinks "deal"… 152 Clearly enough, the diary note supports Mr Brophy's recollection of the conversation. To the extent that it matters, I prefer Mr Brophy's evidence, which is consistent with the file note, over the affidavit evidence of Mr Kalde on this point. I am fortified in this by the fact that Mr Brophy was not required for cross-examination. 153 It is common ground that, during the conversation, Mr Brophy said, in effect, that Aldi was "culturally averse" to acting promptly when pressed to do so. BBB's letter of 26 July 2007 154 On 26 July 2007, Mr Bart wrote (in terms drafted by Mr Bettar) to Mr Brassington. The letter, which was copied to Mr Kopp, reads (omitting formal parts): I am writing this letter out of concern and frustration with regard to the lack of finality re our lease with Aldi at 222 Botany Road, Alexandria. We have acted in good faith since the beginning and despite it now being July, (and we expected a lease to be signed months ago), based on your constant assurance that all is fine, we have spent hundreds of thousands of dollars in accommodating Aldi's planning, traffic and structural solution to our building - we are in the process of spending hundreds of thousands more, in as much as the construction has begun and Aldi's requirements go far beyond what we would do for other tenants. We have now had numerous commitments for the signing of the lease. Could you please confirm that: a) you are proceeding and specifically nominate a date that the lease will be signed, or b) advise us that you are not proceeding. I believe that we have dealt fairly and honestly with you and believe that we deserve a straightforward definite answer. 155 Mr Savell was on leave when that letter was received. On his return from leave (which appears to have occurred on 31 July 2007), he read the letter and discussed it with Mr Kopp. Mr Kopp instructed Mr Savell to inform BBB that Aldi would not proceed. Accordingly, on 2 August 2007, Mr Savell wrote to Mr Bart in the following terms (omitting formal parts): I refer to your letter of 26 July 2007 to Joshua Brassington which was copied to Stefan Kopp. ALDI has again given very careful and thorough consideration to being part of this project. As a result, it has been decided not to pursue the matter any further and consequently not to enter into the proposed Agreement for Lease. I thank you for the opportunity of looking at the project and hope that it proceeds to a successful completion. 156 I interpolate that the fact that the letter of 26 July 2007 was copied to Mr Kopp could be seen to confirm that BBB was aware that he was the relevant decision-maker. Mr Kopp's reasons 157 According to Mr Kopp, his reasons for taking the decision not to proceed were that:

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(7) he was "not convinced of the values of the other side", who were "trying to pressure us". 160 I should note that Mr Watson of Senior Counsel, who appeared with Mr Kalyk and Mr Livingston of counsel for BBB, criticised Mr Kopps' reasons, in light of the agreement in principle to many of the matters that were referred to by Mr Savell; and suggested that the decision not to proceed was not one taken in good faith. The remaining particulars 161 I have dealt expressly with all but the last two items of the particulars. Those items read as follows: (q) In the period 4 October 2006 to 2 August 2007, the defendant's architects worked with the plaintiff and its architects in relation to the details of the re-design of the Site and the Premises to accord with the defendant's requirements. (r) The defendant knew that the plaintiff was proceeding on the understanding that the defendant's execution of a binding agreement for lease was not conditional upon the defendant's board approval or that such approval was a formality only and would not prevent the execution of that agreement. However, the defendant remained silent on such matter and did not inform the plaintiff that such board approval was not obtained and was required as a real and significant precondition to the defendant's execution of that agreement. 162 I have dealt, to the extent necessary, with the subject matter of item (q). It is correct to say that Ms Donaldson worked with BBB, its architect Mr Stanisic and Baseline "in relation to the details of the re-design of the Site and the Premises". It is correct that this was done to accommodate Aldi's supermarket in the basement. It is equally correct, as Ms Donaldson made clear in her essentially uncontested evidence, that BBB was by no means passive in this process. 163 As to the final item, I refer to what I say at [165] and [275] below. The state of commitment before 30 March 2007 164 Before I turn to the remaining factual questions, and thence to the issues, it is convenient to stand back from the detail and look at:

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(3) no binding agreement for lease would be created until BBB executed the documents (letter of 29 May 2007 to Brophy Bridge and Mirow). 171 It was after the meeting of 30 March 2007 that Mr Bart regarded BBB as being at liberty to deal with another prospective tenant of the basement "with a clear conscience" (email of 11 June 2007 to Mr Bettar). 172 It was after the meeting of 30 March 2007 that Mr Kalde, on 26 July 2007, asked Mr Brophy whether "we have "deal or no deal"?" and Mr Brophy replied that he thought it was "deal"; Mr Kalde did not protest, or suggest that it was too late for Aldi still to be considering whether it was bound or not. 173 It was after the meeting of 30 March 2007 that Mr Bart, presumably informed of the conversation that had occurred between Messrs Kalde and Brophy on 26 July 2007, wrote the same day, and in similar terms, to Mr Brassington and Mr Kopp asking Aldi to state whether it was proceeding (and, if so, when it would sign the lease) or whether it was not proceeding. There was no suggestion in that letter that Mr Bart thought it was too late for Aldi to withdraw, or not to proceed. I should note that Mr Watson submitted that the alternative of not proceeding should have been understood to be one attended by the risk of damages. I do not agree. Normally, when a party to negotiations thinks that it has reached a binding agreement with the other party to those negotiations and that other party purports to withdraw, the first party will assert both the fact of agreement and the consequences, in damages, if the agreement is not honoured. In my view, the proper inference from the letter is that Mr Bart thought that, just as BBB was free to withdraw from whatever had been "agreed" with Aldi (so that it could negotiate with another prospective tenant), so he accepted that Aldi, too, was free to withdraw. 174 In my view, the parties became no more committed to each other after 30 March 2007 than they had been before. Nor did the nature of that pre-existing commitment change. It remained a commitment to negotiate in good faith. 175 Nonetheless, BBB presses its case of reliance. Before I turn to that case, and from there to the issues, there are three discrete factual matters on which the parties placed significance. They are:

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(3) Aldi's investigation of a possible alternative site nearby, in Wyndham Street, Alexandria. 176 I turn to those events. Aldi puts work on hold 177 On 15 May 2007, Ms Donaldson received a request for information from Mr Huynh of Baseline. The request sought "specific information from ALDI, in particular design layouts for pipes, conduits and the like". 178 Ms Donaldson said that she "was not sure what to do with the request… because, as [she] understood it, the lease and the scope of works had not been finally agreed". She discussed the request with Mr Savell, who told her not to do anything for the moment, because he and Mr Kopp had to review the agreement for lease. 179 On 11 June 2007, Ms Donaldson sent an email to Mr Savell which stated: We have not yet begun documentation for Alexandria as requested by Baseline pending the lease agreement being acceptable to Stefan. Please advise me with [sic] the current status. 180 Mr Savell replied by email on 12 June 2007. He said: Stefan has NOT approved the site, as such it remains on HOLD until we seek further information from the Lessors. 181 Mr Savell agreed that he was "[e]ffectively … asking Ms Donaldson to down tools pending a review internally at Aldi" (T253.25). He said that he did not tell BBB to "similarly… down tools" because (T253.33-.38): … at the time we had various pieces of communication coming from BBB, including at the meeting in April whereby documentation was changing without our consultant - without being consulted and I felt we were changing things only to turn up at meetings and have things change again without seeing them so I - at that point in time I asked Gillian to not continue to do any work for the work until we had further reviewed the matter. 182 The reason given by Mr Savell is consistent with Ms Donaldson's evidence as to her attempts to settle the scope of works with BBB and Baseline. As I have said, I accept Ms Donaldson's evidence. 183 Mr Brassington said that if he had known of the decision by Aldi to put work "on hold" (or to "down tools"), he would have told BBB. BBB's negotiations with another prospective tenant 184 In an affidavit sworn on 11 October 2010 (the day before the hearing commenced; although it was, I think, common ground that an unsworn version of the affidavit had been served the previous Friday, 9 October 2010) Mr Bettar gave evidence of, among other things, his dealings with IGA Distribution Pty Limited (IGA). According to Mr Bettar, a Mr Phil Gorman of IGA spoke to him on 4 October 2006 and expressed interest in leasing space for a supermarket. According to Mr Bettar, he told Mr Gorman that BBB could not offer IGA space in the Botany Road development, and offered him an alternative property at Chiswick (some kilometres distant). 185 Mr Bettar said that he contacted Mr Gorman again in mid April 2007 and offered him the opportunity to take on lease the ground floor retail space at the Botany Road site, as "complimentary [sic] to Aldi in the basement". However, he said, Mr Gorman then and thereafter put pressure on him to offer IGA a lease of the basement site. Thereafter, according to Mr Bettar, he continued to offer the ground floor retail space to IGA, but IGA, through Mr Gorman, continued to hound him for a lease of the basement. 186 According to Mr Bettar, he had a further conversation with Mr Gorman on 15 May 2007, in the course of which Mr Gorman once again pressed to be allowed to submit "something to consider". Mr Gorman sent an email to Mr Bettar, stating that IGA was "keen to pursue the leasing of the basement level supermarket within this development". The letter set out basic terms including the area to be leased, the rental per square metre, the term of the lease and rent review provisions. 187 Shortly after receiving this letter, Mr Bettar annotated it electronically and sent it to Mr Rogers at KQ Lawyers. One of the annotations read: Ben: as mentioned go through the lease and remove all mention of Aldi. Remove all mention of licienced [sic] areas etc. 188 The annotations also included an instruction: Ben: as mentioned change Aldi to Metcash Trading and IGA Distribution Pty Ltd 189 The reference to "as mentioned" is supported by a file note, apparently prepared by Mr Rogers, which although undated clearly reflects a conversation with Mr Bettar in the course of which Mr Bettar told Mr Rogers that IGA wanted to lease the basement, and passed on the terms that had been stated in Mr Gorman's letter of 23 May 2007. 190 Mr Rogers complied with his instructions. Mr Bettar sent the draft lease to Mr Gorman by email on 25 May 2007. He sent copies of his email to, among others, Mr Bart and Mr Nicholas Bettar. The email stated (omitting the introduction and salutations): Attached is the draft IGA lease for your consideration It was split into 4 pieces and has been scanned in order to get to you in time. My lawyers will need to review it upon return. We cannot be bound by the contents until we countersign. I thank you in advance.

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191 On 30 May 2007, Mr Alex Alemis of IGA sent a letter by fax to Mr Bettar in which he sought: … to confirm IGA's interest in establishing a full line IGA supermarket at the development proposed at [the land]. 192 The letter set out in detail the terms offered by IGA. It was clear that the letter, if accepted, would have binding effect subject only to approval by the board of Metcash Limited (a company associated with IGA) within 21 days. BBB did not sign the letter so as to accept its terms. In my view, that was not because BBB regarded itself as bound to Aldi, but because it wished to negotiate, and improve upon, the terms offered by IGA. 193 To that end, at Mr Gorman's request, a meeting took place on 15 June 2007 between Messrs Gorman, Bart and Bettar. The date of that meeting was 15 June 2007: the "Friday" referred to in Mr Bart's email to Mr Bettar of Monday, 11 June 2002. 194 Mr Bettar said at para 40 of his affidavit sworn 11 October 2010 that he always understood "that BBB was committed to Aldi and vice versa". He said that "[t]he only reason [he] was entertaining a lease to IGA was in the event that Aldi refused to proceed as [he] understood it would". I do not accept that self-serving evidence. In my view, the whole of Mr Bettar's account of his dealings with IGA was put together at the last moment, when it had become clear that Aldi was relying on those dealings to suggest (as it did in submissions) that BBB did not regard itself as bound to Aldi, or Aldi as bound to it; but, on the contrary, regarded itself as being at liberty to negotiate with another prospective tenant. 195 Although Mr Bart's affidavit dealt with attempts by BBB to lease the B1 space after 2 August 2007, it avoided any reference to the negotiations with Aldi in May and June 2007. He was cross-examined on the topic. That aspect of his evidence was particularly difficult to accept. For example, he denied instructing Mr Bettar "specifically to raise the subject of the negotiations with another potential tenant in a meeting that he was to have with representatives of Aldi" (T176.35). He sought to withdraw from that, saying (T176.44-.47): "I'm not sure whether I instructed him or not, that may be the wrong terminology. But Mr Bettar certainly brought up the issue of interest that we had in a site meeting with Aldi to be perfectly open and candid with them. But not as a negotiation." 196 When shown the email exchange of 8 and 11 June 2007, and confronted with his direction to Mr Bettar which I have referred to more than once already, Mr Bart said (T177.21-.37): Q. And what you were doing there is giving him an instruction to tell Aldi that there is another tenant waiting in the wings? A. What I was really doing was venting - venting my spleen and my frustration as much as anything else.

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(3) on 11 June 2007, Mr Bart told Mr Bettar to tell Aldi that BBB would soon give "another group a three week exclusive period - at a higher rent and longer term", and that although BBB was "not walking away from them", it would "do so after Friday, with a clear conscience!" 200 In my view, both Mr Bettar and Mr Bart understood all too well that the extent of their negotiations with IGA could be seen to be inconsistent with their oft-stated believe that BBB had a "binding" agreement of some form with Aldi, and tailored their evidence on this topic in an attempt at damage control. The unreliability of this aspect of their evidence makes it easier to draw, as I do, the inference that as at May and June 2007, BBB did indeed regard itself as being at liberty to negotiate with IGA, untrammelled by any "binding" agreement with Aldi. The Wyndham Street site 201 It seems that in early June 2007, Mr Brassington became aware of the possibility of obtaining space in a development in Wyndham Street, Alexandria, located about 100 metres to the north-east of the north-eastern corner of the land. The property had a frontage as well to Brennan and Power Streets, and was referred to in documents and the evidence as 3-9 Power Street. I shall refer to it simply as "the Wyndham Street Property". 202 It was proposed that the owner of that site and Aldi would enter into a joint venture for its development for retail and residential purposes. Mr Brassington went so far as to prepare some sketch plans, and to ask Ms Donaldson to work up some drawings. Ms Donaldson complied. However, on 3 July 2007, Mr Brassington reported to Aldi that "[t]he vendor has changed his position which is disappointing". Apparently undeterred by that decision (which was said by the agent to be "totally inflexible"), Mr Brassington prepared a "Desk Top Analysis" for the site. 203 There is no evidence that the vendor's "totally inflexible" attitude had changed by 31 July 2007 (when Mr Kopp discussed with Mr Savell BBB's letter of 26 July 2007 and instructed Mr Savell to reply) or 2 August 2007 (when Mr Savell replied, indicating that Aldi was not proceeding). So far as the documents go, as at 31 July 2007, Mr Brassington was still awaiting a formal offer of a lease. 204 It was put to Mr Kopp that his decision, on the proposed transaction with BBB, was taken because he thought Aldi had a better arrangement. He denied that (T295.40-.45). I accept his evidence. There is no basis for concluding that Aldi had secured anything, let alone "a better arrangement, a potential freehold arrangement", in relation to the Wyndham Street property, as at 31 July or 2 August 2007. 205 The negotiations (if that is what they can be called) in respect of the Wyndham Street property were at such an inchoate stage that it could not have been in any way misleading or deceptive for Aldi not to inform BBB of their existence or status. BBB's case on reliance 206 It is difficult to pin down BBB's case on reliance, because, on any view of the facts, BBB began to act in response to Aldi's expression of interest well before even Mr Bettar claims to have thought that there was some form of "binding" agreement. As Mr Watson put the case in his closing address, the point at which Aldi ceased to be free to withdraw from the negotiations was one or other of:

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(3) 30 March 2007. 207 The first of those points was defined by reference to the meeting of that date, in which many of the outstanding issues between Aldi and BBB were resolved, and following which Mr Brassington thought it appropriate to write to BBB, setting out his understanding of each side's position. 208 The second of those points was defined by reference to the meeting on 8 November 2006 at which the outstanding issues raised in the exchange of what it is convenient to call the draft heads of agreement were discussed, and the letter of 13 November 2006 which Mr Brassington regarded as "our Heads of Agreement". 209 The third of those points was defined by reference to the meeting on that date between representatives of the parties and their solicitors, in which outstanding drafting issues were resolved. 210 In looking at the progress of the parties' negotiation, it is necessary to bear in mind that it was not until after the bulk of the commercial terms had been hammered out, in October to November 2006, that serious negotiation began on Aldi's scope of works, and the accommodation of its requirements in basement B1. However, it was well before then that BBB had begun to consider amending the design of Building B, and seeking consent under s 96 of the EPA Act. 211 When Mr Bettar first began to seek out prospective lessees for retail or commercial space, he accepted that the design could be modified (with consent) to meet their particular requirements. Mr Bettar told potential tenants to whom he spoke that BBB might be prepared to modify the allocation of space between residential and retail / commercial. Further, he appreciated that the requirements of prospective tenants, for carparking, could not be met within the existing approval, and that it would be desirable if more carparking accommodation could be included. 212 Mr Bart shared that view. On 22 May 2006, he wrote to Mr Bettar saying, among other things, that "almost every usage would be enhanced by additional parking; we need to consider another level - not of space but of parking". 213 In discussions with one prospective tenant in late May and early June 2006, Mr Bettar confirmed that BBB was considering how the approved development might be modified and would be meeting with the Council to discuss this. That was indeed raised with the Council, at a meeting held on 12 June 2006. Mr Bettar agreed that "one of the matters discussed was the possibility of amending the development to add another layer of basement for additional parking" (T50.43). Mr Bettar agreed that from that date he was "engaging consultants… with a view to putting in a DA to amend the development as soon as possible" (T51.16). Clearly enough, that can hardly have been done in reliance on the negotiations with Aldi, which had only just begun. 214 After the meeting with Council, BBB retained consultants, including a firm of geotechnical engineers, to investigate the possibility of excavating and constructing basement B2, and procuring an amended consent for that purpose. 215 It is clear that significant work was done on preparing the s 96 application before the first of Mr Watson's suggested points of time (8 October 2006). It is equally clear that, as at 8 October 2006, although there was consensus as to the bulk of the commercial terms, there were still significant points of disagreement. The exchange of drafts of what became the heads of agreement showed this. 216 The s 96 application was lodged before the second of Mr Watson's suggested points of time (8 to 13 November 2006). Even if it be accepted that, by this second point of time, BBB and Aldi had reached some commercial consensus, neither the lodging of the s 96 application nor the antecedent decision to pursue the amended development could have been taken on the basis of that consensus. At most, they were things undertaken and done on the basis that Aldi was negotiating in good faith, and was keen to reach agreement on the commercial terms on which it might take a lease of the premises. There is no basis for concluding that at any time up until 13 November 2006, Aldi was doing anything other than negotiating in good faith, and desired (if it could) to reach agreement. (Nor, as I have already said, is there any basis for concluding that this position changed thereafter up until 26 July 2007.) As Mr Bettar understood, those negotiations were undertaken on the basis that it was up to Mr Kopp to approve (if he would) what had been negotiated, and that Mr Kopp's approval was not just a matter of formality. 217 Further, negotiation of the commercial terms was but one of the matters to be attended to. It was also necessary for Aldi's scope of work to be resolved. The parties themselves recognised that discussions on this should proceed separately from negotiation of the commercial terms. Once the commercial terms were resolved in principle, it would be necessary to turn attention to the scope of works. If the commercial terms were not resolved in principle, there would be no point in turning to the scope of works. But on no view could the scope of works be regarded as irrelevant, or secondary, or formal. 218 If one goes to the letter of 13 November 2006 "regarding the potential lease", the attached summary of the parties' respective positions notes the exchange of views on the scope of works and concludes: It was agreed that; - This will be resolved during a S O W meeting. [Emphasis in original.] 219 Resolution of issues relating to the scope of works proceeded at the same time as the drafting of the agreement for lease. Ms Donaldson gave detailed evidence of meetings and discussions, and of the exchange of documents and drawings. Her evidence on this point was not challenged, and I accept it. 220 Mr Bettar, certainly, recognised that the scope of works had to be fully agreed before the agreement for lease could be finalised. When that proposition was first put to him, he sought to avoid it; but, ultimately, accepted it. I set out the relevant passage (T100.21 - .40): Q. You, of course, appreciated at this time that the scope of works which is referred to in this document had to be fully agreed before the lease agreement could be finalised; that's right, isn't it? A. The scope of works kept moving because the design and the coordination kept changing.

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Q. When there was discussion about that matter? A. Yes. 221 To the extent that Mr Bettar sought to suggest, in the first answer that I have quoted, that responsibility for the delay lay with Aldi, I do not accept that this was so. Ms Donaldson's evidence makes it clear that this was not the case, and that the changes were not all the responsibility of Aldi. The point is illustrated by a letter sent by Mr Bettar on 20 April 2007 to Mr Brassington in which Mr Bettar set out, among other things, BBB's requirements for various aspects of the basement design and space allocation. Ms Donaldson replied to that letter on 27 April 2007, attaching "amended plans to accommodate Baselines [sic] requirements". 222 The relationship between the scope of works and execution of the lease is confirmed in Mr Bettar's email to Mr Brassington of 27 April 2007, in which Mr Bettar stated: We eagerly await the layout that would be annexured [sic] to the contract so we can proceed with putting this to bed. 223 The revised documents submitted by KQ Lawyers to Brophy Bridge and Mirow the same day (on the basis that neither was bound, and each could withdraw, unless the documents were executed) reflected the need for the annexures. 224 Mr Watson submitted that BBB had relied, to its detriment, on what he characterised as repeated assurances by Aldi (over the period from October 2006 to June 2007) that the agreement for lease would be executed soon, or shortly, or in the near future. Mr Watson submitted (written closing submissions, para 26): Given that there was no legally binding agreement, it was critical to BBB to know that it had Aldi's commitment to the site, its assurance that a lease would be executed and that Mr Kopp was in agreement with the course adopted. 225 There are difficulties with acceptance of this submission. The first is that BBB recognised that the agreement for lease could not be executed until the scope of works had been agreed. Resolution of the drafting issues between the solicitors did not mean that the agreement for lease would be finalised in draft and ready for execution. Before it got to that stage, it was necessary that the scope of works be finalised. In late April 2007, Aldi was still raising concerns, and insisting on changes, to the documents prepared by Ms Donaldson for Aldi. 226 The second difficulty is that it is very hard to identify anything done by BBB, let alone done to its detriment, in reliance on the assurances said to have been given by Aldi. By the time the commercial terms had been agreed (in the period 8 to 13 November 2006), BBB was committed to its redesign, to accommodate an extra basement level, and s 96 application. In my view, that reflected BBB's appreciation that the redesign would be to its commercial advantage. It could not have been a redesign undertaken on the faith of any commitment by Aldi, because the only commitment was one to continue (as Aldi did) to negotiate in good faith. True it is that BBB continued to invest time and money in dealing with Aldi over the scope of works. But Aldi too was investing time and money in the same process. As I have now said more than once, there can be no suggestion that Aldi was not seeking, in good faith, to resolve the remaining issues (both of a drafting kind, between the solicitors, and of a technical kind, in relation to the scope of works). 227 The third difficulty is that, as I have said, BBB (through Mr Bettar) understood that the question, of whether Aldi would or would not execute the lease once all the drafting and scope of works issues were resolved, rested with Mr Kopp. Mr Bettar understood that the only "approval" given by Mr Kopp was an approval to continue to negotiations. I do not accept that Mr Brassington said, or that Mr Bart or Mr Bettar could reasonably have understood, that this was merely a "formality". 228 The fourth difficulty is that, on the view that I take of the evidence, it does not support the conclusion that BBB was acting on the faith of some understanding that Aldi was committed in principle, and would commit itself in law. The correspondence emanating from its solicitors was to the contrary. Its dealings with IGA were inconsistent with any such understanding. If BBB regarded itself as free to negotiate with IGA, it must equally have regarded itself as free to commit to a legally binding agreement with IGA. I do not think that it was mere coincidence that, at the time BBB was negotiating with IGA, its solicitors were insisting that it was free to withdraw from the "agreement" with Aldi. 229 In short, I do not accept that the evidence makes out the case of reliance asserted by Mr Watson, and I do not accept the self-serving statements, as to reliance, in the affidavit evidence of Messrs Bart and Bettar. Those statements are inconsistent both with the state of negotiations between BBB and Aldi and with the state of negotiations between BBB and IGA. The decision in EK Nominees 230 Mr Watson relied heavily on the decision of White J in EK Nominees Pty Ltd v Woolworths Ltd [2006] NSWSC 1172. He submitted that the facts found by White J were not materially distinguishable from the facts in this case. I do not agree. The fundamental distinction between the two cases is that, in EK Nominees, the "terms and conditions" of the parties' bargain were agreed at a relatively early stage. What was agreed was said to be subject to the approval of Woolworths' board. That approval (strictly speaking, by a delegated subcommittee of the board, but nothing turns on this) was given at an early stage in negotiations, and EK Nominees was advised of this. In this case, by contrast, BBB always appreciated that the approval of Aldi's board would be required before the agreement for lease would be executed and exchanged, and was never told (nor, on my findings, did it understand) that any such approval had been given. 231 Whilst negotiations were proceeding with EK Nominees, Woolworths also considered another site, from its perspective much better, in the same area. I have referred, earlier in these reasons, to the evidence which establishes, according to Mr Watson, that Aldi acted in a similar way. That evidence goes nowhere close to what White J found Woolworths had done in respect of the alternative site. 232 Woolworths required from EK Nominees a "commitment to proceed". Further, and significantly, Woolworths required EK Nominees to acknowledge (and it did) that, once the approval of Woolworths' board had been given, if EK Nominees failed to perform in accordance with the "agreements and approvals" negotiated between them then Woolworths would claim costs and lost of profit (see at [22]). Those matters, which appear to me to be of some significance to the conclusions of White J, are absent from the dealings between BBB and Aldi. 233 Woolworths pressed EK Nominees to proceed with the development before the legal documentation was settled, because it wanted to open its supermarket as quickly as possible (at [44]). There is no evidence in this case to support the proposition that Aldi pressed BBB to proceed with work before the agreement for lease was executed and exchanged. On the contrary, as I have said, BBB decided to pursue its application under s 96 of the EPA Act before it had reached any finality even on the commercial terms of its proposed deal with Aldi. 234 Finally, it was plain that the steps taken by EK Nominees to its detriment were taken only because of Woolworths' repeated assurances that it would proceed to execution and exchange of the agreement for lease. In this case, I have found that BBB made its decision to proceed with the s 96 application before it had reached any "in principle" consensus with Aldi, and before the other essential element of any bargain - agreement as to the scope of works - had been resolved. 235 A judgment as to whether conduct is misleading or deceptive requires an analysis of all relevant aspects of the conduct relied upon, viewed in their setting. It does not follow that, because White J judged the conduct of Woolworths, in its dealings with EK Nominees, to be misleading or deceptive, that his Honour's reasons compel the same conclusion in this case. 236 White J found that Woolworths had made two representations:

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238 The finding as to the representation of no material change is the key to his Honour's conclusion on the case of misleading or deceptive conduct. There is no equivalent to that finding in the facts of this case. 239 EK Nominees also asserted an estoppel, based on Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387. White J concluded that in all the circumstances it would be unconscionable for Woolworths to deny EK Nominees' assumption that Woolworths would proceed to enter into an agreement for lease, and thus that Woolworths was estopped from denying that assumption. He summarised his reasons for that conclusion at [268]: [268] I conclude that notwithstanding that E K Nominees, through Mr Marcocci, did not believe that Woolworths was bound to enter into an agreement for lease, but was free to withdraw, it is nonetheless unconscionable for Woolworths to deny E K Nominees' assumption that Woolworths would proceed to enter into the agreement for lease. The unconscionability arises from a combination of circumstances that: (a) Woolworths knew of E K Nominees' expenditure in reliance on that assumption and encouraged that expenditure; (b) the expenditure would have been for the benefit of both parties had the contract proceeded; (c) Woolworths insisted that if E K Nominees failed to perform in accordance with the agreement in principle which had been reached, that is, if it failed to take all the preliminary steps which were necessary before entering into the agreement for lease, Woolworths would be entitled to make a claim for its own costs and loss of profits; (d) Woolworths represented that the approval which its board had given would be operative for a period of twelve months and that if the agreement for lease were not entered into by that time, Woolworths would regard itself as free to terminate the agreement in principle, free of any claim. That period had not expired when it withdrew from negotiations for the agreement for lease; (e) E K Nominees had previously sought assurances that notwithstanding the possibility of a better site being available to Woolworths, Woolworths had a bona fide interest in locating a Woolworths supermarket on the Auburn Road site, and that assurance was given; (f) Woolworths' words and conduct conveyed that it would not pull out of negotiations with E K Nominees, after E K Nominees had expended substantial moneys on the Auburn Road site, in order to relocate its supermarket to an alternative site. 240 Items (c) to (f) have no equivalent in this case.

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from 29 June 2006 until August 2007, Aldi discussed and negotiated with BBB to finalise the terms of an agreement for lease; represented, and conducted itself so as to lead BBB to think, that it would lease the premises; and encouraged BBB to do what was necessary so that the basement would meet Aldi's requirements (para 5); Aldi worked with BBB to resolve issues so that they could reach a binding agreement for lease, and to enable the basement to be conducted to Aldi's requirements (para 7; there is no para 6); from July 2006 until August 2007, Aldi represented, and conducted itself so as to lead BBB to understand, that board approval was a formality; the board had given approval; any condition as to board approval would be satisfied; and it was committed to proceeding (para 8); BBB relied upon Aldi's representations and conduct, and to the knowledge of Aldi engaged consultants for the purpose of seeking, and sought, an amended consent; engaged consultants to design the basement to Aldi's requirements; and engaged contractors to commence work within the time frame required by Aldi (para 9, first appearing); Aldi formulated heads of agreement on about 30 October 2006 in which it set out what the parties had agreed, and on 9 November 2006 advised BBB that a formal agreement for lease would be exchanged before Christmas (para 9, second appearing); Aldi's solicitors forwarded a draft agreement for lease on 1 December 2006 (para 10); the council gave consent to the s 96 application on 12 April 2007 (para 11); on about 16 March 2007, either the parties agreed, or Aldi led BBB to believe that it had agreed, that all outstanding issues regarding the lease had been settled, and that the signed agreement for lease would be delivered within two weeks (para 12); the parties met on 30 March 2007, and agreed, or Aldi led BBB to believe that it had agreed, on all outstanding issues relating to the agreement for lease (para 13); on 8 May 2007, Aldi represented to BBB that the revised drawings met its requirements (para 14); on 25 May 2007, Aldi represented that the terms of the agreement for lease were agreed, and that a copy had been forwarded to Aldi for execution (para 15); no agreement has been executed or exchanged (para 16); and on 2 August 2007, Aldi advised BBB that it would not lease the premises (para 17). 242 Paragraph 8 of the FACLS, which "pleads" the asserted representations, is of central importance. I set it out (without its particulars, which have been set out and discussed earlier in these reasons): 8. From on or about 4 July 2006 until about August 2007, the defendant represented to the plaintiff and so conducted itself as to lead the plaintiff to understand, that: a. the obtaining of board approval to a binding agreement for lease was a formality only and would not cause any difficulty for the entry into a binding agreement for lease; b. its board had given such approval; and/or c. any condition requiring any such board approval had been or would be satisfied; and d. the defendant was committed to proceedings upon such agreement. 243 Against that background, the allegations of misleading or deceptive conduct are those set out in paras 18, 19 and 20 of the contentions. I set them out: 18. Contrary to the representations and conduct of the defendant as referred to above, at the time of such representations and conduct, the defendant was not committed to lease the Premises, its board had not approved the lease of the Premises, and it was not bona fide negotiating with the plaintiff towards the resolution of commercial issues between them to the intent of entering a formal Agreement for Lease, and it had not resolved to enter a formal Agreement for Lease. 19. Further and in the alternative to paragraph C18 above, insofar as the representations and conduct of the defendant related to future matters, the defendant did not at the time it made such representations and so conducted itself, have a reasonable basis for making the same and so conducting itself. 20. Further and in the alternative to paragraphs C18 and C19, the representations and conduct of the defendant were made or took place on the part of the defendant for the purpose of inducing the plaintiff to act as it did as referred to above, and in the alternative, with the knowledge and approval that the plaintiff would so act. 244 Paragraph 18 is the only paragraph that alleges want of good faith. Specifically, it is not "pleaded" that the decision not to proceed was one taken in bad faith, or with an absence of good faith.

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(6) BBB regarded itself as being at liberty to negotiate with another prospective tenant - IGA - and it followed that it considered that either party was at liberty to withdraw. Decision No misleading or deceptive representations 250 For the reasons that I have given, BBB has failed to make good the bulk of its representational case alleged in para 8 of its contentions. That is sufficient to dispose of BBB's case of misleading or deceptive conduct in so far as that case is based on those representations. 251 In my view, it was not until about mid November (when Mr Bettar wrote his letter of 13 November 2006 that Aldi regarded as "our Heads of Agreement") that the parties had reached consensus on the bulk of the commercial terms of their deal, to the point where Mr Brassington felt confident in instructing Brophy Bridge and Mirow to commence work on the agreement for lease. 252 However, negotiation of the commercial terms was not all that had to be done. Aldi's scope of works had to be negotiated. Both parties recognised that this had to be done before the agreement for lease could be finalised. 253 By mid November 2006, BBB had lodged its application under s 96 of the EPA Act. BBB claims to have done so on the faith of Aldi's assurances that it was interested in taking a lease of the basement. Those assurances were correct. It remained the case, that Aldi was interested in taking a lease of the basement, over the following months, while the drafting of the agreement for lease proceeded and the negotiations over the scope of works were conducted, at least until mid May 2007. It was then, according to Mr Bettar, that Mr Brassington said in substance that the attachments to the lease had been finalised, and the signed lease should be produced in the near future. However, after that date, negotiations over the scope of works continued, as did negotiations over the terms of the draft agreement for lease. On 21 May 2007, KQ Lawyers required further changes to the draft agreement for lease, in a letter which stated, among other things, that BBB "is not bound by the lease or agreement prior to formal exchange". Eight days later, after further correspondence, KQ Lawyers reiterated that position. 254 The essential difficulty with BBB's case of misleading or deceptive conduct based on conduct, including silence, is to identify the point at which it was, or became, misleading or deceptive for Aldi to withdraw from the negotiations. All three of the dates advanced by Mr Watson (8 October and 8 November 2006, and 30 March 2007) occur before the first in the series of letters from KQ Lawyers in which that firm insisted that neither party was bound until execution and exchange (and in one of which that firm stated, further, that either party was free to withdraw). To my mind, that contemporaneous assessment of the situation, made by someone who was aware of the state of negotiations between the parties, should be given greater weight than assertions made by that person's client in the context and for the purposes of litigation. 255 Further, on the basis that actions speak louder than words, BBB's recognition of the fact that it was free to negotiate with another tenant provides strong corroboration for the inference that it understood the position to be as asserted in its solicitors' letters. As I have said, I do not accept Mr Bettar's attempts to explain away those negotiations. I give more weight to Mr Bart's contemporaneous assertion that BBB could walk away from Aldi "with a clear conscience" than I do to his (and Mr Bettar's) rationalisations produced in the context and for the purposes of litigation. 256 If BBB were free to negotiate with another tenant, as in my view both it and its solicitors thought, at the time, it was, why should Aldi be taken to have been more constrained? It is illogical to assert that one party was free to withdraw from the negotiations, but the other was not. The only explanation offered was that which I do not accept: that BBB felt it was driven to negotiate with IGA because it was concerned at Aldi's delay. Silence: the relevant principles 257 The place of silence in the characterisation of conduct as misleading or deceptive was considered recently by the High Court of Australia in Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 84 ALJR 644. 258 Miller, an insurance broker, sought from BMW Finance an insurance premium funding loan for a policy being negotiated by Miller on behalf of one of its clients. The client would be the borrower. BMW Finance required that, to be acceptable as security, the policy should be both assignable and cancellable. Miller gave BMW Finance a certificate of insurance. The certificate referred to several properties, but not to the type of cover provided. It could have been assumed that if the policy referred to in the certificate did cover property damage, it would have been cancellable. In fact, however, the policy, which insured the holder against certain credit risks, was neither assignable nor cancellable. Miller later provided BMW Finance with the policy wording, but did not draw attention to the fact that the policy was not cancellable. BMW Finance advanced the loan sought, and took security over the policy. 259 The borrower defaulted. The security over the policy was inadequate, because (among other things) the policy was not cancellable. BMW Finance made a claim against Miller. It alleged that Miller had engaged in misleading or deceptive conduct, by providing a certificate of insurance that conveyed the misrepresentation that the policy was assignable and cancellable. Alternatively, BMW Finance relied on Miller's failure to disclose that the policy was neither assignable nor cancellable. 260 French CJ and Kiefel J (who agreed with the orders proposed by Heydon, Crennan and Bell JJ) examined in detail the role of silence in a case of misleading or deceptive conduct. Their Honours started by looking at the way in which a case of misleading or deceptive conduct based on silence should be pleaded, saying at [5] that the pleading should identify whether the silence itself is said to be, in all the circumstances, misleading or deceptive; or whether it is an element of conduct, including other acts or omissions, that is said to be misleading or deceptive. 261 In the present case, the "pleading" of misleading or deceptive conduct is based on the acts specified in the particulars to para 8 of the FACLS. I have set out para 8 at [242] above, and I have set out and discussed the particulars from [56] to [161] above. The silence attributed to Aldi is not "pleaded" as being itself, in all the circumstances, misleading or deceptive. It is referred to as part of one of the particulars of acts and omissions from which, BBB says, certain representations could be spelled out; and as relevant to the characterisation of those representations as misleading or deceptive. The role of silence in the present case is that it is part of a pattern of conduct, including in particular other acts, that is said to be misleading or deceptive. 262 At [17] and following, French CJ and Kiefel J referred to the decision of the Full Court of the Federal Court of Australia in Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31. In that case, Black CJ said at 32 that silence was a circumstance to be assessed, like any other, as part of the process of deciding whether there has been misleading or deceptive conduct. Gummow J, who gave the leading judgment and with whom Black CJ and Cooper J agreed, said at 41 that mere silence would be unlikely of itself to convey a representation that a particular fact existed unless, in all the circumstances, there was a "reasonable expectation" that, if the fact existed, it would be disclosed. 263 French CJ and Kiefel J said at [19] that "[t]he language of reasonable expectation is not statutory". In their Honours' view, it simply indicated an approach that could be taken to the characterisation of conduct consisting of, or including, silence. Their Honours pointed out at [21] that the existence or otherwise of a reasonable expectation of disclosure directed attention to the effect, or likely effect, of non-disclosure "unmediated by antecedent erroneous assumptions or beliefs or high moral expectations held by one person of another which exceed the requirements of the general law and the prohibition imposed by the statute". Their Honours warned against "the imposition of a requirement to volunteer information which travels beyond the statutory duty" not to mislead or deceive. 264 At [22], French CJ and Kiefel J stated the "general proposition" that "s 52 does not require a party to commercial negotiations to volunteer information which will be of assistance to the decision-making of the other party". Nor does the section "impose on a party an obligation to volunteer information in order to avoid the consequences of the careless disregard, for its own interests, of another party of equal bargaining power and competence". 265 Finally, for present purposes, French CJ and Kiefel J distinguished between the case of a false representation and the case where a representation is true of itself, but qualified by something that is undisclosed. In the former case, their Honours said (at [23]), it was unnecessary to go to "[r]easonable expectation analysis". In the latter case, the question was whether the making of the representation without its qualification might convey a further representation that what had been said was complete: [23] Reasonable expectation analysis is unnecessary in the case of a false representation where the undisclosed fact is the falsity of the representation. A party to the precontractual negotiations who provides to another party a document containing a false representation which is not disclaimed will, in all probability, have engaged in misleading or deceptive conduct. When a document contains a statement that is true, non-disclosure of an important qualifying fact will be misleading or deceptive if the recipient would be misled, absent such disclosure, into believing that the statement was complete. In some cases it might not be necessary to invoke non-disclosure at all where a statement which is literally true, but incomplete in some material respect, conveys a false representation that it is complete.

[93]

(4) It is correct to say that Aldi did not inform BBB of its negotiations in the Wyndham Street property. (It is also correct to say that BBB did not inform Aldi of its more advanced negotiations with IGA.) But the negotiations over the Wyndham Street property started well after BBB had committed itself to the redevelopment. They were of a very preliminary nature. They went nowhere. They played no part in Mr Kopp's decision not to proceed. Indeed, at the time that Mr Kopp made that decision, it was clear that the negotiations over the Wyndham Street property were going nowhere. 271 In short, the case based on silence goes, like Aldi's negotiations over the Wyndham Street Property, nowhere. The silence was in some cases appropriate (because there was nothing, or nothing material, to disclose) or not relevantly misleading or deceptive (because it occurred at a time when in any event BBB was committed to the redevelopment). No reliance 272 The other difficulty with BBB's case based on misleading or deceptive conduct is to identify the reliance (on the representations said to have been made by Aldi) that is said to have made it misleading or deceptive for Aldi to withdraw from the negotiations. In my view, it is clear that BBB saw the redesign as advantageous in any event, and decided to press ahead with it well before it could rationally have believed that Aldi was in any way "committed" to taking a lease of the premises. At most, at least until mid November 2006, BBB could have believed, rationally, only that Aldi was genuinely interested in taking a lease if suitable terms could be negotiated; and this was indeed Aldi's position. 273 Further, as BBB recognised, agreement on the commercial terms was only one part of the overall consensus, or "agreement", that it needed to negotiate with Aldi. It was also necessary for agreement to be reached on Aldi's scope of works before an agreement for lease could be finalised, executed and exchanged. 274 BBB did not proceed on the basis, whether induced by conduct and representations on the part of Aldi or otherwise, that there was in place a "binding" agreement between it and Aldi, which would result in the execution and exchange of an agreement for lease. In case it is not clear from what I have said already, I reject the self-serving and in my view opportunistic evidence of Messrs Bart and Bettar to the extent that they did hold such a belief. On the contrary, when its negotiations with Aldi were at an advanced stage, BBB:

[98]

(3) the evidence does not suggest that BBB had done "far beyond what we would do for other tenants"; on the contrary, it had indicated, from the outset, to potential tenants that it was prepared to modify its development (of course, subject to the Council's approval) to accommodate their requirements. 278 In all the circumstances, when BBB advised Aldi that both parties were free to withdraw, and neither was bound, and thereafter asked Aldi to indicate whether it was proceeding or not, it cannot have been misleading or deceptive, or unconscionable, for Aldi to do one of the very things that it was told that it was free to do. Mr Watson submitted that there was no evidence that KQ Lawyers' letter of 27 April 2007 had come to the attention of Mr Kopp. That may be so; but BBB's letter of 27 July 2007 certainly did. Mr Kopp said, and I accept, that "[t]he letter required advice as to whether Aldi was going to execute the lease documents which had been prepared, or not proceeding" and that he chose the latter of those alternatives (affidavit sworn 20 November 2009, para 18). 279 The facts of this case bear some similarity to those considered by the Privy Council in Attorney-General of Hong Kong v Humphreys Estate (Queen's Gardens) Ltd [1987] AC 114. The Government of Hong Kong negotiated with a developer to exchange valuable property. They reached agreement in principle, recorded in correspondence. The agreement in principle was stated to be "subject to contract". The parties were aware that they would not be bound unless and until contracts were executed and exchanged. Both parties nonetheless incurred expenditure, in the expectation that they would make an enforceable contract. However, they did not. The government stated repeatedly that it was not committed. Their Lordships concluded that it could not be unconscionable for the developer to withdraw, because it could not be unconscionable for the developer to do that which the government repeatedly insisted it could itself do. 280 In this case, BBB had indicated clearly, through its solicitors' words and its own actions, that it regarded itself as free to withdraw. How could it be unconscionable for Aldi to do that which BBB had insisted it could itself do ("with a clear conscience")? 281 In this context, I adopt the words of Lord Walker of Gestingthorpe (with whom Lord Brown of Eaton-under-Heywood agreed) in Cobbe v Yeoman's Row Management Ltd [2008] 1 WLR 1752 at [91]. BBB's case seems to me to fail on the simple but fundamental point that, as persons experienced in the property world, both parties knew that there was no legally binding contract, and that either was therefore free to discontinue the negotiations without legal liability - in equity as well as at law. Equally, I adopt his Lordship's observation at [81] that the courts should be very slow to introduce uncertainty into commercial transactions by over-ready use of equitable concepts such as fiduciary obligations and equitable estoppel. As his Lordship said, "[t]hat applies to commercial negotiations whether or not they are expressly stated to be subject to contract". 282 I accept, of course, that after Mr Brassington instructed Brophy Bridge and Mirow to commence work on preparation of the agreement for lease, BBB spent considerable sums of money in seeking to accommodate Aldi's requirements within basement B1. But it did so knowing that agreement as to the scope of works was essential before any agreement for lease could be finalised, executed and exchanged. It is certainly not the case that BBB supinely accepted Aldi's requirements. On the contrary, BBB insisted on changes to Aldi's scope of works to accommodate its own needs. I have no doubt that it worked in the expectation or understanding that Aldi was negotiating in good faith. In my view, Aldi was doing so. But it was always Aldi's position, as BBB understood, that once the negotiations were completed, it would be up to Mr Kopp to say "yes" or "no". In my view, BBB took the risk that he might say "no". Perhaps it did so because of the assurances given to it as to the level of Aldi's interest. But those assurances were given on the basis of Mr Brassington's understanding of Mr Kopp's position. The attack on Mr Kopp's reasons fails 283 Mr Watson devoted much time to attacking the reasons given by and attributed to Mr Kopp for his decision. He submitted that the matters that Mr Kopp was said to have identified had been agreed between Messrs Brassington and Bettar in the course of the negotiations. That is so. But it overlooks the fact that, as Mr Brassington said and Mr Bettar understood, it was still up to Mr Kopp to say "yes" or "no" once those negotiations had been concluded. In other words, BBB knew, and must be taken to have proceeded on the basis, that even though it achieved consensus on the commercial terms of its deal with Aldi, in the course of negotiations with Mr Brassington (and, to the extent that he featured, Mr Savell), nonetheless Mr Kopp might say "no". 284 In my view, Mr Kopp did have concerns about the matters on which he relied, in deciding not to enter into a lease; and, in my view, those concerns were well-founded. As he explained, a decision to proceed or not will depend, in most cases, on a consideration of all aspects - positive, less positive and negative - of what is offered. Although, in principle, Mr Bettar and Mr Brassington had reached agreement on the individual aspects of the commercial terms, it was up to Mr Kopp to consider them as a whole, and all relevant features of what was being proposed. I accept that he made a commercial judgment, in good faith and on reasonable grounds, that looking at what was offered as a whole, it would not be in Aldi's best interests to proceed. 285 I do accept that one of the reasons advanced by Mr Kopp was his view as to the "values" of BBB. But I think it was legitimate for him to consider whether a long-term association with a company of the kind that he judged BBB to be was in Aldi's best interests. No doubt, over the course of that long-term relationship, points of disagreement would arise. It was open to Mr Kopp to conclude, and I think he did conclude, that it would not be in Aldi's best interests to take the chance that it could resolve such disagreements that might arise in negotiation with someone who had been, as he perceived it, difficult to deal with. 286 I deal with these matters in more detail at [381] to [385] below. 287 In truth, I think, Mr Kopp was offended by BBB's letter of 26 July 2007. He said that he did not like its tone. He believed that Aldi had been negotiating in good faith (and, I infer, he thought that the letter was accusing it of not having done so). Mr Brassington had warned Mr Bettar that Aldi was a difficult company, and that it could change its mind. Mr Brophy had warned Mr Kalde and Mr Rogers that pushing Aldi to make a decision was rarely fruitful, and usually produced at best delay in the making of a decision. Mr Bart chose in effect to provoke Aldi by putting it on the spot and offering it a choice of saying "yes" or "no". In my view, he took the risk that Aldi would say "no". That is what Aldi did. Conclusion 288 For those reasons, I conclude that BBB's case based on misleading or deceptive conduct fails. The first issue should be answered "no". Second issue: unconscionable conduct The "pleaded" case 289 The case of unconscionable conduct alleged in the FACLS is that the representations and conduct of Aldi that are alleged and particularised were aimed at inducing BBB to act as it did, and with the knowledge that it would so act. BBB says that it did act on the basis of those representations and conduct; alternatively on the basis of an assumption, induced by those representations and conduct, that Aldi would enter into a lease; and that it so acted to its detriment. In those circumstances, BBB says, it would be unconscionable for Aldi to withdraw from the position represented (expressly or by conduct), or the assumption: at least, without making equitable compensation. 290 I set out paras 21 and 22 of the FACLS: 21. In the circumstances, in reliance upon the representations and conduct of the defendant, and in the alternative upon the basis of the Assumption, which was induced by the defendant, or held commonly with the defendant, the plaintiff has acted to its detriment and suffered loss and damage. Particulars

[107]

(3) Mr Kopp's reliance, when he decided not to proceed with the lease, upon matters that had been the subject of negotiation and agreement many months earlier. 295 Mr Watson's submissions did not distinguish between unconscionability under the general law and the statutory concept of unconscionability in business transactions created by s 51AC. He did however submit, correctly, that the latter was wider than the former; and he pointed, in particular, to the non-exclusive list of factors that could be taken into account set out in s 51AC (4). 296 Mr Darke submitted that in circumstances where (as here) both parties were possessed of ample resources, and ability to look after their own interests in negotiations, the Court should be slow to find unconscionable conduct in the course of commercial negotiations. In those negotiations, he submitted, the parties were entitled to be (and would expect each other to be) governed by considerations of self-interest. He relied on Austotel Pty Ltd v Franklins Self Serviee Pty Ltd (1989) 16 NSWLR 582. 297 As to unconscionability under the general law (and s 51AA), Mr Darke submitted that the guiding concern of equity was to intervene where one party took unconscientious advantage of another party's special disadvantage, which disadvantage rendered that other party unable to make a worthwhile judgment as to its own best interests. He relied on Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Limited (2003) 214 CLR 51. He noted that the FACLS did not identify any special disadvantage, and submitted that there was none. 298 In this case, Mr Darke submitted, BBB had negotiated, and expended time and resources, knowing that there would be no contract unless and until the agreement for lease was executed and exchanged (and, indeed, stating repeatedly during 2007 that this was its own position). In those circumstances, he submitted, BBB had acted as it did at its own risk, and knowing that a contract might not eventuate; and it was not unconscionable for Aldi to withdraw. That was reinforced, Mr Darke submitted, because:

[110]

(3) BBB itself was asserting, in the context of negotiations, that it was entitled to withdraw from negotiations. 299 Mr Darke submitted that it could not be unconscionable for Aldi to follow a course which BBB had insisted repeatedly was open to itself to follow. Decision 300 The conclusion that a party has behaved unconscionably requires, as does the conclusion that it has engaged in misleading or deceptive conduct, an examination of the entire factual context in which that conduct has occurred. It requires an examination not only of what was done but also of what was not done. 301 When Mr Bettar first made contact with Aldi, he did not have a basement stratum to offer. He was seeking tenants for the street - level retail area. Aldi was not interested in that. There was not sufficient space for its purposes. But Aldi did express interest in a possible basement space. Its preferred position was to purchase rather than lease, but this can be put to one side. 302 Of necessity, if negotiations were to progress between BBB and Aldi, BBB would have to modify the approved development: from scheme A to scheme B, or something like it. Both parties appreciated that if they were to come to terms, it would be on the basis of BBB's undertaking a development something like scheme B. But BBB had indicated to other perspective tenants that it was prepared to modify its approved development to meet their needs. That is hardly surprising. Further, Mr Bart in particular realised, and communicated to Mr Bettar, that the provision of additional basement carparking would be beneficial for almost any use of the retail space. 303 BBB started work on revising the development well before, even on its case, there was any "binding" agreement between it and Aldi, and well before the commercial terms of any such agreement had been finalised. No doubt, it did so in the belief that Aldi was negotiating in good faith. But two things should be noted. The first is that, as I have said more than once, Aldi was negotiating in good faith at all material times. The second is that, as Mr Bettar accepted, BBB was aware (through Mr Bettar) that once commercial terms had been negotiated with Mr Brassington, Aldi might or might not accept them. That decision was for Mr Kopp to make. In other words, BBB accepted that Aldi might not proceed to lease any basement that was created even if, in principle, the commercial terms on which it might do so were settled as between Messrs Bettar and Brassington. 304 Further, BBB was aware (through Mr Bettar) that once the commercial terms were settled, it would be necessary for Aldi's scope of works to be discussed and resolved, before any agreement for lease could be finalised in draft, executed and exchanged. 305 I am prepared to accept, for present purposes, that if at any stage Aldi had ceased to negotiate in good faith, or had formed a view that it would not proceed to take a lease of basement B1 even if all its requirements were satisfied, it was incumbent on it to tell BBB this. But acceptance of that proposition - which lies at the heart of this aspect of BBB's case - reveals why it is that there was no relevant unconscionability. 306 It might have been unconscionable for Aldi, knowing that BBB was incurring substantial expense, to negotiate other than in good faith. But as I have said, I think that it negotiated in good faith at all times. It might have been unconscionable for Aldi to continue to negotiate, and stand by while BBB was continuing to incur expense, once (if it did) it had formed a definite intention not to proceed. But there is no evidence that Aldi did so. On the contrary, the evidence is that the intention to proceed was not formed until about 31 July 2007. 307 Suppose that Aldi had formed a definite intention, at some stage earlier in the negotiations, not to proceed, and that it had informed BBB of this. Would it have been acting unconscionably? On the way that BBB puts its case, the answer must be "no": because, according to BBB, that is what considerations of commercial morality would have required Aldi to do. The unconscionability does not lie in withdrawal from negotiations; on the contrary, obligations of conscience would require Aldi to withdraw from negotiations in the hypothetical circumstances presently under consideration. 308 Thus, the unconscionability must lie somewhere else. But where? On BBB's analysis, it can only be found in Aldi's conduct in standing by, continuing to negotiate and knowing that BBB was incurring expense, when it did not necessarily intend to be bound by the results of those negotiations. But, in substance, that is what Mr Brassington had told Mr Bettar might happen. The commercial terms might be agreed between them; but Mr Kopp might take a different view, and Aldi might not proceed. How, then, could it be unconscientious for Aldi to act in a way that had been flagged as a possibility, and the risk of which BBB must be taken to have assumed? Mr Watson submitted, I think, that the answer lay in the continued assurances that Mr Bettar said that he had received that the lease would be executed in the near future. But in context, that could only have been understood as meaning that the lease would be submitted to Mr Kopp for execution. That, in turn, could only have been understood as meaning submission to Mr Kopp to decide whether or not Aldi should proceed with execution of the lease. 309 For those reasons alone, I do not think that there is any relevant unconscionability on the facts of this case. 310 Further, I find it impossible to understand how, when parties are negotiating on the basis that they will not be bound until formal contracts are executed and exchanged, it can be unconscientious for one party to withdraw before exchange in circumstances where the other party is reserving precisely that right to itself. To pick up again the reasoning of the Privy Council in Attorney General for Hong Kong, it could not be unconscionable for Aldi to follow a course which BBB repeatedly insisted was open to itself. 311 The position is quite distinct from that in EK Nominees. As I have said, the six essential features which led White J to conclude that there had been relevant unconscionability were summarised at [268] of his Honour's reasons, which I have set out above. Four of those six matters have no parallel in the present case. 312 I do not think that either the decision to put work on hold or the investigation of the Wyndham Street premises requires any reconsideration of the conclusion that I have expressed. Perhaps, in an ideal world, the former should have been communicated to BBB. But at the time work was put on hold, BBB had repeatedly insisted that neither party was bound until the agreement for lease was executed and exchanged; and on one occasion had insisted that it was free to withdraw from the negotiations. Further, BBB had given effect to those statements of its position by negotiating with IGA. Within a few weeks after Aldi put works on hold, BBB returned to those negotiations "with a clear conscience". Why was it not unconscientious for BBB to negotiate with another prospective tenant of basement B1, but unconscientious for Aldi to investigate (at a much more preliminary level) the possibility of acquiring another site nearby? Neither the facts as I find them nor Mr Watson's submissions allow any answer, favourable to BBB, to be given to this question. 313 Those reasons are applicable both to the case of unconscionability under the general law and to the case on unconscionability under s 51AC of the Trade Practices Act. 314 The second issue should be answered "no". Third and fourth issues: estoppel The "pleaded" case 315 The FACLS is unilluminating. I am prepared to assume that the "pleading" of the estoppel case is contained not only in paras 22 and 23, but also pars 20 and 21 which I have set out already. I set out paras 22 and 23 (the latter, without its particulars): 22. Further, and in the alternative to paragraph C21, in all the circumstances: a. There was a common assumption and/or purpose of the parties to enter a lease in respect of the Premises; b. The plaintiff redesigned the project and constructed to that redesign, to accommodate the defendant's requirements in respect of that lease and common purpose; c. The redesign and construction was at the defendant's request, encouragement, consent and co-operation; d. That redesign and construction would not be expected to be done gratuitously; e. The lease was not entered and the purpose was abandoned by reason of the unilateral withdrawal of the defendant for its own purposes. 23. In the circumstances, it would be unconscionable for the defendant not to pay or compensate the plaintiff, and the plaintiff is entitled to be paid, on a quantum meruit or by way of restitution, a reasonable amount for the work provided or costs incurred in connection with that redesign and construction and the further redesign and construction to enable the provision of reasonably lettable space in place of the Premises. 316 For myself, I have some difficulty in seeing how these allegations, whether read by themselves or in conjunction with some or all of the earlier paragraphs, raise a conventional estoppel. But as the parties accepted that they did, I shall proceed on that conventional basis. The parties' submissions 317 The starting point of Mr Watson's submission, as to equitable estoppel, was that where a defendant has made a representation or induced an assumption on which the plaintiff has relied to its detriment, it may be unconscientious for the defendant to depart from that representation or assumption. He relied on Giumelli v Giumelli (1999) 196 CLR 101. Whether departure would be unconscientious required, he submitted (correctly), reference to all the circumstances of the case. Those circumstances included, of course, the conduct (including omissions) of the party said to be estopped, but also whether it was reasonable for the other party to act on the representation or assumption and the detriment that would be caused by departure from the represented or assumed state of affairs. 318 Mr Watson accepted that this case for equitable estoppel was founded on the same representations and conduct relied upon in support of the case based on misleading or deceptive conduct and unconscionability. He submitted, in essence, that it should succeed for the same reasons as those cases should succeed. 319 As to conventional estoppel, Mr Watson submitted: 101. Alternatively, the grounds for a conventional estoppel are made out in the present case because of the following circumstances: a. BBB adopted an assumption as to the terms of its legal relationship with Aldi; b. Aldi adopted the same assumption; c. Both parties conducted their relationship on the basis of that mutual assumption; d. Each party knew or intended that the other would act on that basis; and e. Departure from the assumption will occasion, and has occasioned, detriment to BBB. 320 I observe that those submissions mirror the "pleaded" case in that they do not identify the common assumption that is said to give rise to a conventional estoppel in this case. 321 Mr Darke submitted that, because the parties had negotiated on the basis that they would not be bound unless and until the agreement for lease was executed and exchanged, it could not have been reasonable for BBB to proceed with the amended development application on the basis that a binding agreement would come into existence; BBB's decision to proceed with the amended development was not based on any such assumption. 322 As to conventional estoppel, Mr Darke submitted that the relevant common assumption had never been identified. He relied on Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603, in particular at [194] to [214] (Tobias JA). Decision 323 The case based on equitable estoppel must fail, essentially for the reasons that I have just given in relation to the case based on unconscionable conduct, understood by reference to what I have said already in relation to the absence of any relevant misleading or deceptive conduct. 324 The case based on conventional estoppel fares no better. The relevant common assumption has not been identified. It certainly could not have been an assumption that the parties would incur legal liability towards each other even though no binding agreement for lease was exchanged and executed. It is very hard to see what other relevant common assumption, other than that each was negotiating in good faith (and in my view each was), could be relevant. 325 Each of issues 3 and 4 should be answered "no". Issue 5: quantum meruit or restitution

[112]

a. There was a stated common purpose and common assumption of the parties that they would enter a formal lease of the premises. b. At the request, encouragement, consent and co-operation of Aldi, BBB redesigned the project and constructed to that redesign, in order to accommodate the requirements of Aldi for the premises. c. That course would not be expected to be done gratuitously, but only for the common purpose or assumption. d. The failure to have an executed lease agreement arose by reason of a withdrawal of Aldi for its own purposes. 328 He relied on the decision of Sheppard J in Sabemo Pty Ltd v North Sydney Municipal Council [1977] 2 NSWLR 880. 329 Mr Darke submitted that in circumstances where BBB had not stated that it would only incur expenditure if Aldi accepted some obligation in respect of that expenditure, and where Aldi did not ask BBB to incur that expenditure, there was no basis for relief. In any event, he submitted, BBB expended the money because it thought that the amended development would increase the value of the finished project, and that it did so taking a conscious risk that its negotiations with Aldi might not lead to a concluded agreement. The relevant principles 330 I shall start by looking at the relevant principles, as they can be derived from the decision in Sabemo and from subsequent cases and writings. The decision in Sabemo 331 The defendant council wished to redevelop land, on the basis that it would acquire a civic centre and other facilities free of charge, and that the developer would have the benefit of the remainder of the development (for commercial purposes) over a specified term of years. The plaintiff (Sabemo) was the successful tenderer. Once its tender had been accepted, Sabemo carried out a great deal of detailed work, much of it at the express request of the council, to further the development. The development had to be replanned. Sabemo said that it wished to be compensated for some of the cost (said to be $300,000.00) that it had incurred to date, before undertaking further work. It agreed with the council to proceed upon the basis that the cost of the further work would be shared between them. Ultimately, the council withdrew from the project. 332 After a detailed analysis of the authorities, Sheppard J stated the governing principle as follows, at 902-903: In my opinion, the better view… is that, where two parties proceed upon the joint assumption that a contract will be entered into between them, and one does work beneficial for the project, and thus in the interest of the two parties, which work he would not be expected, in other circumstances, to do gratuitously, he will be entitled to compensation or restitution, if the other party unilaterally decides to abandon the project, not for any reason associated with bona fide disagreement concerning the terms of the contract to be entered into, but for reasons which, however valid, pertain only to his own position and do not relate at all to that of the other party. 333 Sheppard J identified the remedy as being "compensation or restitution", but did not identify the doctrinal or juridical (as opposed to factual) basis on which either might be available. The entitlement was one that seemed to his Honour to be justified by, and to follow from, the cases that he surveyed. But the absence of any identification of the underlying rationale for the entitlement (other than the factual situation that his Honour described) makes it difficult to apply the principle in other cases.

[114]

335 That, no doubt, is why Bryson J observed in Fensom v Cootamundra Racecourse Reserve Trust [2000] NSWSC 1072 at [88], that the continuing significance of the decision in Sabemo is for factual situations that are closely analogous to the facts of that case. His Honour's observations were cited with approval by Bergin J in Leading Edge Events Australia Pty Ltd v Kiri Te Kanawa (2007) Aust Contract Reports ¶90-250 at [260]. 336 One of the difficulties in applying the principle stated by Sheppard J in Sabemo is that the basis on which restitution might be awarded for non-monetary benefits was analysed in detail by the High Court in Pavey & Matthews Proprietary Limited v Paul (1987) 162 CLR 221. The impact of that decision on the principle stated by Sheppard J in Sabemo was analysed by Byrne J in Brenner v First Artists' Management Pty Ltd [1993] 2 VR 221. The questions raised by the decision in Pavey & Matthews, and the basis on which the courts award compensation for the provision of benefits under void, ineffective or nonexistent contracts, have been discussed exhaustively in judicial decisions and learned writings since 1987. Criticisms of the decision in Sabemo 337 The decision in Sabemo has not escaped without criticism. Rattee J considered it in Regalian Properties PLC v London Docklands Development Corporation [1995] 1 WLR 212. In that case, the plaintiff tendered for a licence to develop certain land. The tender was accepted "subject to contract" and to other matters. For various reasons, no contract was formed and the development never took place. The plaintiff sought reimbursement for the very substantial expense that it had incurred in preparation for performance of the intended contract. The claim was dismissed. Rattee J held at 231 that where parties negotiate on the basis that any consensus they reach is "subject to contract", so that they are free to withdraw from the negotiations at any time, they proceed on the basis that unless and until a binding contract comes into existence, any cost that they incur in preparation for that contract will be incurred at their own risk. They will have no recompense for those costs if no contract results. 338 The decisions cited to Rattee J included the decision of Sheppard J in Sabemo, and the decision of Barry J in William Lacey (Hounslow) Ltd v Davies [1957] 1 WLR 932, which, I think it is fair to say, was a decision on which Sheppard J had placed particular reliance. William Lacey was a case where a builder tendered for work, apparently not on the basis that the tender might or might not be accepted but so that the owner could use the tender for what Barry J described as "some extraneous or collateral purpose" (in that case, for negotiating a claim for compensation for war damage). Rattee J did "not find the reasoning of Barry J entirely easy to follow". However, as his Lordship pointed out, the result was justifiable. The builder had done work at the request and for the benefit for the owner. That work was outside the ambit of the contract which they thought might be made. The builder had not charged for that work only because it thought that it would be recompensed when it got the contract. As Rattee J said at 225, it was not surprising, in those circumstances, "that the law of restitution found a remedy for the [builder] when the contract did not materialise". 339 In dealing with the decision in Sabemo, Rattee J said at 230-231 that the principle stated by Sheppard J at 902-903 (which I have set out at [332] above) was "not established by any English authority". However, as his Lordship had said at 227, the decision in Sabemo was distinguishable because there the negotiations failed when the council decided unilaterally not to proceed; in Regalian, the negotiations failed because the parties were unable to reach agreement. Further, as his Lordship had noted at 225, no benefit had accrued to the defendant by reason of the plaintiff's expenditure on the facts before him. 340 In Mason, Carter and Tolhurst, Restitution Law in Australia (2nd edition, 2008), the authors offer two criticisms of the decision in Sabemo at [1035]. They referred to Sheppard J's identification of an entitlement to "compensation or restitution". As to compensation, they ask why there was a right, noting that promissory estoppel (which might now support a claim for compensation) was not available in 1977. As to restitution, they note that Sheppard J "did not adopt an unjust enrichment basis". It is, I think, implicit in their criticism that they regard compensation as the appropriate remedy where there is some breach of duty (for example, by reason of promissory estoppel) and restitution for unjust enrichment where there is receipt of benefit rendered and accepted on the basis that it must be paid for. They point out the importance of benefit by reference to the facts in Sabemo (I omit citations): The case illustrates graphically the importance of information as a benefit obtained from professional services. The council benefited from determining the building scheme which would meet its needs, even though that benefit was not realised (or realisable) in the way envisaged. It also determined what was not feasible, and this was also beneficial. Had it simply gone into the market, and asked for someone to provide the services which Sabemo provided, the council would have had to pay a price, namely the market value of the services actually rendered. In its dealings with Sabemo a point was reached where the council was requesting work for which it knew Sabemo expected payment, and the council then came under a duty to say that it would not pay. In failing to advise Sabemo that it had no intention of paying, it accepted the benefit of the work and came under an obligation, imposed by the law or restitution, to pay for the work done. 341 In my view, that is the correct explanation of the principle stated by Sheppard J in Sabemo at 902-903. It emphasises that at least the following matters must be considered:

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(3) whether, in all of the circumstances of the case, it is unconscientious for the recipient to take the benefit but not to pay the price. 342 In the second point, I say "directly" to contrast payment directly for the benefit with indirect payment (for example, through the award of a contract from which the cost of providing the benefit will be recouped as part of the overhead costs of the provider). The decision in Pavey & Matthews 343 The facts were simple. The respondent / defendant (Ms Paul) made an oral contract with the plaintiff / appellant (the builder) to renovate a cottage owned by Ms Paul. The contract was one for the performance of "building work" as defined in s 3(1) of the Builders Licensing Act 1971 (NSW). By s 45 of that Act, the contract, not being in writing and signed by the builder and Ms Paul, was not enforceable by the builder against Ms Paul. It is to be inferred that the builder and Ms Paul each contracted in ignorance of the impact of s 45. 344 Ms Paul made a number of progress payments to the builder, on account of the contract sum. However, she refused to pay the balance claimed. The builder sued to recover the reasonable cost of the work done, giving credit for amounts paid. 345 The majority in the High Court (Mason and Wilson JJ in a joint judgment, and Deane J and Dawson J in separate judgments) held that the builder was entitled to recover on a quantum meruit basis for the value of work done and materials supplied. Their Honours said that this was neither enforcement of the contract nor an action on some implied contract. 346 Deane J pointed out at 255 that "the old common indebitatus count" (which included claims to recover "quantum meruit") could cover two different kinds of claim. The first was a claim to recover a debt owing "under a genuine contract, whether express or implied". The second was a claim "to recover a debt owing in circumstances where the law itself imposed or imputed an obligation or promise to make compensation for a benefit accepted". As his Honour pointed out at 256, if there were a valid and enforceable agreement governing the plaintiff's rights, then there was "neither occasion nor legal justification for the law to superimpose or impute an obligation or promise to pay a reasonable remuneration". The obligation to pay fair compensation for an accepted benefit "will only arise in a case where there is no applicable genuine agreement or where such an agreement is frustrated, avoided or unenforceable". In those circumstances, the law could impose an obligation to make restitution, or pay compensation, for a benefit accepted under the unenforceable agreement. 347 Deane J said at 256-257 that the various circumstances in which the law might recognise that obligation could be unified by the reference to the concept of unjust enrichment. That concept had a further, wider, significance, as his Honour pointed out at 257: In a category of case where the law recognises an obligation to pay a reasonable remuneration or compensation for a benefit actually or constructively accepted, the general concept of restitution or unjust enrichment is… also relevant, in a more direct sense, to the identification of the proper basis upon which the quantum of remuneration or compensation should be ascertained in that particular category of case. 348 Although the contract could not be enforced, its existence and terms were thus relevant to show:

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(2) in assessment the amount of any compensation to be paid. 350 I have started with the reasons of Deane J because, I think, they were in substance adopted by Mason and Wilson JJ: see at 227, in particular where their Honours identified "the true basis of the action on a quantum meruit" as "execution of work for which the unenforceable contract provided, and its acceptance by the defendant". 351 The analysis of Deane J seems also to be consistent with the reasons of Brennan J. Brennan J dissented in the outcome, not because he thought that there could be no right to recover on a quantum meruit basis where there was no enforceable contract, but because he thought that the policy of s 45 forbade such recovery, even though it did not in terms amount to enforcement of the contract. 352 The High Court has returned to the topic of unjust enrichment one number of occasions. For present purposes, I refer only to the decision in Lumbers v W Cook Builders Pty Ltd (In Liquidation) (2008) 232 CLR 635. In that case, the plurality (Gummow, Hayne, Crennan and Kiefel JJ) referred to Deane J's identification of unjust enrichment as a unifying concept at [85]. Their Honours emphasised that unjust enrichment was not "a principle which can be taken as a sufficient premise for direct application in particular cases". The decision in Brenner 353 The facts in Brenner were complex, and I do not think that it is useful to attempt to summarise them. In substance, management services were provided pursuant to arrangements that were found to fall short of binding or enforceable contracts. It was necessary to consider claims for remuneration on a quantum meruit basis. 354 Byrne J noted at 256 that there were two broad categories of quantum meruit claims. The first was where there was an existing enforceable contract under which there was an express or implied term to pay a fair and reasonable sum for goods or services. The second was the imposition by law of an obligation independent of contract to pay a fair and reasonable sum for services. The latter case, as his Honour noted, imposes the obligation to pay "by the application of the law of restitution or unjust enrichment". 355 At 257, his Honour said that the basis of enforcing the obligation to pay was "that the defendant has actually or constructively accepted the benefit of the plaintiffs' services in circumstances where it would be unjust for [the defendant] to do so without making restitution to the plaintiffs." The principles would have no application where there was a subsisting enforceable contract for the provision of those services: in that case, any right to payment must flow from the contract. 356 At 258-259, his Honour, having considered the question of "benefit", concluded "that in a case where the services were requested and accepted, the law will not stop to enquire whether they were, on any other basis, of benefit to the party requesting and accepting them". As I understand it, his Honour was saying that to the extent that it is necessary to find "benefit" (as an element of a claim for restitution for unjust enrichment), benefit may be inferred simply from the fact of request for and receipt of services. 357 Byrne J at 259 identified further elements of the entitlement (to be paid on a quantum meruit basis for the provision of services in the absence of any enforceable contract for their provision) as including:

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(2) whether they were provided on the basis that payment would be conditional on the occurrence of some other event. 358 At 260, Byrne J said that it was necessary to focus attention on the position of the party from whom payment was sought. The enlivening principle of the entitlement to payment was "the injustice of the enrichment to that party". Thus, his Honour said: In my opinion the appropriate inquiry is whether the recipient of the services, as a reasonable person, should have realised that a person in the position of the provider of the services would expect to be paid for them and did not take a reasonable opportunity to reject those services. The decision in Roxborough 359 The High Court returned to the subject of restitution in Roxborough v Rothmans of Pall Mall Australia Limited (2001) 208 CLR 516. That case concerned an action brought by retailers of tobacco products who bought from licensed wholesalers under contracts where the price included the amount of the state licence fee. The licence fee was subsequently held to be invalid, as being a duty of exercise within s 90 of the Commonwealth Constitution. The retailers sued to recover the amount paid by them in respect of the licence fee. The majority of the Court held that the amount payable for the licence fee was a distinct and severable part of the consideration paid by the retailers, and that there had been a total failure of that part. Accordingly, the money was recoverable as money had and received by the wholesaler to the retailers' use. 360 Gummow J (who formed part of the majority) gave consideration to the basis on which the law imposed an obligation to make restitution. At [72], his Honour said that the courts should be careful in accepting "any all-embracing theory of restitutionary rights and remedies founded upon a notion of unjust enrichment". As his Honour pointed out, a system of law based on precedent develops by deriving general principles from individual judicial decisions. 361 At [74], his Honour referred to problems that might arise if unjust enrichment were regarded as a definitive legal principle: …. substance and dynamism may be restricted by dogma. In turn, the dogma will tend to generate new fictions in order to retain support for its thesis. It also may distort well settled principles in other fields, including those respecting equitable doctrines and remedies, so that they answer the newly mandated orders of things. Then the various theories will compete, each to deny the others. There is support in Australasian legal scholarship for considerable scepticism respecting any all-embracing theory in this field, with the treatment of the disparate as no more than species of the one newly discovered genius… . 362 By contrast, as his Honour pointed out at [75], the action to recover money on a total failure of consideration "may be illustrative of the gap-filling and auxiliary role of restitutionary remedies". Those remedies operate in the absence of contract and "do not let matters lie where they would fall if the carriage of risk between the parties were left entirely within the limits of their contract". 363 It seems to me to follow from the approach of Gummow J that, as Doyle CJ (with whom Duggan and Nyland JJ agreed) had said in Angelopoulos v Sabatino (1995) 65 SASR 1 at 9, the decision in Pavey & Matthews did not seek to overturn the existing case law dealing with the situations in which restitution would be ordered. On the contrary, there was a "need to integrate the decision in Pavey's case into the existing case law while at the same time giving proper force to the emphasis placed upon the notion of acceptance". Some tentative conclusions as to the questions of principle 364 I express my conclusions as tentative because, as I have indicated below, I did not have the benefit of full and adequate argument from (in particular) the party seeking, as alternative relief, "compensation or restitution" as identified by Sheppard J in Sabemo. 365 The decision in Sabemo was expressly based upon decisions in earlier cases where restitution or recovery had been allowed. But as Sheppard J made clear at 897, it was "not a case of unjust enrichment". His Honour reasoned by analogy with existing cases, in which a remedy had been given, that a remedy should be given on the facts as found by him. As Gummow J indicated in Roxborough, that is the way in which the law develops. However, even accepting that Pavey & Matthews did not intend to overturn existing case law, but on the contrary should be fitted into it, it is clear that an understanding of the basis upon which restitution is ordered in the absence of contractual entitlement has changed radically since 1977. 366 Where, for whatever reason, there is no effective contract, a party may be entitled to recover restitution for, or on account of the value of, benefits provided by that party to another party, and accepted by that other party. The factors that may give rise to a restitutionary claim will include at least the following:

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(3) neither party expected that the benefit would be provided gratuitous. 367 So much follows, I think, from the decision in Sabemo, reconsidered in the light of Pavey & Matthews and Brenner. 368 The decided cases suggest that (although the categories of benefit are still the subject of debate, and are certainly not to be regarded as closed), "benefit" may be found in the payment of money to or at the direction or for the benefit of the other; the provision of goods or services; or the performance of work and labour. But there must be something more than the mere provision of benefit. Bowen LJ said in Falcke v Scottish Imperial Insurance Company (1887) LR 34 Ch D234 at 248 that the general principle of English law is that, with well recognised exceptions and in the absence of other circumstances, one person cannot force a liability on another, or confer a benefit on that other against his or her will. As his Lordship said: … work and labour done or money expended by one man to preserve or benefit the property of another do not according to English law create any lien upon the property saved or benefited, nor, even if standing alone, create any obligation to repay the expenditure. 369 The additional factor that may engender an entitlement to restitution is often described as "acceptance" or "free acceptance". But in reality, as the plurality pointed out in Lumbers at [86], the question to which attention is directed is "whether the long-established and well-recognised category of cases constituted by claims for work and labour done or money paid at the request of another should be extended or developed in the manner for which" a particular claimant contends (their Honours' emphasis). 370 It is often said that a liability to make restitution will be engendered where it would be unconscientious for the person against whom restitution is sought to retain the benefit without providing compensation to the person who conferred it. And in many cases it can be said that there is an unconscientious element to the acceptance of the benefit without payment of compensation. But to talk of the matter purely in terms of conscience, or whether retention of the benefit (without compensation) is unconscientious, may well be to do the very thing against which Gummow J warned in Roxborough: obscure the principle derived from consideration of decided cases by application, or through the prism, of a theoretical construct. 371 In the circumstances of this case (and, in particular, of the issue with which I am presently concerned) the questions that arise are these:

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(3) Alternatively, is BBB entitled to restitution on some wider basis that is grounded in principles that can be deduced from the decided cases (see in particular, at [366] above) and that falls within the ambit of its case as "pleaded" and conducted? 372 I put the matter that way because Sheppard J did not, in terms, give consideration to whether or not it was unconscientious for the council to retain the benefit that it had received without paying compensation or restitution. It may very well be that, when his Honour said that the case was not one of unjust enrichment, he was intending to put aside questions of conscience. But if, in addition, there is some requirement that the retention of the benefit, without paying compensation, must be unconscientious, then the reasons that I have given in relation to other aspects of BBB's claim mean that this aspect faces an additional, and very real problem. Decision 373 One of the difficulties in dealing with this issue is that the submissions for BBB stated the entitlement at a level of extreme generality, relying only on the decision in Sabemo and making only passing reference to the decisions in Fensom and Leading Edge. They did not grapple with the decision in Pavey & Matthews, or with any of the learned writings that discuss the subject, although in fairness they did refer (in passing) to what White J said on this topic in EK Nominees at [216] to [218], where his Honour concluded that a restitutionary claim might be considered "according to the principles of estoppel". 374 It is clear that for Sheppard J, the decisive factor in Sabemo was that the council "deliberately decided to drop the proposal" for reasons that "had nothing to do with" Sabemo: see at 900, 901. His Honour contrasted that with a situation where "the transaction had gone off because the parties were unable to agree". His Honour appeared to regard it as an acceptable risk that there might be a failure in good faith to reach agreement on a point of substance in a complex transaction, but not that one party should decide unilaterally "to change its mind about the entirety of the proposal". 375 The other point that is significant is that his Honour concluded that it would have been "unthinkable" that Sabemo would act as it did, had it thought that the council might change its mind. 376 Finally, and in a negative sense, it is clear from what Sheppard J said at 902 that his Honour did not regard it as essential to his conclusion (or, for that matter, to his statement of the governing principle) that the work done should have produced some benefit for the council. That is consistent with his Honour's disavowal of reliance on unjust enrichment (see at [334] above). 377 Turning to the facts of this case: Mr Bettar's minutes of the meeting of 31 May 2006 between himself, Mr Nicholas Bettar and Mr Brassington make it clear that it was BBB, through Mr Bettar, that raised the prospect of leasing basement B1 to Aldi (see item 12, set out at [40] above). As I have noted, that was consistent with suggestions put by Mr Bettar to other prospective tenants, that building B could be modified to suit their needs; although it may be that the modifications would not have been so substantial, for some of those other perspective tenants, as they were for Aldi. 378 Two things are conspicuously absent from the negotiations that followed the meeting of 31 May 2006:

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(4) the requirement that Mr Kopp give his approval was not a matter of formality, or of applying a rubber stamp. 380 To the extent that the fourth proposition is inconsistent with the evidence of Messrs Bart and Bettar, I do not accept that evidence at face value, or in terms, for the reasons that I have given both in dealing with their credibility and in dealing with the particular alleged representations on which Mr Watson placed reliance in his submissions. 381 In summary, Mr Kopp decided not to proceed with the transaction because he decided, overall, that it was not in Aldi's interests to proceed. It is correct to say, as Mr Watson submitted, that many of the elements to which Mr Kopp referred (either on his own account of the decision-making process or as attributed to him by Mr Savell) were matters that had been the subject of negotiation and agreement between Messrs Bettar and Brassington. But those negotiations, which were intended to take the matter as far as they could between those two gentleman, were not decisive. Mr Kopp's approval was required to the whole of the proposal, and it was not something that could be assumed, or taken for granted. 382 Further, as Mr Kopp explained, in assessing any proposal to lease, it is necessary to balance all the positive and negative factors. Where a particular consideration is a "deal-breaker", then, of course, the transaction would not proceed. But when some aspects of the transaction were acceptable, and some less so, it was, as Mr Kopp agreed, a matter of balancing them. It was his role to assess, in Aldi's interests, all the elements of the transaction. That is precisely what he did. 383 Of course, and again as Mr Watson submitted, Mr Kopp relied on factors that did not have to do with the objective commercial merits of what had been negotiated: the "values" of BBB. Although Mr Watson strove to portray this as some idiosyncratic and unsustainable subjective assessment, I think that what Mr Kopp was saying was that he had doubts about BBB, based both on the way negotiations had been conducted on its behalf and on the terms of the letter of 26 July 2007, and had decided that this was not a promising start for what should have been a long-term relationship. That reading of Mr Kopp's reasons is supported by the comments attributed to him by Mr Savell. 384 Mr Kopp may have been right in forming what appears to have been a negative assessment of BBB's "values"; or he may have been wrong. But he was certainly right to take into consideration that the relationship, if consummated, would last for at least 12 years, and that of necessity there would need to be some give and take along the way. (By way of example: the trolley bay licence, which whilst not a matter essential for the conduct of Aldi's business was clearly of benefit to it, was, at BBB's insistence revocable at will.) 385 As I have said, I accept Mr Kopp as a witness of truth. I accept his evidence of his reasons for deciding not to proceed with the transaction, and it follows that I accept that he made, overall, a commercial judgment of the transaction in what he believed to be Aldi's best interests. 386 It follows that the present facts can be distinguished from those considered by Sheppard J, in particular, in relation to what I have identified as the matter that was central to his Honour's reasons. In those circumstances, I do not propose to take any further the first question posed at [371] above. That is because, for the reasons I have given, the answer to the second of those questions is "no"; and on that basis, even if Sabemo should be followed, it does not govern the outcome of this aspect of BBB's claim. 387 Accordingly, I conclude that BBB's claim on a quantum meruit or restititonary basis, based on the decision in Sabemo, fails. 388 If the claim is to be considered on some wider basis, then it would be necessary to identify the features of the transaction that made it unconscientious for Aldi to withdraw, at least without making compensation or restitution for the expense incurred by BBB. Since Mr Watson did not address those matters separately (in his submissions on issue 5) I have assumed that he intended to rely on his submissions on unconscionable conduct as applying, to the extent necessary, to issue 5. 389 I should say that it is by no means clear that Mr Watson did intend to advance a wider restititutionary case. It appears to be reasonably well established, at least by first instance authorities decided since Pavey & Matthews, that it would be necessary to show at least the conferral of a benefit and the acceptance of that benefit in circumstances in which it would be unconscientious for the beneficiary not to make payment. Mr Watson's submissions did not address the "benefit" said to have been conferred and received, nor (except to the extent that I have just indicated) why it would be unconscientious for Aldi to retain any such benefit without making some restitution on account of the costs of providing it. 390 In any event, in circumstances where, as I have said, BBB regarded itself as uncommitted, and free to withdraw, before an agreement for lease was executed and exchanged, it can hardly have been unconscientious for Aldi to take the same approach. 391 Issue 5 should be answered "no". Sixth to tenth issues: relief 392 To the extent that these issues were to be dealt with in the hearing with which these reasons are concerned and not (should it be necessary) subsequently, they do not arise having regard to the conclusions that I have reached on the first to fifth issues. Conclusion and orders 393 BBB's case fails. The proceedings must be dismissed with costs. I so order. **********

BBB Constructions v Aldi Foods

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Judgment (133 paragraphs)

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