Beneficial Finance Corporation Ltd v Multiplex Constructions Pty Ltd

Trade Practices Act 1974 (Cth), s 52 Fair Trading Act 1987 (NSW), s 42

Beneficial Finance Corporation Ltd v Multiplex Constructions Pty Ltd (1995) 36 NSWLR 510, refd Bill Acceptance Corp Ltd v GWA Ltd (1983) 78 FLR 171, refd Bomanite Pty Ltd v Slatex Corporation Australia Pty Ltd (1991) 32 FCR 379 Butt v McDonald (1896) 7 QLJ 68, refd Cedric Constructions Pty Ltd v Elders Finance & Investment Co Ltd (1988) ATPR 40-879, refd Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1, refd Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 41 ALR 367, refd Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64, applied Cropper v Smith (1884) 26 Ch. D 700, refd Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82, refd GSA Industries Pty Ltd v NT Gas Ltd (1990) 24 NSWLR 710, refd Hide and Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310, refd Leda Holdings Pty Ltd v Oraka Pty Ltd (Full Court, unreported, 9 December 1997), refd Malec v JC Hutton Pty Ltd (1990) 169 CLR 638, applied Manchester Ship Canal Co v Manchester Racecourse Co [1901] 2 Ch. 37, refd Masters v Cameron (1954) 91 CLR 353, refd Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221, refd Pata Nominees Pty Ltd v Durnsford Pty Ltd (1988) WAR 365, refd Queensland v JL Holdings Pty Ltd (1997) 141 ALR 353, refd Re Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) 36 FLR 134, refd Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234, refd Sabemo Pty Ltd v North Sydney Municipal Council (1977) 2 NSWLR 880, applied Schuler (L.) A.G. v Wickman Machine Tool Sales Ltd [1974] AC 255, refd Sellars & Poseidon Ltd v Adelaide Petroleum NL (1994) 179 CLR 332, applied Spunwill Pty Ltd v B A B Pty Ltd (1994) 36 NSWLR 290, applied State Pollution Control Commission v Australian Iron & Steel Pty Ltd (No 2) (1992) 29 NSWLR 487, refd

State Rail Authority of NSW v Health Outdoor Pty Ltd (1986) 7 NSWLR 170, refd Tobacco Institute of Australia Ltd v Woodward (1993) 32 NSWLR 559, refd Woodroffe v Box (1954) 92 CLR 245, applied WHITE PROPERTY DEVELOPMENTS LTD v RICHMOND GROWTH PTY LTD AND ORS N 445 of 1995 MADGWICK J 28 JANUARY 1998 SYDNEY

AND: richmond growth PTY LIMITED (ACN 064 750 241)

REASONS FOR JUDGMENT HIS HONOUR: Introduction Richmond is a semi-rural town north-west of Sydney, being caught up in the suburban sprawl. In the early 1990's it seemed to a group of local landowners, including business people, that money might be made out of aggregating certain allotments of land near the heart of the town and then re-selling the land for redevelopment, or developing it themselves, as a shopping centre, if they could obtain appropriate land planning and development approvals. Their idea was to win the right to have built a shopping mall, centred around one or more supermarket stores to be operated by one of the large retail chains, which would become the "anchor" or major tenant(s). In 1993 the landowners formed the first respondent, Richmond Growth Pty Limited ("Richmond Growth"), as a vehicle for the aggregation of and dealing with the land. Options for Richmond Growth to buy all the relevant lots were negotiated. At relevant times Mr O'Brien, the second respondent and Mr Paull, the third respondent were directors of the company. Mr Ken Bennett, the fourth respondent, is an experienced local real estate agent, and members of his family, including his brother Colin, a solicitor, were among the landowners standing behind Richmond Growth. Mr Bennett was Richmond Growth's real estate agent, but he also represented it more fully than is usual in most real estate agency arrangements, even on occasion by apparently having the right to negotiate and make agreements on its behalf. The applicant, White Property Developments Pty Ltd ("White Property") is a wholly owned subsidiary of White Industries Australia Ltd ("White Industries"), and an instrument of the latter and its related group of companies ("the White group") for the development of substantial commercial properties, including shopping centres of the same general kind as that contemplated by Richmond Growth. The processes of "development" as undertaken by White Property typically include the assessment of the financial feasibility of acquiring and building structures of the intended kind upon the land; planning and designing the buildings and other construction works; preparation and lodgment of applications for planning and development approval of the plans by the relevant public authorities; in the case of a shopping centre, deciding the kinds of tenants wanted; negotiating leases and rentals; and having leases drawn up and tenants installed. When the centre is functioning, the land is sold, usually to a large institutional investor. It is at that point that the projected profit of the development may be realised. For several years the relevant local government council had been keen to have a new, major shopping centre built in or close to Richmond. Richmond Growth was not the only company interested in securing approval for such a centre. There was likely in the intermediate future to be only one such development. Hence there was keen competition. The council made it clear to Richmond Growth and the competing would-be developers that it wished no repetition of the council's earlier experiences of undertaking expensive and time-consuming assessments, for approval purposes, of the kind of major development application in question, only to have the process wasted, after approvals were given, by the inability of the successful applicant to bring its plans to fruition. In 1993 and thereafter, Richmond Growth initiated and maintained contact with representatives of Woolworths Ltd ("Woolworths") who had expressed interest in Richmond Growth's proposals. Mr Bennett, through his real estate agency business, had previously known Mr Geoff White, the chairman of White Industries, as a client in relation to an earlier private land dealing. Mr Bennett discussed with Mr White difficulties that Richmond Growth was experiencing in being accorded credibility by the council as an entity capable of bringing into being a major development, if development planning and approvals should be granted to Richmond Growth. Mr White invited Mr Bennett to speak to his relevant subordinates in the White group. Hence White Property entered the picture in October 1994. At that time Richmond Growth was using a local architect, Mr O'Grady, as its designer and construction cost advisor. Mr O'Grady sent his sketches and rough cost estimates to Mr Quayle, a development manager of White Property. Mr Quayle had been asked by Mr White to see if Richmond Growth's planned project appeared sufficiently attractive for the White Group to become involved in it. Richmond Growth's negotiations with White Property and others On 31 October 1994, after an initial lack of enthusiasm on his part, Mr Quayle met Mr Bennett at Mr White's request. Mr Bennett indicated that Richmond Growth would probably sell the property upon development approval being obtained, as Richmond Growth was "not strong enough" to manage the actual development process. Mr Quayle offered to give his estimation of the viability of the project provided that there would be "something in it" for White Property. Mr Bennett agreed. He indicated that it would be helpful if Richmond Growth could give the council a letter showing White Property's "support" for the project. The next day Mr Quayle provided Mr Bennett with such a letter. It registered White Property's "keen interest in working with" Richmond Growth on "this significant project", stressed White Property's skills and experience and enclosed materials showing that White Property indeed had the ability to bring such a development to fruition. In early November 1994 Mr White asked Mr Morcom, the General Manager of White Constructions Limited ("White Constructions"), to take charge of White Property's dealings with Richmond Growth. Mr Morcom discussed matters with Mr Quayle and, on 17 November, the two met Mr Bennett at his office. Among other things Mr Bennett said that he was Richmond Growth's agent and had full authority to act on behalf of the company in relation to the land and the proposed development. Mr Bennett said, in effect, that the letter of 1 November had not been "strong enough" and that Richmond Growth's application would be beaten by another would-be developer at a council meeting to be held on 14 December 1994, unless White Property, as a "credible development company", were to confirm that the project was "extremely viable". Mr Morcom offered to give such a letter but, on his uncontradicted evidence, only on the understanding that Richmond Growth would give White Property "first option to act as project manager for the development and first option to purchase the site under mutually agreeable terms and conditions" (emphasis added). Mr Bennett agreed. He and Mr Morcom then shook hands as an indication that they had reached a deal. The next day, 18th November, White Property sent Mr O'Brien a letter, obviously intended for onforwarding to the council, in the following terms: "Further to our meeting on 17th November with yourself and Mr Ken Bennett, we summarise the discussion as follows: * White Property Developments Limited is very keen to develop the project in its own right or to provide Development Management and Project Management services within a mutually acceptable venture * We believe the project to be extremely viable . . . [various arguments, evidently intended for councillors' and council staff's eyes, favouring Richmond Growth's proposal over a rival's were set out] In conclusion, we again confirm our strong interest in this project and would welcome the opportunity to discuss our thoughts with officers of Hawkesbury City Council." Agreement reached Also on 18th November 1994, Mr Quayle sent Mr O'Brien another letter: "This is to confirm our agreement that should your site receive Council support for a rezoning to permit retail development, then White Property Developments Limited will be granted a first right of refusal to either: * Purchase the site under mutually agreeable terms and conditions; or * Act as Project Managers for the development under mutually agreeable terms and conditions." On 22 November Mr O'Brien, on behalf of Richmond Growth, signified confirmation of the agreement set out in Mr Quayle's letter of the 18th, Mr Quayle having formulated the terms of the confirmation: "We confirm our agreement that, should we receive Council support permitting a retail development on our site at March Street Richmond, we would be happy to grant your company a first right of refusal to either: a. purchase the site under mutually agreeable terms and conditions; or b. act as Project Managers for the development under mutually agreeable terms and conditions. We thank you for your support and interest in the proposal." Winning council approval At Mr Bennett's request, Mr Quayle then (among other things) participated in meetings designed to demonstrate to influential local business people that White Property was supporting Richmond Growth. Thereafter, Mr Quayle accompanied Mr O'Brien and Mr Bennett to a lengthy meeting with a councillor. Mr Quayle assured the councillor of White Property's bona fide interest in the development and argued the merits of Richmond Growth's scheme. On 25 November, Mr Quayle provided a letter aimed at extinguishing an idea, which had apparently emerged, of council supporting "the rezoning of two or more sites simultaneously". On 1 December, Messrs Morcom and Quayle, along with O'Brien, Paull, Bennett and O'Grady, met with the council. Mr Morcom and Mr Quayle lunched with Mr O'Brien and Mr Paull in order to discuss tactics for the approaching, decisive council meeting. Mr Morcom said that if council support was not then given, White Property would not require Richmond Growth to pay "our project management fees for the work done by us to date". Council met at length on 14 December. Four sites, including that proposed by Richmond Growth, were considered. Only Mr O'Grady, the architect, and Mr Quayle spoke on behalf of Richmond Growth. Mr Quayle, among other things, said that White Property would be the "project manager and eventual developer". Richmond Growth carried the day and obtained council's conditional approval for its proposal. The council, inter alia, required Richmond Growth to enter into an agreement with council, which included the condition that a $1 million bond to guarantee that the development would proceed in a timely way would be furnished to the council. If such an agreement was not entered into within four months, the council would support another developer's proposal. Project managers After the council meeting and in the early hours of the next morning, Mr Quayle had Mr O'Brien sign a letter dated 14 December which Mr Quayle had earlier prepared: "This is to confirm our appointment of the White Group of Companies to act as Project Managers on the above development. We understand that fees for this service will not be charged if White purchases the site or enters into a joint venture with Richmond Growth Pty Limited to develop the property. In the event that Richmond Growth disposes of the property to other than White or elects not to proceed with the project, then a mutually agreeable fee will be negotiated for White's services." At about this time, Mr Barlow, the General Manager of White Property, was introduced to Mr O'Grady and details as to how, and who on behalf of, White Property would perform the project management were discussed.

By 31 December 1994, Mr Morcom felt the need to complain to Mr Bennett: "Geoff White is very concerned that you are discussing the above with Woolworths especially Sam [Restifa] - Bruce York and Roger Corbett. He understood, as I told him so that you were to refer all major [tenant] enquiries to us as agreed at our meeting 19.12.94 and I insist that this procedure is followed to ensure correct coordination is achieved for the benefit of the project to ensure we maximize our best commercial position when we start negotiations with the proposed [tenants]. For your information we have already established the $1.0 m bonding facility. As you are aware Alex O'Grady has gone on holidays for 2 weeks and the task of getting the draft guarantee from council was left to Alex to achieve. The main 3 objectives currently to achieve are: (1) Target an institutional end buyer . . . (2) Head lessee for 20 years, . . . (3) Establish price of land which will happen once 1 & 2 objectives met. It was agreed on 19.12.97 that weekly meetings would be established and confirmed dated on 9.1.95 when all concerned was back from hollidays. Roger Quayle will be replaced by the end of January with an experienced Project Manager that will take the project from start to construction completion. To ensure the project is successful we must coordinate through one source which should be a team effort to achieve and all concerns should be tabled at the weekly meetings to enable all concerned to address not outside to persons who are not aware of the detail or the game plan. Our chairman Mr G White has many personal contacts with chief executives of major retailers and developers, i.e. Frank Lowry, Westfields, Jim Flemming, Jewel, but our intention is to only involve him at that level when we are sure and ready of our game plan." In response, on the same day, Mr Bennett assured Mr Morcom that he would "not deal directly with third parties . . . or interfere with the management of the development". Despite this, Mr Bennett and Richmond Growth continued to deal, as they had been dealing, with Mr Restifa, an architect close to Woolworths' property developers. In the new year, White Property was active in arranging for the development to proceed, for example, by engaging a costing consultant and a specialist design architect, and by Mr Morcom's attending on the council to discuss "heritage issues" which had arisen (principally the preservation of some cottages on the lots which would make up the land for the shopping centre). On 15 February 1995, Mr Jamieson, the financial controller of White Property, wrote to Richmond Growth: "As you are aware from our numerous discussions and our representations in our letter dated 30th January 1995, the heritage issues for the development site require resolution prior to 14th April. At our meeting with Council on 27th January we agreed a course of action . . . whereby eight buildings . . . would be retained. All remaining buildings on the site will be demolished, thereby maximising the development site and consequently the return to landowners. We see this as a compromise since it is three more buildings than we believe necessary. We then appointed architects, Drummond & Rosen, to develop a concept for the site. At meetings of various heritage consultants and committees on 8th and 10th February no decisions were made. We were shocked to learn that, in response to these heritage meetings, on 14th February representatives of Richmond Growth and their architect met with Council; tabled an alternative plan for the centre; and discussed an alternative layout for the retention of ten heritage buildings. This has undermined our position with Council . . . As Project Manager it is our responsibility to control and co-ordinate all representations to Council, architects, tenants and other parties. You will understand that we cannot have anyone going to Council independently and changing our agreed strategy. We therefore need your commitment to this to ensure we can bring this project to fruition." In response Mr O'Brien telephoned Mr Morcom and said he was concerned that Richmond Growth were saying that they were the project manager. Mr Morcom referred Mr O'Brien to the letter which Mr O'Brien had signed on 14 December. Mr O'Brien then said ". . . you are right, you are the project manager".

White Property continued negotiating with the council and, in many respects, working as one would expect a project manager to work. However, on 17 February, White Property again wrote to Richmond Growth: "We refer you to your letter dated 22nd November 1994 whereby White Property Developments Limited was granted first right of refusal to either: (a) purchase the site under mutually agreeable terms and conditions; or (b) act as Project Managers for the development under mutually agreeable terms and conditions. Your letter of 14th December 1994 confirms our appointment as Project Manager. We wish to confirm with you that, as Project Manager, we will be commencing negotiations with major anchor tenants on 20th February 1995. It is envisaged that this process will take approximately two weeks. You will appreciate that it is vitally important that our negotiations during this time are not undermined by other parties. Should any offers for the site be made by any other party, you should get such offer in writing along with applicable terms and conditions and forward them to us immediately for our consideration and advice. We cannot over-emphasise the importance of the phase we are now entering. Should you require any further explanations in this regard please do not hesitate to contact me." Soon after this, on 20 February, Mr Bennett denied that Mr Restifa was involved. He said that Mr Restifa was "acting under his own steam and [has] nothing to do with Richmond Growth or me". White Property then procured Richmond Growth (by Mr Paull) to issue letters to possible "anchor tenants" Franklins Limited and Woolworths Limited: "As you are aware, our company controls the land which Hawkesbury City Council is currently rezoning for the development of a shopping centre complex in Richmond. We wish to confirm to you that we have appointed White Property Developments Limited as Project Manager for this development. Furthermore, White Property Developments Limited has been granted first right of refusal to purchase this site.

White Property Developments Limited will be in contact with you to discuss your company's interest in this development." (emphasis added) These letters were signed only after Mr Ken Bennett had referred them to his brother Colin, as indicated, a solicitor, for approval. Offers made (i) Coles On 21 February, Mr Bennett faxed to White Property a copy of a self-styled "conditional Offer to Purchase" the land for $7.95 million dated 15 February, which had emanated from Restifa & Partners Pty Limited on behalf of a wholly-owned Woolworths subsidiary Fabcot Pty Limited ("Fabcot") and been sent to Richmond Growth. On 24 February Mr Bennett told Mr Jamieson, who had taken over from Mr Quayle, that Mr O'Brien had rejected the Restifa "offer" of $7.95 million and "countered with" $9.1 million. Mr Morcom intended departing on leave on 25 February. Before he did so, he informed Messrs Bennett, O'Brien and Paull that White Property would be in a position "to start negotiating terms for the purchase" of the land from Richmond Growth upon his return on 9 March. On 27 February Messrs Bennett and O'Brien showed Mr Jamieson a proposal dated 22 February from Consolidated Properties (sic, but apparently a company), representing G J Coles Ltd's ("Coles") interests, suggesting purchase of the land for $8.6 m. Mr Bennett said Richmond Growth needed "an offer" from White Property before Mr Morcom returned. Mr Jamieson responded that the supposed offer was not legally binding on Coles (because of a vague "due diligence" clause), but undertook to try to make an "indicative", non-binding offer. On 2 March Mr Jamieson gave Richmond Growth such an "indicative" offer. It was for either $7.35 m upon the obtaining of building approvals, or $6 m plus, subsequently, 50% of any actual development profit, up to a total of $8.5 m. On the same day, Mr O'Brien told Mr Jamieson "$8.6 m is the minimum price that Richmond Growth would accept". On 28 February Consolidated Properties had made what appears to have been a firm offer to buy, at the same price ($8.6 million) but on significantly revised conditions. On the following day, 3 March, Mr O'Brien told Mr Jamieson that the latter's "offer" of the previous day was not acceptable and that White Property's "final offer" was "required by 5:00 pm today". Also on 3 March, Mr O'Brien wrote to White Property: "At a Directors meeting of Richmond Growth Pty Limited today, it was decided to reject your verbal offer to buy the above-mentioned property. We consider this to be your first right of refusal. We currently have an acceptable offer from another party for the purchase of this property. In order to be fair we extend the opportunity to all interested parties to submit your final offer by facsimile to this office by 5:00pm, Tuesday, 7 March 1995. The Directors advise that this will be the final offer and that no further negotiations will be entered into regarding the price and that they wish to finalise this matter by entering into a Contract with the successful party by the end of next week. We look forward to your prompt and favourable response." Mr Jamieson replied, denying that "our discussions with you [on 2 March] constituted our first right of refusal". Assuming that Mr O'Brien's reference to "an acceptable offer" was truthful (although, in my view, there is no adequate foundation for this assumption), and that it referred to the Coles offer of 28 February, it does not appear that its accompanying conditions were then vouchsafed to White Property, even if Mr Jamieson might have divined that the $8.6 million price was unchanged. On 6 March Matthew Bennett, son of Mr Bennett and employed in the latter's estate agency, sent White Property a letter in almost identical terms to that sent by Richmond Growth and just set out. However, included was the letter from the Coles interests dated 28 February, proposing a price of $8.6 m on the revised (and significant) conditions. At this point, however, the Coles offer was not acceptable to Richmond Growth. There are three reasons for saying this. Firstly, Richmond Growth was still soliciting offers: on the basis of Richmond Growth's own letter of 3 March, what would have been acceptable was the highest offer to be received by it by 7 March (or by the "end of next week", i.e. Friday 10 March). Secondly, on 2 March Mr Restifa, acting for the Woolworths subsidiary, had indicated that he could produce a substantially higher offer than that of Consolidated Properties; Richmond Growth would not have wished to close off that possibility. Thirdly, if the Coles offer was "acceptable", the dispute, by now apparent, about whether White Property had exercised its (admitted) first right of refusal might have been prudently avoided by Richmond Growth's telling White Property that, if it matched the Coles offer, it could have the land; but that was not done. Mr Jamieson then met Mr Ken Bennett and on 7 March wrote: "Further to our correspondence of 3rd March and our meeting with your representatives of 6th March 1995, we would like to confirm with you our understanding of how the purchase of the development site will proceed. We acknowledge your intention to finalise arrangements with a successful party by Friday 10th March. Therefore once final offers from interested parties have been received today, these details should be given to us so that we can exercise our first right of refusal by either purchasing the site orbeing paid our project management fee. Mr Graham Morcom will be returning from overseas and will be in our office again on Thursday 9th March and we will be in contact with you at this time to enable you to finalise arrangements with the successful purchaser prior to close of business on Friday. Should you require clarification or wish to discuss any aspect of this letter please do not hesitate to contact me." (emphasis added) (ii) Woolworths On 7th March Richmond Growth received from Mr Restifa, on behalf of Fabcot, a "conditional offer to purchase the [entire proposed development] site" for $9.55 million, said by Mr Restifa to remain open only until 5.00 pm on 9 March. Among other things, the offer document stated: "(h) We are aware that Richmond Growth may wish to delete from the site the corner block currently owned by Dr. Ravi at the corner of March and Paget Streets in which case the purchase price would remain the same but if our offer is successful then we would wish to try and negotiate that site ourselves at a later date." In other words, Woolworths would not insist on the entire site being available. Between 7th and 9th March, there were various clarifications and negotiations between various people representing Woolworths and others representing Richmond Growth. These negotiations included a letter from Mr Restifa to Richmond Growth's then solicitor: "We refer to your telephone inquiry requesting clarification of our offer to purchase on behalf of Woolworths Limited the Richmond Growth Shopping Centre site and confirm as follows:- 1) Woolworths are prepared to proceed on whatever structure of purchase you come up with provided that it is legally acceptable by our solicitors and that Woolworths is totally and permanently in control of the site and that there is no responsibility on Woolworths behalf to pay for double stamp duty. 2) We would also like to clarify that our offer is conditional upon approval, which was acknowledged by yourself and that the options which are currently of 2 and 3 odd months will be renegotiated by Richmond Growth as part of their gaining control of the site to onsell or assign to Woolworths so that Woolworths are not responsible to acquire any individual allotments prior to the contract becoming unconditional. We look forward to your urgent response confirming the success of our offer so that we may proceed to the next stage of documentation for both contracts and submission to Council." On 8 March Richmond Growth responded to Mr Jamieson's letter of 7 March: "At the Directors' Meeting of the Company yesterday we were in receipt of several offers to purchase and noted that we had not yet received from your Company a written offer for consideration. In our letter to you of 3 March 1995 we advised you that we had received an offer from another party and invited your company, and every other interested party, to submit your offers, prior to 5 p.m. today and which were to be submitted to the Board's Meeting last night. The highest offer received was $9.55 million with agreeable terms and conditions. You are aware of the time constraints placed upon the Board in this matter [this was a reference to the Council's having required that a development application be submitted by 14 April]. In the terms of our letter dated 22 November 1994, you are requested and directed to submit your offer to purchase the site prior to 4 p.m. 9 March 1995 for the consideration of a Special Meeting of the Board convened for this purpose. The offer should be complete and in detail." (emphasis added) By this time, Mr Morcom had returned from his vacation. He had a telephone conversation with Mr O'Brien during mid-afternoon on the 9th March: Morcom: "Barlow and I are coming out to Richmond [about 70 minutes' drive from the White Group's offices at North Sydney] to negotiate mutually agreeable terms and conditions and to sign an agreement for the purchase of the property. [White Property] wish to exercise their right of first refusal. Richmond Growth will need to have directors available to agree on terms and sign off on the documentation." O'Brien: "Richmond Growth has or will be accepting an offer from another party at a purchase price of $9.55 m." Morcom: "That is not in accordance with our agreement. I want to meet with you today." O'Brien: "I am not prepared to meet with you." Mr Morcom forthwith protested in writing: "We refer to our recent telephone conversation and as requested confirm that prior to us exercising our first right of refusal for the acquisition of the abovementioned site and for you to fulfil your obligations to us it is necessary for us to receive a copy of the offer including the agreeable terms and conditions which your board is prepared to accept. As you would appreciate it is impossible for us to exercise our right until such time as we are aware of not only the price but also agreeable terms and conditions. We have made every endeavour to meet your deadline of 4.00pm on 9th March 1995 but as we have not received the necessary information we would appreciate your extending the deadline until 4.00pm on 10th March 1995. We are available to meet with you this evening and it is essential that there is a quorum of your board present at such meeting that would be capable of accepting our offer." This was to no avail. Mr Morcom spoke to Mr O'Brien again on 9th:

"Morcom:Richmond Growth are in breach of the agreement with us. They have refused to allow us to exercise our right of first refusal. O'Brien: The Board of Richmond Growth have directed me not to comment any further on the matter. . . . Morcom: Where does that leave us in relation to fees for work done? O'Brien: If Richmond Growth sells the property it will have to agree a fee to pay you for work performed to date." (emphasis added) At 5:45 pm Mr Morcom wrote to Richmond Growth: "We have been advised by Mr John O'Brien that you propose to accept an offer for the development site without giving us our first right of refusal. If you proceed with this course of action without granting us the first right of refusal pursuant to our agreement with you then we have no alternative but to proceed with legal action for unspecified damages. We still cannot understand why you will not allow us to exercise our first right of refusal. We remain ready to meet with you tonight so that we can discuss this with you and discuss the exercise of our agreed first right of refusal." Mr Morcom also complained by telephone to Mr Bennett, who agreed to meet him the next day. At a general meeting of Richmond Growth held at 4:00 pm on 9th March, it had been resolved to "accept Restifa's offer" as set out in the letter of 7 March and subsequent faxes. This acceptance was communicated to Mr Restifa in writing at about 5:00 pm. Ms Hopkins, a Woolworths' in-house solicitor, understood the acceptance was for the "site excluding [the doctor's] surgery". It has not been shown that before 9th March 1995 any legal advice had been received by anyone on behalf of Richmond Growth which might have suggested that anything done by White Property before 9 March had amounted to an exercise or waiver of any right of first refusal. Nor was there any suggestion by or on behalf of Richmond Growth that White Property's only right had been, as the terms of the letters of 22 November, read literally, might suggest, to be either appointed Project Manager or to be given a right of first refusal. There were of course, as I have indicated, frank and mutual indications that that had not been intended. The Bennett diversionary tactic When Messrs Morcom and Bennett met on 10th March, Mr Bennett said: "I have been directed by Richmond Growth not to discuss or supply information to you, but I believe you are entitled to information given that you were instrumental in Richmond Growth gaining Council approval and because you have incurred considerable expense in relation to the project so far. Two of the landowner options are due to expire in mid-May 1995, with the majority to expire in July 1995. I understand that several landowners will not extend their options because a developer called Tolson has offered them double the purchase price offered by Richmond Growth. I think that another developer called Tolson will gain approval from the Council over Richmond Growth. The Council has advised Richmond Growth that it could be as late as August 1995 before development approval is obtained." Mr Bennett continued: "Richmond Growth has received an offer of $9.55 m. Here is a copy of the terms of that offer [a document was handed to Mr Morcom]. I have received a better oral offer this morning from Consolidated Properties. They want to come to Sydney to negotiate further but I told them they would need to contact Richmond Growth direct. I have also received offers from Coles, Woolworths, Macquarie, Franklins, Westfield and other minor players. I have not advised any potential purchasers that the first of the landowners options will expire in May 1995. I believe Richmond Growth will lose the property as the options of land will not be extended for a period of time required to obtain Council development approval." Mr Bennett was clearly enough attempting to persuade Mr Morcom that White Property would be better off out of any deal for purchase of the land. But Mr Bennett was dissimulating. There was no real problem about the options. There was no higher offer than that made by Woolworths. There is, given Mr Bennett's (or anyone elses on behalf of any of the respondents), absence from the witness box and despite his denial to Mr Morcom, no reason to believe that he was not still acting as Richmond Growth's agent. After that meeting Mr Morcom had White Property's solicitors write to Richmond Growth in care of Mr Bennett: ". . .Your company has acknowledged on a number of occasions that Whites has a first right of refusal to acquire the site over which you hold options for the proposed shopping centre redevelopment. However, you have consistently failed over the last week to allow it to exercise that right. Last Friday, you told Whites that various discussions constituted its right of first refusal. Whites quite properly rejected this on the basis that a first right of refusal is, in essence, a right for it to match the offer which you would otherwise be prepared to accept. As Whites has told you a number of times this week, it wishes to exercise that right but, to do so, it must know all of the terms which it has to match. Only then can it make a decision whether it wants to exercise that right. As late as last night, Whites told you that it was prepared to meet to discuss and hear what terms it had to match. You again refused that offer and we can only assume that you have accepted another offer in breach of this arrangement. It is obvious that negotiations have taken place with a number of other parties. We have thus been asked to draw your attention to the following entitlements due to Whites which it has been able to quantify at this point of time:- 1. Fees to date for all support and assistance in getting the project to where it is. You know that the Council would not have approved your application on December 14, 1994 without the support of Whites and its Consultants. Whites has quantified these fees to be $500,000. 2. You have already appointed Whites as project manager to the Project. We assume that this arrangement will continue. If it does not, then the losses that Whites, and their Consultants, will suffer for breach of this arrangement will be $3,700,000. We assume that, in any negotiations that have taken place, you will have protected Whites' and their Consultants' entitlements and that you will compensate them for their lost opportunity. We seek your confirmation of this and, in addition, please keep us appraised of negotiations as they proceed and when Whites can expect to be paid its entitlements." Mr Bennett complained of this to Mr Morcom. Among other things, he asked whether Mr Morcom was prepared to "meet and match the offer of $9.55 m". Mr Morcom said White Property would need the landowners' options to be extended and was available to discuss terms. On 13 March, Mr Bennett told Mr Morcom that representatives of Richmond Growth were prepared to meet him but this would be without prejudice to Richmond Growth's right to say that it had already allowed White Property "to exercise [its] first right of refusal". (iii) White Property's offer The meeting occurred later on the same day. Mr Morcom was accompanied by Messrs Barlow and Jamieson. Present on behalf of Richmond Growth were Messrs O'Brien, Paull, Bennett, Matthew Bennett and Kable. The following relevant conversation occurred: "Morcom: How does Richmond Growth intend to commit to transferring the property when it appears that a number of the landowner options will expire before the Council grants development approval. If we pay the $1 m bond required to be paid to the Council for the development approval application to proceed and then Richmond Growth can't transfer the property to us, where does that leave us?" Kable: Delivery of possession of the property is our problem not yours. You don't have to worry about the million dollar bond. Here is a copy of the terms and conditions that are attached to the offer that Richmond Growth proposes to accept." [A document was handed to Mr Barlow by Kable.] Are these terms and conditions satisfactory to you? Barlow: In general, all of the conditions appear satisfactory. Morcom: I agree. Barlow: But what about our right of first refusal? Kable: I have been advised not to discuss that issue." After the meeting Mr Bennett advised the White Property representatives to "put in an offer which matches the terms of the one that Richmond Growth has just shown you". Mr Bennett then sent to White Property purported particulars of each option to purchase the component blocks of land held by Richmond Growth. Some of those particulars were incorrect. The next day, 14th March, Richmond Growth sent a fax to White Property in the following terms: "When we passed the full details of the Offer to you, you undertook to respond today. If you haven't accepted the Offer by midnight, you will be taken to have rejected it." On the same day, White Property wrote to Richmond Growth in the following terms: "We refer to our 'Without Prejudice' meeting yesterday. Following on from that and, for this purpose ignoring whether or not our first right of refusal has or has not been exercised, we remain committed to acquire the development site controlled by your company. For this purpose we re-iterate the following terms and conditions as the basis of our offer. (A) PURCHASE PRICE $9,550,000.00 Total proceeds to be paid by us to acquire the site will be as follows: (i) $1,000 to Richmond Growth Pty. Limited on exchange of contract; (ii) $8,536,620 to land owners as listed in Appendix 1; and (iii) $1,012,380 as a Development Fee to Richmond Growth.

(B) DEPOSIT $238,750.00 Payable on Development Application approval from Hawkesbury City Council. (C) SETTLEMENT 45 DAYS From the time the contract becomes unconditional. (D) SECURITY BOND $1,000,000.00 to be lodged by 10 April, 1995. (E) SPECIAL CONDITIONS 1. subject to satisfactory re-zoning and DA approval from Council on the layout plans generally in accordance with those plans prepared by Drummond & Rosen [White Property's own preferred architects] in consultation with Alex O'Grady and to be discussed with Council and the Heritage representatives. Any submission to Council for the purpose of DA will be in conjunction with Alex O'Grady, who will be responsible for co-ordinating the development submission as the representative of Richmond Growth; 2. we acknowledge that the terms of the Council's Deed are acceptable to us except for those issues discussed with Council and shown as Appendix 2 which are to be mutually agreed. The security bond lodged pursuant to the Deed remains our property should the re-zoning not proceed or approval not be received. 3. Our offer is for the entire site as per Appendix 3 and it is Richmond Growth's responsibility to deliver the entire site with good title free from all mortgages and encumbrances on completion and with vacant possession ready to commence construction within three months from DA approval, so as to protect the security bond lodged with Council to construct a shopping centre within 2 years from approval of DA. Richmond Growth must demonstrate to our satisfaction its ability to deliver the site prior to 10 April, 1995. 4. Exchange of contract for sale will be within 5 days from receipt of an acceptable contract but not later than 10 April 1995. 5. Completion of final Development Application drawings suitable for Lodgement of Development Application on 20 March 1995. 6. The developer will be responsible for any Development Application fees. The preparation and submission of the architectural plans for the shopping centre will be done in consultation with Alex O'Grady, with all costs of Alex O'Grady to be borne by Richmond Growth. 7. Upgraded Traffic Plan to be prepared in consultation with traffic consultant, Mr. Chris Hallam. Because of your requirement for Condition 5 above, the offer to purchase remains open for acceptance by Richmond Growth Pty. Limited up to Thursday, 16 March 1995, after which time the offer will be rescinded." (emphasis added) The rest was silence. On 23 March, Richmond Growth advised Woolworths' solicitors that White Property "are no longer Project Managers" for the development. (iv) Woolworths reconsider Meanwhile, matters were not so clear as might have been thought as to the precise status, or even the content, of the agreement with Woolworths. On 10 March, Woolworths' in-house solicitor, Ms Hopkins, asked Richmond Growth's solicitor to submit a draft contract for sale for approval. However she added: "We note that we have an exclusivity period from the date of acceptance of the offer up until 5 days after submission of an acceptable contract" (emphasis in the original). Further, when the formal contract was finally executed (apparently on 10 April) it provided (Cl. 31.2) that the purchaser might rescind the contract if the vendor was unable by 30 June 1996 to complete all the contracts for purchase, upon the exercise of Richmond Growth's options to purchase individual blocks of land. It also provided that the vendor would pay to the purchaser the $1 million performance bond, or such part of it as was not released by the council. Nothing in the negotiations between 7-9 March would have necessitated this, nor was it, on familiar legal principles, a term that could have been implied into Richmond Growth's and Woolworths' express arrangements. It significantly improved Woolworths' position. It significantly put Richmond Growth at some risk.

Breach of contract claim White Property's claim is that there was an enforceable contract between the parties. Its effect, it is said, given Richmond Growth's decision to sell the land and not itself to develop or co-develop the land, was to entitle White Property: (i) to have the right of first refusal of the land, and (ii) to be appointed Project Manager for the development of the site, and fairly remunerated therefor, but (iii) White Property would waive its fees for acting as Project Manager if it purchased the site. The answers made by the respondents to these claims raise the following questions: (a) Was there a legally enforceable contract? (b) If so, what were the terms and conditions of the contract? (c) What, if any, breaches of the contract occurred? (d) What damages, if other than nominal, should be awarded in respect of any such breach? Was there an enforceable agreement? The argument put by counsel for Richmond Growth was that the references to "mutually agreeable terms and conditions" in Richmond Growth's letter of 22 November 1994 indicated that all the parties had was an "agreement to agree" c.f. Masters v Cameron (1954) 91 CLR 353 at 361-3 or a promise to negotiate where "the promise is too illusory or too vague and uncertain to be enforceable" c.f. Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1 at 27. In the end, "the proper approach to be taken in each case depends upon the construction of the particular contract": Coal Cliff at 26. If this had been an agreement to buy land and/or to be appointed as project manager of a large development in each case "on mutually agreeable terms and conditions", there would, in my opinion, have been much to commend the view that matters had been left too uncertain to justify a court in intervening to give relief. But this was not such an agreement. It was an agreement that White Property should have "a first right of refusal" to purchase and/or (to put the matter neutrally, for there is an issue, to which I shall come, of whether the literal disjunctive truly expressed what was intended) to act as project managers. It was no more than a reflection of reality to say that there could be no acceptance of an offer of such a purchase or of such an appointment except upon mutually agreeable terms and conditions. Thus, as a matter of logic, it may, in one sense, have been unnecessary to spell that out. However, as I explain later, the words "upon mutually agreeable terms and conditions" did have a purpose to serve. Upon Richmond Growth's adoption of the letter of 22 November, White Property forthwith threw its executives into the fray to obtain the local council's approval of the Richmond Growth scheme. So much was desired and intended by Richmond Growth. The parties evidently intended to be bound forthwith by their agreement. As I indicate in more detail later, a "first right of refusal" usually implies that an offer will be made to the grantee of the right at a certain (or ascertainable) price and on specified terms and conditions. Simply to have used words which reflected that there could be no acceptance of such terms and conditions unless they were "mutually agreeable" was not to enter into an uncertain contract. There was nothing still to be agreed to give effect to the contract in question, which was for a first right of refusal. This is not a case where the court might be unable to spell out what would amount to terms and conditions acceptable to each party c.f. Coal Cliff at 77. There was, in my opinion, an enforceable contract. (b) What did the agreement mean? There are two relevant issues. The first is: was there an obligation on the part of Richmond Growth to grant White Property a first right of refusal to purchase the site, or was Richmond Growth's appointment of White Property as Project Manager on 14 December a sufficient performance of its obligations? There are some indications that the parties' arrangements may later have varied, e.g. on 14 December, from what was expressed in the letter of 22nd November. It will be enough to determine what the position was by the earliest time of the alleged breach of the contract, that is, on or about 9 March 1995. The second issue is: what meaning should be accorded to the phrase "grant your company a first right of refusal"? (i) "either . . . or" As to the first issue, read literally, the letter of 22 November 1994 sent by Richmond Growth, but in terms for which White Property was responsible, would indicate that all that Richmond Growth need do was to give White Property the opportunity either to purchase or to act as Project Managers. But that letter was hardly the "entire and final" contract c.f. State Rail Authority of NSW v Health Outdoor Pty Ltd (1986) 7 NSWLR 170 at 191 and Spunwill Pty Ltd v B A B Pty Ltd (1994) 36 NSWLR 290 at 299. It was not entire, because it cannot be properly understood without having regard to other matters. Those matters are: (1) White Property was being asked to lend its strength, reputation and capacity to help out Richmond Growth in circumstances such that Richmond Growth would have the opportunity for substantial profit; (2) such profit might accrue to Richmond Growth either by sale of the land to another for physical re-development or becoming such a developer itself (whether alone and aided by a project manager) or in concert with another; (3) any co-developer might (e.g. if it were White Property) be able to act as project manager but, if it could not, Richmond Growth would still need to be able to influence the choice of a project manager; (4) Richmond Growth was not clear as at 22 November as to which of those possible paths to potential profit it would pursue; (5) White Property was only interested in helping Richmond Growth on the basis that, whichever way Richmond Growth might decide to go (if and after White Property should have succeeded in helping it to obtain council approval), White Property would have the opportunity to obtain a substantial profit for itself. These matters, if they do not themselves explain, in favour of White Property, what in the context, "either . . . or" meant, at least indicate ambiguity. It is permissible to have regard to pre-existing and surrounding circumstances to understand the issues to which the language of the parties was directed: one looks "to the objective framework of facts within which the contract came into existence, and to the parties' presumed [rather than their actual] intention in this setting": Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 41 ALR 367 per Mason J at 375. Further, the contract was not final: the parties immediately embarked on a continuing relationship. As an example of the lack of finality, at the time the letter of 22 November was signed, it seems to me that it must have been contemplated that White Property would do something. However, the letter does not say what that was to be. The detail of that, which necessarily would flesh out the consideration for Richmond Growth's promise, was to be worked out between the parties, in the light of subsequent events. What the parties are to be presumed to have intended by their words, and the ambiguity, can also be resolved by having regard to the parties' "clear and mutual conduct" (Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 per Kirby P at 316), although it was subsequent to their agreement. It evidences "what they originally intended, and thus clothe[s] ambiguous words with a sensible operation" (ibid). In my view, it is entirely inappropriate to apply the supposed rule prohibiting recourse to such subsequent conduct to the present case of a seven-line letter of considerable informality, evidently intended to record something important but not everything agreed upon. Where contracting parties have seen fit to commit complex contractual intentions to paper in a detailed and formal way, as for example with evidently competent legal advice, there is point to both the jeer that to have regard to subsequent conduct is "the last refuge of the desperate" (Schuler (L.) A.G. v Wickman Machine Tool Sales Ltd [1974] AC 255 per Lord Wilberforce at 261) and to the more sedately expressed considerations dealt with by Santow J in Spunwill at 310‑11. But such considerations have far less weight where the written document is a note, exhibiting no legal finesse, and evidently intended to do no more than mark in short form, for purposes of record, a milestone of understanding in an ongoing relationship. If I am wrong in having regard to the relative informality of the means of expression of the contract, then I agree with Santow J in Spunwill (at 304-12), for the reasons his Honour gives, that there is "no justification in principle for excluding such evidence of a mutual, subjective intention at the time of contracting merely because the evidence itself arises subsequent to the making of the contract". Relevantly to the present issue, the meaning of the contract was, in my view, this. In consideration of White Property agreeing to use its best endeavours to assist Richmond Growth to obtain council approval for the development of the land as a shopping centre, Richmond Growth agreed that, in the event of such approval being obtained: (i) if Richmond Growth decided to sell the land without itself developing it, White Property would have the first right of refusal of the land; (ii) if Richmond Growth decided to remain in a position where, alone or with one or more others, it would itself be developing the land, White Property would have first right of refusal of appointment to the role of project manager. It was contemplated that, if (i) did not occur, then (ii) would. Hence the use of the "either . . . or" terminology. Some change to that contract might be inferred from the terms of Richmond Growth's actual appointment of White Property as project manager straight after the council meeting of 14 December, from Mr Jamieson's letter of 7 March 1995 and from Mr O'Brien's assurance to Mr Morcom in the conversation of 9 March (noted at p 14 above). However, such change is not presently germane. After 14 December, the above-stated obligations of Richmond Growth continued. The appointment of White Property as project manager by Richmond Growth's letter of 14 December cannot reasonably be seen as evidence that Richmond Growth had irrevocably decided upon the course contemplated in (ii) above. Richmond Growth never made any such decision. Hence, its obligation under (i) was not avoided, as it might have been if Richmond Growth had embarked on the course contemplated by (ii). (ii) "a first right of refusal" The second issue concerns the context of the promise to "grant [White Property] a first right of refusal". I agree with counsel for the first respondent that the term "first right of refusal" does not have a fixed and certain meaning, but is a colloquial term, the meaning of which may vary in particular cases: Woodroffe v Box (1954) 92 CLR 245, Pata Nominees Pty Ltd v Durnsford Pty Ltd (1988) WAR 365 at 372 and Beneficial Finance Corporation Ltd v Multiplex Constructions Pty Ltd (1995) 36 NSWLR 510. As Young J put it in the last-mentioned case at 522:

"one must not fall into the trap of defining categories and then endeavouring to squeeze the transaction the parties have made into one of those categories. Rather the exercise is to construe the words and actions the parties have employed and to deduce what their legal relationships are accordingly." (emphasis added) That said, however, there is a compelling logic in the language used by the parties, which was spelled out by Fullagar and Kitto JJ in Woodroffe v Box at 257: "If I promise to give you the first refusal of my property, . . . I am saying: 'I will not sell my property unless and until I have offered it to you and you have refused it'". Such is the plain meaning of the words used by the parties here. Unless there is something in the balance of their words or in their actions to indicate that they had any other intention, effect should be given to that plain meaning. The other words in the relevant letter, especially in the reference to "mutually agreed terms and conditions", evidence a matter that was within their common understanding. This was that a potential contract for sale of a large development site, involving such matters as the calling-in by the vendor of options to purchase and the satisfaction of likely stringent town planning and development criteria, would almost certainly be attended by special conditions not to be found in a simple land sale, say, of an ordinary house site. Accordingly, the obligation would necessarily be for Richmond Growth to offer the land at an acceptable price and on particular and acceptable terms and conditions. Those words also serve to exclude another possible meaning of a "first right of refusal", namely "the opportunity of refusing a fair and reasonable offer" c.f. Manchester Ship Canal Co v Manchester Racecourse Co [1901] 2 Ch. 37 at 46. If the terms must be "mutually agreeable", neither party can be under an obligation to be "reasonable": I may unreasonably fail to agree to terms, but I nevertheless do not agree to them. Accordingly, the Court could not imply a term that any gap left in an express offer would be filled by a requirement that a "fair and reasonable" provision be made, because so to do would contradict the express requirement of the contract that the term be mutually agreeable. But nothing in those other words requires or even permits a meaning different from its plain one to be given to the expression "first right of refusal". So much for the language employed by the parties. Was there anything "clear and mutual" in their actions which would give a different cast to matters? It seems to me that there was not. However much or often Richmond Growth, subsequently to their agreement, asserted a different understanding of matters, White Property never joined in it. Thus I conclude that, to comply with its contractual obligations, Richmond Growth was required to specify in an offer to White Property, the terms and conditions, as well as the price, which it would accept. If that was done, but the offer was not accepted and Richmond Growth was subsequently prepared to accept terms and conditions which were more favourable for a possible purchaser, Richmond Growth was obliged, it seems to me, to re-offer the property to White Property, specifying those more favourable terms. The obligation not to sell the land "unless and until" (to adopt the language of Woodroffe v Box) it had been offered to White Property, could not be satisfied unless White Property had been given the chance, and had failed, to accept an offer on the terms (or on terms more favourable to White Property than those) upon which the property would actually be sold by Richmond Growth. That is, if an offer rejected by White Property was not accepted by anyone else, and Richmond Growth was forced to lessen its demands, White Property was entitled to have the opportunity to accept the lesser offer before anyone else did. If White Property rejected an offer but Richmond Growth was then able to obtain better terms elsewhere, White Property was not entitled to be re-offered the property on the more onerous terms. Breach of contract Ultimately it was, in my opinion rightly, accepted by all parties that, as Richmond Growth submitted, it was not only open to Richmond Growth to test the market but, as a practical matter, it was necessary for Richmond Growth to locate at least one other potential purchaser and to enter into detailed negotiations in order to determine a price, and terms and conditions, which would be acceptable to Richmond Growth. Against that background, it is necessary to consider whether anything done by Richmond Growth amounted to a fulfilment of its contractual duties.

(a) the Coles offers Richmond Growth does not rely on its communication of the first Coles "offer" to White Property; accordingly, no more need be said about it. The second Coles proposal, contained in Consolidated Properties' letter of 28 February 1995, was not fully communicated to White Property until 6 March. By that time, as indicated in the factual outline above, the second Coles offer had ceased to be, if it ever was, acceptable to Richmond Growth. In any case, it did not make an offer to White Property. What it did, when one has regard to its letters of 3rd March and 6th March (per Matthew Bennett), was no more than to deny that White Property had any extant first right of refusal and to invite it to enter a bidding competition. There was nothing to which White Property's board might say, "We accept". Hence, nothing in these transactions amounted to a performance by Richmond Growth of its contractual duty. (b) the Woolworths offers Richmond Growth submits that its agreement with the Woolworths subsidiary comprised by the latter's offer of 7 March and Richmond Growth's communication of its acceptance on 9 March did not constitute a binding agreement: it was within the third class of agreements where a later formal contract is contemplated, as referred to in Masters v Cameron at 360; that is, "one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract". In the circumstances of this case, I agree. Either party was free to require new provision to be made on significant matters. That is in fact what happened. Hence those negotiations did not necessarily have the legal effect that Richmond Growth had rendered itself unable to fulfil its contractual obligations to White Property. I agree also that, if the Woolworths subsidiary had a contractual right that Richmond Growth would not negotiate with anyone else for five days, Richmond Growth might still have sold to White Property, but on pain of paying damages to Fabcot. However, while Richmond Growth might still have been legally able to fulfil its obligations to White Property, the proper factual conclusion, in my opinion, is that it had manifested a complete unwillingness to do so. This conclusion flows from Richmond Growth's dealings on 7 March with the Woolworths interests, and the accompanying or subsequent conduct of Richmond Growth's agents, Messrs O'Brien (in his conversation of 9 March) and Bennett (the attempted deception of 10 March), towards Mr Morcom on behalf of White Property. By accepting Woolworths offer, albeit by way only of "agreement to agree", the Richmond Growth board, in my opinion, evidenced an intention of not being bound by any offer Richmond Growth might have made to White Property and which might have been accepted. No circumstance existed to negate the term generally to be implied in a contract that: "[it] is a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his [or her] part to enable the other party to have the benefit of the contract": Butt v McDonald (1896) 7 QLJ 68 per Griffith CJ at 70-1; and see generally, the discussion in Cheshire and Fifoots Law of Contract, 7th Australian Edition, Butterworths, 1997, pp 349-50. White Property could not have the benefit of its contractual first right of refusal, if Richmond Growth was not going to do what was necessary for that benefit to be realised, namely accept that it was bound by the acceptance of any offer by it to White Property. Hence, in my view, there was a breach of contract involved in Richmond Growth's not affording White Property the opportunity to match the Woolworths offer before Richmond Growth signified its acceptance of it to Woolworths. It will be convenient later to call this the first breach. It is true that, when the terms of the Woolworths offer were later put to White Property, the latter indicated, by a counter offer, that it did not wish to accept the property on those terms. But that circumstance goes not to whether Richmond Growth was in breach of its contract but to what loss, if any, arose from the breach, a question I deal with below. In any case, in the events which occurred, Richmond Growth was evidently unable to sell the property on those terms to Fabcot. Richmond Growth manifested a subsequent willingness to accept terms which were less favourable to it. Nothing had absolved Richmond Growth of its obligation to re-offer the property to White Property on those lesser terms. Hence there was another breach of its contractual obligations (which I will call the second breach). (d) Damages for breach of contract Causation The first question is whether it was likely that White Property would have accepted any offer by Richmond Growth made otherwise than in breach of the contract. As to the failure to make an offer equivalent to the non-binding Woolworths' offer involved in the first breach of contract, it appears that White Property would not have accepted such a bona fide offer made at that time: soon after, it did not accept those terms which its executives then thought they were being offered. I agree, in this regard, with counsel for Richmond Growth that, in Australian law as it presently stands, a counter-offer (properly so-called and as distinct from a merely inaccurate paraphrase of the offer) is a rejection of an offer even if the difference in the two positions is not commercially significant (or a "material" alteration, c.f. s 2-207 of the US Uniform Commercial Code). In any case, rejection of the capacity for excision by the vendor of what would undoubtedly be a valuable corner block from the development site does not impress me as lacking commercial significance or materiality. It by no means follows that White Property would not have accepted the lesser terms which, by reason of Richmond Growth's second breach of contract, it was not offered. By the time those lesser terms were available, the White group executives would have had more time for thought and for legal advice. The hypothetical choice for White Property would have been between standing on such legal rights for breach of contract (and/or infraction of the trade practices laws) as it might have, or taking the property on no worse terms than, as White Property would have known, Woolworths was seriously prepared to accept. There would have been a second chance for White Property to avoid the chagrin of losing both the benefits made possible by its decisive intervention with the local council and the value of the subsequent work put into the project. The legal advice would not have been wholly sanguine, given that Whites had, on 14 March, rejected the earlier terms. On balance, I believe that White Property would probably have accepted the offer that ought to have been made to it. Damages The next matter is properly to assess White Property's losses, if any. There are three claims at issue: (i) a "success fee" said to be part of the claimed project management fees, (ii) the project management fees, being the said claimed success fee and the fair value of the work done by White Property after 14 December 1994, and (iii) loss of the opportunity to make a profit from undertaking the development, physical and commercial, of the site into a going concern as a commercial rentier's venture, and then re-selling it, probably to an institutional investor. Success fee In my view, this claim cannot succeed. The consideration for White Property's assisting Richmond Growth to achieve success with the council was that Richmond Growth would give White Property the first right of refusal. That promise by Richmond Growth was itself the success fee. White Property cannot have both the benefit of that promise, via damages for its breach, and a monetary success fee for which it might, alternatively or additionally to Richmond Growth's promise, have bargained, but did not. Project management fees It is clear that Richmond Growth appointed White Property to be its Project Manager by the letter of 14 December 1994, signed by Mr O'Brien after the victorious council meeting. This claim depends on that circumstance and my rejection of Richmond Growth's interpretation of "either . . . or". Rounding the figures to the nearest $1,000, White Property claimed $227,000 made up as follows: Salary and on costs for White group personnel $180,000 Legal fees $10,000 Consultants (not part of the White group establishment) $37,000 $227,000 Three principal questions arise: • how much of what White Property did was "project management" for the benefit of Richmond Growth (and, possibly, also White Property itself), as distinct from project investigation and maximisation of commercial opportunity purely for White Property's own benefit (for, surely, White Property can only, in a direct claim for project management fees, have recompense for the former: Sabemo Pty Ltd v North Sydney Municipal Council (1977) 2 NSWLR 880)? However, the latter kind of expense may also fall for consideration under the claim for breach of contract in relation to the first right of refusal, as expenses reasonably incurred, if White Property's claim for loss of opportunity to make a profit should fail for its inability to demonstrate whether or to what extent a profit would have resulted: Commonwealth v Amann Aviation Pty Limited (1991) 174 CLR 64. Those questions are considered below. • how much of what is claimed represents fair compensation for the project management proper? • should any amount recoverable by White Property include the work of persons paid by other corporate members of the White group other than White Property? In general, except as to the third matter, I agree with the submissions of counsel for Richmond Growth. I summarise the effect of these: (1) Work done before 14 December is not compensable. Before then, White Property was not the Project Manager. (But, the Amann principle could be relevant - see below.) (2) The "restitutionary principle" cases (Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 per Deane J at 263 and Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 at 276) provide compelling guidance as to the method of compensation. Upon their authority, the compensation should be calculated at "a reasonable rate for work actually done or the fair market value of materials [or, as here, services] provided", rather than the value, as performed, of such work and services for the party to whom they are provided. (3) Not more than half of the hours claimed to have been worked by White group staff ought reasonably be assigned to work done wholly or partially for Richmond Growth's benefit. (That is, subject to Amann.) (4) An allowance for "on-costs" of double the actual salaries paid is ample (very ample, I should say - the applicants claimed treble the payments actually made - "ambit" claims are not, it seems, confined to trade unions). (5) Legal costs incurred by White Property provided no benefit to Richmond Growth and ought not be recompensed: see Sabemo at 902-3. (Again, Amann may be relevant.) (6) Fees claimed as payable to three consultants have not been shown truly to have been incurred as debts. The inference rather seems to be that those consultants performed their work merely on the speculative basis that, if White Property secured the ongoing actual development and/or project management rights, they would be paid. This aspect of the claim should be rejected. I do not agree, however, that anything turns on the facts that most of the White group personnel were employed or engaged and paid by companies within the group other than White Property and that it had not been arranged that those other companies should "charge back" the services of their employees/contractors to White Property. That White Property had been able to arrange such work in such a way appears to me not to diminish the "fair value of the benefit provided", calculated by the method set out above. The difference, in this regard, between the work done by the White group staff and the outside consultants, is that the work of the latter was entirely speculative, i.e. only to be paid by anyone if certain other events transpired, such that it could not be said to have had a presently ascertainable "fair value". Applying the conclusions set out above in a broad-brush way, it seems to me that an allowance of $50,000 would be appropriate. The loss of opportunity claim This was, at trial, the principal claim made by White Property. The claim was greatly hindered however by White Property's unexplained tardiness in the preparation of its case; and its choice, until the very last minute, to proceed with scant material; and my consequent refusal of courses of action proposed by White Property which would have allowed it to obtain further evidence as to damages, but which would have also resulted in a substantial wastage of available court sitting time and a lengthy adjournment. This is explained in more detail below. White Property claimed that, but for Richmond Growth's breach of contract, it would have bought the property; that it was its intention to develop the property for resale at a profit; that that was known to Richmond Growth; and that it had lost the opportunity to make such a profit. It was submitted that regard should be had to what Woolworths in fact did with the site, and that that would furnish a sound guide as to the value of White Property's lost opportunity. It was submitted that the likely profit range was in the order of $3.24 m to $4.25 m. The position of the respondents is that, by its own default, White Property left the evidence in such a state that it is not possible to say that it lost anything nor to quantify any loss sustained by it. It is one thing to say that broad judgments and even guesswork may be necessary to value the chance of a lost profit; it is quite another to say that a court must do so even when the fact or extent of the supposedly possible profit cannot reasonably be ascertained or quantified. In this case, the claim for loss of the chance of a profit relates not to a profit which might have been made under the broken contract itself, which was for the right to have first chance to buy the property on given terms. A contract for the supply of goods or services is commonly such a case e.g. Amann. Rather, the present claim relates to profit that might have been made out of subsequent dealings with the property which would have been acquired had the contract not been broken. That White Property intended such subsequent dealing was, of course, within the contemplation of Richmond Growth. It was not submitted that the indirect nature of the claimed loss of the opportunity to make a profit made any difference to the applicable principles. The claimed loss was the loss of an opportunity to acquire a commercial benefit. As Brennan J observed in Sellars & Poseidon Ltd v Adelaide Petroleum NL (1994) 179 CLR 332 at 364: "As a matter of common experience, opportunities to acquire commercial benefits are frequently valuable in themselves, not only when they will probably fructify in a financial return but also when they offer a substantial prospect of a financial return. The volatility of the market for speculative shares testifies to both the valuable character of commercial opportunities and the difficulty of assessing the value of opportunities which are subject to serious contingencies. Provided an opportunity offers a substantial, and not merely speculative, prospect of acquiring a benefit that the plaintiff sought to acquire or of avoiding a detriment that the plaintiff sought to avoid, the opportunity can be held to be valuable. . . . However, a causal relationship between the loss of such an opportunity and the defendant's contravening or tortious conduct must be proved before any issue of assessment of the amount of the loss arises. As the Full Court of the Federal Court observed in Enzed Holdings v Wynthea: 'If the court finds damage has occurred it must do its best to quantify the loss even if a degree of speculation and guess work is involved ... We emphasise, however, that the principle applies only when the court finds that loss or damage has occurred.' Although the loss of a valuable opportunity and the assessment of its amount are concepts that can be logically separated, in practice it will usually be the same body of evidence that tends to establish both the existence of a loss and the amount to be recovered. That evidence may establish the loss of a valuable opportunity more clearly than the value of the opportunity lost." In Sellars, the High Court applied to contractual, trade practices and tortious cases alike the principles that: (a) "where there has been an actual loss of some sort, the common law does not permit difficulties of estimating the loss in money to defeat an award of damages" (at 349) (b) (as originally enunciated in a tort case, Malec v JC Hutton Pty Ltd (1990) 169 CLR 638 at 643), "If the law is to take account of future or hypothetical events in assessing damages, it can only do so in terms of the degree of probabilities of those events occurring . . . [Where] proof is necessarily unattainable . . . the court assesses the degree of probability that an event would have occurred, or might occur, and adjusts its award of damages to reflect the degree of probability." The authors of the principal judgment (Mason CJ, Dawson, Toohey and Gaudron JJ) concluded (at 355): ". . . damages for deprivation of a commercial opportunity . . . should be ascertained by reference to the court's assessment of the prospects of success of that opportunity had it been pursued. ". . . the general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage . . . the applicant shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had had some value (not having a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities." (emphasis in the original) Thus in terms of evidentiary requirements there is a two-stage process: firstly, proof to the ordinary, civil standard that the defendant caused the plaintiff to lose a commercial opportunity of some non-negligible value and secondly, ascertainment of the actual value of the loss by valuing the probabilities or the possibilities. As to the first element, proof of a loss of a commercial opportunity of some appreciable value, it is, in my opinion, capable of legitimate inference that such loss was incurred by White Property. Corporations of the size and character of Woolworths, Coles and the White Group were obviously in pursuit of just such an opportunity by seeking to acquire the land in question. One of them did so acquire almost all of it at a price and on conditions that I have held White Property would ultimately have been prepared to meet. In my opinion, there is no warrant for assuming that it was only in Woolworths' own hands that, at such a price and on such conditions, the opportunity for profitable commercial dealing was not exhausted, although, as indicated later, Woolworths might have had some special interest in the site. Coles' withdrawal from the race appears to have been influenced by factors other than price, notably some apparent disenchantment by Coles' representative with Mr Bennett's perceived ethics as a negotiator. As to the second stage of the inquiry, the actual valuation of that opportunity, questions of real difficulty arise. In my opinion, the general observations in Sellars do not have the result that in no case will it be impossible to arrive at an assessment. The point may be demonstrated by reference to a case of bodily injury (the principles are the same: Sellars). Suppose an injury to an organ (perhaps the appendix) or disturbance of the functioning of an organ (say the brain), and medical evidence that such organ or function is likely to have some significant role in bodily well-being but as yet it is not known what that role is. If it cannot be said what the possible role of the bodily part is, a court could hardly award other than nominal, or at least unusually modest, compensation for its loss. Paucity of the evidence as to the value of loss of an opportunity and late efforts to improve the situation The hearing of this matter commenced on Monday 18 November 1996 after Mr Burbidge QC, senior counsel for White Property, told the Court that the matter was ready to proceed. The liability aspects of the case were opened in some detail on that day. The next day, Tuesday 19 November, Mr Burbidge frankly conceded that "the manner in which . . . damages [has] been approached is not as adequate as might properly be required in a case of this size and . . . complexity" and suggested a stage might soon come when, in effect, there would need to be some delay in trying the quantum issues, a prospect which did not appeal to the respondents. The matter was then left on the basis that, in the "next day or so", additional material on which White Property wished to rely would be provided to the respondents. On Wednesday 20 November Mr Burbidge sought to file in Court further material in support of White Property's claim for damages. As a result of directions given by Whitlam J, White Property had been ordered in February 1996 to file and serve statements of the evidence on which it intended to rely by 8 March 1996. On 18 June 1996 the case was fixed for trial as a "long matter" by Sheppard J, there then being no suggestion that any aspect of the case was or would not be ready for trial. In mid-October the respondents were provided with an alleged expert's opinion attempting to quantify certain aspects of the claim and to justify damages of several million dollars, but little effort was then made to furnish material which would prove the assumptions upon which those opinions were based. The material sought to be filed by White Property on 20 November was in part material that might fill that gap in the evidence and in part new material. The respondents, in my view perfectly reasonably, objected on the basis that they would need, among other possible preparations, to obtain expert advice and evidence from people such as a valuer, architect and a town planner to counter the new material. If the material were admitted there would then necessarily have been an adjournment on the third day of the trial for a considerable period to enable that additional preparation by the respondents to be undertaken, with the consequent wastage of several days' hearing time. I held that White Property ought not be permitted to rely on the additional material, except insofar as it related to the claim for project management fees up to 14 March 1995. I reserved my reasons but indicated that I thought that the respondents should be able, on very short notice, to deal with the additional material on the lastmentioned aspect. My reasons, shortly stated, were these. Nothing was put to avert the inference that the delay in timely preparation, and the consequent unreadiness for trial, after implicit indication that the case was ready, were attributable to the default of White Property (of course, I mean by those controlling and directing it), rather than, say, by its legal advisors, nor was there any other extenuating circumstance suggested. The application to file late material could hardly have come later than it did. The respondents included three human beings as well as a corporation. No respondent was guilty of any relevant default. At the time it is fair to say that I relied upon the statements of principle both made and collected in Bomanite Pty Ltd v Slatex Corporation Australia Pty Ltd (1991) 32 FCR 379 at 387 and 390-2 and State Pollution Control Commission v Australian Iron & Steel Pty Ltd (No 2) (1992) 29 NSWLR 487 at 492-5. In my opinion: (i) it would have been entirely unjust to the respondents to permit a course that would postpone the trial after it had begun. Only those who have never felt the strain of being litigants could doubt the wisdom of the effort by Samuels JA in GSA Industries Pty Ltd v NT Gas Ltd (1990) 24 NSWLR 710 to consign the supposed "emollient effect of an order for costs as a panacea" propounded 100 years previously by Bowen LJ in Cropper v Smith (1884) 26 Ch. D 700 "to the Aladdin's cave which Lord Reid rejected as one of the fairy tales in which we no longer believe". (ii) any injustice to the applicant was the consequence entirely of its own unmitigated default; (iii) the established rules and procedures of courts must, for their practical efficacy, be vindicated by insistence that they be complied with in cases where extenuating circumstances are lacking and a significant amount of hearing time would be wasted without such insistence; (iv) weight must be given to the injustice to litigants generally in permitting wastage of court sitting time at the behest of particular litigants - it would not have been possible to avoid such substantial wastage in this case; (v) weight must also be given to the public interest in the Court maintaining "the integrity and vigour" as (Gummow J put it in Bomanite) of its own processes of case management; and (vi) the effective denial by a court of an opportunity to a litigant to bring evidence of an allegedly substantial claim is a big step, even when that litigant has wasted earlier opportunities to do so, and ought only to be taken where there is no just and practicable alternative; in my view, there was none such here. After I gave that decision, the High Court delivered judgment in Queensland v JL Holdings Pty Ltd (1997) 141 ALR 353. The Court made it clear that, while case management factors are a relevant consideration for a trial judge exercising a discretion in circumstances like those in this case, such factors should not prevail over any injustice to a litigant in being shut out of the presentation of a legitimate issue. The Court, while upholding the general principle of Cropper v Smith that no punitive approach should be taken and that parties' mistakes should not stand in the way of the trial of the real issues in a case, if that "can be done without injustice", did not comment adversely on the modern perceptions of limitations of the balm of costs, at least for personal litigants: see 357 and per Kirby J at 369-70. No subsequent application was made to me, based on the reasoning in JL Holdings, to take steps which might relieve White Property from its difficulties which my interlocutory decision left unrelieved. Nevertheless, I considered whether I should invite further debate on the matter. I concluded that I should not. In my view, leaving aside case management considerations, this is a case, albeit commercial, in which the injustice to the personal respondents by proceeding as White Property wished would have outweighed the injustice to the applicant of not so doing. In any case, considerations of case management are relevant. Here, for the reasons I have given, they were highly relevant and, indeed, in my view, powerful enough to warrant preference being given to them over White Property's own interests, White Property having so egregiously brought itself into conflict with such considerations. In my view, in this case a balance of the considerations listed by way of guidance by Kirby J in JL Holdings quite decisively favours the course I took. This was, in my view, a much stronger case for the refusal of indulgence than JL Holdings. On 22 November Mr Burbidge then sought the adjournment of the proceedings (again, involving a substantial waste of sitting time). I also refused that application. My reasons were, broadly, the same as those discussed above. No further application to be relieved from the consequences of its miscalculation or neglect of its own interests was made by White Property at any subsequent stage of the hearing or thereafter. Later in the hearing, on 28 November, I admitted certain material into evidence at the behest of White Property, despite its lateness, subject to a later decision as to its relevance. This was material of a non-controversial kind, so far as it went, as to what Woolworths had done with the land by way of its physical development and arranging tenancies, both from itself and others. Mr Burbidge put that: "It certainly provides a measure of the damage . . . nobody from our side is suggesting that this is a dollars and cents exercise . . . this is evidence which would assist your Honour to come to some evaluation of the level of loss which we had sustained by the loss of our chance and it is clearly relevant for that reason." In my view, the material does not so assist. Woolworths' project was quite different from what White Property had been planning. Woolworths' ultimate commercial objectives as to their entire involvement in the site would probably have included securing an outlet at that site and excluding its competitors. For example, Woolworths might have been prepared to administer matters so that it would pay a higher than ordinarily expected rent in a complex built quite for its own purposes - such would assist re-sale of the complex and might be seen as involving no more than an acceptable marketing cost to Woolworths. Likewise, such material as was otherwise admitted into evidence concerning White Property's own feasibility assessments does not assist. Boardroom assessments, at least in this industry, on the evidence of Mr Quayle, are somewhat speculative. They do not bear any of the character of a disinterested, objective assessment such as ought be made by relevant experts like valuers. Hopes, or even expectations, are not indicators. Thus White Property was left without proof of the factual assumptions of its expert. An assessment ought to be made This case, in my opinion, is close to the borderline but I think that principle requires that I do my best to make some assessment. In my opinion, one can make a judgment that White Property lost a significant chance to make some substantial profit. That, however, imprecise it is, is nevertheless as precise as one can be. I am conscious that such a finding is a vague one. There was no evidence to establish an actual likely resale price. As a real possibility, no profit might have been realised; I cannot say how great that possibility was. When any profit might have been realised is problematic. Whether any profit would actually have been large or small is unknown. Nevertheless, the choice is between awarding a purely nominal amount which, despite the uncertainties and guesswork, I believe would certainly do an injustice to White Property, or making an assessment that can be little better than a stab in the dark and which might, because of that, do one of the parties an injustice. In my view, the certainty of injustice should be avoided despite the great attendant difficulties in so doing. In the circumstances, an assessment must be very much a subjective affair: an award of $100,000 seems to me to be too little; anything over $500,000 seems too much. Because of the uncertainty, conservatism seems prudent. I think that an award of $200,000 is, but is all that is, warranted. Damages in the nature of lost opportunity to make a profit having been thus assessed, there is no warrant for adding thereto those parts of White Property's expenses not compensated above under the rubric of "Project Management Fees": Amann. If I am wrong in proceeding to assess the loss of opportunity in the state in which the evidence was left, the case would be one of inability to quantify that loss and Amann would require the award of the justifiable balance of those expenses; this might be of the order of $100,000. The right party? A submission was made on behalf of Richmond Growth that White Property could not get damages because, within the White group, it was intended White Construction should actually purchase the property from Richmond Growth. The contractual right of refusal was, however, that of White Property. That right was, in my opinion, not robbed of its value because White Property was intending to have a related company exercise that right. There was no evidence that White Property would not have had, one way or another, from White Construction or otherwise, countervailing benefits if, in the result, White Construction had exercised White Property's right against Richmond Growth. The breach of White Property's right, in my opinion, remained compensable at White Property's suit.

Misleading and/or Deceptive Conduct claim: Trade Practices Act It is necessary, for the decision of this claim, to set out White Property's final version, as pleaded in its Further Amended Statement of Claim, of its claim that Richmond Growth, Messrs O'Brien and/or Paull as its directors, and/or Mr Bennett as its agent, engaged in misleading or deceptive conduct. For clarity I have substituted the parties' names for their more formal descriptions. "13. From 17 November 1994 until 14 March 1995 O'Brien, Paull and Bennett on behalf of themselves and Richmond Growth represented to White Property that they would accord and would occasion Richmond Growth to accord to White Property a bona fide opportunity to exercise the right of first refusal which they had procured Richmond Growth to grant White Property on 22 November 1994. PARTICULARS (a) A statement made by Bennett on 17 November 1994 that he was happy to agree with Graham Morcom on behalf of White Property that if White Property assisted Richmond Growth in obtaining Council support for a rezoning to permit retail development of the Site, Richmond Growth would give White Property first option to act as project manager for the development and a first option to purchase the Site under mutually agreeable terms and conditions; (b) Execution by O'Brien of a letter dated 22 November 1994 from Richmond Growth to White Property; (c) Statement by O'Brien on 12 December 1994, during a conversation at North Sydney between Graham Morcom and Roger Quayle on behalf of White Property and O'Brien and Paull, that White Property would have the option to acquire the development rights and the project management in the event of Council support being obtained; (d) The silence of Paull in the face of, and the consequent acquiescence in the correctness of, the statement of O'Brien as particularised in sub-paragraph (c) above; (e) The silence of O'Brien, Paull and Bennett in the face of, and consequent acquiescence in the correctness of, a statement made by Roger Quayle on behalf of White Property on 14 December 1994 during the course of Council meeting that White Property would be the project manager ad developer in the event of Richmond Growth receiving Council support; (f) The silence of Bennett in the face of, and consequent acquiescence in the correctness of, the statement made by Graham Morcom and Mark Jamieson on behalf of White Property, Bennett, Alex O'Grady, Hugh Williams and Robert Stash, that White Property was the project manager and would be the purchaser of the development; (g) Acceptance by Bennett without comment of the terms of White Property's letter of 17 February 1995; (h) The silence of O'Brien and Paull as directors of Richmond Growth, in the face of, and the consequen[t] acquiescence in the correctness of, the contents of a letter dated 17 February 1995 from White Property to Richmond Growth; (i) The silence of Bennett in the face of, and the consequence acquiescence in the correctness of, the statement by Graham Morcom on behalf of White Property during a meeting on 20 February 1995 with Bennett that White Property had a right of first refusal to purchase the property; (j) Execution by Paull of letter dated 20 February 1995 from Richmond Growth to Woolworths Ltd and Franklins Ltd which contained a statement that White Property had been granted first right of refusal to purchase the site; (k) Approval by Bennett on 20 February 1995 of the form of the letter dated 20 February 1995 to Woolworths Ltd and Franklins Ltd. 14. White Property in reliance on the representations particularised in paragraph 13: (a) entered into the agreement [of 22 November 1994]; (b) acted and continued to act as project managers for the project; and (c) did not seek to enter and did not enter into negotiation with Richmond Growth to purchase the Site, but rather waited for and invited Richmond Growth to offer to sell the Site to it on such terms and conditions as it was prepared to sell the Site to a third party; and in consequence did not, as it otherwise would have, negotiate for and purchase the site at that prices and upon those conditions accepted by Richmond Growth on 10 April 1995. 15. The representation particularised in paragraph 13 was misleading and deceptive in that Richmond Growth did not intend to, and none of O'Brien, Paull and Bennett intended or proposed to procure Richmond Growth to give White Property a bona fide opportunity to exercise its right of first refusal.

PARTICULARS (a) The statement made by Bennett during the course of a conversation on 27 February 1995 between Mark Jamieson on behalf of White Property and O'Brien and Bennett at Richmond, New South Wales that Richmond Growth needed an offer from White Property before 10 March 1995; (b) Silence of O'Brien in the face of, and the consequence acquiescence in the correctness of, the statement made by Bennett as particularised in sub-paragraph (a) above; (c) The statement made by Bennett during the course of a telephone conversation on 2 March 1995 between Mark Jamieson on behalf of White Property and Bennett that Richmond Growth wanted White Property to indicate what it was prepared to offer for the Site. (d) Execution by O'Brien of a letter dated 3 March 1995 from Richmond Growth to White Property . . . which . . . stated that all interested parties must submit a final offer to purchase the site by 5pm on 7 March 1995. (e) Statement made by O'Brien during the course of a telephone conversation on 3 March 1995 between Mark Jamieson on behalf of White Property and O'Brien that the deadline for receipt of final offers was 5pm 7 March 1995. (f) Statement made by O'Brien during the course of a telephone conversation on 9 March 1995 between O'Brien and Graham Morcom on behalf of White Property that Richmond Growth had or would be accepting an offer from another party; (g) Execution by Paul of a latter dated 8 March 1995 from Richmond Growth to White Property which stated that: (i) Richmond Growth had not yet received from White Property a written offer for consideration; (ii) in the letter particularised in sub-paragraph (d) above White Property had been advised that Richmond Growth had received an offer from another party and had invited White Property, and every other interested party to submit their offers prior to 5pm on 8 March 1995; and (iii) in accordance with the terms of the latter sated 22 November 1994 from Richmond Growth to White Property, White Property was requested and directed to submit its offer to purchase the site prior to 4pm on 9 March 1995 and that such an offer should be complete and in detail. (h) Knowledge of O'Brien and Paull, as the only directors of Richmond Growth at the relevant times, of the matters particularised above and their subsequent silence on the face of, and consequent acquiescence in, the above particularised matters. 16. In the circumstances: (a) Richmond Growth has engaged in misleading and deceptive conduct within the meaning of section 52 of the Trade Practices Act; (b) O'Brien, Paul and Bennett have: (i) engaged in misleading and deceptive conduct within the meaning of section 42 of the Fair Trading Act; and (ii) by their conduct, for the purposes of s75B(a) and (c) of the Trade Practices Act, aided, abetted, counselled or procured, and were knowingly concerned in the contravention by Richmond Growth of section 52 of the Trade Practices Act as particularised in sub-paragraph (a) above. 17. In all the circumstances, White Property has suffered loss and damage. PARTICULARS (a) Time and expense in management of the project; (b) White Property did not, as otherwise would have, negotiated for and purchased the site at the price and upon those conditions accepted by Richmond Growth on 10 April 1995." The essence of White Property's case, as developed in submissions by Mr Burbidge, was that Richmond Growth and its agents had engaged in misleading and deceptive conduct within the meaning of s 52 of the Trade Practices Act 1974 (Cth) in that, as of February or March 1995, they knew that Richmond Growth's understanding of the obligations arising under the agreement made on 22 November 1994 was not shared by White Property, and despite their knowledge of White Property's position, did not seek to remedy White Property's misapprehension as to its rights under the agreement, as those rights were perceived by Richmond Growth. The Trade Practices Act provides that where a corporation makes a representation with respect to future conduct, that representation will be deemed to be misleading if the corporation did not have reasonable grounds for making the representation, the onus being on the corporation to show that it did have such reasonable grounds: s 51A. Although "the non-fulfilment of a promise when the time of performance arrives does not of itself establish that the promisor did not intend to perform it when it was made" (Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 at 88), the onus lies on Richmond Growth to show that it had such an intention. The intention of the directors, Messrs O'Brien and/or Paull and/or Bennett would be deemed to be that of Richmond Growth: s 84. Having regard to the facts that no evidence was adduced from the Richmond Growth directors or Mr Bennett, and that Mr Bennett is an experienced real estate agent, and also to all the circumstances of White Property's position, in my opinion it is highly unlikely that Mr Bennett (acting on behalf of Richmond Growth) actually or reasonably thought, at the time he signified his and Richmond Growth's willingness to agree on 17 November 1994, that a first right of refusal consisted of nothing more than the right to make an offer along with, or as the first of, other interested parties at the negotiation stage. Nor is it reasonable to assume that the directors reasonably believed that Richmond Growth would discharge its obligation to White Property merely by inviting White Property to make such an offer. It is more likely that, initially, everyone acting on behalf of Richmond Growth understood that the granting of the first right of refusal would require some greater obligation on Richmond Growth's behalf, but that, as events unfolded, the inconvenience of having so committed Richmond Growth became more sharply felt. So far as Messrs O'Brien and Paull are concerned, one can readily enough infer that interest then began to determine consciousness; it became convenient to believe that, at best, all White Property had was a right to be the first among bidders, and they did so come to believe. Despite their absence from the witness box, it would not be right to infer that, before 9 March, they simply lied to White Property about their understanding of Richmond Growth's obligations. At least in the case of Mr O'Brien, the factual summary suggests that he was inclined to be honourable, by his own lights. No worse view need be taken of Mr Paull. As to Mr Bennett, it is not reasonable to take such a benevolent view. An inference arises from his background, the extent of his conscious attempted deception on 10 March and his choice to avoid the perils of the witness box, that he did not believe on 27 February that Richmond Growth's obligations were as limited as later asserted. Reliance The time at which there was or may have first been any (relevant) misleading conduct becomes of critical importance. Even in the case of Mr Bennett, there is no evidence of this before 27 February. As I have indicated, I see no reason for concluding that, as at 17 and 22 November 1994, he or anyone else had any doubt that Richmond Growth would honour its obligation as Mr Bennett would have understood it (and he would have understood it properly). Mr Bennett's conduct up to that point was not misleading or deceptive. Once one so concludes, Richmond Growth has discharged its onus under s 51A. The crucial significance of that conclusion is as to whether White Property relied on any misleading conduct. Such reliance must be shown, of course, in order that the loss can be said to be occasioned "by" such conduct, as s 82 requires: see for a recent instance Leda Holdings Pty Limited v Oraka Pty Ltd (Full Court, unreported, 9 December 1997). At the meeting of 17 November 1994 with Mr Morcom and Mr Quayle, Mr Bennett (acting as the authorised agent for Richmond Growth) agreed that White Property would have the first right of refusal. It was on the basis of Mr Bennett's implied representation, as pleaded, that White Property entered into the agreement of 22 November. It will be recalled that Mr Bennett had previously dealt with Mr White, evidently (as a matter of inference) to the latter's reasonable satisfaction. Apart from reliance on Mr Bennett, why else would White Property, staffed by experienced executives, have contented itself with the informal document of 22 November and an absence of personal guarantees of the performance of its obligations by Richmond Growth, a mere proprietary company? Even if that company might come to possess valuable rights, they were very likely to be of a highly contingent kind. But all that that reasoning shows is that there was reliance on conduct which, at the time it occurred, was not misleading or deceptive, and that is the crucial time: Bill Acceptance Corp Ltd v GWA Ltd (1983) 78 FLR 171; Cedric Constructions Pty Ltd v Elders Finance & Investment Co Ltd (1988) ATPR 40-879. However, once the agreement was reached and council approval was obtained, it was within the active, indeed avid, contemplation of White Property that it would purchase the site. By the time Richmond Growth began to raise any questions about what a first right of refusal meant, White Property had felt the need to complain on a number of occasions to Richmond Growth about what it regarded as Richmond Growth's disrespect for White Property's role as project manager. It is unlikely that White Property relied on anything that Richmond Growth or its agents thereafter said or did. This is, indeed, evidenced by the fact that White Property sought to set a timetable for "negotiations" regardless of its first right of refusal. White Property no doubt drew some comfort, in fact, from the possession in law of its contractual first right of refusal, but that was reliance upon the contract, not on later behaviour of White Property or its agents. Although White Property did not make an offer earlier than it did, it cannot be said that White Property was motivated not to do so by misleading or deceptive conduct of Richmond Growth which occurred after 22 November. Further, White Property was, quite properly, quick to assert its legal right at the first hint of action by Richmond Growth seriously impinging upon that right. And, by 22 February, the White Property executives, obviously no fools, must have had their reservations about representations emanating from or on behalf of Richmond Growth. They did not, in my view, rely on any such representations. I do not overlook the uncontroverted evidence of Mr Morcom (to which no objection was taken) that "if [he] had not thought [White Property] had . . . a first right of refusal agreement, [he] would have entered into negotiations to purchase the property at an earlier stage than [he] did". There are however two answers to this. The first is that it is only relevant if one assumes that there was a period of silence on behalf of Richmond Growth and those acting for it, during which they were not intending to honour the agreement. There is no warrant for assuming this: Richmond Growth made its (legally wrong) position clear immediately that position was formed. One has no duty to speak up before silence might amount to misleading conduct. The second answer is that as late as 9th March, White Property was not prepared to match Woolworths' terms, and there is no basis for thinking that White Property would have been prepared to do better earlier. With Mr Restifa (a man nothing if not assiduous) active on Woolworths' behalf, a lesser offer would not have secured the site. Accordingly, I find that at the times and in the ways indicated, Richmond Growth acted in contravention of s 52, but that any loss occasioned to White Property was not occasioned "by" such conduct. As to the conduct of the personal respondents, therefore, s 75B neither improves nor worsens White Property's position and it must also fail against them. (ii) Claim under s 42 Fair Trading Act 1987 (NSW) There was a dispute between the parties as to whether Messrs Paul and O'Brien, as directors of Richmond Growth, and Mr Bennett as its agent, could be said to be "engaged in trade or commerce" on their own behalf, rather than on behalf of Richmond Growth, for the purposes of the Fair Trading Act. In my opinion, the actions of Mr Bennett are capable of being in contravention of the Act. Section 4(1) of the Act defines "trade and commerce" to include "any business or professional activity". In Re Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) 36 FLR 134, Deane J said (at 167): "The terms 'trade' and 'commerce' are not terms of art. They are expressions of fact and terms of common knowledge. While the particular instances that may fall within them will depend upon the varying phases of development of trade, commerce and commercial transaction, the terms are clearly of the widest import..." An agency arrangement does not necessarily exclude the categorisation of Mr Bennett's actions as being concerned in trade or commerce on his own behalf; to the contrary, agency relationships are the very nature of his commerce (see also Leda). I assume, though I need not decide (the position is considerably less clear: see e.g. Tobacco Institute of Australia Ltd v Woodward (1993) 32 NSWLR 559) that Messrs O'Brien and Paull can also be said to be so engaged. It is enough to say that, in relevant respects, the concepts and considerations applicable to the personal respondents under the Fair Trading Act are sufficiently similar to those applicable to Richmond Growth under the Trade Practices Act, that what I have said above on the issue of reliance indicates that each of these claims must also, in my opinion, fail. Claim for future Project Management Fees In the alternative, White Property made a claim for its project management fees incurred between December 1994 and March 1995, as well as damages for the fees foregone as a result of the purchase of the site by Fabcot. I have dealt with the first part of the claim by including it in consideration of the damages to be awarded for the breach of the agreement. In relation to the second part of the claim, in my opinion, no one could have expected, as a matter of commercial reality, that Richmond Growth would have any control over the hiring of a project manager, once the site was sold to another developer. Accordingly, it never was any part of the bargain that Richmond Growth was promising White Property a first right of refusal of appointment as project manager in circumstances such that Richmond Growth would be unable to arrange to honour such a promise. Thus, in my opinion, this claim cannot succeed. Conclusion For the foregoing reasons, there will be: (1) judgment for White Property against Richmond Growth on the breach of contract claim and I will award damages of $250,000; (2) judgment for each of the respondents on each other claim. I will give the parties an opportunity to be heard on interest (including the rate and commencement date), costs (including the reserved costs), and the form of the final orders. I certify that this and the preceding fifty one (51) pages are a true copy of the Reasons for Judgment of the Honourable Justice Madgwick. Associate: Date: 28 January 1998 Appearances Counsel for the Applicant: R Burbidge QC Solicitor for the Applicant: Mallesons Stephen Jacques Counsel for the 1st Respondent: G Underwood Solicitors for the 1st Respondent: Gibsons Counsel for the 2nd & 3rd Respondents: W Nicholas QC Solicitors for the 2nd & 3rd Respondents: Ebsworth & Ebsworth Counsel for the 4th Respondent: P McClellan QC Solicitors for the 1st Respondent: Murray Stewart & Fogarty Dates of hearing: 18-29 November 1996 17, 19 & 20 December 1996