The plaintiff ("BUL") was incorporated to conduct a private university on land owned by the first defendants and subsequently mortgaged to the second defendant ("the Bank") which represents a group of Japanese banks that were creditors of EIE International Corporation ("EIE"), a Japanese land development company with international activities. BUL's incorporation was the result of a joint venture entered into between Bond Brewing Investments Pty Ltd and Bond Corporation Holdings Ltd (together compendiously referred to as "Bond") on the one hand and EIE on the other for the development of a large area of land, on part of which the university was then established. It still occupies the site. The first defendants were respectively owned by the joint venturers and together were used, among other things, as the land-holding vehicle for this purpose and the conduit for funding loans made to BUL.

Because of Bond's incapacity to contribute to mounting costs of the venture due to its own financial stress, its interest was bought out by EIE in 1992 with funds supplied by the Bank on security over the first defendants and their assets, including the subject land. As the result of EIE's default in meeting its obligations under the securities held by the Bank, the latter appointed receivers to the first defendants, and they have arranged to sell the land to the University of Queensland. This will threaten BUL with ejectment unless it can make other arrangements with that party.

In order to forestall this situation, it claims against the first defendants to be entitled to a ninety-nine year lease, or its equivalent in occupation rights, and seeks to enforce this by equitable remedies, principally based on proprietary estoppel or constructive trust. Alternatively, it claims damages under the Trade Practices Act or, in effect, restitution based on unjust enrichment of the defendants because of the sums outlaid by it in the formation and conduct of the university, the benefit of which, it says, will accrue to them if BUL is forced to vacate this land.

It is also claimed that as the result of the Bank's assumption of EIE's fiduciary duties, it inherited the obligations of the first defendants towards the plaintiff and/or that by its own conduct it directly became bound by similar obligations; and that its title as registered mortgagee of the land is subject to an equitable interest arising from those duties and obligations to the plaintiff.

The defendants deny that the conduct of any such party, in its proper context and limited to the true facts, can amount to the necessary promise or representation that would support the equitable and other claims made, that there was any relevant reliance by BUL on the alleged promise or representation, or that it suffered detriment. Alternatively, they argue that if a remedy be granted, it should be limited to monetary compensation, preferably set off against BUL's admitted debt to them of $94,297,221.11. Further in the alternative, they raise the principle of proportionality, that is, that the relief sought by the plaintiff is out of all proportion to the detriment alleged to have been suffered as the result of the alleged conduct. They also deny that any equitable lease or its equivalent could have come into existence, having regard to the uncertainty of its major terms. Further, or in the alternative, they point to BUL's significant delay in its action, during which it has obstructed their attempts to sell the land and then has stood by while the Bank's receiver conducted the sale, in which BUL itself was an unsuccessful bidder.

Limgold, or alternatively the Bank as its assignee counterclaims for the repayment of the debt which BUL admits it owes but which it claims is not yet due and payable because of the effect of a deed of subordination which also suspended BUL's obligation to repay the debt, or alternatively because of the original terms of the loans. The Bank claims that under the terms of the deed, the subordination and suspension have terminated and that under the terms of the original loans the debt has become payable immediately. In the alternative, if the deed permits the loans to become payable at once, BUL seeks rectification of it on the ground that it conflicts with the terms that had been agreed.

The evidence is heavy with complex detail but the general stream of relevant facts is fairly well defined. It is desirable to commence with a brief outline of the history of events and of the parties' relationship so that in the next section the detail with accompanying observations may be properly understood in the total context, which is essential in this case.

Prior to 1987, Bond and EIE together acquired a large area of vacant land at the Gold Coast in the name of the first defendants with the intention of fostering the establishment of a university on part of it and then selling the remainder as a residential subdivision at a premium generated by the university's presence. They were to be further reimbursed for their outlay on the campus land and buildings by selling it to a public investment trust after granting a lease to BUL. The return on the trust's investment was to be the income from rent paid at a commercial rate from the commencement of the lease. The substantial costs of the buildings were to be met from the funds generated by the sale, so that they were not to fall on the joint venturers' own resources.

To this end some independent persons were recruited to the venture to assist in the establishment of the university and BUL was incorporated on 12 February, 1987. In the course of this stage of development, statements were made to those recruits about the intended permanence of the university's existence and its presence on the site under the venture scheme. Its funds for its rent and its operational costs were to come from its earnings and donations from other sponsors, but plainly in the formative years that would be insufficient. In the first two or three years of its establishment it was to receive loans from the proceeds of the sale of the land to the trust. This scheme failed, so the plan was changed and the funds for its outgoings, including rent, were to come from its own independent borrowings. This plan also failed, and it had to look to the joint venturers indefinitely for operating funds. Nor could it pay any rent when after occupying the site during a period of establishment it opened on 15 May, 1989 with an enrolment well below the figure projected in its planning stages.

The failure of these plans not only threw these burdens on the joint venturers, but it also meant that they had to find from their own resources the cost of the expensive buildings on the campus amounting to about $200m., which had not been part of their anticipated outlays. They planned to recover these and the cost of the campus land by selling it to an investor, subject to a lease to BUL, but it could not enter into a commercial rent arrangement that would justify a purchaser's investment. Soon after, Bond began to suffer from a cash shortage that turned rapidly into financial disaster and it was unable to contribute its share of any of these costs. From 1990, because of its financial inadequacies EIE too was placed by the Bank under some management supervision that later became much more intrusive and intense because of its poor performance.

By late 1990 Bond, still unable to subscribe any funds to the venture, was threatened with receivership that would have terminated the whole venture, including the university. After protracted negotiations EIE was obliged to buy out its interest in order to save the project, but this was not completed until January 1992. Its own difficulties impeded its raising long-term finance for this purpose and to enable it to proceed with the purchase, so in order to sustain vital funding for the university, the Bank finally provided it with the necessary support This led to its granting the Bank various securities, including a mortgage over the subject lands and a debenture over its holdings in the first defendants. In the meantime BUL had lodged a caveat against the land to protect its interests. The Bank and EIE denied that it had any interest but after EIE and the Bank had made it clear that it would get its lease, the mortgage was registered on 27 October, 1992, but expressly subject to any prior interest of BUL, and the caveat was allowed to lapse. A second mortgage in favour of the Bank was subsequently registered. In the meantime, with the Bank's support EIE continued to fund BUL's operational expenses.

There had been assurances to BUL by the joint venturers of their willingness to grant it a long-term lease and to allow concessions because of its inability to pay rent, but it well understood that this was subject to an implicit proviso that the benefits would be limited to what the joint venturers could reasonably afford to provide. It knew of their respective financial situations and of the further stress of its own calls on their resources, and it knew that the assurances were given in the context of various schemes that the joint venturers were continually devising to try to achieve a successful outcome for all. This included the scheme under which the lease would be granted with suitable concessions but so limited that the property could be sold at a commercial price that would bring them some financial relief.

Significantly, it also unequivocally acknowledges that to the end of the transaction the joint venturers genuinely attempted to fulfil their assurances. This is borne out by the evidence. Apart from some delays because of the intervening uncertainties produced by the financial crises of the various parties, from 1989 they, and later EIE with the concurrence of the Bank, tried conscientiously but unsuccessfully to formulate a suitable lease which would have been granted. The obstacle was the deep uncertainty of the extent of rent concessions that BUL would need, and whether EIE could reasonaly afford them. Unfortunately, tax problems associated with its plan to provide concessions also interfered with this. The concession that had to be provided was not merely the cost of the rent foregone at the time. The grant of a lease with indefinite concessions would have severely reduced the value of the asset that it needed to sell at a reasonable price to help to meet its debts.

These were good reasons why the matter remained temporarily in abeyance but EIE, with the Bank's approval, continued to investigate ways to provide the lease. In the meantime BUL was permitted to continue to occupy the site and no rent has ever been paid, even to this day.

In 1993 after some change in the personnel controlling BUL, a new attempt was made to grant a lease on such terms and with such concessions as would be commercially acceptable to a purchaser but affordable to BUL and then to sell the land. After studying its financial state EIE, with the Bank's approval, proffered to it a thirty-year lease of a reduced area at an affordable rent payable in arrears and after a two year rent holiday which was to begin after it had occupied the premises rent-free for over four years. BUL rejected offer and its demands excluding compromise led to an impasse.

Soon after, EIE's poor performance of its obligation to the Bank led to the latter's withdrawal of support, and it lost its power to grant any lease either with or without the concessions that BUL would have needed. The Bank acted on its securities, leading to the sale of the land to the University of Queensland, but not until lengthy negotiations with BUL had proved fruitless. In those negotiations, BUL raised the brief suggestion of a claim of right to a long-term lease on grounds that had no foundation, but did not accept an invitation to substantiate it and, except for vague allusions to that claim, conducted its negotiations along other lines. It refused to provide its financial papers to allow the Bank to see whether negotiations were worthwhile and it temporised on the payment of rent for its occupation of the land. It was also very obstructive of the Bank's receiver. When he put the land up for sale, it became a bidder. When the completion of the sale to the University of Queensland was imminent, it then commenced this action.

It should be stressed, though it will not be constantly repeated, that from the beginning, it was plain from the nature of the enterprise, the establishment of a university, that all the participating parties intended that it should occupy the proposed site for a long time and that long tenure would be granted. Whenever the subject was adverted to, particularly in isolation from other considerations and more especially at times of mutual encouragement, this aspiration was clearly expressed in such terms, or at least implied. Consequently, whenever the proposed lease was mentioned in similar circumstances, it was spoken of in terms that assumed lengthy tenure. On some occasions, that result was taken for granted because it was the genuine intention of all parties, and they never resiled from it. EIE with the Bank's approval was still trying to do that at the end.

However, and this must be equally stressed, this goal was understood to be subject to conditions which, though implicit, were realistic and well understood. These changed with the changing schemes to provide the lease that were pursued as each was defeated by circumstances. The primary condition was that the joint venturers were to recoup their outlays on the university land and buildings, and for this result the lease had to provide for a commercial rent. When it became obvious that extensive concessions would be necessary, the joint venturers indicated that they would provide them but again it was clearly understood that they would provide only what they could reasonably afford. That level would change as their fortunes faded and Bond departed the scene, but in the end EIE, with the Bank's concurrence, offered a lease with the best terms that it reasonably could.

The university now has no registered lease nor even an agreement for lease. It is because the land is to be sold free of any interest except its acknowledged tenancy at will that it has brought these proceedings for the enforcement of its present claim to the substantial interests described above. In effect, the claim is that although with genuine goodwill the joint venturers tried to provide it with a lease and actually proffered one, this was not sufficient, and the expectations on which it relied in setting up its university entitled it to a long-term lease, even if that should be unreasonably financially detrimental to EIE and its creditors. Its difficulty lies in its emphasis on the intended result, which is not in issue, rather than on the conditions attached to it, which, associated with its rejection of the lease that was offered, were the reasons for its frustration.

It should be emphasised that the issue is not whether there was a promise of lengthy tenure or an assurance of substantial concessions, for both were offered to BUL and refused. It is whether the promise extended to an immutable ninety-nine year lease with all the rent concessions that BUL might be found to need, irrespective of their cost to the joint venturers and of any harm that the grant of such concessions might do to them; or whether these were subject to an implied condition of reasonable affordability, and if so whether the lease that was offered was sufficient because of this or in any case. Alternatively, BUL claims that EIE could have afforded the concessions it required, particularly as it had the support of the Bank.

In respect of BUL's indebtedness of $94m., because of its concerns over its large indebtedness and doubts as to the terms of repayment that had never been formulated, in August, 1989, it demanded and obtained from Limgold as the nominal provider of the loans a deed which suspended BUL's obligation to repay, and subordinated the debt to all other debts of the company until the deed's termination was triggered by one of three events. The trigger that became relevant was BUL's achievement of a surplus as defined in the deed. There is contention as to whether that has occurred, and if so, when, and as to its consequences.

Unless it is more fitting at the time to refer to a particular person who will then be identified, it will be convenient to refer compendiously to the representatives of BUL, Bond, EIE and the Bank simply by their respective principal's name when their knowledge or conduct is such as to bind or affect it. Similarly, except where the context demands reference to the first defendants expressly, they will be spoken of as though they were the joint venturers or EIE, depending on which had control of them at the time. The reason is that the representatives of the principals spoke of relevant matters as though they were themselves the owners of the land or the supplier of funds and without reference to the first defendants as the instruments for their actions and promises.

Because of an approach adopted in the plaintiff's case, it is desirable to give a prefatory word of warning. In this analysis, any tendency to consider the welfare of the university alone as though it were the only or even the prime purpose of the venture should be avoided. As all those involved knew from the beginning, and as BUL itself stresses in part of its argument when it suits it, the university project was only part, albeit an integral part, of a total venture. Its importance to the success of the financial purpose of the venture was a factor that the representatives of BUL could validly, and did, have in mind when assessing their position. Significantly, it also means that it shared the risks of the venture, for it had much to gain from it and was not above and removed from its vagaries, although its attitude as betrayed in its argument would suggest otherwise.

The most obvious of these risks included changing economic forces and, if they proved adverse, the financial decline and fall of the joint venturers that would deprive them of their capacity to provide indeterminate gratuitous benefits to the university as a preference over their own creditors. Just as the entrepreneurial prominence of the joint venturers would naturally lead to an expectation that their philanthropy would have some magnitude in good times, so it would be wrong to treat these risks as irrelevant to issues affecting BUL's legitimate expectations.

Equally, when the details of the project were first revealed, it was understood that the recoupment by the joint venturers of their very substantial outlays on the university through a commercial sale of the campus lands and buildings was to be a significant contribution to the success of the venture, and this required that a commercial rent be paid under the lease. Consequently, this factor, as well as their philanthropic attitude towards the university, must be included in the circumstantial background when construing their statements.

As a matter of balance it should also be remarked that in addition to the anticipated profits, the purpose behind the venture included the public relations benefit to the joint venturers from setting up a substantial educational institution, the prestige associated with it, and probably some satisfaction in creating it. Conversely, its failure would reflect badly upon them. This factor was influential in a number of the dealings which occurred later, particularly when BUL made demands on the joint venturers for benefits that, due to their deteriorating financial condition, they were unwilling to provide. In essence, their profits and financial well-being were not the only factors in the background context in which their assurances were given, but they also had an important role. It is convenient now to turn to the details of relevant events.

In 1986, the companies controlled by Mr Alan Bond were apparently prospering, and for various reasons he wished to be associated with a work of some prestige as part of his entrepreneurial activity. At the same time EIE had very substantial dealings in land holdings in Australia, and as a foreign entity it was concerned about the local response to this and wished to make some gesture of goodwill to deflect it. In a multi-purpose plan the two groups entered into a joint venture for the subdivisional development of a large area of residential land at the Gold Coast. It is agreed on all sides that the various features of the plan were mutually interdependent.

It proposed that part of the land be used for the establishment of the Bond University, the first private university in Australia, with ancillary facilities. In addition to making the land available, the joint venturers were to arrange for the erection of the necessary buildings on it, provide a lease to BUL, and then sell it. Another part of the land was to be dedicated as a commercial scientific research park, which was to be separate from the university but intended to work in co-operation with it to their mutual advantage. The third element of the plan was the subdivisional development of the remaining residential land, which was to be sold at a premium because of the ambience created by the university.

For the realisation of the university aspect of this plan, an Advisory Council headed by Professor Watts was recruited. It was the predecessor of what became the University Council and the BUL board after the company was incorporated in February, 1987. Its first meeting was held on 30 September, 1986, though Professor Watts had become involved before then. Although it makes no difference to the result, no action taken by any person associated with it as the result of an expectation generated in this period could have been the foundation of any present claim of BUL, for it was non-existent at that time. However, implied promises and assurances made to them acquired a certain indirect force because the same persons became the first members of the University Council and the company board after incorporation, and BUL can rely on an implied ratification of what had earlier been said to them.

As it turned out, further assurances confirmed what had gone before, but equally they were not unconditional. That they were accompanied by the genuine goodwill and support of the joint venturers was what gave them their greatest strength in their effective encouragement of BUL. What was presented in evidence as a series of assurances of a lease and of necessary concessions given without express reference to any implied limitations were in fact always made in the general context of the scheme that was being undertaken at the time towards that result, and they were always given and understood to depend on the success of the scheme and on their reasonable affordability to the joint venturers. The oral evidence, the contemporaneous written material and the parties' conduct all point to this contextual reservation even though it was not expressly mentioned. That is why the incidents of the lease that was proposed from time to time would vary in accordance with the scheme that was currently under consideration in the joint venturers' attempt to find a suitable answer.

As well as responding to the assurances given by the joint venturers there may well also have been a commitment by BUL to complete what had been begun by the Advisory Council, a commitment that was not dependent on them but operating collaterally. The alternative to its continuing with the process would have been the abandonment of the work that had already been done by the Advisory Council and Professor Watts. But these components all combined to encourage BUL to proceed.

It would be wrong to treat the assurances artificially as distinct from the scheme of which they were part, and indeed BUL acknowledges that this is so and that its expectations varied according to the exigencies of the situation at the time. However, it claims that there were some fundamental features that remained constant and were not to depend on the fortunes of the occasion, though it never explains why they should be different from other features. The length of the term of the proposed lease was one of these.

During this early period when the 'vision' of the joint venturers was explained to those recruited to help in the establishment of the university, much was said in broad and non-specific terms as to the intention that it be an enduring institution located on that site, clearly implying that it was intended that it have long tenure. However, this did not exclude the further implications referred to above, that the project was part of a larger enterprise that could well involve risk, or that the long-enduring stability of the university was a goal that was aspired to rather than a result that was promised, or that the proposal for long tenure would be conditional upon the university's capacity to accept its terms, subject to such concessions as the joint venturers could reasonably afford. Consequently, when the details became specific and the question of BUL's capacity to afford the high rent that was set for the lease caused concern, the matter of concessions was spoken of in terms of discretionary philanthropy by the joint venturers and not as of right for BUL.

This series of brave statements of extravagant aspirations of greatness and of the intention to pursue them was the first basis of the claim of reliance by those who undertook the establishment of the university, including Professor Watts, who was to become the founding Vice-Chancellor. He was of a somewhat entrepreneurial disposition himself and naturally had a personal as well as an altruistic interest in the university's welfare and quickly knew the developing details very well. There have been suggestions that the university Councillors relied on such vague statements to give them an assurance of permanence of occupation of the site, but they were not naive people, and they appreciated the substance of what was proposed.

More particularly, they did not believe simplistically that because the joint venturers were of very substantial status in the business world, their benefaction would be unlimited and entirely altruistic. While they were entitled to rely on the honesty of the joint venturers in making them, they knew very well that these implied assurances were not absolute and unqualified and that there were limitations on what their benefactors would and could afford to provide for the project. They understood that apart from their encouragement and goodwill, the principal contribution by the joint venturers to the university project did not involve expense so much as their facilitation of it by organisational experience and their backing of it as parties of wealth and power whose support would attract to it the further support it might need. It is quite possible and even likely that they did not anticipate fully how serious the limitations would become as circumstances changed. The case suggesting that they were gullible people who accepted these statements in their highest possible optimistic sense and without any sensible qualifications does not do them justice and is contrary to their performance as witnesses.

A number of BUL's arguments refer for support to the benefit to the joint venturers in the sale of the surrounding residential land from the premium that would be attracted by the presence of a prestigious university nearby. This, they say, was so fundamental to the scheme that the survival of the university was correspondingly fundamental, and this implied in turn the necessity of the grant of long tenure that was seen as essential to its long-term future. It is true that this was an essential part of the project under the only plan that was pursued, while it lasted; but it is wrong to say, as BUL sometimes implies, that this was the only plan that could have been pursued, that this benefit from the university's presence was the only source of such planned benefits, or that the joint venturers had no expectation of recovering anything directly from their heavy investment in the campus. As it has been explained, the recoupment of their outlays on it was also to come from the proceeds of the sale of the university land and buildings.

Other recoupment was to come from profits and incidental benefits to related companies from ancillary activities relating to the university, such as management companies controlling student accommodation, and the profits from the research park. These tend to favour the above argument as to the university's place in the scheme, but there is also the point that the financial benefits from the project were of equally major importance so that the welfare of the university was certainly not the only nor even the main consideration.

Consistently with this, the heavy cost of the buildings and some temporary financial support of BUL by way of loans for rent obligations and operational costs were not to be provided from the joint venturers' own resources but were to be lent from the proceeds of the sale of the land which was to be paid from the sale of the units in the public trust. The result of all this was that although they would themselves invest in the public trust that was to acquire the campus lands, the joint venturers were to have little net cost or depletion of their own resources from their material support of the university and if anything hoped to profit by it. Although there was to be some philanthropy and considerable genuine goodwill, it was not a case of grand endowment with an altruism that put the university before the interests of the joint venturers themselves. That is why the advances that were to be made would be by way of loan rather than gift, and residual questions such as interest were left open. This is the context in which the assurances of a lease and of rent concessions and funding were given and received.

The public trust was to attract subscriptions as an investment. Its income was to be the rent payable by BUL on a long-term lease from its commencement at a rate sufficient to provide a commercial return to the investors. It was recognised that it would not immediately have the financial capacity to pay this rent or other operating costs, but, as it has been mentioned, it was planned that for the first two or three years, loans would be made to it by the joint venturers from the proceeds of the sale to the trust. While they would be fully compensated for their outlays, and would profit from the other features of the venture, the cost to them aside from direct donations made at their discretion would be the deferral of the repayment of moneys lent.

At first the scheme was non-specific as to the terms on which BUL would occupy the campus except that it was strongly implied from the circumstances and expressed in general discussion between the joint venturers and members of the University Advisory Council and its successor, the University Council, that long tenure was intended. There was abundant evidence of this understanding, which, so far as it goes, was never challenged in the defence case. It was limited to a denial that any absolute assurances of a lease were given and alternatively the uncertainty of the terms of the proposed lease. At first its structure, particularly on financial details, was vague and always understood to be on terms that were to be devised. The volume of evidence concerning assurances given as to its duration does not detract from its provisional nature, which depended on the settling of its other terms.

One basic criterion was that, subject to some philanthropic consideration by the joint venturers, it was to be within the financial bounds of the scheme of the joint venture. Despite the confidence that was felt, and expressed, that it would come about, the proposed lease was certainly not a simple, unconditional and totally discrete arrangement divorced from the benefits, risks and constraints of the scheme. The general optimism could not have disguised the risk behind the venture that was to have for BUL the prize of a fully functional prestigious university, if it succeeded; and the joint venturers never undertook to provide that result unconditionally at their own expense.

It does not advance the resolution of the real issue that, as BUL says, "the joint venturers were involved in telling third parties that BUL would be entitled to long term tenure". In this proposition its unjustified elevation of an intended result into an entitlement may be overlooked because it makes no difference in substance to the result. It was known to its representatives that a number of matters were being represented to various authorities as an established position when it was only the intended course of action if and when other interdependent parts of the total plan were successfully achieved.

Indeed, in some cases the BUL representatives were themselves parties to the statements, which they knew were not entirely accurate but were a true representation of the part of the intended plan that was relevant to the discussion in which they were made. Implicit in this was excuse that the intended result that was represented as an accomplished fact was so stated on the assumption that all would proceed according to plan. That was Ms Nosworthy's excuse for this and it is quite understandable, but it is also the answer to BUL's argument that the joint venturers acted in the same reasonable way.

If by this evidence BUL intended to show that the provision of long tenure was part of the parties' genuine intention, it is correct and not an issue. If it is intended to suggest that it was a discrete and unconditional intention that was to remain unmarked by any disappointments as to other features central the overall plan, that is not what was said and it is unacceptable. It would fail to recognise or to accord sufficient weight to the inherent conditions and contingencies that it knows clearly attached to and were an integral part of the intention. These were not relevant to the discussions with the third parties referred to, and consequently their omission was meaningless. The limited statements of intention as such were true so far as they went, but the parties knew that they were also provisional only and this has a decisive effect on the implications that can be drawn from them in isolation.

In this context they could not have been interpreted by BUL representatives as implied promises that were independent of the scheme or the inherent conditions to that part of it. Indeed, the contrary was clearly the case, and any evidence to the effect that the joint venturers intended an unqualified promise or the recognition of absolute entitlement is at best rationalisation by witnesses who wish to advance BUL's cause.

While accepting in argument that the statements referred to part of a scheme that failed, BUL argues that together with later statements and actions of the joint venturers they promoted "the idea that BUL was entitled to long term tenure and was not of a temporary nature". This artificially converts a continuing good intention into an `entitlement'. Aside again from this unjustified reference to entitlement, it is undoubtedly true that by their statements they made abundantly clear their continuing intention that BUL's long-term future would be secured by the grant of a suitable lease so that it would not be merely a transitory being. But this was always within the context of discussions as to plans and intentions relating to them, and was understood, if not fully appreciated as to its significance, to be subject to the financial limits of the scheme. This included the capacity of the joint venturers to afford any benefits that were necessary to that result. Unfortunately, this condition of affordability naturally continued throughout the transaction to qualify that intention, and had the effect of limiting the concessions that could be offered.

The difficult task of trying to frame a lease in terms as appropriate as possible to the original aspirations of the parties but with adjustments suitable to the reduced circumstances had begun in March 1988 with the drafting of proposed terms. The draft (Ex 19) spoke of a lease by the public trust of the academic buildings, but possibly not of the retail and commercial parts of the campus buildings, for ninety-nine years with an option for a further similar period. The rental was to be 10% (in later proposals this was to be reduced by donations in the early years to 6.5%) of the capital cost from the commencement of the lease. Although 10% was not set as a final figure, for that would have amounted to more than $20m. per annum, as events turned out the lowest figure discussed was always far outside the capacity of BUL to pay it, and that remains the position even now.

It was followed by a draft lease prepared by BUL's solicitors which was presented to it on 18 May. It still had the proposed trustee of the public trust as the lessor, but it contained no details as to the area demised, the terms of the rent or the length of tenure. This reflects the difficulty in finding a solution to the problem thrown up by BUL's incapacity to pay any reasonable rent in the definable future, if at all, and the joint venturers' known unwillingness to provide open-ended benefits.

When the draft was discussed in a Council meeting on 10 June, questions were raised by Professor Watts as to BUL's capacity to pay a rent that would reflect the very large capital cost of the extravagant buildings that were being built, and although the minutes of the meeting do not record it, he says that the Bond representatives gave an assurance that whatever was paid as rent would never put BUL's operation at risk (T95/23). No doubt something along these lines was mentioned, but whether it was in terms of an assurance or merely of an encouraging prediction or a hopeful intention is difficult to decide. There is difficulty in distinguishing these close but significantly distinct messages in respect of unrecorded casual remarks that are not confirmed later with the principals as might be expected, and because of a tendency to rationalisation in the evidence of many of these matters.

However, it is convenient to assume that it took the form of an assurance. Again BUL presents this as absolute, but in its context it was clearly implied to be qualified by its affordability. This is also established by the absence of any formal confirmation or even any written record or advertence to it, and by the complete absence of any implementation of it in the formal drafting that followed. It was not even raised later in discussions as to the amount of rent that BUL might afford to pay, but this is consistent with its remaining as a tacit understanding similar to the understanding as to affordability.

Proposed Heads of Agreement along the lines proposed, but significantly without any mention of concessions, were assented to by the university Council on 16 June, 1988, and the relevant committee was authorised to develop a lease in accordance with them, but again because of the difficulty in knowing what BUL could pay by way of rental, nothing came of this until September. Because of later mention of these Heads, it should be understood that it set a ninety-nine year term but although the rental was reduced, it was far beyond the level that BUL could afford, so various proposals were considered that ultimately led to a decision that BUL would seek very substantial independent finance.

Bond's representative gave an assurance of support in respect of possible concessions. This was a precursor of the more specific discussion that came much later when the prospect of BUL's obtaining independent finance became more remote, and it has limited value here. It was made by Bond only, and was confined to a context as to very high rental rates as distinct from the subject of payment of any rent at all. More importantly, Professor Watts understood this to be subject to the condition as to affordability, as he acknowledged. The true position is probably that although he knew this, he did not properly evaluate the risk of Bond's failure and was content to rely on the manifestly genuine goodwill behind the gesture.

With this knowledge, however, it is unlikely that he understood the assurance as excluding any risk to BUL or as absolutely assuring continuing philanthropy without any limitation of duration or cost. If he intended to convey that he had such an understanding, his recollection in this respect would seem to be unique. Further, if the joint venturers had intended that, it could have been easily done by linking the rate of rent to the amount of a defined surplus in BUL accounts. This was not done, and the simple explanation is that the assurances were manifestations of goodwill that were sufficient to act upon; but they were also subject to the realistic qualification that Bond would do only what it reasonably could to aid the university.

His cognate claim of detriment from reliance on this assurance is also suspect. He claims that in its absence he would have been able to call on 'corporate Australia' for sponsorship if BUL's financial position demanded it, but the success of such a call is very doubtful. It is noteworthy that soon after at a time when BUL was in a serious funding crisis and his garnering of outside support would have provided it and the joint venturers with welcome relief, he did not do so. Had he been able to obtain funds from any source, he would have pressed for them. It is likely that despite any encouraging signs he had from other potential sponsors, BUL's close association with Bond would have been unattractive to them at that time, and that he knows it.

Because of the joint venturers' continuing delay in producing a set of terms, further draft agreement to lease and lease documents were prepared by BUL's solicitors in the following September, but again they did not show the duration of the term, the rent to be paid or the land to be demised. Again, this merely shows the uncertainty inherent in the whole question at the time.

Because of the variety and inconclusive character of changing plans that were considered under proposals made by a financial adviser, it is difficult and unnecessary to trace precise details of the suggested arrangements as to the lease and rental accurately, but the following summary is close enough for present purposes. It was during these developments that the parties first began to realise that the original plan would have to be modified because the scheme for the sale of the campus to the public trust had proved patently unworkable and the joint venturers abandoned it in about October, 1988. However, the process under the original scheme was not quite exhausted because the plan for BUL to obtain long-term independent finance that would accommodate its operational shortfall in its formative years and allow it to pay a suitable rent was mutually adopted. It began searching for it early in 1989. Though this was pursued for some time, it gradually became clear that it would not succeed, even with the assistance of EIE's good offices in the Japanese finance market. Even then EIE continued to try to obtain it.

When BUL commenced its search in January, 1989, both it and the joint venturers were active parties in representing to various sources of finance, including government ministers and state instrumentalities, that a long-term lease was proposed which would require it to pay from its commencement the rent calculated on the capital costs of the land and buildings as described above. Broadly speaking, that was the proposed plan. Some went so far as to say that a lease had been granted, which of course was not true. But the basis of the lease referred to was the payment of a rent of at least 6.5% of the capital value from the commencement of the lease, which was far beyond BUL's dreams unless it obtained the finance.

It is now suggested by BUL that it was really intended that even if long-term finance was found it was still to have the concessions and that the misrepresentation as to the rent payable would be corrected in the course of negotiations with any financier who might show interest. This explanation is unacceptable. The assurance as to concessions had not gone that far. If funding were obtained, the need for them would be overcome, and there would have been no reason why BUL should not have been required to pay rent, for the recoupment of their outlays was certainly a serious part of the joint venturers' thinking at that time. Moreover, if the rent were immediately payable in the event of adequate funding, there would have been no misrepresentation to the people who were told that it would be payable. Apart from the issue of misrepresentation, if the rent payable was to be limited, there would have been a danger in overstating BUL's liability for it in such a presentation, for it might have thrown BUL's capacity to meet its obligations into serious doubt and deflected a potential lender before there was an opportunity to correct the representation.

While BUL's case promotes the importance of these representations that indicated that the parties intended that it should have a long-term lease, it finds it necessary to deprecate the importance of the rent tie to the lease that history has shown it could not pay. In this way it suggests a distinction between its hope and expectation of being granted such a lease and the joint venturers' hope and expectation of receiving a commercial return on their outlays through rent or sale.

The suggestion is egocentric and should be rejected, particularly as it is not supported by documentary corroboration or evidence of any conversations identifying such a distinction. Indeed, the tenor of the written material is to the contrary. The evidence supporting the suggestion is largely a present assessment of the past state of mind of the parties. It may have been an egocentric view at the time, or it may simply be a retrospective misjudgment due to the joint venturers' supportive willingness in offering this limited relief. It should be found that under this new proposal it was the general expectation that BUL would pay the stipulated rent from the commencement of the lease from this independent finance, subject perhaps to some limited temporary assistance from the joint venturers.

Although there is little evidence on the point, it seems likely from later events as well as the general circumstances that under the new plan the joint venturers contemplated following the thrust of the earlier one but with the difference that the land would be sold privately. It was intended that a long-term lease to the university should be in place so that the rental would be a reasonably attractive return for the purchaser's investment. However, the price for which it could be sold would plainly be affected by the amount of the rent and BUL's capacity to be a viable lessee, and so any concessions as to rent in the lease or uncertainty as to BUL's capacity to pay it would have reduced the expectation of a reasonable capital return from this source.

At this time the conversion of this capital into cash would probably have been much more important in their financial crises than any comparatively small return by way of rental. So although there was no great urgency they probably felt the deprivation of a reasonable sale more acutely than the mere non-receipt of the rent for that period. It will be more convenient to speak of their loss compendiously as the loss from any concessions that would need to be made, but the added and more onerous disadvantage was experienced also.

They did not immediately negotiate any sale to another investor, which would have been premature in the absence of a settled lease, but in an attempt to grant the lease they continued the line of investigation under which a commercial rent would still be payable but with affordable concessions. Affordability became a more pertinent factor because of their own deteriorating financial position. This was a very good reason why specific agreement as to a suitable formula that defined the concessions with some certainty was to be necessary.

Because EIE was working sympathetically if unsuccessfully to devise and present such a formula and probably expected that if it met the criteria it would be reasonably accepted by BUL, the specific extent of the assurance as to concessions never came up for discussion. This was the practical consequence of the criteria controlling them, for EIE would need to know the amount of the concessions with sufficient particularity before it could assess whether it could afford them.

Uncertainty as to these impeded the progress of the negotiations as to the terms of the lease but they proceeded on the assumption that they would succeed. The whole financial structure of the proposal had changed. The joint venturers were deprived of the funds from the sale and they were faced with paying for the erection of buildings costing nearly $200m. and the funding BUL's operational expenses from their own resources. This and other factors such as the university's own financial underperformance defeated any attempt to adhere to the original plan; but they investigated other means of carrying out their intention to provide a lease by other arrangements.

This is a reasonable example of the tie between the success of the project's schemes and the benefits that BUL was to receive to allow it to accept the lease. The failure of the scheme supporting the benefits could not have left the arrangement to provide them untouched. BUL acknowledges the reasonableness of this proposition but argues that there were some features, such as the actual grant of a lease and the length of its tenure, that were constant throughout the various schemes and not subject to abatement or alteration by the failure of the respective conditions or at all.

It is a feature of BUL's case throughout that while it correctly notes the beneficial changes of plans, such as those relating to rent that were made to meet its failure to attract independent funding or an adequate enrolment, it still relies on the unaltered continuation of the factors in the former scheme that favoured it, that is, the intended existence and length of the lease, as though they were to be absolutely unaffected by the change. Consequently, it is prepared to change its definition of the goal so that it becomes the grant of the long-term lease with the necessary rental concessions, but it is not prepared to recognise or give sufficient weight to the unfavourable factors that went with it in the change, such as the affordability of the concessions. This enables it to disregard their adverse consequences to the joint venturers.

Though some features remained superficially constant because they were important to all of the changing schemes as the goal to which they were directed, it is difficult to understand how they should have had an ultimate inviolability against disaster, or why, though keeping their quality as the result to be achieved if reasonably possible, they should not have been modified by way of reasonable compromise to meet other equally important considerations. The grant of the lease was not the only item of critical importance to the whole scheme, and the proposition that it should remain untouched while the others should bear the whole of the unexpected burdens and carry the whole of the risks is not entirely balanced.

The alternative is that some compromises, devised with goodwill and with a proper recognition of the importance of these matters to the respective parties, be made in suitable terms so as to reach a fair and reasonable result, but this is rejected by BUL. It wants primacy of its interest over the competing interests of the joint venturers and their creditors and total or near-total immunity from compromise for its claim to a ninety-nine year lease and says that the financial harm to EIE of providing the rent concessions is immaterial. This is inconsistent with the whole tenor of the relationship. It was one of philanthropic support and not one of obligation, even to the extent of the benefactors' own financial harm.

Taken with the provision and subordination of the large loans that were made, such an entitlement would have provided BUL with the virtual certainty of a massive benefit while insulating it from any risks of the venture. Conversely, if as it happened there was an economic turn for the worse and the joint venturers were put in financial jeopardy, it could have caused the joint venturers grave harm at a time of their financial vulnerability. This would have been contrary to any underlying understanding that BUL must have derived from the nature of the enterprise or what was said, yet it was the recurring assumption of many of its arguments. The implication that BUL was to share in the risk of the venture was much of the same order as that which it relies on relating to the long tenure expected for a university. It was only that in the beginning the risk appeared negligible.

It is true that the goal of a long-term lease had some special enduring quality so that the parties continued to work towards it, but with the changes in the means of achieving it came a subtle difference. Unless some other means could be devised, the need to provide unassessable but obviously substantial concessions and the ability of the joint venturers to afford them made the prospect of long tenure, or of any lease at all, less secure, but the assurance of the genuine endeavours of the joint venturers to try to achieve it remained.

It was generally understood, though not specifically expressed, that this necessary radical departure from the original plan was designed to overcome the consequences of BUL's financial failure. This was largely not its fault nor was it the fault of the joint venturers who were doing all they could to help it. It was also understood that this heavy burden cast on them had not been part of the assurances upon which BUL had undertaken the venture. The joint venturers would not have been in breach of any commitment if they had simply declined to provide funding or any rental concessions of the magnitude required or to erect the campus buildings from their own resources, and the force of external factors would have terminated the whole arrangement. Their adoption of a new scheme did not mean that all former assurances were totally abandoned, but equally it did not follow that their pursuit of the same goal as before meant that the conditions were to remain the same.

BUL's alternative argument for total freedom from any conditions as the result of the special quality of the constant goal is that the paramount purpose of all this activity was to provide it with a lease, and that the concessions that were finally found to be necessary were merely a means of adjusting the feature of rent, which was insignificant to entrepreneurs of the stature of the joint venturers. Again this misstates the emphasis of the relative values applying. The grant of a lease was certainly the point of the exercise but, as it has been explained, the joint venturers' own commercial wellbeing was of the same order of importance, the more so because of the very large cost to them of what they had already given.

As it turned out, because EIE sought to fulfil this philanthropic goal as far as it could, a substantial lease with concessions was later offered, but it was rejected on the basis that it was not enough. The difficulty with BUL's justification of this lies in this attempt to make the grant of a long-term lease at any cost to the grantor an unqualifiable imperative of the arrangements between the parties, totally independent of the financial state of the scheme of which it was a part and of the capacity of the grantor to afford it. That was not the way in which it was understood at the time. This concept of affordability will be discussed when its significance becomes clearer.

The joint venturers turned their attention to devising the terms of the lease that would provide BUL with the concessions necessary for it to be able to accept it. EIE was having difficulty in obtaining an assurance of tax relief in respect of the transaction that would have made the concessions more affordable, and it seems to have taken the view that before they could be finally embodied in a binding lease, their extent had to be reasonably foreseen and definable in order to enable it to assess whether it could afford them.

Though it had always been an implicit element of the provision of financial assistance or concessions, it was at this later time that the factor of affordability became more germane in a practical way and of most importance in the history of this period. A lease with large and particularly indeterminate concessions would have had a seriously adverse effect on the sale value of the reversion. As this represented a saleable asset as a means of recoupment of large outlays and satisfying its creditors, any serious depreciation in its value in this way had to be evaluated and treated cautiously.

With the frustration of the original plan, while the joint venturer's persisted with their intention to provide the university with a ninety-nine year lease, the most relevant part was the conditional nature of that intention. Their continuing genuine desire to find a way to provide a lease is acknowledged, and they tried to do so. There was however no talk of BUL's entitlement to a lease. That would have introduced an alien element into the atmosphere of co-operation. The grant of the lease was part of the prevailing line of positive discussion so that, given the goodwill of the joint venturers, things were said and actions were taken in the optimistic expectation that the necessary conditions would be fulfilled and it would eventually be forthcoming, but they did not imply any absolute element.

BUL's unquestioning co-operation in the various attempts to find a way to give it a lease was in accordance with what would only be expected in the circumstances. It entered into arrangements that were not strictly orthodox because, given the genuineness of the joint venturers, it was assumed that it had a lease when that was only their intention. So when a lease of part of the commercial area of the campus had to be provided to Westpac, in anticipation of the result it was decided to have BUL enter into the transaction as sub-lessor under an agreement for lease. This was a convenient way of doing business in a period when matters were unresolved so that the formalities could be not be strictly observed but goodwill led to reasonable optimism of the result that was assumed. It was based on the common confident expectation of a successful outcome. There was a reasonable implication that if in the end a suitable lease could not be arranged, these premature anticipatory actions, such as the grant of sub-leases by BUL, could be reversed or re-adjusted. For example, if BUL had accepted the lease later offered by EIE, then everything would have fallen into place, but since it did not there has been no suggestion that these affairs are not adjustable.

This was not an unequivocal expression of any certainty of the outcome. If such an interpretation were genuinely held by BUL, it would have completely misinterpreted the joint venturers' actions that merely reflected their good intentions. These were the equivalent in principle of their allowing BUL into rent-free occupation despite the absence of a lease.

In any case, in the factual context in which they were made the implications to be drawn from these statements and actions were at their best equivocal as to essential issues, particularly the condition of affordability, and were probably well understood to have been provisional only, though supported by genuine goodwill.

Conversely, the Bank's argument that the joint venturers' willingness to grant a lease was understood to be dependent on agreement as to the terms of rental and other details is not quite a correct version of the position because it too is incomplete. They undertook to grant the lease and to that end to provide the concessions that would enable BUL to accept it, providing they could reasonably do so. The difficulty was not a matter of agreement because the parties were generally agreed as to what was intended. It was a matter of finding the result that met all the competing conditions.

As it will be seen, in 1993 when BUL's income improved and BUL's capacity to pay rent in the future could be reasonably anticipated, Mr Ogawa, an EIE employee who was highly motivated was able to produce a set of terms that reasonably did so. The failure to finalise the lease stemmed in part from BUL's disregard of EIE's reasonable protection of its own interests in the critical state of affairs of the time, but this does not mean that it was not in accordance with the full understanding that had been engendered. The Bank's further argument that the terms of any such understanding were too vague to found a right in BUL will be discussed later.

BUL's answer to this is that the formulation of and agreement as to the rent was not a precondition to the grant has validity to a point. There was no difficulty in agreeing as to the appropriate measure for determining the rate of rent, which was to be such as to enable BUL to survive. That was in accord with simple commonsense as well as the joint venturers' goodwill, but there was the other dimension. The joint venturers had to be able to afford the concessions that would allow that rate, and the first answer did not mean that they would be unlimited or more than could reasonably be afforded. There was no uncertainty as to the way in which the rent should be fixed but whether the uncertain amount of the concessions could be afforded.

In further support of its claim that agreement was irrelevant to EIE's obligation, BUL refers to the undoubted special relationship between these parties and from this draws the reasonable inference that their arrangement was different from the usual case where agreement is necessary to a binding obligation. This special relationship of support and co-operative philanthropy certainly had an effect that distinguished this from the usual case where the parties negotiate at arm's length and where more formal manifestations of conditions and qualifications, of the acceptance of specific obligations or the grant of rights, and of the fact of agreement would be necessary. However, the proposition conflicts with BUL's other proposition that because limitations on the assurances of the joint venturers were not specifically expressed or mentioned they did not exist or had no force. This will be discussed later. It is certainly true that there was a special relationship. In addition, estoppel does not depend on any agreement.

Whatever the basis of a cause of action of this kind, the obligation of the person responsible for the promise or representation does not exceed its proper content Any conditions or limitations implied through that same special relationship are as essential to that content as the promise or representation itself. Here, it was known by implication and accepted, though it was not expressly stated and agreed to, that the undertaking was to make only such concessions as could be afforded. Because of the good faith of that approach, BUL is correct in its proposition that express agreement in specific terms was not seen as an issue. But since the mutually satisfactory level of concessions had to be resolved before a lease could be viable, and they could be determined only in terms of a rental and other terms that the parties accepted as conforming with the total arrangement, it is not to the point and not entirely correct to argue, as BUL does, that because no witness said that the formulation of the rent was a precondition of the lease, it was not so. In the special relationship that existed, it would not have been necessary to say it, and it probably would not have been said. However, this point is an irrelevant distraction. This is different from the case where a transaction fails because the parties could not agree on the criteria controlling the result. If BUL had reciprocated EIE's goodwill when a suitable lease was offered, their failure to agree on the implementation of the criteria would have merely established its impossibility at that time. The rejection of this argument of the Bank is of little import.

When these changing events cast uncertainty on the prospects of the concessions, the joint venturers, and particularly EIE, were slow to produce an alternative formulation that could resolve the conflicting interests. One further problem that must have faced EIE was Bond's default in its contributions to the venture and especially to the large and unexpected burdens of providing indefinite funding for BUL and of paying for the construction of the university buildings. In EIE's own state of financial difficulty it must have been uncertain as to what concessions on top of these it alone could afford to undertake.

Although BUL's financial uncertainty was a serious contributor to the uncertainty and it had no solution except its request for concessions, it pressed to have the lease granted. As practical and intelligent people, its representatives' awareness of the rumoured problems of the joint venturers made them anxious to have this security. It is likely that they recognised that the original scheme had failed, but they must have been encouraged by the continuing goodwill of the joint venturers in pursuing alternative means of providing it through new strategies and by the assurances of support that they received, but they still knew of the risks.

There could also have been a further reason for delay, though it was only of minor and temporary importance. Because of its failure to meet planned targets and because its continuing demand for operational funding could not be sustained indefinitely, there must have been some doubt as to BUL's prospects of survival. In the risky business of setting up the first private university in Australia, until that became more reasonably assured it must have made the joint venturers cautious as to how much further they should go in providing further substantial benefits lest they be wasted. BUL's winding up would have meant that a lease, granted to BUL on the favourable terms, would accrue to the benefit of another party whom they had no reason to benefit. Moreover, the new lessee might not be as suitable to the advancement of the rest of the project as they might wish.

This prospect of failure was rarely if ever expressly adverted to, probably because an emphasis on success was deliberately adopted. Nevertheless, until it was seen that the university would become viable with continued support, the pace of action could have been influenced by this factor. The only relevant result of this was to contribute temporarily in delaying the joint venturers' confidence to grant rental concessions in the lease, and it had no other effect on the final result. In any case it never came to the point where this alone delayed the drafting of the lease. Although it was a contributing factor, it was substantially if not entirely subsumed in the delay caused by the difficulty in trying to devise a mutually affordable rental formula that was caused by the same uncertainties.

In an attempt to disparage the idea that the intention to grant the lease was conditional upon some reasonable prospect of its survival, BUL suggests that if that were so, then at that time it would have been left without any expectation upon which it could rely until its survival was established. That is not so. It had a conditional expectation upon which it could rely and which would have served it appropriately if the result had turned on that point. This was fortified by the further justifiable expectation that the joint venturers would continue to provide their philanthropic support to the extent indicated above. These were far from fanciful or light grounds, but they did not exclude some risks as BUL's case would suggest.

As an alternative course it would have been possible to make the university's survival a condition subsequent in a suitable lease, but that would have been a very embarrassing term to insert in a registered lease that would publish the uncertainty as to the university's prospects to all who would see it, and a difficult and unusual one to formulate.

Unfortunately, towards mid-1989 when the university was due to open, it had failed to find any independent finance and seemed unlikely to do so. The enrolment of the first intake of students was far below the projected figures and although the numbers increased, this deficit continued for the whole of the relevant period. For example, its planned enrolment by the end of the first stage in 1991 was 2500, but in the seven years to the time of trial its highest enrolment had been about 1650. It is said with some justification that this was not its fault because the public's perception of the insecurity of the university's future raised by Bond's growing problems turned off the interest of many potential students. However, it was probably compounded by BUL's own poor financial management that damaged its credit with suppliers as well as inducing the joint venturers to impose severe constraints on its funding. However, the relevant problem was not a question of its fault. It was simply the result of its participation in a venture associated with Bond for all the advantages that it would bring, and the accompanying disadvantages had to be accepted as part of the risk, even though they may not have been adequately considered at the time.

This manifest disappointment as to enrolment and financial viability during the whole of the relevant period must have had a destructive effect on the financial planning of the scheme that included the provision of a lease with only modest concessions. It would be 1993 before BUL would have even a small surplus in its accounts, and then only because it was not called upon to pay rent or to contribute to maintenance and repair costs. This state of affairs did not admit of any reasonable assessment of the concessions that would have to be written into a lease. Nor had it been the basis of the assurances that were made under a scheme whereby the need for concessions was to be considerably less.

Nor did it assist towards their affordability by the joint venturers. Contrary to all the plans on which the assurances had been given, it meant that the joint venturers and particularly EIE had to supply from their own resources very substantial funds for the university's operating costs until it could support itself. The most disturbing feature must have been that the extent and duration of both the funding and the concessions could not then be evaluated, which with Bond's financial misbehaviour and its own financial stresses must have caused EIE some indecision. This is the only reasonable explanation for its failure to act, for it was certainly not due to any lack of good intention. This serious uncertainty again changed the whole picture relating to the lease and justified its postponement until BUL's chances of survival and the joint venturers' capacity to provide the necessary concessions could be assessed. In the meantime, consistently with their genuine goodwill, they continued to provide encouragement and other support of a more practical nature.

It is further claimed that these manifestations of continued commitment amounted to a confirmation that BUL could expect to be there for ninety-nine years or at least a long time. In support it is argued that the alternative would have been for the joint venturers to say to BUL in effect: "Well, things are very tough. You should have known that you had nothing from day one and never did.", and that this was contrary to the commitment that was shown. This is similar to an earlier argument and is plainly wrong on both counts.

The commitment was that BUL would have the continuing support so far as it was affordable, and this applied to the goal of long tenure. This did not imply that BUL had nothing. It had a justified but contingent expectation of a lease; and it had a justified expectation of the genuine goodwill of the joint venturers. Together, these gave a very valuable, if contingent prospect even before the benefits had been provided, and those that were actually provided and offered were very substantial, even if in the misadventures that followed the benefits were not all that were hoped for. This line probably reflects BUL's persistent refusal in argument to acknowledge the existence or at least the effect of the condition that was acknowledged by its witnesses.

As further support of its attempt to devalue the condition, it advances the argument that because the plan of the joint venture, while it lasted, always intended that this university be the one to fulfil its purpose, and because the buildings that were erected were of a style and quality that matched that intention, there was no other use within the plan to which the land could be put than occupation by this university. This, it is said, implied the certainty of the grant of a long-term lease to BUL and contributed to the justification of that expectation.

This proposition was raised often in BUL's argument and in the explanation of some witnesses as to how, despite what the joint venturers clearly implied as to a limit to their philanthropy, they came to an expectation of entitlement to a lease as a matter of inevitability. The facts are broadly correct but the conclusion is defective. Undoubtedly the establishment of this university was the strong intent of all the parties to the venture, so far as it went, and while it lasted they did not pursue or even consider any alternative result. The lease that EIE would later offer was in conformity with this intent. However, until negotiations failed irretrievably they never reached the point where an alternative course required consideration, but if the exigencies of the situation demanded it, occupation of the campus by another university was plainly an alternative option to be taken up if this university had palpably failed. The factors mentioned in BUL's submissions were certainly consistent with an intended grant of a lease to BUL, but that was not inevitable as claimed and they did not detract from the condition of affordability. Particular care must be taken to observe this distinction.

The manifestations of limits to the support that would be provided are in direct conflict with the picture of unlimited support to any necessary extent that BUL tries to paint. While they never failed to produce continuing funding, the joint venturers showed express reluctance to undertake this burden for very long, much less indefinitely. In plain terms which were never contradicted, they said that their support of the university had not been part of the original plan and was not part of their responsibility. For example, they said this on 26 May when they undertook to continue funding but limited their promise to the next eight weeks. They also strictly limited their guarantees of future funding until forced to extend them by threats by BUL to wind itself up.

This is another example of the understanding accepted by all parties at the time that any assurances had to be read in the context of the scheme under which they were made, that they were not absolute and unconditional, and that they were vulnerable to the vicissitudes of the scheme. Most relevantly, the joint venturers' reluctance to provide funds impliedly emphasised the constraints imposed on their assurances by their capacity to afford them. Conversely, the fact that they continued to provide them and their other expressions of support also implied their continuing goodwill and that they would try to find a way to provide the necessary help, but no more than that. BUL's arguments relating to these gestures ignore the former and draw too much from the latter.

It has been suggested in evidence that while the written material certainly exhibits some reluctance by the joint venturers to give an assurance of indeterminate funding, their representatives gave personal spoken assurances, never recorded nor noted in writing, that despite this, "underneath it all there was goodwill towards BUL and that the joint venture parties would not let BUL fail, and in the event they did not" (T. 239). So far as it goes, this is acceptable if it is understood as showing that the joint venturers' warnings as to the limits of their philanthropy were softened by genuine assurances of goodwill and support in averting failure, so far as they could reasonably afford to do so. It is not an acceptable interpretation if, contrary to the prevailing circumstances, read in the total context of the matter, and contrary to the mood and implications of the written restrictions, it is suggested that they were unconditional assurances of unlimited support for an unlimited time, if that were necessary, unaffected by the financial condition of the parties.

This would ignore the whole context, which was much more complicated than that. The clear and powerful reservations made formally in writing from the joint venturers themselves, as distinct from informal verbal comments by their representatives on the Council who may have been expressing their personal opinions as councillors, would be meaningless. They made it abundantly clear that the donors were not the source of an endless supply of benefits contrary to the prudent preservation of their own financial health.

Conversely, the Bank's contrary claim that these limitations strictly defined the extent of the support that would be forthcoming cannot be fully accepted because of the effect of the element of goodwill as reflected in their spoken assurances and general attitude. The true position lies in the sensible middle ground described above, and their conduct shows that that is how it was understood by most interested parties at the time.

The above reference to the fact that in the event the joint venturers did not let BUL fail does no more for BUL's case than to show that in respect of the provision of operating funds EIE found that it could reasonably afford to provide them as far as they went or, more accurately, that it could not afford not to provide them while they remained as limited as they were. This does not advance its case on the issue whether after providing all the other benefits it could have afforded to provide more benefits in the lease than it offered. But there is another implication from this point. Since despite its own difficulties that strengthened its reluctance to do so, it still continued to the end to provide the funds, it should be more fully appreciated that, as BUL claims, EIE maintained its genuine goodwill throughout.

This is of particular importance in the appraisal of the quality of the lease that was later offered in respect of its reasonable affordability. If it had stretched its resources in respect of funding, there is no reason to believe that it did not also do so then, though its capacity to afford more would have been weakened by the provision of funding and the other financial loads it had to carry. There is no answer to this in the Bank's control of EIE's affairs for it permitted EIE to provide the funding and even provided the money for it to do so, and the terms of the lease that was offered were sympathetic and in accord with the limits on EIE's capacity.

At the same time as they imposed limits of the amount of funding to which they would commit themselves, the joint venturers made public expressions of support of the university. This was badly needed to provide it with some credibility in its search for independent funding and to avoid further depletion of the confidence of potential students and creditors. Apart from its uninspiring enrolment level, the further emergence of public knowledge of the financial weakness of the joint venturers themselves, and particularly Bond, was continuing to have a deleterious effect on confidence in the university.

On 15 May, 1989, Mr Bond had tried to repair this by informing the Council of the joint venturers' strong commitment to its welfare, which of course was true. It is noticeable that he gave no unconditional assurance. Nor did he express any condition to the commitment, but the purpose of the statement was to give encouragement and the expression of continued commitment, albeit one understood to have limits, was of value to BUL in those circumstances. The nature of its arguments on these expressions of support that they had to be all or nothing is just not right since the intermediate position had a logical point and considerable value.

Later, when agreement was reached to provide additional funding from time to time, the joint venturers continued to accompany it with public declarations of support. The same considerations apply to them. Though it is likely that at the time of these events some of its witnesses had a somewhat vague recognition of these things, these public and private expressions of support are now claimed to have inspired an expectation that such support would include the grant of a long-term lease. There must be a strong suspicion that they well knew and connived at Mr Bond's and the others' deliberate intention to raise public confidence by this means, and that they personally made a much more restrained appraisal of their public message. The private messages of goodwill were no more than that. As with their understanding of the effect of the assurances, if the claim of these witnesses is limited to saying that such a grant was the genuine goal but that it was subject to the same conditions as applied to those assurances referred to above, then it was perfectly reasonable; but if more is suggested then it is not justified either in the context or in reason.

Consequently, the message carried by the public and private statements of support was not in conflict with implications flowing from the joint venturers' express limitation of the future funding that could be expected when the two were read together. They indicated to responsible members of BUL that while their assurances were honest they were not absolute and unlimited. They were subject to the existing qualifications, which were already well understood. As most of the university Councillors had some knowledge of their financial stress that exacerbated this added unplanned burden, the reconciliation of these superficially conflicting messages should have been obvious, and in fact in most cases it was well understood..

Statements of encouragement must be distinguished from assurances intended to be relied on as a virtual promise, for while a philanthropic party may be generous with its encouragement, it might well be less forthcoming with its assurances of the delivery of actual benefits. In their evidence, some of the BUL witnesses failed to recognise this distinction, at least in their evidence, and tried to use expressions of encouragement to fortify such assurances as were given or to modify the conditions behind them. In a suitable case such an effect is possible, but that was not what happened here, and the witnesses realised that. This, incidentally, accounts in part for their anxiety as to the lease despite the encouragement, and for their pressure to have it resolved notwithstanding BUL's incapacity say when it could pay a commercial rent.

Subject to the circumstances, to be binding, assurances should usually be clear in the case of purely gratuitous benefits, the more so when the total benefaction involved is very large, and even more so when it is suggested that it may be at the cost of serious financial harm to the benefactor. This is magnified further when the benefactor is known to be in serious financial difficulty. All of these operated in the present case so that unconditional assurances to be relied on would be found only if they were very clearly given. But on the evidence it is not necessary to have recourse to this measure: it is enough if these things are merely read sensibly and in their context. Where the evidence depends on subjective interpretation, consistent objective evidence will be sought, especially where it has a retrospective element.

BUL continued to fail to attract its projected enrolment but it was permitted to remain in rent-free occupation of the campus while the uncertainties unravelled themselves through time. In that process, partly because of the stigma of its association with Bond but also partly because of its own poor financial showing, it abandoned hope of finding an independent funding source in Australia, though EIE unsuccessfully continued to try to obtain it from Japanese sources, first in the form of a loan to BUL and then by borrowing in its own name to on-lend to it.

At this stage, this lack of resources was forcing BUL to borrow $750,000 per week from the joint venturers for its running costs, which of course did not include rent or repairs and maintenance. Bond's failure to contribute meant that EIE was the source of these funds which in turn it was forced to borrow from the Bank. This seriously strained its philanthropy which to its credit it maintained, but that did not deter BUL from pressing for a lease without any regard for its difficulties.

In this it has been consistent. In its submissions, it has addressed all the issues with a single-minded focus on its own problems, which at that time were certainly severe. The many crises that could have been fatal to its very existence would understandably have produced an egocentric emphasis. This has the disadvantage that in its presentation of the relevant circumstances in which statements were made and assumptions adopted, it has given little or no balanced attention to the legitimate interests of the parties taking the risks by providing the benefits, that is, EIE and the Bank.

It is now convenient to discuss the factor of affordability more closely. For relevance it is desirable first to be mindful of the circumstances of its application. In this case estoppel depends upon reliance by BUL on assurances or promises or the like as a result of a reasonable expectation engendered by the respective parties to be estopped. To be reasonable, that expectation must take into account and give proper value to such conditional features of the promises or assurances relied on as BUL knew or should have known, and in the present circumstances this includes affordability.

Its basis is that it was an integral part of the assurances or understanding said to be relied on. (In this there is some analogy with the reasoning behind the basis for reference to the objective expectation of the parties to a contract. See Contract Law: Fulfilling the Reasonable Expectations of Honest Men: Lord Scarman (1997) 113 LQR 433). Consequently, for its full meaning, it should be read together with them and interpreted in the light of the whole transaction, including the fact that the project was part of a risk venture for profit to the joint venturers. Though it had been an implied element of the earliest arrangements, it had little practical relevance until this time when the benefits assured became indeterminate but very large and the benefactors had other very large unexpected costs on top of their own seriously declining resources. Its meaning did not change, but, for example, as the fortunes of the joint venturers declined, what they could afford obviously diminished; and the more the unrecoupable cost of this venture that was already spent, the less they could afford to spend further on it.

When they were asked, several university Councillors in general terms acknowledged this implied condition as applying to any assurance as to the lease and the concessions relating to it. As might be expected, most treated it as being in the 'of course' category though they may not have given it the attention it deserved. Because it was largely a product of inference from the broad range of the circumstances, it is not defined by sharp edges; but its broad thrust is reasonably clear. To borrow from BUL's own description in argument as to the extent of concessions it expected, the concessions to be supplied by the joint venturers was to be "according to (their) means, but not so much as was detrimental to (their) continuation as a business". It was not something the parties discussed directly and so its precise content was never inferentially defined by what was said.

This measure, quite correctly proposed by BUL as a reasonable inference from the circumstances in respect of its own affairs, it would deny to the joint venturers in respect of theirs. However, their wellbeing should have been understood to be at least as fundamental to them as that of the university and in these circumstances, it would have been unrealistic and unreasonable to expect that the preservation of the beneficiary was intended to be given priority over that of the benefactors. If anything, the implied limitation against self-harm should and was understood to prevail in the end over general assurances, though some reasonable flexibility would be expected to operate before that point. This means that it would be unreasonable to interpret them to imply that they would apply even if it were "so much as was detrimental to (their) continuation as a business". The effect of this was that the concessions required by BUL beyond what was finally offered to it were not covered by the assurances if it would have been unacceptably harmful to the joint venturers to provide them.

BUL correctly points out that the assurances were never expressed in conditional terms, but again this ignores the influence of the factual background. In earlier optimistic times, the conditions were not usually relevant because the proposed benefits were small and affordable within the scheme itself, and they surfaced only when it failed and other material problems intruded. Then they were "part of a set of assumptions that underpinned other discussions that were going on...rather than...something that was the subject of specific debate". This very apt description by Ms Nosworthy of the assumptions concerning the anticipated length of tenure applies equally to this conditional feature. Even in the later and more critical situation, they remained unexpressed but were already well understood. Besides, since at that time EIE was sensitive as to its financial reputation it probably would not have been anxious to publicise its difficulties by such a reference and the tone of any discussions seems to have been designedly positive and encouraging.

Unfortunately the university Councillors who admitted to recognising this conditional feature were not taken in evidence to their understanding of its effects on the plans for the lease. Typical of this is the evidence led from Mr Schultz. Though in error on some minor issues, he was very honest and realistic and freely acknowledged his understanding of its existence. Yet his evidence reads:

"MR MORRISON: Going back one step to March '88 when you first started on this council, and given your concern for the university running up debts and incurring costs and the lack of documentation, for want of a better word, in relation to-----?-- Proper management processes.

Much better than mine. If someone had said to you in those early days that the university had no right to stay on the land, to expect tenure or have tenure----?-- I would never have become involved in the first place. I mean, it was my chance to be part of history. I mean, I was excited about it and wanted to be there and have something to do with it. It was something I was excited about and interested in and I wanted to play my part.

Did your understanding about the university's right to tenure play any part in you continuing?-- I am not quite sure I understand the question exactly, but---

I asked you if someone had said the university had no right to expect anything and you said you wouldn't have been there----?-- That's right, I wouldn't have. It was never discussed in that - I mean, that was an issue that never got discussion that we didn't have right to tenure or that we could get kicked out."

The question, so selectively framed in extreme terms, is patently wrong in its premises. It should have been: "If after so much had been done towards the establishment of BUL, someone had said that the original basis for the grant of the lease had failed but that without any guarantee of the result the sponsors intended and were genuinely committed to trying to provide tenure so far as their financial circumstances reasonably permitted, what would your attitude have been?" It is likely that the expected response was the reason why such a pertinent question was avoided in favour of one that had no relevance.

Nor were these witnesses taken to the precise point of explaining how the difficulty of uncertainty and affordability was to be overcome and whether it was expected that the benefits would be provided, even if they could not be afforded and would cause harm to the donor. The evidence was left as a set of generalised statements of comfort in the expectation of a long-term lease, but properly the only comfort that could have been taken was in the continuing genuine commitment of the joint venturers to try to resolve the problem. That is what happened.

In trying to avoid the effect of this factor as reinforced by the joint venturers' express limitations on present funding and their reluctance to commit themselves to its future supply, BUL has sought to confine it to the sense of their simply being able to find the resources to provide the necessary concessions, no matter how expensive and damaging to them that might have been. It says that it was entitled to believe that they had sufficient funds for that purpose, so that there was virtually no risk that this condition would be an impediment. This would have the effect that the issue of affordability would be meaningless, which is the intention of the argument. To be fair, it is desirable to set it out as it was presented:

"4.2 At the time the statements were made, and the enterprise embarked upon, both EIE and Bond Corporation were companies of some stature and were financially well off. Strains and tensions which became evident later had not then surfaced. Consequently the University representatives were dealing with corporations that a high profile in the development area, apparently unlimited access to funds and were giving all the signs of being deeply committed to the project. In those circumstances one may ask rhetorically why it would be unreasonable to believe what they said. Indeed, more than one witness has commented on the fact that an element in the dealings was the apparent stature and financial capability of the joint venture partners.

'Now, when this project was set up it was set up at a time when Bond Corporation was, you know, been given an AO and was sort of Australia's hero, and EIE was a major Japanese company with significant investments in Australia. Both of the companies appeared to be, not only solvent, but spectacularly successful and the university was conceived against the background of those two companies investing in a large project on the Gold Coast of which the university was a centre piece. It had a lot of publicity.'"

All of this evidence is correct and it merely reveals the error of judgment and the failure of some but not all Councillors to consider the adverse contingencies. It is true that the joint venturers were deeply committed to the project, but that did not exclude from consideration a prudent recognition of the possible pitfalls in the event that the fortunes of the joint venturers waned, nor that the plans for the university were not part of a risk venture that might fail or be modified if it proved to be unreasonably costly or financially damaging. In fact, these things were probably generally understood and any surprise sprang up because it was not expected that the catastrophe would fall as heavily as it did, if at all.

No doubt it underrated the risk because of the perception of the sponsors' substantial wealth and its representatives' critical scrutiny may have been dulled by this. They would have had a justifiable expectation of substantial philanthropic support while the joint venturers remained rich, and they actually enjoyed this in some abundance, but even then the implied condition would have excluded relatively excessive expense. This is confirmed by the conduct of the parties even before the financial strains and tensions appeared. The joint venturers insisted on limits and BUL did not demur.

It is necessary here to remember once more that a lease with concessions was in fact offered and at best for BUL's case, its only complaint could be that because of EIE's own financial needs those concessions were not as extensive as it wanted. This complaint is that it was entitled to have its total requirements to ensure its security even if that could cause harm to the benefactors and the interests of their creditors, providing they could find the resources to provide it. Neither the assurances nor the circumstances ever supported such an incautious view. The argument is in error in treating the assurances as isolated from the restrictive indications or as abrogating them when in fact the two should be read together.

It sometimes seems that these arguments tacitly assume that the joint venturers failed completely to offer any lease or concessions. That of course is not so. With the Bank's approval EIE offered a substantial lease with substantial concessions because it wanted to help the university and this honoured the assurances given. Consequently these arguments must relate only to the question whether the limitations on the terms of the offered lease were justified by the factor of affordability at a time when EIE was in serious financial difficulties but still exercising its continuing goodwill. BUL says that this was not enough and that it had to provide the university with a ninety-nine year lease and all the concessions it might need, even though these may have caused it further serious financial harm.

Even at the time when the enterprise was first embarked upon and before any "strains and tensions" appeared, there were limits. The arrangement required that BUL would pay an "arms-length" very substantial commercial rent from the commencement of the lease while the sponsors were to provide little benefits from their own resources, and they quickly made it clear that their support in that respect was limited. At that time affordability was not so much related to their financial health as to avoiding excessive leakage from the profits of the venture. When they remodelled the scheme, their express reluctance to assure future funds reinforced the original understanding of limits on the level of support.

BUL argues that these were neutralised by casual assurances of their representatives on the Council that the necessary support would be forthcoming, but the contrary would be equally valid. If the two messages are read together, the most acceptable construction of the whole is that the joint venturers would continue to be fully supportive within affordability. Though their genuine expressions of goodwill emphasised the positive side, these were not understood to have changed anything. It was just that the prevailing mood of optimistic endeavour did not direct much thought in this direction. When BUL needed further significant funding and concessions, the limit of affordability meant that the further funding sometimes had to be extracted by threats and then only sparingly and grudgingly. By then this constraint attracted more attention and anxiety because the financial insecurity of the joint venturers themselves was generally known.

It might be remarked parenthetically that this elevation of affordability's importance did not take anything from BUL's 'entitlement' for the condition was always part of it and only attained that importance when BUL required much larger concessions than had ever been contemplated when the original scheme was formulated.

From this history it is plainly immaterial that when little in the way of funding or concessions was anticipated, Bond and EIE had the trappings of success if that perception did not remain when later assurances as to the provision of substantial benefits were given. This does not even touch the issue whether an assumption of the continuing future success of such entrepreneurs was ever valid.

The joint venturers' imposition of constraints on funding and BUL's failure to invoke any entitlement is a factor in the above analysis in showing the consistency of their respective conduct with the mutual understanding that support had to be affordable.

BUL may have taken the view put in argument that this constraint was merely the action of 'profitable giants' with 'bottomless pockets' that were writing these letters only 'to bring BUL to heel' in respect of its irresponsible spending, and had nothing to do with their own capacity to afford the funding. If it did have this view, later events showed that it was both egregiously wrong and unjustified. Indeed, this error may well have been at the root of some of its attitudes that are otherwise logically insupportable. It would have miscalculated the financial strength of the joint venturers, which was totally inexcusable after rumours of their problems emerged, and before that it was part of the risk of associating with parties of this kind, as circumstances have so dramatically demonstrated.

If BUL really believed in its 'entitlement' to a lease, that may have been the product of the same misconceptions, perhaps fortified by the equally mistaken belief that the assumed essentiality of its university's presence to the profitability of the whole venture would have forced the joint venturers in the end to give it a lease with the concessions it demanded, whatever they said in the meantime.

Though it was never indicated by the joint venturers, by this misguided route some BUL members could have persuaded themselves that the issue of affordability, though present, was probably marginalised and had no real or practical meaning. Others however took a more level approach and were increasingly concerned by the declining fortunes of the joint venturers. This was the reason why they were anxious to obtain a lease while understanding the difficulty in providing it, particularly with BUL's overall financial uncertainty.

The measure of affordability could not have included the Bank's providing EIE with the resources, to its own prejudice, to provide the benefits, for it could not have been thought that it bound itself to such bounty. It was the principal creditor that would suffer loss from any shortfall of payment that would be magnified by such a preference to BUL, and although it co-operated with EIE's philanthropic plans, it never assumed the mantle of benefactor in its own right. On the contrary it expressly rejected it. It is probably also relevant that it had duties to protect the interests of BUL's other creditor banks that had entrusted it with the management of the arrangement with EIE.

The concept of affordability is less restricted than BUL submits. The term has been adopted during the trial as a compendious description of this limitation. It was not used by the parties during the transaction and so its meaning does not depend on the definition of that term but is to be inferred from the circumstances that led to the understanding of those Councillors who acknowledged its existence. This assumes that there would be a philanthropic factor at some cost, but not so large as to sacrifice the interests of the joint venturers or their creditors. Within these parameters it becomes a matter of reasonableness and goodwill.

As it has been remarked, the argument also misses the very important point that BUL always knew that the development of the university was part of a risk venture, in which its own prize was the acquisition of a substantial operating university through the financial help of its co-venturers. The argument assumes that it was to be entitled to a guaranteed result of great value from the venture without any participation in its risk, while those who were providing it with considerable benefits were to assume all the risk, even at the cost of serious loss to themselves and their creditors. But that aside, the measure of affordability that was mutually understood was not as BUL submits, nor was it entitled to have the perception suggested, if indeed it did have it.

One of the most serious dangers in BUL's argument in this area lies in retrospectively viewing the extent of the need for concessions as it can now be seen, which has the virtue of certainty that was absent at the time. The lease was never granted because, except for the offer that was refused, it was not possible to formulate a rent clause that could be seen at the time to meet the needs of all parties, including affordability. Valid hindsight shows that except in respect of that offer, it never was affordable, which is why there is no evidence whatever to the contrary. If it had been so, such was EIE's unquestioned goodwill that BUL would have had its lease.

On a related issue, it is true, as BUL claims, that no witness spoke of any conversation where an agreement as to rental was mentioned as a condition of the grant of the lease, but that is irrelevant. Parties to negotiations for an agreement rarely express an obvious condition that all the terms must be agreed to before they are bound by terms that are agreed. It is almost always implicit, and the circumstances known to the various parties in this case were certainly such as to carry that clear implication. BUL would never have thought that the assurances of the joint venturers' intention to provide a lease were free of such implicit conditions as agreement on rental simply because none was expressly mentioned.

It would also have been contrary to the prevailing co-operative atmosphere to introduce such expressions of reservations. The negotiations hardly amounted to arm's length bargaining as between strangers where every term not reasonably implicit would have to be spelt out. Before any discussions as to the terms, all assurances concerning a lease must have been understood to have been subject to the details to be worked out, though BUL's representatives justifiably believed that the joint venturers would be strongly supportive, as indeed was the case. To have expanded this to a promise of unlimited concessions beyond their capacity to afford them would have required a naivete that was alien to those persons.

In this way, the conditions naturally escaped mention for simple and practical reasons. Yet the evidence as a whole shows that they undoubtedly existed, though on some occasions some BUL representatives acted as if its interests were the only and unconditional consideration. This was not consonant with the general tone of the relationship and was really motivated by some desperation to extract as much security for the university as possible rather than by any belief in an unconditional entitlement. Its justification was simply essential need, and while that was enough, in the conflict of negotiation that took place, if guarantees of the university's welfare at any cost had been an available argument, it would certainly have been pressed, and it was not. In response to BUL's attitude, the joint venturers resented that their genuine efforts were not appreciated.

BUL goes further to suggest that the formulation of terms for its payment of rent at a suitable rate and within a suitable time was a requirement of higher clarity than had previously existed as a condition to the assurances of a long-term lease, but this too is wrong. When it was first discussed in broad terms that did not descend to such details, that did not imply, and nothing was said to suggest, that the normal incidents of a lease would not require agreement. It was certainly implied that so far as the joint venturers could reasonably afford it the rental to be set would be within BUL's capacity to pay it, but no more than that. When the original proposal had failed and the lease was delayed while discussion as to rental concessions were taking place, which with the admitted goodwill of the joint venturers is totally consistent with the essentiality of agreement for otherwise it would have been granted. Without agreement as to the concessions and the rent, the grant could not be made, and the inference of affordability was an essential part of it.

Similarly, BUL did not claim that these matters imposed a need for clarity beyond the original assurances and that the lease should be granted without any regard to them. For a variety of reasons, it wanted to have the security of the lease even if it could not afford to pay the rent. That would have had the effect of deferring the problem, and that would have allowed it to exert pressure for further concessions as it did with guarantees of funding and the subordination deed, for it believed that the joint venturers could not afford to allow it to fail. If it felt that the delay from the rental question was outside the common understanding, it could have raised the point.

These views does not diminish the importance of the earlier apparent financial standing of the joint venturers to the general understanding as to the extent of the benefits that might be forthcoming. While the circumstances implied that the assurances of the benefits contemplated their affordability, those same circumstances also included the support of two entrepreneurs with the trappings of wealth and success who spoke in terms of philanthropic vision and who had a strong financial interest in a successful result. Consequently, BUL was entitled to rely on them to lend their strength while it lasted to the provision of any necessary assistance so far as they could reasonably afford it.

They tried to do this. Their burdens that led to their offering less benefits than had been hoped was unfortunately increased by their own financial stress and the other unplanned benefits that they had to confer on the university. These naturally reduced the range of what they could afford in this direction. As well as supplying operational funding reaching $94m. and then subordinating and postponing the debt, erecting buildings at a cost of about $200m., and permitting the university to occupy them free of rent until the matter was decided, they conscientiously tried to find and finally offered an affordable lease that BUL should have found acceptable. But in the intermediate stages they were unable to do so since BUL's financial state was so poor and its prospects so unpredictable that the affordability of its needs were difficult to assess.

In a related argument, it is also said that "many of the witnesses were united in saying that the financial capability of the joint venturers had little or nothing to do with BUL's entitlement to occupy the land", and some passages of evidence were cited in purported support of this proposition. Aside from any doubt as to whether the witnesses may have been referring to the university's rent-free occupation in advance of the hoped-for lease, these passages have no value on this issue for a variety of reasons. The first is their contradiction by the acknowledgments of the condition of affordability that were made. This has already been discussed. The second is that some of the witnesses were simply trying to help the plaintiff's case or were rationalising as to their past state of mind. In some cases it is quite possible that they were simply revealing their own failure to think sufficiently about the matter at the time or were relying on the absence of discussion of it.

Usually the attention of the witness was not taken to the critical point where the joint venturers' financial capacity was cogent, that is, the allowance of indeterminate rent concessions at a cost that the joint venturers might not afford and at the possible expense of creditors. In addition, Professors Watts and Lovering did not deny the connection and said no more than that they believed that the financial support would be found in some way. This is a frank response that was fully consistent with the view that they were really relying on the goodwill of the joint venturers, which was perfectly valid, and hoping that they would find a way to produce a satisfactory result that could be afforded. These various witnesses seemed to recognise that this element of affordability was a factor in this. However, any failure on their part to appreciate the extent or significance of the danger does not exclude its relevance or cogency.

Ms Nosworthy seems clearly to have accepted that EIE would proceed with its commitment to BUL only so far as it was able. Professor Mortley did not know whether there was a connection between the lease and affordability or not. In his comment on the point, Dr Ishizaki discussed only the connection between the lease and BUL's own generation of income. And Mr Bond, Mr Lucas and Mr Fox merely took the usual opportunity to favour BUL's case through contrived interpretations of past opinions. When evidence was led from the university Councillors of their understanding or interpretation of the tenure that they were led to expect by the combination of the statements of support by the joint venturers and the expected longevity of a university, except for the selective examination referred to, they were generally not asked about or were carefully shepherded away from this issue of affordability of the concessions and its effect on their views, so that is largely unknown.

Where the witnesses spoke of their erroneous or incomplete views of the whole transaction, or where they spoke of only an artificially detached part of it, their understanding or interpretation is irrelevant.

Further, the remedy is available only to the extent that the joint venturers made a promise or representation to BUL as a whole, either directly or through its representative. In the latter case, any omission by the representative to convey a full and accurate account of the relevant message does not assist its claim. For example, an insufficient instruction in the history of the matter is a possible explanation as to why Ms Nosworthy seems to have continually underestimated the reasonable expectations of the joint venturers as to their recoupment of their outlays from the sale of the property, which depended on the rent that BUL would bind itself to pay. This in turn seems to have affected her expectation of the degree of sacrifice of their own interests that they were prepared to make, so far as that was to be properly implied from their assurances of support in the form of concessions. Of course, this is only speculation, but it would seem to be the best explanation why her demands and expectations paid so little regard to the resulting burden on them, despite their attitude of goodwill.

Conversely, their implied qualifications to later assurances as to rent concessions that were recognised by Ms Nosworthy as Chancellor cannot be disregarded simply because other members of the Council did not know of or did not consider them because their special interests were directed to other aspects of the Council's work or because they did not think about it.

At the opposite end of the argument, the defendants contend that after the failure of the first scheme this change of circumstances and variation of the arrangements between the parties under the new scheme meant that the earlier understanding as to the goal of a long-term lease was also abandoned. This too suffers from the same error of isolating selective parts of the transaction. It does not follow that their embarkation on a new scheme as the result of the failure of an earlier one signifies the abandonment of the earlier goal. Nothing direct was said to that effect, and in the circumstances of this case it would have required a clearer indication to dispel the firm understanding of the intended goal that had developed. Everything indicates that the joint venturers gave the university to understand that the provision of a long-term lease remained the goal and that so far as it was reasonably affordable they would provide practical assistance to achieve it.

At the same time, with this need to change the scheme to pursue the same goal, there were some implied variations in the arrangements affecting it, including greater emphasis on a affordability since the new scheme involved additional onerous philanthropy. The difficulty was exacerbated by BUL's failure to achieve financial standards planned under that scheme, leading to the need for greater assistance for an uncertain duration. Moreover, in the absence of any clear indication to the contrary, of which there was none, the greater the burden thrust on the benefactors by such a change, the less secure was the expected result in its original pristine form. But that did not mean that the goal did not remain the same.

In an alternative argument, BUL acknowledges that their financial reversals had the effect of limiting the extent of the expectation that they were raising, but argues that they "remained wholly committed to giving every support that they possibly could and (financially) so long as they could". This is correct in saying that they remained committed to giving support, but it overstates the extent of self-inflicted harm they undertook to tolerate. It would have been unreasonable to expect that in a state of distress they would provide the university with full security with the last of their available resources, or resources that they might need for recovery, or even resources that they might need for their general well-being. It also fails to have any regard to the heavy unplanned burdens referred to above that they did provide and the further benefits under the lease that they later offered. These things reflected a very strong commitment in action, but there had to be a reasonable limit.

BUL says that because of its strength and the joint venturers' deep personal involvement in the establishment of the university, it was entitled to believe the expectations that they created. This is perfectly true, but it is the content of those expectations where the controversy lies. It contends that these factors helped to fashion its belief that simply and without any relevant qualification a long-term lease would be provided, which has already been discussed. This commitment and involvement certainly justified comfort of genuine support beyond the level of an ordinary sponsor with unfettered inclination, but that did not mean total and unqualified obligation.

This argument assumes that there is only one alternative to a philanthropists' total discretion, and that is total assurance. The assurance of help to the extent of reasonable affordability is significantly greater than the former and significantly less than the latter, and it is this middle ground that is supported by the joint venturers' commitment and involvement.

Further, any expectations they excited should have been inferentially confined to reality from the limited nature of the benefits contemplated under the original scheme, and even more by the joint venturers' reluctance to commit themselves to continued funding and their disclaimer of any such obligation. These deliberate limits on commitment defeat any reading that it excluded or put unrealistic limitations on the condition of affordability. Such an interpretation depends upon a far more remote inference.

However, the strength of that commitment would have influenced the measure of affordability. For example, the joint venturers' conditional commitment to provide operational funding and rent concessions was a larger commitment than before and it changed the level of affordability that applied. At this new level it was more liberal, but even then it was still significant. As it turned out, the results betrayed no want of commitment for despite all that had been provided and despite EIE's serious financial state, it found a way to offer substantial concessions for a lease.

In this attempt to attribute primacy to its claim for a lease at any cost to the joint venturers, BUL refers to the evidence of many witnesses who in answer to confined and often leading questions said in effect that the grant was "a given" and that there was no issue on the point. The witnesses did not say that it was a `given' at any price. So far as they go within that narrow range, these propositions have some element of truth: it is the inference to be drawn from them that is not acceptable. It was commonly accepted by all parties, and never put in issue, that a lease was intended as fulfilling a very important need, and there was always an optimistic assumption that it would be granted. And indeed it was in accordance with this that EIE later made its offer as part of the continuing common intention to achieve the same goal, but it always remained equally 'given' within the common understanding that the condition of affordability had to be met. This whole argument is strange since, when they were asked, so many of the university Councillors readily conceded their recognition of it.

A similar argument says that BUL's 'entitlement' to occupy the land as lessee should not be found to be subject to implied limitations based on contingent events unless they were made expressly or clearly enough to put it on notice that if they occurred it would have to leave the campus contrary to the 'entitlement'. This begs the question by assuming the primacy of the 'entitlement' with a distinct and inferior condition whereas the assurances were to have operation only if and to the extent that the conditions, which were part of them, were discharged. It also supposes some unexplained subordination of the conditions because they were implied terms.

The argument further suggests that the university's actual occupation of the site attracted some circumstantial support for its claim for primacy of its `entitlement'. This is just not so. It certainly evidenced the genuine attitude of the joint venturers and their desired intention and optimistic assumption of a successful outcome, but no more than that is necessary to explain this feature. It was also essential to the university's progress and survival that it go into occupation as soon as possible, and it is understandable that this should be permitted even though the lease and its terms were still contingent.

These contingencies were not closed or reduced by the indulgence. When the occupation began, which is the time when its ramifications should be viewed, it was anticipated that BUL would sign a lease committing it to paying a full commercial rent with some modest assistance. Even when that plan failed and substantial concessions became necessary, the condition as to their affordability became of central importance, but the continued occupation did not conflict with it because that issue was expected to be resolved. It would for example have been appropriate on the chance of success, to have allowed the occupation as a temporary measure to give the university the opportunity to establish itself, even if in the end it were found that the problem could not be resolved. If the offer of a lease that was made had been accepted, the contingent nature of this anticipatory occupation would not have been questioned.

The point is that while the permitted occupation conformed with the joint venturers' deep intention to grant the lease if possible, it did not conflict with the existence of the condition that might reduce its benefits or, at the worst, terminate the occupation. It was not accompanied by the grant of the lease, which has negative implications strongly consistent with its contingent nature. BUL's reasoning assumes that the only alternative to the grant of a ninety-nine year lease with full concessions for its total security is not to grant any lease or concessions at all, and that allowing it into occupation is consistent only with the former. This is merely taking argumentative advantage of a practical and philanthropic gesture that accorded with genuine and optimistic but provisional intentions. Its provisional nature was well known and understood but omitted from the argument.

It will be useful to summarise the position at this critical time. Under this new understanding, the goal of a long-term lease remained, but it was subject to three relevant conditions or qualifications that were or should have been recognised. The first was that it would depend on BUL's reasonable prospects of survival to justify. The second had changed with the circumstances. The condition that BUL would pay a commercial rent remained but this was now to be relieved by concessions sufficient to ensure its survival, so far as possible. (See for example the evidence of Professor Lovering - T 180) . The third condition, consequent upon these developments, was that the joint venturers could reasonably afford to provide such concessions or, in other words, could afford to bear the loss in the sale value of the land that would accompany them.

Progress depended on the successful negotiation of terms that would marry such competing factors. Obviously they inter-operated simultaneously, but each had a different significance which at different times had a changing bearing on the result. Because of the difficulties that this presented, that progress was slow. In addition, with the financial and organizational turmoil caused by Bond's failing status, it was an understandable temporary strategy for EIE, upon which the whole of the burden was falling, to pause to see how events turned out and to decide whether what BUL might need could be afforded.

This is contrary to the essential feature of BUL's arguments, that is, that the assurances given was simply that it would receive a long-term lease and that any conditions as to affordability were either met or were inoperative in the circumstances; and that what followed was merely an attempt to formulate a suitable rental system to meet the needs of the occasion in conformity with this basic plan. It does not admit the importance that, objectively, the conditions should have enjoyed if all the circumstances are taken into account. Simply because the conditions were necessarily changed to try to achieve the constant goal that favoured the university, despite their significance it now seeks to relegates them to an inferiority that they did not suffer at the time.

Its error is to isolate a favourable element, the goal of a long-term lease, out of its total context of an integrated combination of objectives, their conditions and their means that changed over the period, and to claim that because that element was a constant it should prevail alone and untouched by the conditions that in different forms or degrees always qualified. It is perfectly reasonable that without being an absolute imperative the goal should have remained the same because of the logical desirability of long tenure for a university, but that did not call for an immunity from modification if the exigencies of the occasion demanded it.

BUL is not alone in permitting a partisan view of the arrangements to distort its perception of them by overemphasis of a favourable feature. In their submissions, the defendants stressed the conditions that applied in the original arrangement as though they applied at all stages, and they did not properly allow for their modification and the substitution of others as they were found to be impractical in the changing circumstances. The argument should have been confined to the conditions operating at the time under discussion, but understood in the light of what had gone before.

To return to the historical account of the matter, BUL continued to fall far below its projected enrolments and overspent its budget through some fiscal indiscipline, and it was still failing to attract independent funding. Bond's financial position was growing more desperate and it continued to default on its contributions to the project, throwing the whole burden onto EIE, which was having its own financial stress. BUL still failed to attract long-term or even short-term independent finance. And although the joint venturers agreed to extend further operational finance for eight weeks maximum, with a reminder that it was never to be part of their ongoing obligations, BUL extracted a further commitment from them by a threat of being forced to wind itself up. This was quite justifiable from BUL's point of view, but EIE probably intended to provide it anyway, and after its generosity its reaction to such threats was probably adverse.

These things threw the further planning into greater uncertainty. The documentary evidence of this period shows clearly that extensive discussion simply failed to produce any decision on the rental arrangement. On 30 June, 1989, Ms Pidcock of BUL stated to its accountants that no agreement had been finalised as yet, and that it was likely to be finalised once negotiations by the joint venturers concerning long-term funding had been finalised, which of course was never achieved.

Then on 19 July, in speaking of their proposals for concessions as a way of meeting BUL's financial inadequacy, financial advisers engaged by the joint venturers for the purpose noted in a memorandum to the university Council that "The sponsors have not agreed to either the no rent scenario nor the reduced rent scenarios at 3 and 4". They had prepared alternative plans showing the rental at 6.5% and 8% of the capital cost payable from the commencement of the lease, with some subordination of an additional amount, but the impossibility of BUL's meeting any of these had required the consideration of further concessions, which was the sticking point. On 21 July, they noted that while the other basic terms of the lease had been agreed,"the exact net amounts effectively payable under the lease are yet to be finalised".

These facts reveal a number of relevant points. The joint venturers were still looking for some reasonable commercial recoupment of their outlays, the concessions that BUL needed were not being provided, and it was not complaining that assurances relating to them were not being kept.

The next relevant event was the presentation of a draft "Leasing Heads of Agreement" to BUL (Ex 94) by the joint venturers on about 27 July in answer to BUL's further pressure for its production, though it had no capacity to pay any rent and on the contrary was still depending heavily on them for funding. Again the draft proposed a ninety-nine year lease of "Academic Areas and relevant Land and all Areas other than the Research Park, the Facilities Areas, the Retail Areas and the Commercial Areas" at a rent, to be paid from 1990, of 10% of the cost and/or value of the relevant lands and buildings and interest through to completion. That would have meant a rent in excess of $20m. per annum, and it made no provision for concessions. However, it was still in accord with the pre-existing arrangements, and was said without contradiction to be in "the same terms as were the subject of an in principle Council resolution some time ago", referring to the decision of the previous year that had not been productive.

Again nothing came of this because without independent funding or suitable concessions BUL could not afford to pay the rent proposed, even if the figure were reduced to 6.5% for the early stages as was proposed in some exercises. As late as 20 July, the Council had been discussing what was described as "a financial crisis affecting the university". The impracticability of this suggests that while showing their own bona fides, the joint venturers were demonstrating to BUL that its pressure was unreasonable in the absence of agreement as to the level of concessions. It emphasised the difficulty that would have to be overcome to define and assure them.

Naturally, BUL does not suggest that this led to any binding agreement, though it would later in negotiations make some such suggestion which will be discussed in its place. But it would portray the production of this document as an affirmation of the joint venturers' commitment to the constant goal. That is so, but it also strongly confirmed the contingent nature of that goal. In a more limited way, it led to some relief from further pressure while they tried to sort out all their interrelated problems that extended well beyond the subject of concessions. In evidence, Ms Nosworthy, who was Chancellor at the time, explained her view of the situation in this way:

"Well, look, I am not a property lawyer. I mean, I would concede that there was some disagreement about some of the terms which would go into a long-term lease. Now, I don't really - unless you want me to express a legal opinion, which I don't feel qualified to do - I mean, what I would simply say is that my understanding throughout was that there was a common view that eventually when the various difficulties of the joint venture parties were resolved the university would be entitled to a long-term lease. Now, I concede that there was disagreement at various times about what the lease - what the structure of the rental in that lease should be, that's certainly right, and although I saw one document called - one lease document which was in draft form, not all of those provisions were filled in - and there was - certainly so far as I am concerned I never took part in any detailed negotiations of a final form of a lease agreement. So, what you are asking me is whether there was certainty about all the terms of the lease. No, I don't think there was certainty about a number of them. However, what I am certain about is that there was a common intention by all of the parties that a lease ultimately be granted.

"The grant wasn't something to occur unilaterally, as might have occurred if what was in prospect was a grant for a peppercorn?-- Yeah.

It was to be in return for valuable covenants to pay rent?-- I think that's right. I don't disagree with that. Where I think we are at odds is in the timing of when that valuable rent, as you put it, would kick in. I don't assert that there was an agreement that forever and a day the university would pay a peppercorn rent. What I do assert is that it was common ground that there would be a period at the commencement of operations of the university during which period the university would be unable to afford to pay any rent or more than a minimal rent and that it was common ground that the rental structure to be put into the lease would reflect that and that over time the rental would rise in that structure to a reasonable commercial rental. . . ." (T347 - 348)

Her critical suppositions are not quite fair and ignore BUL's share of such fault as there was in planning, financial irresponsibility and assessment of external support. She is correct that "there was a common intention by all of the parties that a lease ultimately be granted", even though the comment is incomplete in failing to voice the conditions operating on that intention. She is equally correct that the parties recognised that the university could not pay rent in its early years if it did not find independent finance, and the joint venturers were willing and tried to provide some concessions as best they could. They allowed it to remain in rent-free occupation for another four years and then offered it a further rent-free holiday for two years under the proffered lease.

Although it was plain generally, and even from the above extract from her evidence, that her focus on the university's welfare distracted Ms Nosworthy from an objective allowance for EIE's reasonable self-interest, she has always agreed that this provision of rental support was conditional on the capacity of the joint venturers, and this meant EIE, to afford it. As the documentary evidence shows, this required agreement on some form of limitation upon its amount and duration. However the continuing impossibility of knowing what that would be simply precluded determination of whether it could be afforded.

These events are important in demonstrating that affordability as a recognised factor denied any absolute assurance to BUL of the amount of concessions necessary to achieve a concluded lease. Otherwise that could have been easily accommodated in the draft or alternatively in a formal acknowledgment. If the draft had not properly reflected the true state of affairs, adverse comment would have appeared in the Council minutes and there would have been significant controversy. None of this happened, and on the contrary, while temporary concessions were allowed in the form of rent-free occupation, no lease was granted despite the agitation of the staff for the security that it represented. Contrary to its present arguments, BUL did not claim that it was entitled to the lease and the concessions necessary to make it. Its reticence in this situation may be contrasted with its earlier and later effective actions that saw the respective grants of guaranteed funding and of the Deed of Subrogation.

The defendants deny that there was a general understanding that, the question of affordability aside, BUL's payment of rent was to be deferred until it could afford to pay it. This fails to answer the realities that all parties wanted the university to survive, and that that required at least some deferral if it were to have the intended lease. It is also inconsistent with what followed, namely, rent-free occupation right up to the time the draft terms prepared by Mr Ogawa of EIE offered a rent-free period which it was hoped would meet its needs.

Conversely, as Ms Nosworthy properly volunteered, no-one could have realistically believed that this rent deferral was to be unlimited and unconditional, and this view too is borne out by later events. For example, despite his sympathetic approach, Mr Ogawa's limitation of the rent-free concession and his adjustment of other terms to compensate for it would reflect the general understanding.

By August, 1989, it was EIE's policy to allow a lease with the rent at first calculated at the rate of interest repayments on long-term finance, presumably on the value of the capital assets, plus depreciation, to be charged from about that time and paid from any surplus, but otherwise accruing; and a rent at the rate of 8% of the capital cost as soon as the operation reached the break even point, which was then expected to be 1992 (Ex 206). The lease period and the area to be included in it were not worked out. This was not communicated to BUL, possibly because it was overtaken by events such as its requests for further substantial funding to meet its shortfall that put its viability in doubt, but more likely because of Bond's rapid public decline. Its default in providing its share of funding and the costs of the building programme had already been the first signs of its incipient permanent removal from any contributory role and consequently from the venture, but the threat of its general financial collapse put the venture wholly in doubt. Even without its own critical problems, this would have affected EIE's capacity to afford further benefits, at least until the position was clarified.

However, its attempts to formulate the terms of the lease, and its failure to implement them before Bond's collapse, have certain relevant implications which should be conveniently summarised:

* It remained committed to providing a lease if it could reasonably do so.

* The sticking point was the uncertainty of BUL's capacity to pay a commercial rent, both in respect of amount and time, if ever. Any premature obligation would simply lead to a demand for further funding to meet it. It is doubtful whether in any case it would or could have agreed to an ultimate figure based on 8% of the capital cost, and at that time its chances of reaching that capacity in the foreseeable future were rapidly diminishing.

* Despite its sympathetic support, it was EIE's policy to limit fairly strictly the extent of the concessions. It certainly could not be read as an attitude of total support or an assurance of large or indeterminate concessions, and this probably led to the abandonment of the proposal because the contingent nature of the calculation could leave the amount forgiven larger than might have been intended.

* EIE still regarded the provision of a suitable rental in the lease as of considerable importance to it, and was still looking for a timely commercial return on its very large investment on the campus.

* When Bond's failure soon after led to the casting on EIE of the whole burden of funding BUL's operations and of meeting the costs of construction of the remaining buildings, and then required it to find the funds to buy out Bond's share in order to save the project, its capacity to reasonably afford even these concessions alone would be more doubtful.

Except for continuing discussions and the production of drafts of proposals that came to nothing, no conclusive or significant action on the question of the rent to be paid was taken for some time, though this did not deter the joint venturers from continuing to look for ways and means, and it is undeniable that the were genuinely trying to settle the matter. For example, Bond's Mr Fox developed a rough and incomplete Draft Leasing Heads of Agreement which interestingly set the term of the lease at fifty years and he was later to propose a reduction of the area that would exclude the retail areas. At a time when a very sympathetic person with an understanding of the arrangement and its difficulties was trying to resolve them, this confirms the conditional nature of the arrangement and of the unaffordability of the concessions required. His actions here and later were far removed from the picture he painted in evidence of BUL's 'entitlement. His exercise also shows that modification of terms other than the rental was an alternative possible way to a reasonable result compatible with the original design. It was a method taken up later by Mr Ogawa.

No doubt provoked by the joint venturers', and especially Bond's, lowering financial reputation, from time to time BUL continued to put pressure on them to grant a lease but without any proposal for solving the difficulty. It is said that there were discussions in which the joint venturers' representatives on the Council indicated with some clarity that this would be done and that a suitable lease would be formulated. This evidence is of low grade. In the light of the written material, there is a strong likelihood in these circumstances that again these statements were no more than encouragement or indications that the matter was being positively pursued and that they have now been re-interpreted retrospectively as assurances.

Further, some or all of these statements may well have come from the Bond representatives, whose attitude was less restrained since Bond was defaulting totally in its contributions to the project. Their assurances at that time were not taken seriously by some of the more detached Councillors who understood the position, and insofar as they were not consonant with the official stance of their principal as revealed in the documents, they are irrelevant. The context indicates that in making any such statements these people were not representing EIE, and that was or should have been known to the other Councillors in the circumstances in which they were made. There must also be some doubt as to whether their statements were more than contributions to the discussion and made in their role as Councillors who were giving the others the benefit of their knowledge and personal opinion.

If anything of this general nature was said by EIE representatives, many of the same considerations apply. It is likely that there would have been positive statements of support and encouragement made in good faith because EIE fully intended to provide a lease that contained concessions, as its later conduct confirmed. The evidence on this issue probably overestimates its content and effect, since significantly the statements never found their way into any official expression or record other than that the joint venturers were working on the matter. It would be fully consistent with this if EIE representatives, providing the benefit of their own views, had made cautiously encouraging statements in line with its sympathetic support, but not changing anything. It would have been gravely inconsistent with its attitude and the circumstances known to all for it to have given a complete assurance of a lease having all the necessary concessions, irrespective of their cost.

This is not to say that the evaluation of these statements in evidence by some of the witnesses was not perfectly honest, but there were factors operating that could affect the recollection of anyone in a similar situation. In that time of great adversity a partial, forceful and exclusive focus on BUL's own welfare is understandable, and it would not be surprising if perceptions, particularly in retrospect, of equivocal matters were influenced by this adversarial posture that plainly continues into this trial.

Because of this and their conflict with other more objective and recorded evidence, it seems that these perceptions did not fairly give sufficient weight to the legitimate reservations of the joint venturers, and particularly EIE. This may well have affected any interpretation of what was said even at the time, but especially in a retrospective exercise. Some witnesses who spoke indirectly or in general terms supportive of the point, such as Professor Lovering, did not know the full background, including the understood condition of affordability, and their interpretation as revealed broadly in their evidence is innocently flawed. As well, there were other demonstrated areas of error and acknowledged vagueness in all of this evidence, due certainly to the passage of time and probably to the emotional stress also, but it was mostly honest and did not deserve the harsh criticism of it that was levelled in the defence case.

One difficulty with it that has been touched upon is the role of the joint venturers' representatives on the Council. They had a conflict between the interests of the party whom they respectively represented and those of the university. At first Bond had the only representatives, and for some time they watched the interests of both joint venturers, but it is not shown that their statements in Council meetings or on related occasions were regarded by any independent members of the Council as binding on EIE unless affirmed by it, the more so when their interests did not coincide.

In the course of time EIE had separate representatives appointed to the Council, but it is still far from clear that their statements were to be treated as binding on it in the blanket fashion that BUL suggests. It is probably necessary in each case to determine on the circumstances whether it should be so. In most if not all cases the evidence is not enough to do that because it is equivocal, for it is possible that they expressed opinions and encouragement as councillors who were giving the Council the benefit of their knowledge of the affairs of the joint venturers. It would require a deeper study than the evidence permits before it could be found that anything they said in such circumstances and without ratification by their principal had the degree of solemnity and authority necessary to attract its liability of that magnitude in this equitable exercise. So far as the other reliable and recorded evidence indicates, the statements were not understood by BUL at the time as binding EIE to provide all the concessions that might be needed.

If any such casual statements were in contradiction, extension or modification of the formal stand taken by a joint venturer itself, it is unlikely that they influenced the other Councillors in the way they now claim in hindsight, and that conclusion must be stronger since their present claims were not always consistent with their contemporaneous and later responses and there is no recorded support for them.

There is a tendency in many of these arguments to seize upon the positive actions and statements of the joint venturers and their representatives that were simply consistent with their abiding intention to grant a lease, but always to exclude or denigrate the associated implied qualifications and conditions that accompanied them. As it has been shown, this fragmentation of the arrangement and artificial concentration on one feature is wrong, despite the continuing importance of that feature. Its importance should be accorded proper value, but not in this way.

The resolution of the rental problem continued to be impeded by Bond's financial illness, which was becoming terminal. It had first become publicly manifest in the latter part of 1989, and early in 1990 Bond had effectively ceased to pretend to contribute its share of the project. It could no longer participate in the joint venture and because a substitute could not be found, the whole project, including the university, was in danger of being wound up.

Contrary to EIE's wishes, it was forced to buy out Bond's interest in order to save the project, and for this it was obliged to borrow further from the Bank. The purchase negotiations were difficult and the transaction was not settled until 24 January, 1992. Although at that stage its position was not as bad as Bond's, almost the whole burden of the building costs and the funding of BUL had fallen on it alone from a fairly early stage, and since early 1989 it had been subjected to supervision of its internal affairs by representatives of the Bank. This further borrowing added to its obligation to consider the Bank's legitimate expectations, which seriously constrained its freedom to provide gratuitous concessions; but with the Bank's approval it continued to display its goodwill towards the university and within the range permitted of it, it acted accordingly. However, its own affairs continued to deteriorate.

This increasing public instability of the supporters of the university further adversely affected its progress in attracting enrolments, outside sponsors and credit. It was in a difficult position between the staff, who were pressing for a lease, and EIE, which was resisting it until a reasonable solution could be found. No doubt it was more politic for the Council to press for such security as it could without any reciprocal regard for the joint venturers' legitimate reservations. Because of the desperate insecurity of its position, there was nothing wrong with this.

In response, Bond continued to express its worthless support, while EIE wrestled with the insolubility of the problem that it hoped time would cure. It was not open with BUL as to its embarrassing financial plight, but it did not join in any grandiose assurances that were contrary to its usual caution. While unaware of the full details, BUL knew that EIE was in financial difficulties (Ex 66) that would reflect on its capacity for further philanthropy, and it recognised that they might affect the concessions that it needed for a lease, which increased its anxiety.

Mr Schultz, a university Councillor who properly turned his mind to the joint venturers' position, correctly appreciated that they were fighting for survival (T 755). Certainly, EIE was not well placed to agree to indefinite but substantial concessions at the possible expense of its creditors but with the support of the Bank it was at least maintaining its good faith by keeping the university alive with funding and free occupation of its site. No doubt it was hoping that if it could hold out, things might improve so that a satisfactory lease could then be formulated. On 1 May, it was suggested in internal EIE correspondence that there be a three-year lease with rent deferred until the long-term lease was executed.

At this stage, another important event intervened. Properly concerned at their position if the worst came to pass, BUL's directors demanded the subordination of the debt created by the loans, past and future, under threat of refusing to sign the company's accounts, and on 14 May, 1990, the joint venturers had Limgold, which was the instrument by which they provided the funding and therefore the nominal creditor, enter into the Deed of Subordination. This subordinated the debt to BUL's other debts, and repayment was suspended pending certain triggering events, the most relevant being BUL's achievement of a financial surplus in accordance with a prescribed definition.

This was necessary for BUL to continue to conduct its business, and it provided the directors with the protection they deserved, but it had an adverse effect on their relations with EIE and the Bank. The aggression shown in this and in other dealings to parties who were trying to do their best for it in very difficult circumstances must have reduced their sympathy and increased their caution towards it. They probably felt unfairly distrusted after the consideration that had already been shown and resented being threatened again. Nor would it have won much appreciation from the Bank which to that stage had been quite reasonable. This is not to say that some firmness was not warranted in these matters, for it may have been necessary to produce an effective result, but the effect was to harden EIE's and the Bank's attitude to those Councillors thought to be unappreciative of its generosity and unmindful of its difficulties and reasonable interests. In time, this reaction was to lead to their removal from the Council. It would also have tended to reduce EIE's and the Bank's willingness to bend to later aggressive demands for gratuitous benefits. However it did not seem to have affected EIE's commitment to the university or the Bank's compliance with its reasonable wishes as to the provision of necessary assistance. It did not interfere with their intention to try to find a way to grant a lease.

The Subordination Deed relieved BUL's immediate difficulties in that direction but it also represented a significant gesture of support. Because it was made under threat and as a matter of necessity, for the reasons discussed above in respect of other forced concessions it did not impliedly promise to resolve other difficulties or to provide other benefits. It should be noted however that it seriously reduced the value of the joint venturers' asset constituted by the debt, which has relevance to its capacity to afford further benefits. This is borne out by the way in which the recovery of this debt became a serious bargaining tool in later negotiations.

This transaction must also have cast a serious doubt on the practical prospects of BUL's paying any substantial rent within a reasonable time for it would suggest that any debt for future rent would similarly come within the umbrella of the subordination. It made for a very awkward situation, for if BUL did not pay the rent according to the formula adopted, EIE would then be faced with the same threats that had driven it unwillingly to give guarantees of funding and the subordination of the debt. Non-compliance with such demands would inevitably mean BUL's failure because the directors could not trade while such a debt remained. The lease with concessions might then go to an unwanted lessee.

At the university Council meeting of the same day, 14 May, it was made clear that in the unsettled state of EIE's attempted purchase of the Bond interest in the venture, EIE had not been able to finalise its position as to the level of its funding of the university beyond 30 June. This was consistent with other indications that future funding by the joint venturers could not be assumed beyond what was expressly approved in advance, and it must have underscored the earlier disclaimer of obligation made in May, 1989. It must also have signalled further their restricted capacity to provide rent concessions for any lease, and the message to the Council in May.

However, BUL's rent-free tenancy confirmed EIE's continuing goodwill with the support of the Bank, and this must have given BUL some comfort and encouragement. If that is freely allowed, the climate created by these negative factors exclude any higher assurance. It is most inconsistent with any understanding that all necessary concessions would be provided without regard to the cost, and that issue had to be settled before a lease could be granted. The suggestion that somehow the two could be disconnected does not explain how EIE's grant of the lease in circumstances where it would not receive the rent would not thereby amount to an allowance of the concessions.

It would be useful at this point to recapitulate the factors that were or became relevant to EIE's difficulties in formulating suitable terms for the lease during this period:

* It had shared in the cost of the provision of the land for the campus.

* It had provided most of the money for the erection of the buildings which were to cost in all about $200m.

* It had provided most of the advances to BUL for operating expenses, which was to total $94m. by the end.

* It had no prospects of recovering those loans within the foreseeable future since the debt had been subordinated, which must have considerably reduced the value of that asset.

* Bond was now failing totally to meet its share of the costs and was moving into crisis.

* EIE then had to buy out Bond's interest in order to save the project.

* It then also had to continue to fund all BUL's further needs absolutely alone.

* It also had to continue to fund the building programme absolutely alone.

* Its own financial position was deteriorating towards bankruptcy and its management was then under the aid and later would be under the control of the Bank.

* BUL's enrolments were continuing to fall below projections and were prejudiced by Bond's failure and EIE's own weak financial status.

* BUL had no prospect of paying rent in the foreseeable future, thus depriving EIE of anticipated income or a satisfactory sale price for the land.

* There was still a real possibility that the university would fail altogether, especially if EIE could no longer support it with funding.

The effect of the financial burdens on EIE was cumulative. It must have been apparent to anyone who thought about it that this would weaken its capacity to provide substantial rent concessions, particularly as it was already financially stressed. This is significant because of the understanding by most of the BUL Councillors that its commitment was limited by its ability to afford these things (T 665).

During the following period and until the end of the relationship, EIE's advances of funds remained necessary for BUL's ongoing operating expenses. Although it made some statements of general support, its express commitment to guarantee this was still given only grudgingly and for limited periods and it was again accompanied by the observation that it was not part of the original arrangement. It was also made clear that it was temporary only and "on the understanding that it was not a part of any plan to continue this type of support for this period of time".

It is correct that these manifestations of commitment were not accompanied by any indication that the grant of the lease was in jeopardy, but no relevant inference can be drawn from that. At that time, the funding was at least as important as the grant of the lease and it was a more immediate problem. As EIE still intended to try to devise an affordable scheme, it is unsurprising that it did not associate the statements as to the funding with negative warnings about the lease. Besides, as the rental difficulties had not been resolved despite considerable negotiation, any negative references to that would have generated disquiet that it would have wanted to avoid. Just as its reluctance to continue to provide funding indefinitely did not mean that it was any less committed to the lease, so too its support through funding did not mean that the lease was not in jeopardy if the concessions could not be afforded. Though they were connected through the same test of affordability, they were different subjects, and the absence of reference to one during discussions about the other bears no significance whatever. The cost of funding was detracting further from EIE's capacity to afford the concessions but the lease was then the more remote issue.

In the meantime, Bond had not yet divested itself of its interest in the project and was still actively associated with it in order to rescue for itself as much return as possible. Again contrary to their evidence as to the strength of BUL's 'entitlement' to the lease, its representatives investigated a multi-use development including the campus land. This would have seriously reduced BUL's exclusive occupation, and it opposed it quite forcefully. The scheme was eventually abandoned but only because it proved to be impractical.

This exercise itself confirmed by strong implication that the lease was not a settled arrangement, unconcerned with the practical financial considerations of affordability necessary to support it, and indeed it was but another attempt to find a way to overcome that obstacle. As a lease could not be granted in the existing circumstances, it was designed to achieve that result through an alternative scheme that would make the rent concessions more affordable. In doing so it considerably modified the benefits under the lease as compared with earlier plans and the interesting thing is that BUL did not see in it any disparity with the assurances that had been given nor complain that it was in conflict with its `entitlement'. Although it was dissatisfied with this proposal and said so, it did not challenge the joint venturers' right to implement it. Its failure to do so was consistent with its recognition of the true situation that in the circumstances it had no such right.

It seems that no-one saw any immutability about the scope of the intended lease other than that its basic purpose should be respected in a practical way. That is a reasonable test to apply to the lease that was later offered by EIE.

It is also useful to note the context of the surrounding discussions. They were in terms that assumed that, absent the scheme, BUL would have a lease, but it was also assumed that the obstacles to that result could be overcome. It was reasonable for the parties to speak in these terms, for that result was what they were all working towards in good faith. It would be artificial to expect that, contrary to the prevailing relationship and to the positive outlook that they were striving to uphold, they would carefully lace their expressions with negative references to the conditions relating to the difficulties that were well understood. The following extract from the evidence of Ms Nosworthy (T.318) encapsulates the mood:

"To come back to what I was suggesting to you, though, you appreciated that after that meeting in May 1989 there wasn't a blanket assurance by the joint venturers that they would continue to fund the thing through to the bitter end?-- Well, I don't think anybody discussed a bitter end. What I appreciated was that there had been difficulties with the joint venture parties in finding the funding that they had said they would do their best to. I believed that they were making strenuous efforts. I believed they were acting in good faith and I placed a lot of reliance on the fact that EIE at that stage appeared to, you know, have access to significant funding and, you know, would do their best by the university, as it ultimately did."

During this and other periods, consistently with other reassurances of continuing support Bond representatives on the Council made statements concerning the production of the lease such as: "Look, we really don't know...We will get to it." These are claimed to have re-affirmed a promise on which the estoppel claim is based, but because of the alternative interpretation explained above that included the condition, they are at best equivocal. The interpretation that BUL postulates would ignore the totality of the surrounding circumstances and the history of the matter. The members of the Council were intelligent people who understood this very well, and some have properly admitted it (e.g. T 776 - 778). In any case, the most favourable implication that BUL could possibly draw from this was satisfied by the lease that was subsequently produced and offered by EIE in June, 1993.

The matter remained unresolved until in September, 1990, when the joint venturers presented a further proposal (Ex. 99) in order to counter the adverse effects of the existing instability. They had devised it over a period of months in consultation with BUL to try to afford it some temporary security of tenure and it conformed generally with what on 24 August the university Council itself had agreed to investigate. It recognised the ultimate goal of a long-term lease, but again it expressly noted the complexity and difficulty of the issues that would delay its progress for some time.

Most significantly, the recitation of the relevant factors included a reference to "the need to provide a workable balance between the needs and requirements of (the joint venturers) and the needs and requirements of BUL". This was not new but it was the first time that it was expressly mentioned. The factors referred to related partly to the proposed multi-purpose scheme but they must have included the difficulty in fixing any rent for a long-term lease. It was said in evidence about this topic (T 250) that "it was clear that the joint venture parties were still having difficulty in working out what proposal they would put forward in terms of the structuring of the long-term lease..." The only difficulty of those proportions related to what concessions should be made in order to meet BUL's needs while remaining affordable, and what compensatory modifications of other terms were needed in EIE's interests in order to keep the concessions affordable.

This contemporaneous recognition of the value of the joint venturers' interests in the process is directly contrary to BUL's present insistence on the overwhelming superiority of its interests in the event of any conflict. The exercise reflects the true understanding that there should be compromise, including the modification of the lease, if necessary. That is what EIE tried to achieve later in a proposal for a more limited lease containing concessions thought to be sufficient and affordable.

The proposal was for a three-year lease from 1 May, 1989, with a deferral of the rent until the signing of the anticipated long-term lease, whereupon the deferred rent would be paid over a period of five years along with the rent then payable, which was anticipated to be paid as it fell due. The amount of rent under the short lease was to be computed as an adjusted figure based on the rent to be struck for the later lease. Plainly this was designed to give BUL some immediate security of tenure. It would also meet the practical necessity of relieving it from the obligation to pay rent for a reasonable time, and yet preserve to EIE and the Bank the recovery of the deferred rent, also within a reasonable time, if BUL became financially viable.

This proposal shows many things. The first is that it confirmed that the goal was the grant of a long-term lease, but that is well established and not in issue. Because it depended on BUL's agreeing to pay a commercial rent plus a fifth of the arrears as from 1 May, 1992, it did not commit the parties to that absolute result, so that the joint venturers were not bound to give it if BUL did not agree to a commercial rental, and BUL would not be bound to take it if it could not afford it. Secondly, the proposal also deferred the question of the grant of the long-term lease to a time when it could more clearly be seen whether BUL could survive without further support from EIE, and if so whether EIE could afford to make what concessions might be found necessary. Thirdly, the joint venturers were not prepared to grant unlimited concessions, and indeed those offered were very restricted while BUL would have been committed to heavy liability. This was in full conformity with the sentiment expressed in the recital as to the equal relevance and value of the requirements of the joint venturers and in clear contradiction of the contrary view. Fourthly, contrary to its present stance, BUL accepted the limitation on concessions and the chance that it might be unable to afford to accept the long-term lease. It made no demand for any assurance that this would be accommodated, which, if it were entitled to it, would have been very valuable since the joint venturers were showing such reluctance to grant it. Fifthly, the proposal did not specifically identify the terms of the long-term lease or even the broad intentions of the parties in that respect. And sixthly, the proposal that was later offered by EIE in June, 1993, a year after the termination date of this short-term lease, provided for a two-year rent holiday and a further year before the first payment became due. In this respect it would be far more generous than this agreed proposal.

While the September, 1990, arrangement was very beneficial to BUL, especially in the concessions allowed in the three-year lease, it did not bind EIE to dispense any further concessions for the hoped-for longer lease. On the contrary, if anything the tenor of the arrangement seems to have excluded them, but it left open the possibility of negotiated concessions with some alteration of the lessee's benefits. This was fluid, but EIE with the Bank's concurrence was still favourably disposed to some such solution if it became necessary. The university would not necessarily be defeated if it could not pay a commercial rent at that time, but equally EIE would not be obliged to provide concessions that it could not reasonably afford. The Bank was under no obligation to accede to the provision of any benefits at all, and its co-operation towards BUL's obtaining eventual long tenure was again probably motivated by self-interest. It did not amount to any representation or promise that could support a claim of estoppel against it. Its approval of the grant of the short-term lease would not have implied anything other than that it supported the proposal generally under which the relevant decisions for the long-term lease were to be deferred.

Because of the financial status of all parties at that stage, BUL was prepared to consider this arrangement and asked for the presentation of a draft of the short-term lease and an explanation of the proposed longer-term agreement (Ex 100). Its restraint from any demand for an immediate long-term lease with suitable concessions, which its present claims would have justified, was probably due to its recognition of the conditional nature of its expectations. Ms Nosworthy's stressing during the course of the negotiations in March, 1991, that "the short-term lease arrangements should not prejudice the long-term lease negotiations" is not in conflict with this. Nor is the limited view of Mr Robertson of EIE's solicitors that "it appears to have been recognised that there will have to be some sort of relief from payment of rent in the early years until the university is trading profitably", which was correct but only so far as it went. It did not exclude the need that the relief from payment of rent be affordable and accordingly it carried no useful implication except that concessions would be considered, presumably in the negotiations referred to by Ms Nosworthy.

Unfortunately, the negotiations that followed remained protracted, mostly because of the continuing difficulty in finding a formula suitable to the legitimate interests of all parties and the proposal was never implemented. There were various conflicting proposals as to the amount of the deferred rent, ranging from $1.00 per week to 10% of capital cost, and as to the subject of the demise, which was sometimes suggested to be limited to the academic, hotel and student accommodation buildings while the control of the land and the retail area remained with the lessor, which would enjoy the income from them .

During the course of the discussions on this matter, the solicitor for the joint venturers is recorded as having referred in passing to the "current absence of any agreement at all" in respect of the lease. This did not provoke demur by any member of Council (Ex 100) but at that stage there was no formal agreement that would have justified dissent, and it was probably understood in that sense.. It is true, as the Bank argues, that there was never any final agreement as to the precise terms of the lease, but this does not affect the common understanding as to the goal and concessions, subject to the conditions that have been described.

In its evidence concerning this matter, the Bond witnesses were willing to be as generous to BUL as might be necessary, but it now has nothing to lose because it does not have to bear the future consequences, and if the interests of the university could be promoted it might preserve some prestige to the Bond name. At the time of these events, although it spoke in supportive terms it contributed little, and in these negotiations it took care to conserve its interests with an eye to the price it could negotiate with EIE for its share of the project. Because of the involvement of the Bank in its decisions, EIE was obliged to act with more propriety in the interests of its creditors. As the result the joint venturers could not agree on the terms of the lease, and particularly the rent, for presentation to BUL.

During this period, Mr Turnbull, who had been engaged by EIE, drafted a letter for it to send to Bond's Mr Lucas, a witness called by the plaintiff, complaining of his and Bond's prevarication and lack of good faith. Although this should be approached cautiously in case it was no more than a tactical ploy, it has some consistency with the supporting evidence.

Mr Fox, another former Bond employee who was called in BUL's case, conceded (T 615/48-52) that towards the end of 1991, which was typical of the whole time when the joint venturers were experiencing financial pressures, it was a difficult task to reach agreement that balanced the university's problems and interests with the joint venturers' problems and interests. Such were the difficulties that although BUL itself had its solicitors prepare a draft lease, it made no proposals as to the rent and the draft was never presented to the other side. The difficulty in part explains the continuing delay.

The continuing serious uncertainty as to the ultimate viability of the university was also still present (See T213, for example). Its immediate capacity to survive if EIE had been unable to continue to fund its operating shortfall with moneys advanced by the Bank was virtually non-existent. And another persisting impediment was the uncertainty that prevailed through EIE's frustration in its negotiations to buy out the Bond interest. BUL's implied suggestion that the joint venturers were delaying for ulterior purposes is unworthy and contrary to its admissions as to their sincerity.

These things are demonstrated in a passage in Exhibit 58 which, though not written until 11 November, 1990, reflects the pervading problem during this whole period. It said:

"Both Joint Venture representatives were of the view that the planned budget performance of the University to 1995 was inadequate. If account was taken of service of the University's debt to the Joint Venture, let alone any provision for payment of rental on buildings and site, it was clear that the projected budgetary performance would not be satisfactory. Mr Robertson confirmed that he would not be satisfied with the levels of supplementary funding required in the 5 year budget." (doc738)

Similarly, on 8 April, 1991, Mr Le Lievre of Price Waterhouse as agent for EIE reported to his principal that the grant of a long-term lease would be a serious error because of the then structure of the Council, that the university was not adequately structured to be assured of financial stability, and that a lease would not enable the joint venturers to control the management and utilization of the assets being leased. This gentleman was also a witness for the plaintiff and said that it was understood that it was entitled to a lease and concessions, but if that were so it is strange that he did not discuss this in his report, since it would have been most relevant to his advice. His evidence is discredited in many other ways as well, but the point is that he can hardly be said to be unmindful of BUL's interests, and if that is so, his failure to mention any obligation suggests that none was operative in the circumstances that he was discussing.

Even as late as 1993, as BUL's own oral argument points out, Mr Le Lievre and Mr Ogawa, who were both very well disposed towards BUL and tried hard to see it provided with a suitable lease, would want to wait some years to determine what level of rent BUL could pay because until then it was difficult to work out a precise formula. If it could not reasonably be done then, it demonstrates that there was good reason for the delay at this earlier and more disturbed time, rather than that EIE and the Bank were deliberately delaying for ulterior purposes, as BUL alleges.

It was in this context of uncertainty that the joint venturers explained the delay and their intention to the Council. However, BUL was discontented with this and kept pressing for the security of a lease which could have been granted only with open-ended concessions, but EIE could not agree to this nor could it discern a solution. If anything, the difficulties were becoming more profound and more complex, at least temporarily, with the result that the lease was becoming more remote.

The consistency of this with the facts is demonstrated by BUL's contemporaneous conduct. Although it was under considerable pressure to secure its tenure, in contrast with its forcefulness in obtaining guarantees of funding and a subordination deed it did not make the same type of threat for the lease. While the urgency was not as great, if the assurance had been as uncomplicated and unqualified as is now claimed, it was still important enough to prompt at least greater pressure for its immediate performance. In fact, it was not applied even to the point of a demand without any threat, and the likely reason for this is its recognition of the factor of affordability and the irresolubility of the problem at that time because of BUL's own financial weakness. As both joint venturers noted (Ex 58, referred to above), the problem that BUL would not be able to service its debt and still less be able to pay rent, remained.

The other major delaying cause was Bond's lack of integrity, which was intruding into the joint venturer dealings and in EIE's negotiations to buy out its interest. Among other things, it was concerned that Bond would use the lease as a lever in those negotiations, and indeed it was at this time that Bond began to promote the suggestion to BUL that it had a right to tenure (Ex 71). This present claim may have had its genesis there. There must be a real question whether in all this it was acting mischievously with an ulterior motive.

It is evident from its internal documentation of this time that EIE did not resile from its general goodwill towards the university and it favoured a lease, but quite reasonably it wished to defer the matter until BUL became "cash positive". In March, 1991, it even investigated the possibility of a short-term lease to protect BUL in case a receiver of Bond's affairs should put its occupation of the campus in jeopardy, at the same time remarking the factors that made the grant of a long-term lease such a difficult problem (Ex 314). As it turned out, the uncertainty produced by Bond's derangement continued to delay even the negotiations for this short-term lease. BUL was aware that the purpose of this was to allow time for the resolution of those difficulties, and it was anxious to have even a short-term lease because the insecurity driven by Bond's financial decline was increasingly affecting its business and the morale of its staff.

The university's contemporaneous documentary records clearly implied that the long-term lease was still to be the intended goal of all parties, but significantly it was neither implied nor stated, except perhaps for a misunderstanding by the representatives of the staff, that there was any right to it or that the understanding was unconditional. On the contrary, the tenor of the Council's internal discussions seems to have been that it was a matter of negotiation. Unfortunately, at this time of great stress, it began to be more seriously unsympathetically indifferent to the reasonable interests of its benefactors.

Moreover, it was not fully co-operative on important matters affecting its affairs. Japanese banks were reluctant to deal with any institution associated with Bond, and this affected the flow of money to EIE for funding it. There was a similar adverse effect on its direct general corporate sponsorship. However, EIE's recommendation of a change of name for the university was rejected (Ex 63.). Irrespective of the overall validity of this decision, which is very doubtful, it was certainly not conducive to abating the relevant problems, and this nonco-operation in helping itself could not have impressed those who were trying to help it.

In a Council meeting on 26 July, 1991 (Ex. 71) during a discussion of the reasons for the delay of the short-term lease, Bond again suggested that BUL had a right to long tenure and referred to BUL's becoming self-funding (Ex 71), that is, through borrowings from an independent source. If it had been self-funded so that it could pay a proper rent, there would have been no point to a discussion of rights for the lease would have been willingly granted. It would have relieved EIE of the burden of excessive concessions. However, BUL's continuing association with the Bond name and its retention of Bond representatives on its Council defeated any chance of this. This reference to self-funding associated with taking the lease is significant to the extent that it again identifies the core of the problem and links it to the delay. It is also interesting that there was no dissent from the linkage of the lease with the funding to pay for it.

At this meeting there was also a broad indication that EIE was having some difficulty with the Bank in relation to any acknowledgment of BUL's entitlement to a lease, but this is very ambiguous. It could have meant that wished to make some form of acknowledgment, but it could well be interpreted as referring to the conditional interest. In fact, BUL did have an entitlement according to the arrangements, and this was generally accepted and acted on. It was the basis on which a lease was later offered. But that does not mean that it was not conditional, and it is possible that EIE was addressing the positive side and wanted to give an assurance to that effect while the Bank's opposition was caused by its doubts about its affordability and BUL's use of any acknowledgment. In any case, the event makes no relevant point. EIE and the Bank would have been very willing to grant a long-term lease as soon as possible if the rent problem could be resolved.

The minute of this discussion indicates that the Bank may also have been unwilling to prejudice its own interests by allowing EIE to grant the concessions that were necessary at that time, if in fact EIE had wanted to do so. There would have been nothing wrong with this. The Bank was under no obligation to permit EIE to act to its prejudice. The Councillors did not question the Bank's right to act in this way. Although for other reasons some action was contemplated concerning a caveat to protect any interest held by BUL in the subject land, the rationale behind that discussion did not include the notion of any obligation on EIE to provide concessions or on the Bank to allow it.

At this stage EIE was no longer in full control of any decision as to affordability, and any assessment of that measure had to take into account the extent of its rapidly growing obligations to the Bank. This is why BUL finds it necessary to try to set up a right in the land having priority over the Bank's interest or to impose on the Bank some direct liability by alleging that it too was guilty of some unconscionable conduct.

One of the means it employs is to suggest that this continuing delay was unjustified and for ulterior purposes, but documentary records referring to the legitimate reasons have already been referred to, and these continued to apply. In a letter as late as 1 August, 1991, from the Bond representative on the Board of BUL, Mr Lucas, to the Chancellor (Ex 73), after restating Bond's support for long-term tenure he would explain that EIE's difficulties included "the fixation of a formula for determining the proper rent". From this source at that time, such a justification of EIE may be confidently accepted. Besides, the same continuing causes for this were still running.

He also noted that EIE was unable to provide a lease with concessions that would diminish the value of the asset to the disadvantage of the Bank. This was realistic and highly pertinent to the whole issue and his apparent acceptance of it as a legitimate factor in a letter that would have no reason to misrepresent the point and which was not challenged confirms its validity and status. It also establishes the soundness of Mr Ogawa's later approach in negotiating the lease that was offered to BUL when he tried to balance the rental concessions that were to be made with measures that would avoid serious diminution of the value of the asset. Despite equivocation in his evidence, he knew that EIE's ability to grant the lease on any terms depended upon the Bank's acceptance that the transaction was not commercially disadvantageous (T 1157). The significance of this evidence is that it clearly confirms the existence and importance of affordability, in the sense adopted above, that it was known to and unchallenged by BUL at the time, and that it was the genuine cause of the delay.

Mr Schultz, who was still a member of the Council at that time, very properly acknowledged that it had sympathy with EIE's funding difficulties (T762/18). He and Mr Gibson, another Councillor whose objectivity was not overcome, conceded that EIE was doing its best consistently with its own interests, which was all that it was obliged to do, and that the Bank too was entitled to protect its own interests (See e.g. T1228). Ms Nosworthy acknowledged in evidence that the concessions to be provided in respect of rent were to depend, not only on the needs of BUL, but also on the financial position of EIE (T 278/30) and its capacity at the time (T297/15). She too has fairly conceded that she was aware of EIE's difficulties and of the Bank's involvement in such decisions in its own interest (T1021), but it is doubtful whether she attached sufficient importance to it at the time or whether in the university's interests she ignored it in the hard bargaining she felt obliged to undertake. No doubt the Councillors' concern as to these things, so far as it went, was abated by their knowledge of the other parties' genuine pursuit of a satisfactory solution and an optimistic hope that one would be found.

Unfortunately, in some cases these positive elements, and perhaps an excessively subjective expectation engendered by the value of their cause, may have excluded sober reflection of EIE's position and of the Bank's freedom from any obligation. Consequently, when a lease with all the terms they wanted was not forthcoming, there was a tendency to blame those other parties for looking to their own interests and to complain in effect that they were deviously not being philanthropic enough. However, this attitude was not universal.

In the meantime, with the support of the Bank EIE had continued to guarantee and supply limited funding on a six-monthly basis. This was done under pressure of the Council's threat to withhold signing the company's accounts. Again it is claimed that this would have encouraged BUL to believe in the continuing goodwill of EIE with the Bank's acquiescence, which is reasonable and correct with reservations. It was rather ominous that the promise to provide further benefits was extracted only under threat, and this and other accompanying signs adumbrated the continuing danger posed by the condition as to affordability.

Bond's representatives on the Council, who at that time certainly did not have common interest with EIE, knew very well that it was threatening to stop funding but say that they were content to read this down and that they attributed the treats to EIE's attempt 'to satisfy their bankers that they had security for the money they were putting in' (Lucas T1133/10). This is either unsophisticated or false. Because of the importance of the university to the project there was a strong incentive, even for the Bank, to keep it funded, but there had to be a limit to the benefits that EIE could afford in its condition. However, at least this evidence revealed the witness' understanding that any concessions granted had to accord with the interests of its bankers who were making it possible to continue, and it is highly likely that with Bond's preferment of the university's interests they would have shared their knowledge with other important members of the Council.

After the words quoted above, Mr Lucas went on to say in his letter, ". . . and given that, we couldn't see them jeopardising what was already in by not putting in the next little bit". In this, he also betrayed what may well have been the fatal flaw in BUL's and Bond's thinking. This and the importance to the project of the presence of a university may also have led them to believe, if indeed they did believe, that an unmodified lease would be forthcoming notwithstanding the cost.

In respect of that subject, Ms Nosworthy recognised that the most that was offered by EIE was a commitment that it might not be able to keep (T 238/10). The evidence reads:

"Did you consider then the danger that Limgold might not be able to meet its commitment to provide the lease, or the joint venturers?-- Well, we certainly considered it, but we considered it against the background of strong representations that we had from EIE at that stage to the effect that EIE proposed to seek to buy Bond University out of the joint venture, number one, and, number two, that EIE recognised the necessity of maintaining a commitment to the university. So, we believed - I certainly believed - that EIE had a genuine concern for the university and for the students and staff-----

Well, at least a commitment to make it succeed?-- Yes, indeed.

If it could?-- Yes, and that was expressed on a number of occasions by their representatives."

The intention has never been in issue in this case, nor has the commitment. The only real

issue in this area is whether they were qualified by affordability, and in what way. This frank

On 21 December, 1990, with the approval of the Bank EIE undertook to advance further funds to an amount of $14.6m. for the year to 31 December, 1991. In her evidence Ms Nosworthy said in effect that because previous advance commitments to funding had been only on a six monthly basis, she regarded this extension to a year as being a step forward (T256). It certainly displayed EIE's continuing goodwill and the Bank's good faith, and it indicated a heightened confidence in a continuing capacity to provide funds, which may have extended to a capacity to provide rent concessions. It was a modest prospect of some hope but it did not solve the major problem.

The need to guarantee funding for such a period without any provision for the payment of rent could also have indicated that the lease was far from resolved. Eventually, EIE did buy out Bond and it did maintain its commitment, but it was not able to provide a lease with concessions as substantial as BUL demanded, which shows the leap in this logic that would impliedly equate a limited commitment to funding to an unconditional assurance of a lease, though to be fair it is likely that this response was argumentative only and that Ms Nosworthy was aware of the flaw.

In December, 1990, EIE had reached the point of financial desperation and it was only the Bank's massive support that saved it from bankruptcy. In return for this and because of the unsatisfactory performance of its management that had taken it to that position, its owner, Mr Takahashi took an oath not to act contrary to the Bank's instructions, and with its consent the Bank effectively took control of it from 1 January, 1991 by the appointment of its own officers to strategic positions in the top level of its management. But while EIE had undertaken to follow its directions, it seems to have retained much of the management of its ordinary affairs, including the matter of BUL's lease, subject to supervision and approval.

These moves by the Bank were played up in evidence as though they were heavy handed and overbearing, but they were necessary for its own protection and most appropriate because of the poor financial behaviour of the company's management that had taken it to that position and because of the risk taken by the Bank in saving it from bankruptcy. It had earlier tried to correct the position by a less radical remedy, but this had been unsuccessful, and it seems highly likely that it was fully justified in taking this later strict action. The unfair attempt to denigrate its conduct reflected badly on the credit of those witnesses who were manifestly seeking to misrepresent the position.

Under this new regime, the Bank continued to protect its own financial interests consistently with its duties to EIE, but it was not adverse to its philanthropic attitude to the university providing it was not deleterious to those interests. Contrary to its character as portrayed, it had already given BUL some direct assurance that continued temporary funding by EIE would be allowed, and it is noteworthy that soon after its management group entered into control, it allowed EIE to guarantee BUL's funding for the following year. It accepted the general thrust of EIE's policy on the BUL lease, and later as it investigated possible solutions to its problems, ironically it preferred to have such a lease in place in order to have a more secure asset to sell to a potential buyer. At this time, however, it sanctioned the scheme for a short-term lease as a temporary measure. As revealed in these and other results, BUL's criticism of it is unfair, but its case depends on trying to establish unconscionable conduct.

It has also argued in effect, though not in those terms, that the Bank's permission of EIE's support while it had the control of such decisions, and its participation in it by providing the necessary funds, somehow made it a party to an assurance or promise of further support in the form of the concessions for a long-term lease, no matter how much that might cost This has a number of flaws.

In its own practical interest, the Bank allowed this controlled funding because of the enhancement factor of a surviving university to the value of its security, but it is not shown to have been incautious in its forbearance nor was it committed to this university as the one to provide that enhancement. The benefits it allowed were no more than were necessary on a temporary basis until the full cost of all matters could be assessed, but these were further clouded by Bond's lingering departure.

There were many other obvious explanations why the Bank's co-operation should not support the suggested inference. It can be fully explained as merely a willingness to co-operate within reason with EIE's goodwill in accordance with its retained decision-making power. Since BUL has also stressed that the Bank was pursuing its self-interest in sustaining the university, it could not reasonably have assumed that the support would continue beyond that.

As part of its strategy in this action, BUL has taken an ambivalent approach to the Bank, both aspects designed to secure advantage. On the one side it presents a picture of its willing co-operation in permitting EIE to continue this assurance of funding, to allow BUL free occupation of the premises, and even to present it with a draft lease. It also refers to the Bank's giving assurances of its own support of the university. This argument is intended to support BUL's claim that the Bank was a party to assurances that would attract estoppel directly against it as well as EIE. On the other side, it tries to paint the Bank as a tyrannical and ruthless controller of EIE's affairs, acting exclusively in its own interests in a devious manner and without honour in respect of its commitments. This is designed to make it appear as an unworthy party without any merits against whom an adverse judgment should be given without discomfort. Some more detailed comment should therefore be made about its role.

First, it should be said that so far as the evidence goes, it seems that EIE behaved very badly as its debtor, finally forcing it to withdraw its support despite its progressive attempts to avoid that step. So incensed was it by that behaviour that it later refused to have any dealings with the Council while EIE's representatives remained. It would not be surprising then if its entry into the company's management had been caused by the same type of conduct, if not to the same degree.

Secondly, if the Bank had not provided additional funding for the purchase of the Bond interest, as it has been observed above it is likely that the whole project would have terminated. This would have included the university, for quite apart from the lease it could not have survived without EIE's continuing funding. Of course, the Bank's support was not altruistic. It was motivated by the desire to preserve EIE's assets, including its interest in the venture, as a means of recovering its already substantial loans.

The only relevance of this is that BUL's recognition of it led it to believe that the Bank would continue to support it for its own good, but only so far as it met that criterion. This could not have reasonably implied that it would contribute anything towards BUL's benefit that was more than useful in protecting its own interests, a fortiori because it was known to be acting as the representative of a conglomerate of creditor banks as well as itself, so that its decisions had to take its duty to them into account. At the same time, its attitude towards the university was benevolent within the limits described, and respectful.

Thirdly, the provision of a further substantial amount for the purchase of the Bond interest was of benefit to EIE and BUL. It was therefore reasonable that the Bank should have suitable security for this additional funding. It also had some claim to be satisfied of the proper management of EIE's interest in the venture which had so much of the Bank's money supporting it, though it had no right to share in any of the profits except for interest on its loan.

Fourthly, because it saw the welfare of the university as a means to the best chance for recovery of its loans, even if this involved some outlays and concessions, it was content to support it while it remained so. This included the provision of a lease providing that its terms were reasonably compatible with its own commercial interests. In this way its consistent approach and statements assumed its co-operation towards that goal, but this always had the reservation that it was conditional and even discretionary. BUL has seized upon the co-operative elements in isolation from their full context to impute untenable implications from them. It knew the true position very well and understood that it would not have any extravagant benefits from the Bank through EIE but rather that they would be controlled and qualified by a reservation of its right to preserve its own welfare.

Consequently, contrary to the light in which BUL would cast it, the Bank did not treat BUL harshly or oppressively in any way, and on the contrary it behaved professionally in the ordinary protection of its commercial interests but showing reasonable respect for the interests of the university so far as it could within that constraint.

During this period, Bond's insolvency broke and there were fears that the threatened appointment of a receiver would destroy the entire project, including BUL's chances of survival. It finally ruined any chance of BUL's finding independent finance, even through EIE's intermediation as an on-lender, and further attempts were suspended. It also seems to have caused the suspension of further discussion of the lease, no doubt for very practical reasons, and it was not until EIE finally succeeded in buying out the Bond interest in January, 1992, that the way was open to resume meaningful discussions. By that time its own affairs had grown worse but the Bank was still supportive.

Because of this damaging turmoil, the academic staff became further agitated by the uncertainty surrounding its future. The Council took this up with EIE, which expressed its continuing support and asked that the matter remain in abeyance until its purchase of the Bond interest was complete. Although the Bank's involvement in its affairs was generally apparent, it probably would not have wished to confess its distress publicly to the Council. Further, it was not the time to mention BUL's own financial affairs, which could have been taken as an implied reproach to the university at a time when it needed all the encouragement it could attract.

However, contrary to BUL's full concession to the Court of EIE's genuine goodwill, its witnesses were led to imply that again it was mischievously and with deceptive excuses delaying production of the terms of the lease for no good reason, and that BUL knew of no such reason. However, this was just not true. Most of the members of the university Council knew the reasons and that they were good. For example, when in evidence Mr Lucas was emphasising his expectation of a long-term lease as confirmed by his explanation of the situation to Dr Lader, who later became Vice-Chancellor, he said (T1137/03):

". . . What did you tell him, Mr Lucas?-- I told him that the agreement and understanding had been all the time that the university was there in its location forever, that it was true that the lease document had not been concluded and I outlined to him some of the reasons why that had not been concluded, but that it was certainly everyone's intention that it be concluded.

And what did you tell the council about this matter on 15 April '91?-- I told them precisely that that was the issue that he'd raised and that was the way that I dealt with it.

So, did you relate to them what effectively you have just told us?-- Yes."

He omitted to identify the reasons to which he referred, but presumably because he was trying to persuade Dr Lader that the university would have secure tenure, he would not have said that the proposed lessor was proving recalcitrant. He knew very well that the obstacles were mainly the difficulty in knowing if ever and when BUL might be able to pay rent and in what amount (T1144-1147), he knew of the problem caused by the frustration of EIE's attempts to reach agreement with Bond as to terms for the purchase of its interest in the venture, and he certainly knew that EIE's financial position as to concessions was part of the difficulty.

He reported to the Council just what he had said to Dr Lader, and in evidence was led to say that the EIE representatives on the Council did not challenge his version of the situation; but again he was not taken into details of what he said in his report. If he had told the full truth to Dr Lader that the long-term lease was understood and agreed as the goal, but was also subject to resolution of the financial difficulties on all sides, and if he reported this to the Council, it is unsurprising that the EIE representatives reacted without demur. Further, in recruiting Dr Lader Mr Lucas may have made sanguine representations as to the prospects of the lease, but it does not follow that his report to the Council was in quite the same terms, for he is shown elsewhere to have been quite capable of duplicity in analogous circumstances.

In the meantime, a further serious complication intruded. On 29 June, 1990, that is, after EIE began negotiating to buy out the Bond interest in the project, there had been a collateral agreement between them under which the excess of EIE's advances to the project over those made by Bond were to be secured by an equitable charge against the joint venture assets. In order to protect this equitable interest, EIE lodged a caveat against the lands. This was not directed against BUL in any way, but although they knew of its purpose its Councillors, sensitive to its vulnerable position, also arranged the lodgment on 22 July, 1991, of its own caveat claiming to protect its entitlement to a long-term lease.

Since this is now advanced to support the existence at that time of its expectation of such an entitlement, it is useful to refer to Ms Nosworthy's instructions to BUL's solicitors for its lodgment (Ex 66). Though representing a one-sided point of view provided to the solicitors as the argument justifying the caveat, it bears marks of what has been discussed in the above analysis. The following points should be noted:

* She stated that from the time of BUL's incorporation, which, incidentally, was not the earliest relevant time in this history, it had always been common ground that it would be granted a long-term lease. The incompleteness of this otherwise correct proposition has been adverted to elsewhere. Moreover, she used this fact only as support for her view that there had been a binding agreement.

* Although she spoke of the common understanding and assurances of a lease, she knew of the absence of agreement as to the concessions and spoke only of the university's entitlement as residing in the agreement for a lease that she said was established by the documentation enclosed. That is not included in the exhibit, but it would seem from the context to relate to the Leasing Heads of Agreement that had proved barren because of BUL's incapacity to pay rent. For this obvious reason, that is not a basis of any claim in this action.

* While she reviewed a variety of factors that interfered with the progress of the grant of the lease, and remarked that she knew of the financial difficulties that the respective joint venturers were suffering, she significantly omitted to mention that one serious obstacle was that BUL could not pay the rent expected to be paid under the lease.

* She mentioned BUL's funding difficulties flowing from the joint venturers' stress but omitted to refer to the problem of EIE's granting the concessions on top of all its other benefactions, or to any connection between that factor and its own inability to pay rent.

* This is consistent with the assumption behind much of BUL's case that it was entitled absolutely to a lease with all necessary concessions, even if the joint venturers could not reasonably afford them, though the assumption never quite acknowledged.

* She referred to the planned device of an interim short-term lease in order to achieve certain results, including the university's then being "in a position to negotiate an appropriate level of rental under a long-term lease together with appropriate arrangements for repayment of the debts outstanding between the Joint Venture Company and the University in respect of operational funding", but again she did not refer to rent concessions at all. Perhaps this was intended to be subsumed by "the appropriate level of rental", but if so, she neglected to mention that it would involve further philanthropy by EIE at the possible expense of the Bank, two parties who would be directly affected by the caveat.

* Further, even if the concessions were to be treated as loans, it would have been necessary to subordinate them for the same reason that BUL had been able to demand the subordination of the funding loans, and this would have placed greater stress on the affordability of any such concessions.

* Her concentration on the beneficial aspects to BUL of the "common ground"continued to disregard the cognate adverse contingencies and factors and the position of those who had and were still providing it with very substantial benefits at considerable cost to themselves.

* Although she acknowledged the Bank's gesture of good faith in giving an assurance that it would continue to support the university funding, she pressed the solicitors to act with some haste to lodge the caveat in order to forestall and defeat any action that that party might take to protect its interests. Although they knew of what was going on, it is to the Bank's and EIE's credit that they did nothing to try to forestall this by any action of their own.

* She made no mention of reliance, detriment or estoppel, which, in view of her standing as a solicitor, may have some value as evidence of her perception at that time; but it is also possible that she did not advert to estoppel and if so she would not have had cause to discuss reliance and detriment.

The caveat lodged by BUL extended to lands which even the Bond representative on the Council said were beyond those to which any claim could reasonably be made. This is of little relevance except perhaps to confirm some intemperance. It is possible that it was deliberately done to provide a negotiating weapon against EIE or that it was simply a mistake. It is recorded in later material that EIE denied that BUL had any caveatable right and correctly asserted that all that it proposed was future discussion on the issue of tenure. As the immediate aftermath it was affronted by this aggressive lack of trust after all that it had done for the university, and it gave further assurances of its good intentions concerning the long-term lease.

Having regard to the known difficulties, these could not be interpreted as a promise to give a lease with unaffordable concessions. The reasons have been discussed many times. Even after it put in receivers, the Bank would remind BUL that it was not a sponsor and would not itself confer any benefits.

After instructing the lodgment of the caveat, Ms Nosworthy's later advice to some of the Councillors was that the court action to support it was not "completely free from doubt, although it does appear that (BUL has) sufficient evidence, at least, to cause difficulties to the joint venture parties if (it) were to take the matter to litigation" (Ex 70). In the light of her instructions to the university's solicitors, she was probably referring to an action based on the alleged concluded agreement for lease which has since been abandoned. Whatever the answer, she obviously recognised that the validity of the simple proposition that a long-term lease had been promised unequivocally was at least doubtful. In that she was perfectly correct, though the full force of the negative factors did not appear until later.

In further argument, BUL cited an internal Bank memorandum, which was never communicated externally, that said that there was a lease to BUL although there was no written agreement. In fact there was no lease other than the tenancy at will and the obstacles to more secure tenure had not been overcome. If the memorandum is said to be some form of acknowledgment of a right to a lease rather than a loose anticipation of what was genuinely intended, that is very doubtful, and it is even less clear that it implied that it was no longer subject to the relevant conditions. This is all fairly irrelevant since a lease was subsequently offered in conformity with the intention that lay behind the remark, but it will be considered more fully later

Another internal Bank memorandum spoke of means of facilitating the execution of the lease and loan agreements. It must have been intended to try to resolve the problems through gaining control of BUL. Although BUL argues that this is evidence of its acknowledgment of a right to a lease, it establishes no more than the Bank's desire for its own purposes to put one in place with acceptable terms. That wish is consistently evidenced throughout the material, and it was simply coincident with the other parties' plans. Yet despite this common effort it was only in June, 1993, that EIE could offer suitable terms to fulfil that wish. This again emphasises the magnitude of the difficulty, but it is not surprising.

BUL's argument on these documents is part of a set of submissions designed to establish that EIE and the Bank acknowledged its absolute right to the long-term lease and at any price to themselves, but this is different from their conduct at the time and the documentary records. For example, they denied any caveatable rights and refused consent to the caveat. Conversely, when they confirmed their continued commitment it is difficult to understand why the caveat was not removed at once or an offer was not made to exempt EIE from its effects in consideration of their hurt feelings. It is likely that an intelligent assessment of the obstacles to EIE's capacity to afford the desired concessions was not far from BUL's thoughts, and that it retained the caveat as a bargaining tool. It probably felt some self-justification in giving itself as much leverage as possible in its precarious situation, even though it was to be exerted on its benefactors.

The caveat's obstruction to further dealings with the land became important later when EIE had to direct the first defendants to give the Bank a registrable mortgage to secure the credit necessary to settle the purchase of the Bond interest in the project and to continue funding BUL (See the evidence of Mr Le Lievre at T1506 - 1507). Despite the benefits flowing to it from this process, BUL refused to allow the registration of the mortgage unless it was made expressly subject to its own claim to a lease. This was embarrassing to EIE and it put the arrangement for the Bank's security and consequently the whole venture in some jeopardy. BUL's demand was of little concern to the Bank because it intended to offer a reasonable lease, but it was an obstacle to the security it needed through the registration of its mortgage.

In the absence of the registered proprietor's consent to the caveat, it would normally have expired after three months unless the caveator commenced an action to justify it. By the device of withdrawing it just before its expiry and immediately lodging a new one, BUL kept it effectively alive without commencing an action. This inconvenienced EIE and the Bank until they brought the matter to a head by lodging the mortgage so that if BUL did not commence its action in support by 10 December, 1991, its next replacement caveat would follow the lodgment of the mortgage and be relegated to inferiority to it. As a tactical move BUL then agreed to the immediate registration of the mortgage on the condition, which was accepted by EIE and the Bank, that it would be "subsequent to the interests of Bond University Limited which (were) protected by its caveat".

It will be noticed that this did not acknowledge that any right to a lease or other interest existed. The interest referred to by the agreement was only such as could be proved to have existed so as to be protected by the caveat. No right was created or enlarged, and on the contrary the existence of any right was still denied. EIE and the Bank could have waited until the caveat expired or BUL commenced its action, but because they intended to provide a lease it was convenient to them to agree to these terms. Accordingly, their agreement is irrelevant to the issues here.

The mortgage was then registered with the consent of the caveator, and the caveat was allowed to lapse. EIE subsequently gave the Bank a second mortgage which was also registered, this time without any hindrance or specific arrangements as to priorities. If it were necessary the Bank would now claim to be acting under the powers given by the second mortgage, which replicate those given by the first. If it came down to this point, estoppel would probably subject its use of the second mortgage to the terms of the agreement, but this is academic.

It is also unnecessary and undesirable to traverse in full detail all the statements of EIE or the Bank in the negotiations leading to the registration of the mortgage, or their significance. EIE and the Bank maintained their aggrieved reassurance of support and of their desire to continue to work towards the lease, but they never resiled from their denial of BUL's claim.

The only serious issue here is that BUL now claims that on instructions from Mr Kamaike, the Bank's representative who was generally in control of EIE, Mr Wran gave Ms Nosworthy an unconditional assurance that BUL would be granted a long-term lease and in reliance on this she agreed to the arrangement allowing the mortgage to be registered immediately. If it were an absolute assurance of such a result, it is argued, then it would have been implied that it was for the ninety-nine years that had previously been discussed and at a rent that BUL could afford, without any limitation relating to affordability. Mr Wran supports Ms Nosworthy's claim, and in the absence of evidence from Mr Kamaike as to his instructions to Mr Wran, there is little doubt that an assurance was given.

The issue is whether at the time it had the import that is now claimed for it or whether, since a lease with concessions was in fact offered later, it meant that this would happen and that the concessions, though still affected by the need for affordability, would be more liberal so that agreement should be reached. It should be clearly understood that, as against an interpretation for an assurance of unlimited concessions to the full extent that BUL might need them the competing interpretation here is for an assurance of reasonable concessions that should be sufficient. It is not for an interpretation for no assurance at all. This will be explained.

It is said by Mr Wran that the assurances Mr Kamaike gave him to pass on included one that BUL's rights would not be adversely affected by the registration of the mortgage. This was true and has already been discussed. The evidence of his further assurance "that there was no issue as to the entitlement to a lease: it was a question of working out the details" is more ambiguous and controversial. Although he did not give evidence to contradict this, there is a substantial body of well established facts that strongly indicates that this evidence is a misconstruction of the conversation. Apart from the ambiguity of Mr Wran's reconstructed version, for reasons that will be explained that part of the evidence relating to the mention of entitlement was unconvincing in every way.

It is very likely that the assurance was at best no more than that there was no issue about a lease. This would also be most consistent because it was the Bank's genuine intention at the time that EIE should enter into negotiations with a positive desire to achieve that result. As that would have been sufficient for his purpose, it might be wondered why Mr Kamaike would go further and acknowledge entitlement that the Bank and EIE had been assiduous to deny. The more limited version would have been consistent, true and still reassuring, as well as credible. As it will be seen, according to Ms Nosworthy's evidence of the message that was passed on, Mr Wran did not mention entitlement to her.

The only possibly acceptable alternative consistent with the interpretation that BUL now puts on Mr Wran's account is that in an internal discussion Mr Kamaike was cryptically referring to a limited and contingent entitlement relating to the lease, for the Bank and EIE proceeded to develop and offer one. In doing this they implied no consciousness of an entitlement in the evidence of their internal discussions. Further, when the lease was offered, their final reaction to BUL's excessive demands for more was to refuse them. All of this is consistent with an intention to make a reasonable but limited offer, and he may have been referring to an entitlement of that order. However, it is more likely that he made no reference to entitlement at all.

Interestingly, Mr Wran's evidence of his recollection contains no suggestion that at any other time Mr Kamaike acknowledged BUL's entitlement to a lease (See T. 1273/50; 1279/30). From all the things that he knew of the Bank's refusal to accept that BUL had any right to a lease (e.g., T1281/30), Mr Wran should have realised that it was giving no assurance of such an "entitlement" His actions at the time corresponded with this and strongly suggest his correct understanding of the position.

For example, in writing to Professor Lader in December, 1991, he said that on the settlement of the purchase from Bond, it was EIE's intention to discuss the question of tenure with the Council (Ex 280). This restrained description is hardly consonant with his understanding of the Bank's unqualified acknowledgment of the university's entitlement to a lease, particularly as it was contained in a letter offering benefits as an inducement to BUL's consent to the registration of the mortgage, and the mention of tenure is designed to demonstrate EIE's goodwill. If the entitlement were also acknowledged, he would surely have used that fact.

Similarly, on 17 November, 1992 in writing to Mr Breese of Griffith University in relation to the possible sale of the campus that would include control of BUL (Ex 286), he said :

". . .(d) The contract was made on 20 August 1992 for a fixed term of one (1) year with an option to renew for a further two (2) years. University Project Management Pty Ltd is to provide project management planning and development advice in respect of University Park Estate and Stephens Estate, including provision of accounting, administrative and secretarial support. In addition, it is responsible for the administration of all services contracts for BUL including the provision of 2 maintenance and building staff for repairs and maintenance work. The fee in respect of the administration of services contracts and repairs and maintenance support is $36,000 per month. The contract may be terminated by EIE at the end of one year upon 3 months notice.

There is no lease to BUL in respect of the use and occupation of the University campus. At present BUL is paying no rent in respect of such occupancy and no market rental has been agreed upon.

As a real estate agent on commission, had he believed that there was any entitlement to a lease, he would surely have said so in this context. For many reasons, his present retrospective interpretation that he meant to refer to a written lease was not convincing.

Other facts show that at that time he had no thought of the Bank's acceptance of any entitlement. On 19 December 1991, after the "assurance" of Mr Kamaike that he passed on to Ms Nosworthy without mentioning entitlement, he wrote to EIE's solicitors urging a letter to assure BUL of their client's willingness to discuss tenure as a persuasive means of securing its agreement to the registration of the mortgage. In that context he said, "While such a letter would impose an obligation to discuss tenure,... it would impose no obligation as to the terms and conditions of any lease..." (Ex 301). The tenor of this is hardly congruent with his present version of his understanding. There were other documents in similar vein.

He also knew that BUL's claim referred to in the caveat was formally disputed and that the reservation expressed in the caveator's consent was so framed as to accommodate this. Further, as he knew, EIE refused to consent to the caveat, which would have been a meaningless and discordant gesture if the existence of the right was openly recognised. If it had been available, the consent would have been of some importance to BUL, for it would have solved its problem of continuing security against the title of the land to protect its claim as against others. It would also have signalled to the world, and particularly its restive staff, potential students and pressing creditors, that its own title was more secure for being formally acknowledged, which was also of great moment for its own peace of mind.

All of these contra-indications against any admission of an entitlement were objectively manifest. It is likely that at the time Mr Wran knew of EIE's intention to grant a lease as part of its larger plan for the sale of the campus land and took it for granted that it would happen. His late introduction into the transaction and the limited scope of his knowledge and instructions as well as his flawed memory may have hidden the fairly fine distinction from his retrospective perception. He was probably not equipped at the time to recognise, distinguish and know the importance of factors antecedent to his involvement, including the difference between BUL's entitlement and the mere conditional willingness of EIE and the Bank that it should have a lease. As well, some rationalisation may have been induced by what he has since heard concerning this action in his role of BUL Councillor and witness. Although honest, his evidence on this point seemed to be more forced and deliberate, but his understandable partisanship may have inhibited any critical scrutiny of his recollection. This appears elsewhere, such as in his understatement of the force of the Bank's threat concerning the continued funding of BUL if the registration of the mortgage were frustrated (T. 1275/20). Sometimes signs of his leaning to the university emerged in his demeanour in small ways, but this observation is not intended to reflect adversely on his honesty. These complex matters were over five years old and he frankly acknowledged his imprecision and his forgetfulness of some matters, even where he could have helped BUL's cause. For all of these reasons, his accounts of Mr Kamaike's instructions should generally be accepted, but not on this point.

On the other hand, the correct version of the assurance could not have been without value. When he gave it Mr Kamaike must have intended it to have some persuasive influence on Ms Nosworthy despite the conditional elements. Since she knew that the Bank was supporting EIE and exercising some control over its management, he should have expected that she would understand that the Bank's positive involvement provided some cause for optimism on the issue. Consequently his assurance certainly implied that at least sufficient funds would be available to support any affordable concessions that might be granted; but not that this would extend to all necessary concessions that might unreasonably harm its own financial interests.

It probably also implied some greater liberality than had previously been offered, perhaps because the problems caused by Bond's presence in the transaction would be disappearing with its sale of its interest. The university's improving strength in the intervening period was probably also part of the reason for his optimism. These matters were enough to lead to the persuasive optimism of the assurance so that it is not necessary to infer that it must have been intended to suggest an unconditional result. This was implicit as a matter of reasonableness in the circumstances and impliedly confirmed by his reference to the need for negotiations. This was still a substantial advance from the uncertainty that had prevailed. In the circumstantial context of the occasion, it probably amounted to a representation or promise that would bind the Bank in estoppel to that extent.

Ms Nosworthy's account of Mr Wran's relayed account (T.275-276) is that after explaining the difficulties imposed on EIE by Bond's problems and the necessity to buy out its interests, which required the production and registration of the mortgage to fund the purchase, Mr Wran gave assurances that there was no dispute about the granting of the lease, that it had always been EIE's intention that BUL would be granted a long-term lease, that it would be getting such a lease, but that the Bond purchase had to be concluded first and, if BUL co-operated, the registration of the mortgage would be followed by negotiations for the lease. There was however no statement of acceptance that BUL had or was being invested with any right in the matter.

Though Ms Nosworthy realistically confesses to some imprecision of memory as to the details of conversations and offers only a recollection of their thrust, this is the best account of these statements and subject to that reservation as to precision it should generally be accepted. This does not extend to the construction advanced for them.

On another construction the say nothing new. It was true that with the Bank's concurrence EIE always had the intention to grant a long-term lease, and that goal remained, so there was no dispute about that. Later history has established that the settlement of the purchase from Bond would be followed by negotiations towards that end as promised, and EIE would offer a lease that allowed for rent concessions that were, in the circumstances, generous. With the intervening rent-free period they far exceeded anything that had previously been offered, though it was limited in other ways to form a marketable package to accommodate their respective reasonable interests. Because there might be an area where BUL's perception of its needs would not accord with EIE's perception of its affordability, there would need to be negotiations.

These closely corresponded with most of the statements said to be made. If Mr Kamaike had them in mind when giving Mr Wran his instructions, then this more limited interpretation is most consistent with them. That is also the more realistic view and the subsequent conduct of the parties to the conversation and the contemporary written records, both of which will be considered below, strongly verify this view, while the alternative interpretation would not do so at all.

The mention of negotiations was consistent with this because it predicated potential dispute, and it had to have some meaningful content, but what that was is somewhat equivocal. In these circumstances it had more of a flavour of the parties' bargaining for the protection of their respective interests within the range of reasonable liberality, and in this context it is difficult to attribute more than this to such a loose and equivocal remark standing alone. However there is little in this point.

In contrast to the comfortable interpretation discussed above, that advanced by BUL suggesting that the statements amounted to an unconditional assurance of a lease has many difficulties. After all the concern as to the affordability of the concessions that had delayed the matter, such a reversal would have been most surprising in view of the further deterioration of EIE's financial capacity and its assumption of very heavy additional debts that led to the need to register the mortgage. The perception that the proposed negotiations would be totally free of the condition would have departed fully from the point of all earlier negotiations, and moved in the opposite direction from that taken by EIE's fortunes. Although an assurance of a more liberal approach would also be inconsistent with EIE's reducing fortunes, its degree could be more controlled and tolerable so that some limit measured by reasonableness could be applied. The statement was made on its behalf, and it and not the Bank would have to bear the primary cost of any concessions.

These features support the less extreme interpretation, and that finds support elsewhere. In her evidence of her present construction of this conversation (T. 278/30), Ms Nosworthy said that in fixing the rent the negotiations were to address BUL's financial capacity, but that they were certainly to have regard to EIE's financial position also. She also spoke of the difficulties caused by the uncertainty as to whether and when BUL would be able to pay a commercial or any serious rent and the collateral question of EIE's capacity to afford all necessary concessions (T 278/18-30). She said:

"How did you understand that question of negotiation? Was that to establish a lease or the terms of it?-- No, to establish the terms of it. I mean, the issue that was always in debate was the issue of rental and how the rental would be structured, over what time-frame it would take the university to reach a break-even position, at what point the university would be capable of paying something approaching a commercial rent and so on. So, it was really the structuring of the rental and what impact - and how that related back to the budget of the university and the revenue stream of the university and so on.

HIS HONOUR: Would it relate at all to the financial position of EIE?-- Oh, yes, certainly, yes."

If full weight is given to this acknowledgment, there may be little practical difference in the position of the respective parties on this whole point, and even her version of it would not have produced such a radical change from the prior course of dealings between the parties as BUL's present interpretation of it would suggest. Unfortunately, she was not asked whether the lease that was later offered conformed with her understanding of Mr Wran's assurance, but her knowledge of BUL's financial at that time may have been inadequate for this purpose.

The assurance must be read in its historical context and particularly the relevant circumstances that influenced the thoughts of the parties at the time. EIE wanted to settle its purchase of the Bond interest before returning to the negotiations for the lease, and the Bank needed to have its mortgage registered, giving it substantial rights over the land. Ms Nosworthy must have been disturbed by the further delay and the possible ramifications of the Bank's formal acquisition of rights in respect of the title to the land, as Mr Kamaike should have realised, and he probably attributed her conduct concerning the caveat to that. It is likely that rather than giving total assurance, his message was designed to abate her fear and antagonism by reassurance of his commitment, a hopeful prediction of the result with its hint that a satisfactory offer was coming, and an undertaking to return to the abandoned negotiations.

This conclusion is strongly supported by events that followed. The most reliable interpretation of the conversation appears in Mr Wran's confirmatory letter recording its result, which was acknowledged by Ms Nosworthy as correct with one irrelevant exception (Ex 83). It said that it was agreed between the two of them that EIE would "undertake in writing that early in the new year the matters of tenure and the rescheduling of outstanding loans (would) be discussed by BUL and EIE". Despite her care in correctly noting the exception, and despite the importance to her that any unconditional assurance would have meant, Ms Nosworthy did not suggest any modification of this.

Nor, despite the incongruity of EIE's promising a lease on the one hand and refusing to consent to the caveat on the other, did she comment on that part of Mr Wran's record where it read simply:

The registered proprietor will not give its consent to the caveat and the mortgage will be expressed to be subject to the caveat. BUL will consent to the lodgement of EIE's mortgage.

The implication of EIE's rejection of the caveat's claim to an interest in the land is plain. So too is the absence acknowledgement of any rights of the caveator protected by the caveat.

Of greater significance was the absence of any record in the letter of any assurance of the lease by EIE or the Bank. If the statement were seen by Mr Wran or Ms Nosworthy as having the significance that is now claimed for it, Mr Wran would not have omitted to mention it and Ms Nosworthy, who was laudably efficient in the protection of BUL's rights, would certainly have had such a valuable promise recorded. So important was the right to a lease, which EIE and the Bank were both denying, and so powerfully did she press every point, that it would have been uncharacteristic of her not to have insisted on formal confirmation of it. Nor did she formally convey the news of such an auspicious development to the Council or to the academic staff who were still in a state of uncertainty and insecurity.

Mr Wran's written description of the agreement also conformed with a letter from BUL's solicitors to EIE's solicitors concerning the same matter (Ex 82), where it is said, "The upshot of those discussions appears to be: 1. The question of tenure and of funding cannot be resolved until the new year, but the parties will sit down in the new year to negotiate the matter". This clearly indicates that the promise was limited to an undertaking to negotiate and if it went further than that it should have been raised here. That version was accepted by EIE's solicitors in their reply which added, without challenge: "The question of your client's entitlement to maintain the caveat remains to be dealt with at a future date. Without prejudice to the registered proprietor's position we believe that discussions are in hand whereby the registered proprietor will at least commit to discuss the question of tenure early next year."

In defence of its construction of the matter, BUL has argued that these "terse" letters were merely summaries and do not detract from the force of the conversations themselves. It is true that they summarise the results of the negotiations, but they reveal the true understanding of the parties as conveyed in the conversation. They were and were intended by highly competent people to be full summaries of all items of importance, and BUL's claim of right to a lease was at the centre of the dispute and the point of that part of the conversation. Their accuracy as records for avoiding later misunderstanding was the purpose of their preparation and presentation. The excuse that is offered is unacceptable.

This conclusion is further clearly supported by a powerful combination of diverse factors. It is also supported by the fact that BUL gave little of substance in return except to lift its obstruction to the Bank's having the full security from the registration of its mortgage without any loss to itself. It secured the retention of its very doubtful claim's priority over the mortgage in place of the caveat which was soon going to lose that effect. On a very practical level it secured continued vital funding which would have been jeopardised if it had continued to obstruct the Bank's mortgage and which would have forced it to surrender in the end. Because of the weakness of its position, Ms Nosworthy must have been very satisfied with such a result even without any assurance such as is now suggested. This is consistent with the account of the matter deposed to by Mr Turnbull, Mr Wran's partner, (T 1361, 1373) though his involvement was less than Mr Wran's.

That the construction found above was the true flavour of Ms Nosworthy's contemporaneous understanding of the assurances is confirmed by the following passage from the minutes of a meeting of BUL Council of 31 December, 1991 (Ex 85), where she reported on her perception of the significant matters that Mr Wran had conveyed to her. The minute reads:

The Chancellor reported that Mr Wran had indicated that, once settlement of the joint venture had been achieved, EIE would be seeking to negotiate with the University on the question of a lease. It was further noted that an indication had been given by an EIE representative that a medium term lease would be possible, to be followed by a longer term commitment if the University was managed in such a way as to achieve a surplus of income over expenditure."

There are some noteworthy points to be observed from this. Inexplicably she did not tell the Council of any unconditional assurance from EIE and the Bank as well that BUL would have a lease, though this would have been the time to say so and to have the public concurrence of EIE's representatives. This could then have been relayed to the staff.

However, the position grows worse. It will be seen from the minutes that the EIE representative said that the outlook, while optimistic, was contingent only, and this denial of any unconditional assurance is more emphatic for Ms Nosworthy's failure to contradict or to correct him. Among other things the contingency referred to must still have turned on resolution of terms that met the financial interests of all parties, as she has acknowledged, for nothing in that respect had changed.

She now interprets the reference as meaning that the negotiations were to determine the terms of the lease rather than whether there was to be one. This is an unsatisfactory interpretation contrary to its ordinary meaning, particularly as it was used as a qualification of the reference to an optimistic outcome. The notion of a lease the terms of which cannot be agreed seems contradictory in his mouth as well as in logic. No doubt the emphasis was on the optimistic aspect, but it is unreasonable to rob the cautionary qualification of its proper content and force.

If Ms Nosworthy meant that everyone agreed that a lease should be granted but only if the terms could be negotiated successfully, then her view corresponded in effect with what was said and her failure to demur is explained. EIE and the Bank were willing and even wished to grant the lease, and that at that time there were prospects of success. That much was not in issue, but it did not mean that there was no uncertainty as to the result. As events turned out, the subsequent negotiations failed precisely on the contingency that the terms could not be agreed. If the EIE representative's deliberate raising of it had cast any ambiguity over the certainty that is now suggested, it would have been clarified at once.

Another Councillor, Mr Gibson, very fairly and objectively recalled that at the same meeting Mr Wran said that "they", presumably EIE and the Bank, "wanted to achieve this settlement. Then they'd start talking about the lease." Mr Wran had reason to remember it for he recalled it as an item of some controversy. In his evidence he added, "But we were wanting to have the lease...and then talk - the other way round."(T 1202/23). He does not explain how they could have the lease without negotiating the terms. But most striking is his implied admission that `they' had a different idea so that there was no mutual understanding then. In this context the only 'talk' must have been the negotiations of the terms, so he must have meant that there was no concluded arrangement for their having the lease already in place. Otherwise he would have invoked Mr Kamaike's assurance or Ms Nosworthy would certainly have set the record straight at once, and that is not suggested. Indeed, when faced with the controversy , that Mr Wran himself did not simply inform the Council what he had been authorised to give Ms Nosworthy has similar significance.

BUL cites his further evidence as to the Council's subsequent optimistic attitude with which, he said, it proceeded with the business of acquiring tenure "in accordance with the assurances (they) had been given". Even disregarding the recorded minutes that contradict his intended inference, it might be remarked that this is quite equivocal. Such a reaction would be expected to a limited but positive assurance from Mr Kamaike. If Mr Wran's evidence meant to convey that, then it is perfectly acceptable.

The optimism referred to was probably further fuelled by some Councillors' mistaken belief that EIE and the Bank would be forced to provide total support in order to protect their investment. This was often stressed in BUL's case. It could have led them to assume, again mistakenly, that, given the Bank's assurance, albeit a restrained one, the grant was virtually a fait accompli. Such a sense of inevitability could have fostered Mr Wran's rationalisation as well. Again, this speculation is designed to show how this incorrect evidence may well not be dishonest, for the complex and distant events to which these witnesses deposed, and the way in which their evidence was led admitted of and encouraged rationalisation that was pregnant with error.

In summary, it is probable that it was understood to be so limited, because:

* Ms Nosworthy did not seek any formal acknowledgement of it;

* The consequential correspondence between Mr Wran and Ms Nosworthy gave no hint of anything more and indeed by omission supports the limitation;

* The consequential correspondence between the solicitors was to the same effect;

* The Council and academic staff were not told of any assurance;

* At the next meeting the Council was told that the proposal was contingent only and this was not challenged by Ms Nosworthy or Mr Wran;

* EIE and the Bank continued to deny any entitlement in BUL and refused to consent to its caveat;

* The limited version is more logical and in keeping with the prior state of the relationship between the parties; and

* The subsequent performance of the arrangement by the parties, who were acting with goodwill, was consistent with it, but not with the alternative.

In its outline of submissions, BUL says that it 'was assured that its interest in the land would not be adversely affected' by the mortgage, as though the interest were acknowledged. This overstates what was said. There was no concession that any interest existed and there was a denial of any right to caveat. The outline then goes on to claim that there were assurances to BUL that 'its title would be formalised if it permitted the (Bank) to register the mortgage over the campus', but this also goes too far and in addition begs the question whether it had a title to formalise.

The next event of importance was the resignation in February, 1992 of Ms Nosworthy and other independent university Councillors at the behest of EIE, which threatened to withhold further funding if this did not take place. There can be little doubt that it was motivated by its resentment at what it regarded as the Council's past ingratitude and threats and the fear that this would be repeated in the intended negotiations. The Chancellor was replaced with Professor Messel, who had been a Councillor since February, 1992, and the other Councillors were replaced with Mr Wran, Mr Turnbull and others. Later, when EIE fell out with the Bank, it would use its representative Councillors for its own purposes, which were sometimes in collision with the interests of the Bank, but at this stage it was expected that under this new regime, there would be co-operation towards a successful result in the interests of all.

In 1991 in a plan to unburden itself of the substantial funding and other support of the university and to relieve some of its own financial pressure by liquidation of some assets, with the approval of the Bank EIE had entered into preliminary negotiations with a potential buyer of the university land, Mr Tanoika. The progress of these moves depended on the purchase of the Bond interest. After that had been completed, at about the time they were appointed to the Council it also commissioned Mr Wran and Mr Turnbull to try to find other buyers. They entered into protracted negotiations with Griffith University of Brisbane, which too had already had some superficial discussion with EIE on the matter.

EIE's preference was Mr Tanoika. He was its silent partner in its side of the joint venture, and was interested in buying the whole BUL project, which would have given him an incentive to continue to support the university. He had an interest in private educational institutions in Japan which might have been able to co-operate with the university, so he was sympathetic to its welfare and would have been content to have a lease to it in place. For EIE's purpose, a lease that would provide an attractive return on the investment would enhance the price it could ask. The problem lay in setting terms that would be attractive to an investor and yet remain within BUL's capacity.

The Bank and EIE still adhered to their intention to grant it. In an internal Bank memorandum dated 14 January, 1992, it was said:

For the purpose of the early disposal of Bond University, i.e. recovery of the investment capital it is considered advisable that EIE International should acquire 100% shares in BUL and thereby gain the entire control of the future negotiations to sell Bond University to a third party. . . .

(4) Matters to be taken into consideration upon the acquisition . . .

b. No agreement has been executed with respect to .......................... loan and lease. (The accounts receivable on the loan and lease are not shown in the account books of the parties concerned.):

Both parties concerned recognise such loan and lease (The loan is recorded in their balance sheets.) However, because there were problems of the borrower's payment ability and the lender's corporate income taxation, no agreement has been executed.

®This matter will be examined when a specific investor appears."

This again confirms the ubiquitous underlying issue of affordability to both parties, but these were now approached differently in the light of the proposed sale. The memorandum's tenor also confirms the Bank's supportive approach. As late as 30 January, 1992, another internal document shows that it still anticipated that a lease would be granted, but now in a different context that would necessarily affect its quality.

The matters causing major difficulty were BUL's inability to pay any rent or to repay the loans, with uncertainty as to when it may acquire that capacity, its need for even further loans without any certainty as to the time of repayment and Bond's failure to contribute its share. The Bank was concerned that BUL was incorrectly treating the joint venturers as if they were sponsors.

Although a sale at some time may always have remained the joint venturers' intention, the timing and other circumstances suggest that its execution at this time was probably connected with and even forced by EIE's own financial difficulties, particularly those associated with its support of the university and the Bond purchase. This was not matched by any increase in its income from the venture and on the contrary it faced further funding of the university with only a subordinated debt in return and the continuing cost of maintenance and repair of the land and buildings without any return at all by way of rent. Allowing that state of affairs to continue would have enlarged the loss considerably so that selling the land after providing a lease to BUL, which was broadly similar to the original plan, was attractive and had the Bank's general approval for the move. A sale at a reasonable price and was part of the picture of the affordability.

In the meantime, EIE continued to support the university with funds provided by the Bank. Again, despite BUL's argument, nothing can be inferred from this. In fact they continued to promote its sale which would have terminated their support of it.

Over a period in 1993, a lease conforming with the new scheme was negotiated and the exploration of a sale was continued broadly contemporaneously. Advertisements were placed in Australian and Japanese newspapers calling for expressions of interest without attracting complaint from BUL. With knowledge of these plans Professor Messel and at least some other Councillors acquiesced in them, though it would follow that BUL could be dependent on any new owner for support, including any further concessions beyond those to be provided in the lease. It can be said that the prior arrangements and understanding concerning the lease were adjusted to this new approach.

It should however be inferred that they were working on the assumption that EIE would maintain its goodwill and provide such benefits as it could afford and that a suitable lease would remain the goal. Again, the argument that these discussions reflected mutual acceptance by all of BUL's entitlement to the lease simply ignores the context and to the inherent condition of affordability From what they said at the time, the version advanced was certainly not the view of the participants.

It is very significant that in the interim there had been no demand by BUL for any promised lease, nor even for the commencement of the negotiations concerning one. Nor was there ever any controversy or even questioning by BUL's directors or Councillors of the intention manifested by EIE and the Bank to sell the land or of their coupling the resolution of the lease issue with the sale. This is consistent with BUL's understanding that such was the uncertainty of its own financial state that its best chance was to explore the opportunities of the new scheme and to trust EIE to provide what it could. It was still enjoying rent-free occupation and operational funding from EIE during that critical financial time.

With this continuing evidence of goodwill, if it felt it had the entitlement that it now claims, it could still have pressed for the entitled security of a lease with all necessary concessions which, as it stressed so often in its evidence, would have been important to it at that time, unless it had other plans. Since EIE and the Bank were voluntarily moving to put a lease in place, it was the occasion to raise its claim and remind them of the entitlement on which it was based. Consequently its inactivity was inconsistent with any continuing claim to such an entitlement from any prior arrangement, understanding or promise.

There is a possible explanation that it may have found it politic to remain silent on the point while EIE was still manifesting its good intentions, but this could not have applied when the proffered terms were less than it now claims as an entitlement. It is likely that if it had had any sense of entitlement, it would have at least made some mention of it and requested some action during this protracted period. Further, this inconsistency persisted in other ways in the dealings that followed.

As an excuse BUL complains of the influence of EIE's or the Bank's representatives on its Council, but they did not have control of it, and of course that explanation cannot account for the absence of any discussion of the matter by the other Councillors. Further, the explanation is quite inconsistent with the indisputable fact that in the negotiations that followed, BUL was most unco-operative and aggressive. Any influence was largely due to the funding that EIE and the Bank were providing, and though withholding it was a tacit threat, it was never used in the negotiations, even when Professor Messel was being most offensive.

In any case, the representatives did nothing detrimental to the Council, and on the contrary they sympathetically provided it with assistance and advice in their role as Councillors consistently with the genuine goodwill that they felt. This charge of disloyalty that was levelled rather freely in argument is not supported by reference to any evidence, direct or inferential. It is also contrary to the benevolence that was admitted by the witnesses and to the subsequent serious attempts to provide the lease on favourable terms.

In the absence of any reasonable excuse, the best inferences that can be drawn from BUL's inactivity during this period and other circumstantial facts are all unhelpful to its present claims of a prior entitlement. On the contrary, consistent with the other acceptable evidence it supports an inference of acceptance of the conditional feature of its expectation, and of acquiescence in the new scheme as its best chance of a lease. It was still free to negotiate to its best advantage within its parameters.

The negotiations for the lease did not begin until April, 1993. This delay does not predicate any default by EIE or the Bank for there was no complaint by BUL and both were conscientiously considering the matter internally and in consultation with each other with the intention and desire ultimately to grant a lease under this new scheme. The need for its terms to support a commercial sale price for the asset was tacitly understood.

Referring to its efforts to find a satisfactory solution within this framework, in a cogitative discussion in an internal memorandum a Bank officer wrote: "As for the rent, we should probably link it with the profit of the university"(Ex 426.). This was a speculative suggestion for furthering the new scheme and it reflects a genuine and more liberal approach in the pursuit of the same goal against the same problems. Disregarding a variety of basic change to some fundamental aspects, BUL's attempt to present this as a continuation of the former arrangements is only half true. It was a continuation of the former attempt to provide a lease but it was also part of a significant change of direction which was understood by both sides.

Moving ahead voluntarily and still without any pressure from BUL, after enquiring carefully into the university's financial prospects EIE had its solicitors prepare a draft lease, leaving the essential terms of duration, rent and identification of the subject premises in blank. Mr Ogawa, who, it will be remembered, was an employee of EIE, was conscientiously trying to formulate terms as to rent that would reasonably soften BUL's financial burden, as he described it (Ex 292), and meet its unpredictable financial capacity while protecting EIE's own interests in respect of such matters as taxation and ensuring that the rent was not too low (T. 1517 -1518). He wrote to the solicitors on 16 February, 1993, (Ex 347) expressing his thoughts. In this, he inferentially revealed many things as to EIE's understanding of relevant matters without trying to make any point of it. It is useful to review these and although this involves some repetition, it confirms once more the explanation provided above as to the true and complete circumstances and understandings between the parties.

First, it is clear that under the new strategy EIE and the Bank still shared the intention to provide a lease, suitable to the circumstances. Because Vice-Chancellor Lader's forecasting of the university's income was limited to ten years, it was thought best to limit the term of the lease similarly, probably so that the terms could be reviewed on its termination.

Secondly, the letter betrays no consciousness of any entitlement in BUL to a lease for a long term or at all, as distinct from this common intention to try to produce a result satisfactory to it within the criteria attached to the new scheme. There is no inference of any recognition of an obligation of any kind, or under any understanding known to Mr Ogawa. Nor is there any sign of expectation of BUL's dissent from the thrust of the scheme. It is only fair to observe that he may not have had a full knowledge of the history of the matter, but as the officer in charge of this task, subject only to the overview of Mr Kamaike, he should have informed himself on all important details of the matter. He is likely to have done this because they would have had an important bearing on his work, even if he had not intended to respect them. His words reveal no such state of mind.

Thirdly, the discussion as to rent starts with the provision of a commercial return to the landlord as its basis. That was assessed at $16.1m per annum, but in view of the impossibility of BUL's affording this figure, in line with its anticipated prospects Mr Ogawa would have reduced it to $7.5m. to $9.0m. at the commencement of the lease. The inferences here are that EIE and the Bank were prepared to take BUL's capacity to pay into account, but that the expectation of a commercial rent was of similar importance. This was confirmed in Mr Ogawa's evidence on this matter. In his proposals in this respect he showed no consciousness of inconsistency with the past.

Fourthly, this reference to the landlord's interest referred to the then landlord, but it also anticipated the possibility of the sale which was the primary objective.

Finally, because of Mr Ogawa's sympathetic attitude towards the university, and because of pressure by the Bank to settle the matter with some urgency, it is reasonable to infer that although the terms he first drafted allowed for a bargaining margin, the terms that he finally proposed were as beneficial to BUL as he could make them within the constraint of reasonable affordability. The latter point is confirmed in two ways, first by his own attitude as revealed in his writings, and secondly by the Bank's intervention at the final stage when it insisted that any final agreement should have its prior approval.

Although Mr Ogawa's perception should be treated with suitable caution lest it be underinformed or idiosyncratic, it has the virtue that when the result of his work was later presented to BUL in specific terms, no-one on that side controverted it in principle, as distinct from negotiating for different terms.

It is instructive that although his sympathy towards the university coloured his evidence, and he spoke of the understanding that it should have a long-term lease, he was not asked to reconcile his apparent comfort with his formulation of terms that provided for a much shorter tenure, a limited area of the demise, and rent that gave limited concessions. There was an attempt to lead him into deflecting responsibility for these terms to the directions of Mr Kamaike who was his superior as the Bank's representative in the EIE administration, but it emerged that this drafting was according to Mr Ogawa's own perceptions, and that he had discussions with Mr Kamaike only from time to time (T1865-1866/01, T1867/20-30). When he said this, his evidence was then led rather abruptly to the point that Mr Kamaike would make the final decision, but this was rather selective because he was not asked whether it was in any way contrary with his understanding of the arrangement.

Mr Le Lievre, with whom he consulted on these matters, similarly betrayed no sign of doubt or discomfort at the time.

Once the negotiations began, despite disagreement as to the terms of the proposed lease, the attitude taken by those involved in the dealings that followed, and particularly Mr Ogawa on the one side, and Professor Messel, Messrs Wran and Le Lievre, and indeed the whole university Council, on the other, was consistently on the basis of free negotiations without any claim by BUL of an entitlement based on any proprietary estoppel, trust or other ground relied on by it in this action. The only exception was an untenable claim by Professor Messel that the Heads of Agreement had amounted to a binding agreement. Although it is significant and it is relevant in answer to several BUL arguments, it is not proposed to refer repetitively to the implications of this failure to claim an entitlement based on allegedly unconditional assurances every time they appear in the following narrative of the details. There was still a common expectation that a lease would result, but it was understood to depend on the success of the new scheme to solve the rental problem.

In order to provide the rent concessions that his enquiries suggested BUL would need Mr Ogawa apparently found it necessary to make adjustments elsewhere in the lease if it were to be acceptable to a private investor, such as by the reduction of the ninety-nine year term. This is not shown to be unreasonable. Yet BUL needed a moderately long period that would provide some security and be enough to allow it to consolidate and obtain renewal of its lease. It was a reasonable possibility that anyone who would purchase the land with such a lease in place would renew it. The equation of the period of ten years first offered with the period of the forecast of BUL's financial progress was reasonable approach so that the fixation of rent for the following term could be negotiated with the knowledge that would be available at that time. Because its financial state was improving, a modest rent-free holiday related to an assessment based on enquiries was believed to be acceptable. From these elements Mr Ogawa set to work to devise a reasonable overall compromise by using parts of the entire transaction to balance others. BUL's agreement to these, and the acceptability of the whole packet to the potential buyer were together the key to the success of this new strategy.

He was under time pressure because the Bank insisted that a lease should be negotiated by a date in June fixed for the completion of its Loan Agreement with EIE, with the threat that failure could affect its willingness to extend that agreement. That was an added incentive to find a formula that BUL would accept quickly. He designed and adjusted terms to try to make them practical while there is much to indicate that he was also sympathetic to BUL.

In his first full proposal presented to BUL, it was provided that after a rent-free year in 1993 when only outgoings were to be paid, the rental was to be limited to $2m. in 1994 and to $4m. in 1995, both in addition to outgoings. This might be compared with the original figure of $16m. and the concessional figure of $7m. on which he began the exercise. There was to be no payment of back rent or maintenance and repair costs for the occupation of the premises since 1989. The term was to be limited to ten years, and the area to be leased was also to be very limited.

A draft lease along the above lines was presented to Mr Wran on behalf of BUL at the end of April, and he immediately passed it on to Professor Messel. Mr Wran says that at about that time he said to Mr Yaginuma of EIE that the term of the lease did not correspond with the "assurances" that BUL had been given, and he adds that there was no denial of this. Mr Yaginuma was not called to deny this, but his position with EIE would have generally put him in the plaintiff's camp. However, for several reasons, the accuracy of this account of the conversation and its circumstances must be considered doubtful.

It is strange that there was no response or enquiry by Mr Yaginuma to Mr Wran's comment nor any consequential discussion of it, such as might be expected after such a pregnant observation. There is not even an indication that Mr Yaginuma understood the significance of any inferences that are now suggested, and again it would have been strange in those circumstances that Mr Wran would have allowed his comment to remain so cryptic and lacking in elaboration if he intended it to have any point.

The reliable and objective contemporaneous evidence surrounding circumstances throw considerable doubt on the accuracy of his version of this statement but there are two possible explanations that are consistent with his account. The first is that Mr Yaginuma chose to ignore the remark because Mr Wran was a paid agent for whom an explanation may not have seemed to be appropriate. In that case it would be difficult to draw any inference from his silence. Alternatively, Mr Yaginuma may not have understood the remark or its significance and simply let it pass, for the documentary evidence of internal EIE and the Bank's discussions implies that they had no consciousness of any suggested assurances and any such remark by Mr Wran would probably have had little meaning for Mr Yaginuma. However, in that case or even if he had some understanding of its reference, if it had been in the form now presented he might have been expected to have asked for further details so as to prepare himself for the confrontation adumbrated by Mr Wran's warning.

This is not the only inherent improbability of Mr Wran's version. His later failure and that of any others of the BUL Council, even in any recorded meeting among themselves, to refer to such assurances when negotiations were breaking down is difficult to reconcile if they were real and highly relevant to them as this version implies. This suggests that after such a long delay Mr Wran may have retrospectively misconstrued the effect of this conversation, for aside from his want of impartiality he was certainly not fully informed of the details of earlier discussions between the parties concerning the transaction and was shown in evidence to be similarly in error in his interpretation of some features of it.

Because of his manifest ignorance of other background historical material due to his late entry on the scene, it is doubtful whether he had any direct knowledge of anything more about assurances of a lease than he learned from his conversation with Ms Nosworthy referred to above. For all he knew Mr Ogawa's draft could have fulfilled that assurance because the relevant statements that he made to her related only to a lease and not to any terms, so his comment to Mr Yaginuma could not have been referring to that. It is possible that he had heard of partisan references to assurances during his discussions with Ms Nosworthy concerning the caveat, when she was fiercely adversarial in making claims in support of BUL's alleged rights. If that is so, then that may have been the stimulus for his comment, but it would then have no significance. However, though the circumstances permitted him the chance to have written something at the time that would corroborate his present claim, nothing that he ever wrote remotely made any suggestion of such assurances, and indeed the contrary was the case.

This rationalised version of the conversation could easily and quite inadvertently be imprecise on a subtle but vital feature. If he had commented that the length of the lease according to the draft was less than BUL would want, or that it was less than what had earlier been discussed between the parties, that would have conformed with the contemporaneous and later circumstances quite well and the route to his present error would have been short. Both of such comments would have been true and could well have merited comment; but though it is possible it is certainly not shown to be likely that he mentioned "assurances" or any word with the same connotation.

After the long delay between the conversation and the trial, his evidence was generally imprecise on such fine detail and, as might be expected in his position, when any room for rationalisation was involved, his leaning consistently favoured BUL. It is much more objectively telling that his general response to the draft at the time, as well as that of others in the BUL camp, was inconsistent with the tenor of what is now alleged. There is a marked parallel here with his error in respect of the assurance given by Mr Kamaike. Of course, he may have been giving a deliberately false version by means of a small change in the text, but the alternative explanations are reasonable and should be accepted.

When he received the details of the proposal, Professor Messel did not immediately dispute the relatively short term of the lease as being inconsistent with any assurances or understanding of BUL's "entitlement"; and by a curious twist, with his apparent approval Mr Wran reported to EIE that BUL would prefer to defer the question of the lease until after the sale, presumably in the hope of obtaining better terms from the new owner. He may well have understood the practical difficulties of obtaining greater concessions from EIE because of its financial state and the restrictions placed on its philanthropy by the Bank, and felt that a purchaser of the land could be financially stronger and more amenable to better terms. But a buyer would have had no obligation to grant any lease or any concessions so that in such negotiations BUL would be in a weaker bargaining position than with EIE, if it had a supportable claim against the latter. However, in an historical irony that says much, EIE and the Bank insisted on the lease before any sale, and they prevailed to the extent that negotiations for the lease continued.

BUL claims that Professor Messel's failure to complain at that time that the length of tenure offered was in breach of EIE's assurances was due to his expectation that on its termination it would be followed by a further lease. If by this he meant that the lease would be granted by EIE, this is not a tenable proposition. He must have been anticipated that a sale of the reversion that was to follow the grant of the lease would be effected before its termination so that EIE would no longer be in a position to grant an extension.

If he meant that the extension would be granted by the purchaser, that is reasonable. He may have expected that the university land would be sold together with the rest of the land and that because of the university's importance to the purchaser for the further development and sale of the residential land, BUL would receive a further lease as a matter of practical consequence rather than of entitlement. However, such a view would have meant that he was content with the term that was offered, and that does not accord with the facts. In his negotiations for a longer term, if he or any other Councillors had any consciousness of a higher 'entitlement' to it he would assuredly have stated it very loudly and vehemently.

This is confirmed by what followed. He referred the draft Heads of Agreement and other matters arising from EIE's draft lease to BUL's solicitors, and it is relevant that no instructions were given to them concerning any other possible ground of entitlement such as is now raised. The claim based directly on the draft Heads of Agreement must have been quickly found to be unjustified and was never again pursued except in vague general references as part of his threats to EIE and the Bank in his campaign for other benefits.

When the draft lease was first considered by the university Council, he said that in the interests of the university the lease should have a long term and that he understood that there was a draft Heads of Agreement in existence that substantiated a long-term lease. In this, he was advised by staff members of the law school, who had earlier agitated for a lease, and as it has been explained above, this advice was misconceived.

Apart from this reference, he made no suggestion to the Council that BUL had any right to a long-term lease or to a lease at all. Nor did any other Councillor, including Mr Wran. All that Professor Messel asserted along this line was that a long-term lease was necessary to provide the university with the security that would engender public confidence so that it could attract sufficient income to survive. His silence as to any other claim to an 'entitlement' cannot be attributed to sensitivity to the feelings of EIE's Councillors, for he was offensive to its representatives in his later assertive demands though they were sympathetically trying to accommodate them.

Stripped to its essentials, the real basis of his pre-trial claims then and since seems to have consistently been that because of its desirability as a social institution, the university should have a paramount claim to all it may need without regard to the reasonable interests of any other parties. To the extent that he now claims that he was moved by any promise or representation by EIE or the Bank, his evidence should not be accepted. Not only is it inconsistent with his words and actions at the time but it was also unconvincing as he presented it. His evidence was regrettably most unsatisfactory in several ways and seemed to be constrained only by the values of argumentation. He fought very hard for the university, regrettably too hard.

There is a side issue that came up at the same Council meeting. He also said that the basis of calculation of the rent under the proposed lease should be a percentage of BUL's "net surplus", a concept which another Councillor, Professor Mortley, accurately foresaw could have potential problems in the definition of "surplus". His perspicacity has been amply demonstrated by the considerable dispute generated in this trial in relation to the use of that same expression in the Subordination Deed. Aside from that, such a system could have been susceptible to abuse by manipulation of the accounts.

This is not far fetched, for it was a device adopted by Professor Messel as a means of disguising from staff the extent of BUL's true surplus in order to deflect their demands for salary adjustments. In any event, at this meeting he pressed for an assessment on that basis, but EIE later rejected it because it was too uncertain and was not a reasonable rent. He did not answer this by reference to any assurances or 'entitlement'.

Following the Council meeting, on 7 June he conferred with Mr Le Lievre, representing EIE, to try to work out some proposals for discussion between the parties. This was arranged at Professor Messel's request, probably because he recognised Mr Le Lievre's favourable disposition towards the university, though as both knew, he had no power to bind EIE. His report to Mr Ogawa (Ex 338) makes this clear, and Professor Messel received a copy of it. ( See also Exhibit 361.)

Mr Le Lievre had been employed by EIE and his present employment also has an indirect connection with EIE's owner, who supports BUL's cause in this action. Despite his claim to the contrary, he knew that the discussions concerning a long-term lease that took place through the history of the project were provisional only, and it was his view that BUL had no unconditional entitlement to it. This is implied in Exhibit 329, for example. Further, in his dealings with Mr Ogawa between March and June, 1993, and in this meeting with Professor Messel, he made no suggestion of any such entitlement though, if he had any idea to that effect, the circumstances should have led to its mention.

As a substitute Councillor whose sympathies lay with BUL and at the same time an agent for EIE which had obligations to the Bank, his position was equivocal, and he seems to have been running with both sides. For example in separate correspondence with Mr Ogawa and EIE's solicitor on 24 February and 3 March, 1993, respectively, he had expressed his personal view to one that apart from outgoings the rent to be charged for the second year of the proposed lease should be $2m.,which was the figure adopted in the first draft, and to the other that it should be rent-free. This could have been an error, but this disturbing feature of duplicity also appears for example in the disparity between his readiness to agree with Professor Messel at this meeting and his expression of contrary personal views in his report on it to Mr Ogawa. It is also consistent with his general attitude of ambivalence, which was recognised by Professor Messel (T. 1558).

When he had this meeting in June with Professor Messel, he agreed with the merit of all that the other demanded, including a ninety-nine year lease, a much more substantial area than the draft lease had proposed, and a rent-free holiday for four years with very generous terms after that. It is significant that at that meeting not only was there an omission by both parties to refer to any entitlement to the lease, but further, they agreed only that it would be "preferable" in the interests of the university's stability to have a long lease; and similarly the rent concessions discussed were spoken of in terms of practical desirability without a hint of entitlement. So it cannot be suggested that these subjects, in which there was an opportunity to mention any entitlement, were not discussed.

In his report of the meeting to Mr Ogawa, Mr Le Lievre did not suggest that these demands corresponded with any 'entitlement', nor, as might be expected if he believed that it existed, did he even mention it as a factor necessary to be considered in their evaluation. So far removed was he from such a belief that he recommended that Mr Ogawa consider a twenty-five year term as an achievable option; and there was no discussion explaining how this could be reconciled with the long-term entitlement that he now supports. Not only does this recommendation discredit the suggestion of any absolute entitlement, it also confirms that so far as he knew the common understanding as to what BUL should have, the terms of the proposed lease that would be finally offered would be within it.

It is said elsewhere in BUL's evidence that matters relating to an entitlement based on promises and understandings were discussed frequently in Council affairs at this time and this might be accepted in a general way if it refers only to loose talk of subjective notions of what they felt they deserved, but if it is suggested that it had the meaning that is now promoted, the above evidence and much other objective material from this period are so grossly inconsistent with such a claim that it must be rejected. Not surprisingly, this conclusion conforms with the quality of the demeanour of these witnesses in giving their evidence on this issue.

The next relevant event consisted of negotiations between the solicitors for the respective parties on matters relating to the lease that were of concern to them, but again there was no suggestion of BUL's entitlement to anything. All that was said on BUL's side on this issue was that it required a ninety-nine year lease on both the open space and buildings "to be able to operate efficiently as an on-going concern". The implications provided by the limited justification of this claim are useful but otherwise these negotiations were fruitless. It cannot be said that BUL's silence on the issue of entitlement can be attributed to any delicacy, for delicacy was not a mark of its negotiating style, at least at this time, and besides, the polite mention of such a claim would not have offended any delicacy at this stage, particularly as between the solicitors.

A meeting between Professor Messel and Mr Ogawa then took place on 15 June. Mr Wran and Mr Le Lievre and some Japanese representatives were also present. Mr Ogawa proposed a ten-year lease of a restricted area with a one-year lease of another part, and a rent-free period of three years. Professor Messel countered with a request for long tenure, again mostly on the argument of the need for a perception of stability. He also referred again to a view of the academic staff, and particularly the law school staff, relating to the draft Heads of Agreement, but this time the thrust of his proposition was different, probably because by this time he was aware that the document had been discredited as any basis for a claim of right. Instead, he said that the staff claimed that the document stated that a ninety-nine year lease would be granted, and he argued that a failure to grant a similar lease could result in some disruptive action. He did not say that the view referred to had any foundation, nor did he claim any entitlement to a lease on the grounds now postulated. Nor did the others present contribute any such view.

Stating his own position and unmindful of the four years and more of rent-free occupation that had passed, he said that the only option that he was prepared to countenance, without any compromise, was a ninety-nine year lease of the whole campus area and research park with a three-year rent-free period. He proposed that the rent should then be at assessed at the rate of fifty per cent of BUL's annual net surplus. The year then current would produce a small surplus, but he says that at that time its prospect was thought to be in the remote future. Consequently, the rent he proposed had very limited value. All his proposals had no consideration for EIE's needs and were impossible.

By this time BUL's financial progress had reached this point where a lease with limited concessions could be considered, even if there were some uncertainty as to whether it could afford it. It could not expect concessions that it might not need and that EIE could not afford. Yet that was in effect what Professor Messel was demanding, while EIE's offer was based on its reasonable enquiry. This whole stance of demanding extravagant benefits from a position of weakness was part of his style, probably supported by the dangerous reliance on the essentiality of the university's wellbeing to the whole venture. It may also have been due to a misplaced confidence that Mr Takahashi's goodwill would prevail, as it had done in the past. In any case, his demands were unacceptable to EIE, and so the negotiations ended in deadlock.

Reporting later on this meeting, Mr Le Lievre recorded that there were three mutually exclusive options. His report then said: "Finally, it was acknowledged that in view of the impending sale of BUL Land and Buildings the preferred approach would be to defer the issue of the lease until such time as the new owner was in place." This is a correct account of the final position of the parties, and its importance is that not only did BUL not claim an entitlement to a long-term lease, but it was still prepared to defer the question and take it up with a new owner against whom it could have no claim to any entitlement.

It was at this meeting that the Japanese parties were concerned at what they saw as Professor Messel's "offensive reaction...in the name of 'independence'". However this did not deter them from continuing to try to find a basis for the grant of the lease, and because they were extremely anxious to have it in place urgently, Mr Ogawa then drafted compromise proposals which were probably close to or at the limit of EIE's capacity for concessions. The term was to be extended to thirty years. After two rent-free years and one outgoings-free year, the rent was to be first five per cent and later ten per cent of the "Total Operating Revenue", payable in arrears. This was a modest rate and there was to be further provision for relief where necessary. The areas to be demised were to remain limited in keeping with the low rent. This proposal is evidence of EIE's continuing goodwill and commitment.

On 23 June he sent this proposal to Mr Wran with a copy to Mr Le Lievre. In their comments on it, neither made any mention of an entitlement, nor did they raise any point supporting Professor Messel's demand for a ninety-nine year term. Despite Professor Messel's denial, which may simply be a matter of memory, Mr Wran's evidence and the contemporaneous written material confirm that the proposal was referred to him and he then took it up with EIE's representatives in Japan. The detail of this discussion is not available and it is not important, but in a reference to it in a letter to EIE's solicitors, Mr Ogawa said that he was postponing completion of the draft agreement because of "BUL's placing of hard conditions". If he felt that way about them, apart from the dictates of any fair assessment it is reasonable to believe that they were excessive and unaffordable. By that time the earlier pressure on him to achieve a result was relieved because the difficulty and delay in the negotiations had persuaded the Bank to waive its insistence that a lease be in place by the nominated date.

The rent proposed by Mr Ogawa has been proved to be reasonable, and it was in keeping with the contemporary indications. For example, Ms Nosworthy said that she estimated that it would have been reasonable to set a commercial rent commencing five years after the university's opening, that is mid-1994, if there had been no adverse factors. On Mr Ogawa's proposal, the first rent to be paid was at the end of the third year of the lease, that is, mid-1996. By then, with independence and a lease, it should have been in the position Ms Nosworthy assessed. Even in its difficult circumstances, its financial papers show surpluses of $.562m., $4.505m. and $6.796m. for the years from 1993 to 1995 respectively, so it would have been able to meet the obligations set by the offered lease, particularly with some sponsorship such as those that it has since attracted.

In trying to show that its rejection of the proposal was justified because the area offered was inadequate, BUL claims that the area it was entitled to have was the "campus land" that was proposed to be sold and which it had been allowed to occupy to that time. It also claims that the area was always understood to include the entire campus, despite the difficulty in predicting when or even if it could pay any reasonable rent; but this is in conflict with the evidence, which shows that the discussions on this point were very fluid.

The proposed area was indeed less than that which it had been occupying and which was to be offered for sale. However, the argument is not justified by the evidence. Such a proposal for a smaller area of the lease was not new. In various past proposals, there had been a wide variation in the premises that were to be included, and in accordance with the scheme then currently under discussion most freely adjusted the area that should be demised in relation to the rental that could be paid.

This led to some important differences as to what should be included. For example, in the original plan under which BUL was to pay a commercial rent calculated as a percentage of the capital value, the students' residential facilities were to be retained by the joint venturers and sold to a separate property trust to their advantage. Later negotiations saw the possibility of their being included in the lease, despite BUL's incapacity to pay rent on any of the premises for an indeterminate period. Another scheme considered the possibility of confining the demise to certain buildings while the area outside them was excluded and treated much like common property. There were also variations in the proposals relating to the Research Park building, which too had been originally excluded, and some other parts of the premises.

The common factor militating against inclusion of the entire campus and influencing these adjustments, notwithstanding BUL's occupation of the entire campus, was the extent of its inability to pay rent. For much of the time this would have applied even to rent for the academic buildings, and the possibility was explored that at least the joint venturers could recover some return on their outlay from their independent control of excluded areas such as the accommodation buildings. The reason why such a relatively easy question was never answered despite the parties' mutual goodwill is that it was related in this way to the rent that would be charged, and the circumstances never admitted of a reasonable assessment of that.

Accordingly, although as a gesture of goodwill the university was allowed to occupy the entire area during its occupation while the matter was being decided, that had no bearing on what was finally to be demised, and that was well understood.

Further, the land intended to be included in one transaction does not necessarily correspond with what is included in the other. As different transactions for different purposes, there were several good reasons why they should differ, the best and most obvious being that BUL could not pay an adequate rent for the lease of the whole of the land but a purchaser could pay a reasonable price for the whole and recover an additional return from the part excluded from the lease. The distinction between the area to be leased and what was to be included in the sale was evident in the subsequent negotiations between the parties, so it was adverted to; but although BUL strove in the negotiations to gain a larger area, it did not claim any right to it or present an argument such as this.

While it hopefully embraced this new means of acquiring its lease, it still approached the negotiation of its terms with its eye focussed only on its own needs and desires and without proper regard for the reasonable needs of the other interested parties the more so since it ignored the need for some compensatory feature for the substantial rent concessions contained in the offer. Moreover its demands were based not on what it reasonably needed but on what it wanted and it felt that it was in a position to force this. As later events would show, it may even have intended to try to force a gift of the land to the university, but it is sufficient for the moment that it was uncompromising and aggressive in its demands. This state of mind was manifest in the evidence of its witnesses who spoke of this time. It led to a rejection of an offer that was the result of a conscientious attempt to provide a lease that met the needs of both parties and to an uncompromising demand that was unrealistic and unreasonable.

After that, extraneous events rapidly intervened. Because of EIE's deteriorating financial conduct, and perhaps because of Professor Messel's excessive demands, the Bank notified BUL on 8 July that its approval as mortgagee would be necessary to the terms of any concluded agreement on the lease but this did not mean that it had a change of heart for it would later try itself to negotiate reasonable terms with BUL. Then on 10 July before the negotiations made any further progress, the Bank withdrew its financial support for EIE, and on 10 August it appointed a receiver to the first defendants under its security. This terminated EIE's capacity to take any meaningful part in the negotiations for the lease and consequently they terminated also. It is perhaps of some weight in respect of BUL's present claim against the Bank that it did not call on it at the time to proceed with the negotiations because of some obligation on its part. With the wealth of high level legal advisers it had available to it, including eminent parents of some of its students, its failure to raise a claim of an estoppel, if it believed it had the grounds for it, may be indicative of the true position in its present claim.

It probably knew that EIE could not reasonably provide it withthe concessions it demanded, and believed that by using aggressive tactics and relying on the importance of the university to the project it could force a result that suited it. That was probably why on EIE's total loss of power it sought to negotiate with the Bank on other grounds. Its continued invocation of the unsustainable claim under the Heads of Agreement as a negotiating point, never accepting the invitation of the Bank's receiver, Mr Allpass, to justify it, is transparent. Nor does its later claim to Mr Allpass that it had an equitable lease provide any support for the present claim, for the respective grounds are entirely unconnected. And since an equitable lease was mentioned, its failure to include the present ground at that time should not have been due to an oversight. It is possible that as its other options have disappeared it has rationalised the qualified encouragement it received into its present claim.

Whatever the explanation, the rejection of the offer and excessive demands were unjustified by the obligation that the joint venturers had accepted. Witnesses such as Ms Nosworthy, Mr Gibson and Mr Schultz have acknowledged their recognition at the time of the constraints on their legitimate expectations that should have been taken into account before the offer was answered by such demands. During their involvement its effect only delayed EIE's resolution of the problem and it is interesting to speculate whether the result may have different if they had still been in office when the offer could at last be made.

Presumably in order to avoid the consequences of the Chancellor's flawed response to the offer and to preserve its former position, BUL now argues that by that time the parties had come very close to agreement on a formula for the lease. That is just not correct, and for obvious reasons it has not attempted to postulate the suggested result. In addition to the serious disagreement as to the concessions and the rate of rent, BUL was not prepared to accept the abridged period of the lease or the limited area to be demised as proposed by EIE, and there is simply no evidence that EIE was prepared to or could improve its offer. Professor Messel's conduct and statements over the period of these negotiations made it clear that BUL would not accept any medium-term lease or any reduced area, and would probably not pay any higher rent. If this were bluff, something that is not suggested in evidence, it was very dangerous, but it cannot possibly be said that agreement was close.

Even if it had been close, it would not have led to any long-term lease, for the final offer was a notable advance on the first and it is unlikely that EIE would have extended it further. Even if there had been some margin, which is very doubtful, it is most unlikely that it could have approached BUL's demands. It is quite possible that the final offer had already favoured BUL too much, and it may not have been allowed by the Bank. It evidently did not think that agreement was close for though it wanted the lease finalised it did not take over and continue the negotiations as it could have done. However, it is not necessary to decide these questions. It should be remarked that this claim that agreement was close does not sit comfortably with the further claim that EIE and the Bank were acting unconscionably and in bad faith. Although the first is wrong, there is no reason whatever to believe that they and Mr Ogawa were not acting with full good faith to try to provide the lease and to grant such concessions as they honestly felt were sufficient for BUL's purposes and consistent with reasonable affordability.

Because of the Bank's intervention to restrain any further concessions without its approval and because of the imminence of EIE's default on its obligations to the Bank, it should be inferred that the offer was the best that EIE could afford. The goodwill of both and their desire to produce a lease support the likelihood that they had gone that far, but even if there was some room for added concessions BUL's intransigence would probably have made that futile. As a further indication of its good faith, the Bank later seriously considered Professor Messel's further proposition, but rejected it.

To the extent that EIE was prepared to meet its duty as limited by the criterion of affordability, this was a proper tender of performance of its obligations and it would not matter if the terms of the proposed lease were beyond BUL's capacity, though it is quite possible that it may have been able to do so if it had accepted the offer. The conclusive refusal by BUL to accept terms other than those that were plainly unaffordable absolved EIE from any further duty to try to find an intermediate position that BUL could accept, and the changing circumstances would destroy this opportunity. The further passage of time was providing BUL with concessions in the way of rent-free occupation which, associated with what had gone before, was counting towards the cost that had to be affordable.

If, even in this most favourable atmosphere, BUL could not have afforded the rental asked by EIE, the financial obstacles to agreement to a suitable lease were insurmountable, just as they had delayed the earlier arrangements. If it could have afforded it, then because of the generosity of the concessions offered despite EIE's circumstances, it should have been accepted. That a lease was not produced in this climate demonstrates very clearly, if that were needed, that it was an impossible task, except on the terms offered by EIE. Though there is no evidence of it, for a variety of personal reasons Mr Takahashi, who controlled EIE, may have wished to provide further concessions, but as things stood in practical terms the offer was the best that the company could reasonably afford.

Disregarding the fact that BUL refused to entertain any lease that did not meet its demands, it is said by way of further criticism of the lease offered that it "made no sense whatsoever for a rent to be imposed upon BUL which it could not pay, thus driving it to its knees and perhaps causing it to fail". Again the premises of this proposition are flawed. It is not established that it would not have been able to meet the concessional rent terms, and it may also have been able to find other sponsors once it became independent and had a lease. From its own evidence, which is realistic, the principle inhibition of support from this quarter was the university's association with Bond and its lack of independence and he security of a lease. With the lease that was offered, all of this would be cured. In addition, with its new-found security, it could hope to attract a higher enrolment with higher surpluses.

It also does not follow that it would have been driven to its knees if it had been unable to pay the rent, for consistently with Professor Messel's wish that the lease be deferred until after the sale, the new owner would have had an interest in sustaining it. It is certainly not shown that the terms offered were beyond the range of BUL's actual or potential surpluses, alone or together with funding from other sources, including loans that may have become available with its new independence. However, if the rent were unaffordable to BUL, EIE was incapable of finding a better formula that it could afford to.

Of course, acceptance may have involved some risk that BUL naturally wanted to avoid; but again total concern for this artificially limits the question to the welfare of BUL alone. It takes no account of the alternative result, that providing such concessions on top of all else could have contributed to driving the joint venturers to their knees, to the destruction of the whole project. It was the financial fragility of the joint venturers that precluded the provision of all the concessions that BUL demanded, or anything more than was offered in the lease. The provision of sufficient concessions to avoid BUL's being driven to its knees always remained the goal towards which the joint venturers and particularly EIE strove, but this was always subject to the implied limitation. Ms Nosworthy made this clear in her evidence (T. 278).

The level of the concessions that was said by BUL in this argument to be impliedly promised also had an element of exaggeration. As argued, they would have freed BUL from all financial stress from this source, and with a sizeable margin. The return to the joint venturers for their own financial safety would have been totally postponed to BUL's comfortable welfare, even to the extent of its amassing reserves before becoming liable to pay rent. It is likely that the mutual understanding of when rent payments would begin, and in what sum, and with what increases, was much less generous than that.

There is an argument to the effect that the interest claimed by BUL attached to the land and endured as such beyond the time when EIE ceased to have the power to grant the lease so that BUL would be entitled to have the lease when it became able to pay the rent; and that this interest in the land retained its priority over the Bank's rights under the mortgage. In discussing this it will be convenient to avoid the complexities flowing from the unusual position that the reason for EIE's loss of control of the title was the appointment of the receiver to the first defendants, and that the Bank's use of the mortgage is a later event.

Its error is to ignore the content of the equity constituting the interest. It was no more than a right to have a personal obligation of the joint venturers, that is, to offer a lease in accordance with the conditions, fulfilled. There is nothing noteworthy about this except that the interest in the land cannot exceed the extent of the personal obligation. If that were performed by the offer, then there is no equity remaining to attach to the land. After its rejection BUL could not afterwards enforce the equity, for it was discharged. This deprived the interest in the land, which depended on it, of any content.

If it were assumed that the concessions were not enough to enable BUL to accept the offer, because further indeterminate rent-free occupation would itself amount to a concession additional to any concessions contained in the offer, it would have been unaffordable for that reason. The obligation did not extend to providing rent-free occupation until a lease could be accepted and then providing it, with further concessions if necessary Under the terms of the obligation itself it was performed by the offer that contained appropriate concessions according to affordability, and if the acceptance of it proved to be impossible, the equity ceased and no longer attached to the land.

To put it another way, it would be unrealistic to derive from the assurances that were given the supplementary inferential assurance that the joint venturers or EIE alone would preserve the asset indefinitely and at all costs in such a state of security as to ensure that it would be available if and when BUL became able to pay the rent and to allow it to be occupied rent-free or in return for a debt of dubious value in the meantime.

That would have included keeping the land free from any mortgage that might lead to the loss of the ability to grant the lease and doing nothing in respect of the first defendants that might unintentionally lead to that same result. There would be nothing wrong with this except for the indeterminacy of the time involved that would have made it unaffordable to grant. It was not as though BUL asked for a specific deferral that would be taken into account as part of the concessions, nor did it accept the receiver's later invitation to discuss a lease when suitable concessions may still have been arranged.

Further, even if it were found that BUL's express total rejection of any proposal other than on its own terms and its failure to revive the proposal did not relieve EIE of an obligation to leave its offer open, equity would not now enforce it after the delay and its consequences that have since occurred. Its rent-free occupation of the land in the meantime and the radical change of circumstances makes what was then affordable and reasonable no longer so, and it would be inequitable to enforce it.

The conclusion is that EIE and the Bank did all that was required of them and BUL has no further entitlement. It has tried to depict them as defaulting and devious, which was unfair since they were reasonably generous and conscientiously tried to provide it with a lease. It is almost a case where, as Hegel says, the essence of tragedy is the clash between right and right. However, a compromise was available in which each would have shared the benefits and the disadvantages in an equitable way according to their claims, and the benefits to all would have outweighed the rest. Unfortunately not content with that, BUL rejected that way when it was offered, and that is why Hegel's observation is not quite apposite here.

Many submissions have already been discussed in relation to the historical features to which they have special application. It remains to deal with the other more serious points that could not easily be dealt with in that way.

It is argued that ostensibly the joint venturers first and then EIE could have afforded all the necessary concessions up to the appointment of the receiver in 1993 because, as the history shows, they allowed the university to occupy the campus without rent for that period. This has an abundance of error. It ignores the obvious possibility that at first it was intended to be brief and temporary only, and that they could not escape it because there was no other practical alternative at the time. Its continuation for over four years was a further burden that EIE could well have done without. More importantly, the issue of affordability does not apply to that period because the concession was granted in that respect. If it is suggested that it can be projected to affordability of further concessions for the future, that is wrong because it does not follow, particularly as the earlier cost would make the additional cost less affordable if the whole is considered. It is also irrelevant since further rent-free occupation for two years and then payment of rent in arrears was offered by Mr Ogawa. That EIE did not escape from this burden earlier by granting a suitable lease again demonstrates how impossible it was at that time.

The extent of the concession that would have been needed has not been proved or even suggested by BUL with any pretence at precision so that its affordability to EIE could be measured. The best that it can argue for is that "BUL would commence to pay rent according to its means, but not so much as was detrimental to its continuation as a business", which would have been a reasonable measure except that its application was to be in the future, which was very uncertain. BUL's failure to identify the terms that would have met this problem is also significant in respect of other important discussions.

It is argued that if its obligation to pay rent began only after an unprescribed rent-free period that would permit it to develop sufficient financial strength to pay it, EIE would somehow be compensated. It is not possible to say this in respect of such an indeterminate amount that would certainly be lost. Any payment after that time would not enable them to recover that in addition to all the other burdens associated with the university that it was bearing. This argument adopts a different and incorrect criterion as to affordability.

More importantly, the return suggested could not compensate them if the total burden including the concessions had caused irreparable harm before a commercial rate began to be paid. Further, for the reasons explained above, to have required that the existing state of affairs should continue indefinitely to the exclusion of any relief for EIE that would be produced by a sale at a suitable price would have been most unfair to it.

The only fair and relevant inference that could be drawn from the long period of rent-free occupation that was allowed is that EIE, with the Bank's consent, was continuing to exercise its goodwill to the university, with the probability that by the offer it made it extended the grant of concessions so far as it was able.

Although that argument works very badly against BUL's case, it is taken further and with similar results. During the whole of its rent-free occupation since the appointment of the receiver in 1993, it is said, although BUL was "cash positive" the receiver did not ask for a particular rent but merely suggested discussions on the subject; and further, in this action he has not claimed rent for that period. Consequent upon these points, it is argued, the condition as to affordability has had no practical operation because this further concession particularly demonstrates that it was within the capacity of EIE with the aid of the Bank to afford to have granted more than it had offered.

The difficulties of this argument are many and various. First, the receiver's conduct after he took control is totally irrelevant to EIE's former capacity to afford the concessions. Further, at this time the Bank's position in controlling the receiver was completely different from before, for it was moving to dispose of all the land as best and as quickly as it could, and it even negotiated with BUL over its possible acquisition of its campus. Its restraint from creating the turmoil of ending its temporary rent-free occupation in those circumstances has nothing to do with EIE's capacity, then or earlier, to afford the indefinite future concessions. It may have suited the receiver's purpose of obtaining the best sale price for the lands to prop up the university until they were sold by not pressing for rent, though it is likely that for some of this time it hoped for a better solution.

It is also incorrect to base any argument on the proposition that BUL was cash positive at the time when the receiver took control, or to imply that even if it were so, it would have been able to pay any reasonable rent at once. In the end the 1993 accounts showed a small surplus which would not have been nearly enough to pay a proper rent, and though in his evidence Professor Messel emphasised that at the time when the receiver was appointed it was facing insolvency, there must be some allowance for his hyperbole. In any case, the receiver did not know its financial position except that it had not yet been able to pay rent, and Professor Messel denied his several requests for access to its financial papers.

It is also incorrect that he did not ask for rent, but he wanted to have information of BUL's capacity in order to determine a rent that was reasonably within its. The argument tries to take advantage of his reasonable approach in trying to reach consensus on this rather than demanding some amount that it might not be able to pay. That he did not exert strong pressure was probably due to some of the considerations mentioned above, but his request was made more than once, and the highest point of significance lies in BUL's response, or lack of it.

In any case, this is all irrelevant to the affordability of EIE's allowance of greater concessions. Those that it offered would have seen BUL occupy the premises without paying rent until at least June 1996, which was well after this action was begun, so the receiver's indulgence at its best was less than EIE had offered. The essential fact is that up to the time when it lost its power to provide a lease, it could not afford more than it offered.

It is argued that the condition of affordability was satisfied because a stage was reached where the joint venturers were, or at least EIE was, capable of providing the necessary concessions . Except for the offers made under the final scheme, this is not correct and the submission depends on an incomplete view of the circumstances. Until that time, BUL's need for substantial concessions were unquantifiable in time and amount. Bond could not contribute anything to the project and in addition to all that EIE had already subscribed, further funding and other heavy burdens were then cast on it alone. Then it had the uncertainty caused by Bond's failure. These have all been catalogued above.

By that time it had its own financial difficulties, and the fact that it did not provide concessions indicates that it could not afford them. Although the Bank was providing support, it was also applying a standard of commercial strictness to its dealings. Although nothing suggests that that was not reasonable in the circumstances in their respective interests, or that it did not approve of reasonable concessions, it would not have permitted excessive philanthropy that would prejudice EIE's financial well-being and the Bank's own interests. The totality of all of these excluded any acceptable offer until the uncertainty relating to Bond was removed, by which time BUL's own capacity to pay strengthened and became more definable and the affordability of the more limited concessions could be assessed. Because it became affordable, the offer was then made in the belief that it was sufficient to meet BUL's needs and would be accepted. If it was not sufficient, then the concessions demanded were clearly unaffordable.

Next, BUL argues that the interest of a party who is encouraged to rely on a promise of an interest in land "cannot be defeated by the mere fact that the landholder becomes bankrupt". Equity, it is said, will protect the interest in the land. This is true on the assumption that it makes, that is, that the interest so created is independent of the capacity of the promisor to afford it. As the interest here was the right to be offered a lease on terms that reflected certain concessions, and as that was offered and refused it has no further right.

Further, the extent of the concessions allowed in the terms offered was limited by the condition of affordability, and if their insufficiency to allow acceptance had been the result had been the result of insolvency, then the failure of the interest would have been due to the conditional term in the interest itself that was triggered indirectly by the insolvency. The argument ignores this integral contingency within the interest or it tries to demote it to an inferior or postponed status. As the condition operates to defeat the interest, equity will not support it against those of creditors. The proposition is also unmeritorious and inequitable. It seeks by that means to obtain substantial gratuitous but conditional concessions in preference to existing creditors which provided the funds that saved the project.

The same approach was an important, though not a central, feature of another of BUL's arguments that "It is of significance that the whole project was predicated on the existence of a successfully operating university". This, with respect, is patently correct: it is its implications that are controversial. That for this purpose it was intended that BUL would have long tenure is also broadly correct and was never seriously in issue. This, it is argued, conveyed an implied promise to that effect. This does not follow. The project was also predicated on the joint venturers' making a profit and not suffering a loss through their assistance to the university and though it was intended it was not essential to the project that BUL had to be the party conducting it.

The preservation of the joint venturers from commercial harm through such assistance would probably have been accepted by anyone who thought about it as being at least equal to if not overriding the risk that the university might not be successful. This and the equally basic factor that the project was to produce substantial profit were subject to risk and conditions and there is no apparent reason why the plans for the university should not have been similarly contingent.

The assurances that they gave never obliged them to guarantee that result, particularly to the extent of causing their own financial harm. This became more significant as plans were disappointed, fortunes waned, and the university's demands for help grew. They persevered but were hampered by its excessive cost. The final result was not intended nor was it due to any failure to honour their commitment. The lease offered was the best that could be afforded and should have led to a successfully operating university. If contrary to the probabilities BUL could not have undertaken its obligations, the result was simply due to the same adversity that defeated the whole project.

It might also be remarked that by reason of the benefits it has already received, the university will probably be successful now, even without a lease. In answer to this, BUL's argument would be amended to say that it was predicated that this university would be successful by having a lease on this site, but it is quite a different proposition. While that was intended if it could be achieved without unreasonable harm, the two were not linked as a matter of necessity. If the cost were found to be unreasonable, there were other ways by which the success of the university and the benefit to the lands could each be achieved.

One recurring difficulty with the respective parties' arguments is that they focus on part only of´each of the various arrangements and ignore other significant parts and relevant features of the context in which they were understood They also neglect the historical developments that defeated each scheme so that change became imperative if the common goal of a lease was to remain viable. When faced with the need to address the conflict between BUL's need for substantial concessions and their affordability to EIE, they assume self-serving values as to their relative importance or totally devalue the other.

Unfortunately, this tendency to a selective view has probably led to some misjudgment at the time and to later rationalised claims as to past understandings and their significance that disregard the interests and difficulties of others. For the most part, it is not that statements of the general type alleged were not made nor that the events recited did not happen, nor even that the expectations referred to were not held, so far as they go, but the reliable evidence shows that their meaning was different from what is now suggested. The difference was small but, if the concessions finally offered were insufficient, it was critical. There must also be a serious suspicion that it was usually appreciated by all relevant parties, at least to some extent.

In a related contention labouring under the same kind of error, BUL claims that the joint venturers knew "that BUL held the belief that they were entitled to long term tenure" and was acting on that belief in the expenditure of moneys and the conduct of its affairs. This is incomplete and incorrect. They knew that it believed that they would grant such tenure on terms as to rent which it could not afford and that it would allow concessions to help it to accept it but only to the extent that they could afford them themselves. The differences are fundamental and cannot be obscured by oversimplification. Until a late stage, there was no thought of entitlement, and when it was suggested EIE denied it. Further, throughout the transaction the joint venturers by strong implication through their words and conduct denied assurance of any entitlement.

It was partly on the basis of the expectant hope generated by this correct version of the belief that BUL first undertook its expenditure. The perceived link between that and the hope of a long-term grant of a lease is reasonable, but when it suggests a belief in an entitlement as a factor, it goes too far. The positive factors and the relative weakness of the apparent risk in the early stages induced high hopes of a successful outcome although it was not absolutely assured. Although strict prudence might have demanded something more secure, this optimistic prospect justified the expenditure, especially as the funds were coming from sympathetic benefactors. Once this heavy investment had been made, the preservation of what had been begun was an added motivation. After that, the hope that EIE would be obliged to provide the necessary concessions for a lease and the qualified assurances that confirmed its goodwill justified the additional expenditure of funds that came from the same source. There is nothing in this point

It is argued that in addition to the commercial element of its relationship with the joint venturers, Messrs Bond and Takahashi personally displayed an altruistic and philanthropic disposition towards it and that this engendered its belief that it would be more than a transient institution, with the consequence that it justifiably expected to be granted at least a long-term lease at any cost. The thrust of this is similar to that relating to the inferences to be drawn from the many benefits that the joint venturers bestowed and the encouragement they expressed, and it has the same merits and defects. Its major premise may be accepted for whatever the complexity of their motivation, they had some philanthropic commitment to the university's welfare. It is also true that their plan for the project encompassed its establishment as a permanent institution on the site, with suitable tenure. However, this argument too refers to only part of the transaction without regard to its conditions. Though the personal interest of those gentlemen should have fortified the belief in their goodwill, they made it abundantly clear in a variety of ways that their philanthropy and altruism were not unlimited. In any case, they were responsible to the shareholders and creditors of their companies and it is doubtful whether BUL could reasonably have drawn any favourable inference from the philanthropic factor if it depended on a preference over the legitimate claims of the creditors.

BUL argues in further support of its same general proposition by implications from the facts that "the parties were involved together from the outset in the establishment and then the operation of a university" and that "the Plaintiff was incorporated specifically to carry out one purpose". These are correct, but both refer to intentions that were provisional, and the implication that it would draw from them is subject to the same reasoning.

This also applies to the continuation of its argument which says that because all the proposals concerning the lease had one common element, "namely, that BUL was to occupy the campus", and that "(n)o structure or proposal envisaged only a temporary residence by BUL or a right to occupy limited in time or by some other event". There was no express statement, the argument goes, "of any limits or qualifications on BUL's entitlement to occupy the campus, and an implication of a qualification, such as that no right to a lease would arise until such time as it could pay rent, would not have any validity unless it appeared so clearly as to come to the attention of all the members of the Council".

The implicit conclusion that these are said to support suffers from a number of errors, some of which have already been discussed. First, the common and continuing theme throughout the transaction that a lease would be granted attained those characteristics only because that was the continuing common goal during the transaction, and its possibility of fulfillment remained open until just before the end. It may well have ceased when EIE found that BUL refused the best that it could reasonably offer. But the basic point is that the joint venturers persisted to attain the goal and that this resulted in the offer of a lease with suitable concessions. It was because of the consistency of the goal of long tenure that there was no structure that "envisaged only a temporary residence" etc., and so these facts lead to no valid inferences other than that there was a consistent philanthropic commitment, albeit limited, throughout this period to grant a suitable lease.

Otherwise this `common element' that is invoked was always subject to relevant conditions. Sometimes they were express, such as the payment of a commercial rent with limited concessions, and sometimes they were implied but no less clear. On a wide range of the evidence, they were far stronger than any suggested implication that BUL was entitled to a lease with full concessions whether they could be afforded or not, which was contrary to not only the realistic implications of the circumstances but also the understanding of the responsible Councillors.

The second error of the argument lies in its reliance on the absence of any express limit on BUL's entitlement to occupy the campus. This argument also suffers from the false assumption that in a special relationship such as this, which it invokes when it pleases, the absence of express statements of terms means that none can be implied, such as that if the university's continuing occupation depended on concessions that could not be granted, it would of necessity cease.

Just as many of its own valid propositions, such as the intention that a university should have long tenure of its site, depended on matters that were understood but unsaid because of the special nature of the relationship, so too was it in respect of the conditional aspect of the intention. The parties did not speak in explicit terms of their arrangement, as might be the case with strangers at arm's length. The expression of such things would have been out of keeping with the atmosphere of friendly trust and cooperation that has been referred to before.

It might also be remarked parenthetically that equally, the joint venturers made no express statement of BUL's entitlement to a lease as distinct from their committed intentions to provide it. Nor was there any clear statement that all the necessary concessions would be provided even if they could be afforded, though that was probably implied.

The joint venturers always tried to encourage the university and kept explicit negative statements to a minimum. Prior to the Bank's appointment of a receiver, the position was never reached where the matter became critical, for EIE was still trying to reconcile all interests. Consequently, there was no occasion to speak about it.

The third error lies in the proposition that any implied reservations to the proposed grant of the lease should have been made abundantly clear and communicated to "all of the relevant members of the council", whoever they might be. This misses the point that they were very clearly seen and understood by at least some relevant members of the Council who thought sufficiently about the matter, and that is enough. If any others chose to rely on the favourable part of the assurances, they are bound by what they should have understood, since it is not shown that the other side knew of their error or should have known of it. Further, because BUL was a single entity whose representatives should have shared any relevant information, they cannot claim to have relied on a state of affairs that was contrary to the knowledge of other members.

The reason why the reservations were not voiced very often has already been discussed. It is not to the point that Professor Watts drew some comfort from the statements of support by the joint venturers (T. 134 - 135). That was a reasonable response but it does not mean that the statements implied more than genuine goodwill, which itself should have been enough to give him some comfort. He knew very well that they were not unconditional and, as he also implied, it was never guaranteed that the concessions would be available.

Nor does it signify anything that there was no indication that concessions that would permit continuity of tenure would not be attainable (T. 626 -627). Equally, there was no indication that they would necessarily be attainable, and this is because it was not known one way or the other. Such concessions were in fact offered, but even if it were assumed for the sake of argument that they were insufficient, this absence of indication means nothing because that could not have been known until the end, and even at that stage EIE was still trying to find a compromise solution. The omission to indicate at all was the natural result of this.

Further, at about the time when its need for such extensive but indeterminate concessions became more germane, the Council also became aware of the serious financial problems of both joint venturers and the heavy additional burdens thrown onto EIE. This combination of competing claims of at least equal importance should have warned Professor Watts' that the full concessions might not be attainable. That it probably did so would explain the very careful way in which he framed his answers in evidence, but in any case it does not matter whether it did so or not for he should have known it.

It is not relevant other than to explain how he fell into overly optimistic error that he "never believed at any time that the original intention of the joint venturers would not be met in some way" (T. 658). No doubt insufficient prudence would have led to that state of mind if it really existed, and superficial acceptance of all the positive features could have led to such optimism because of the apparent remoteness of the risks. When dealing with entrepreneurs whose business involved large risks and in a world of rapidly changing economic forces, to fail to allow for such a possibility would have been a serious oversight. Such a risk should not have deterred him in those circumstances, but that is different from ignoring it.

By way of contrast, Ms Nosworthy confirmed that, although on Bond's failure the Council drew some comfort from EIE's stated intention to buy it out of the venture, it knew that any future assistance depended on EIE's ability, supported by its commitment, to try to provide it (T. 238). That was a much more realistic, and credible, approach. The consequence was that she was not deterred by the risk from continuing, but that if the chance proved to be adverse then BUL had to bear the consequences. Fortunately, they amounted only to the limitation of concessions and benefits that applied to the lease that was offered.

For much the same reasons, it is equally irrelevant that some of the Bond and EIE witnesses say that it was "given" that BUL would be granted a lease, or that there was no issue as to that fact, or that it was never questioned. Many of these witnesses were unreliable particularly on matters of general retrospective perception or assessment that were difficult to challenge, such as these. Many of their statements referred only to general expectations that were prompted by particular discussions without reference to the qualifying factors and were of little use. If the witnesses had said that it was "given" so far as the joint venturers could afford the cost of concessions that BUL would need in order to accept it, they would have been more precise and credible.

In addition, the perception of these people does not matter. The conditional nature of the expectation was known to significant persons within the Council such as Ms Nosworthy and Mr Schultz, and on this issue it is the knowledge and understanding of the Council as conveyed to its members by the joint venturers and by the circumstances themselves that are essentially material.

A similar argument is mounted on the basis of the permanence of the buildings constructed by the joint venturers. They were clearly dedicated to long-term university purposes and particularly for the needs of Bond University. This, it is said, conveyed the same message. The features mentioned would certainly have fortified confidence as to goodwill and commitment and they may have increased optimism. It is the further step that is not justified. It did not exclude the conditions attached to that project. For example, if the university had quickly proved to be an abject failure that the joint venturers could not rationally support, no-one would have expected the grant of a lease that would quickly pass into the hands of a liquidator who would have all the benefits of the concessions granted at the lessors' cost. So too if the full concessions could not be afforded, or if the concessions offered were reasonable but rejected by BUL as part of a demand for excessive benefits.

Nor were the nature and dedication of the buildings an unequivocal message that Bond University would be their only possible occupier, and indeed some did not entirely conform with BUL's wishes. It would have preferred them to be less lavish so that the expenditure could be directed in other ways more beneficial to its operations. However, when the buildings were constructed it was intended that they should be occupied by Bond University on a long-term basis, so far as that could be achieved within the total plan. It was equally intended at that time that a commercial rent would be paid and that the whole be sold off at a price at which the joint venturers could recoup their outlays. The only part of this that was consummated was the offer of the lease.

In summary, despite the complexity of the history of the matter and the variation of the circumstances and the parties' responses to them, the primary issue is really essentially short. These arguments all support the proposition, never in issue, that because of their continuing goodwill and commitment the joint venturers had a persistent intention throughout to grant long tenure; but to the extent that by borrowing the facts supporting that, the arguments go further and claim that they also support an unconditional entitlement, they do not discriminate between the two possible inferences nor justify the extension. For the most part they do not touch the condition of affordability or the question whether EIE discharged its obligation by genuinely striving to find suitable terms and by offering the lease that it did.

The lease that was offered and rejected met the competing claims, but even upon the hypothesis that it did not do so, BUL's case would not have been made out. There was no departure from the terms of the assurance and therefore no foundation for an estoppel. By divorcing the grant of a lease from the conditions so that it should have no risk at all, BUL's interpretation is not consistent with the circumstances and actions of the parties, the climate of understanding in which all transactions were conducted, or the actual understanding of at least some important members of the Council.

It is regrettable that the joint venturers' acknowledged generosity and genuine commitment to the university's success and their intention, which they actively and conscientiously pursued, to provide it with a lease so far as circumstances would reasonably permit, have been unfairly distorted to the exclusion of their reservations of their philanthropy for the reasonable protection of their own interests and those of their creditors. The same applies to the co-operative conduct of the Bank which financed EIE to support the university, and allowed it to provide it with rent-free accommodation and to offer a lease with substantial concessions. In its own right it also considered granting BUL some advantages but the latter's conduct was unacceptable and it asked for too much. It is also unfortunate that EIE has sided unfairly with BUL against the Bank.

These criticisms of BUL's arguments are not intended to suggest that it did not have some expectation of receiving a long-term lease. In concentrating on its own serious problems and failing to consider the ordinary entitlement of the other parties to exercise reasonable self-protection in their philanthropy, it withheld recognition of the limiting factors or did not give them adequate consideration. Its concentration on the favourable aspects may have been encouraged by EIE's perseverance in seeking ways to provide a long-term lease, so that its hope grew into an unjustified expectation. It may also have dulled its understanding that EIE's obligation abated with its diminishing capacity to afford it; or alternatively when it offered a lease that contained all the concessions that it could reasonably afford, it met its obligation.

This misapprehension may have been deepened by its mistaken calculation of the extent that EIE and the Bank would be forced to meet its demands because of the importance of the university to the project as a whole. It also probably owed something to its exaggerated belief, at least for part of the time, in the wealth of its sponsors.

Unfortunately, these misjudgments, perhaps contributed to by its ignorance of the gravity of EIE's position at that time, may also have led to its uncompromising stance in the rejection of the proffered lease. Even when EIE lost the asset, because the Bank had co-operated in EIE's efforts to provide a lease it was probably assumed that it would be vulnerable to the same pressure. If so, that was a serious error of judgment. The Bank did not need its presence. It was probably disaffected by its aggressive style, but as its later conduct showed, it was not averse to its welfare and would probably have given it some preferential treatment where it could have done so without harm to the interests it protected.

If the justice of the result has any bearing on the issue, it is useful to note that EIE's financial difficulties must have been seriously contributed to by its very large contributions to the joint venture that provided the BUL land, in paying for the very costly buildings erected on it, in saving the whole project by buying out Bond's interest, and in providing funding of about $94m. by way of loan to BUL. On top of this, BUL's inability to pay rent delayed its projected sale of the leased land to an investor, which would have furnished it with a substantial amount of cash that may have kept its creditors satisfied, at least temporarily.

Much of this was possible only through the advances made by the Bank. Without all this, BUL would have been wound up at a fairly early stage of its existence. As it was, the many and very substantial benefits it has received have enabled it to survive and become a viable and very valuable business at the cost of substantial loss to both EIE and the Bank. It was offered and refused a lease with substantial benefits that would have given it a good chance of tenure for a very time. This is all irrelevant to the respective rights of the parties, but because of BUL's attack on the Bank and EIE, it is desirable to note these results lest there be a misconception as to where the losses have fallen in this transaction.

The result is that BUL has not shown against the first defendants that it is entitled to any remaining interest in the land.

Since it cannot obtain a remedy against the first defendants, establishing the liability of the Bank is vital to BUL's case. It was not a direct party to any of the transactions until its appointment of a receiver to the assets of the first defendants in August, 1993, but from 1 January, 1991, it had become indirectly involved because it effectively exercised general supervisory direction over EIE's management, with control, but not total control, over financial affairs where it saw fit. It did not assume full direction of all aspects of the business so as to replace the persona of EIE for that purpose or to be knowingly concerned in all the detail of every one of them.

Under its control EIE's conduct was not contrary to any relevant representations or promises and the present issue is distilled into the question whether its own conduct created any estoppel. Its support of EIE may well have fortified BUL's hopes of a successful outcome, but it did not carry any intimation of entitlement such as is argued.

It must have had notice of any relevant fact coming to the attention of EIE, and this circumstantial implication is fortified by the absence of any evidence from it to the contrary. This included notice of the conditional intention of the parties that the university should have a long term lease, but also that it would pay a commercial rent subject to reasonable concessions. It also knew, as was the fact, that no lease was in place for that reason, for its officers spoke on different occasions of the need for negotiations to try to agree on suitable terms. It was not expected to assume that EIE had to provide unaffordable concessions that would conflict with its own security for the funds that had saved the project. It knew of and permitted the negotiations in which the offer was made by EIE.

However, when it took part in the control of EIE, that did not place it under any obligation beyond observing EIE's responsibilities and it was entitled to say, as it did without contradiction, that it was not a sponsor of BUL with any moral or other obligation to provide it with benefits at its own expense. It had never said or implied that it would do so, and on the contrary it quickly repudiated the idea when that was implied. It had been entitled to require EIE to protect its interests and this included limiting the concessions in the lease that it would be prepared to grant.

It would be amenable to estoppel if it were a party to any relevant representation or promise for which it was responsible, even if it were nominally acting in EIE's name, or if it directly made a promise or representation in its own right. However, it did no such thing. Its

representation or promise through Mr Kamaike in connection with the registration of the mortgage was limited and complied with when the offer was made. Even the agreement relating to the caveat merely preserved the priority of any interest that BUL already possessed.

It had not otherwise been a party to any assurance or understanding that gave BUL's interest any priority over its own. Except for those that could be said to have been expressly made on behalf of the Bank itself, the evidence does no more than show that its officers' assurances to BUL bound EIE only, for in those discussions they had no standing other than as its agents and they presented themselves as such. In any case, nothing was said that can support any claim for estoppel. It can however be said that if it had become relevant the Bank could not say that EIE's action was unauthorised or that it had no knowledge of the matter.

Some argument has been directed to the oblique use of the term, "lease", in two of the Bank's internal documents which were referring to tenure, but not to any point for which the issue of entitlement to a lease was relevant. It is difficult to understand what is to be made of it, even if it were assumed to mean that the authors mistakenly thought that BUL had a lease, which of course it did not. The Bank consistently asserted that BUL had no entitlement but it intended to grant one on acceptable terms. These mistaken casual references by subordinate officers did not mean that the Bank or EIE had committed themselves to provide one at an unacceptable cost when they had not. The suggestion that this usage indicated an understanding of the authors that BUL was entitled to the lease suffers from the same weakness.

It is far more likely that the term was loosely used because the issue of was not relevant to either memorandum and because of the Bank's genuine co-operation towards the intended result. Its factual inaccuracy may also be comfortably understood since BUL was a tenant at will in anticipation that a lease would be granted. It is fortunately true that the authors were not called from Japan to explain their thoughts, but these are devoid of any meaningful weight. Otherwise the documents were irrelevant as they were not communicated to BUL.

The knowledge by the Bank of EIE's affairs does not advance BUL's case that it acted contrary to anything it said or that it was 'knowingly concerned in' any false or misleading conduct within the meaning of the Trade Practices Act 1974. Indeed, it did no more than represent that it would co-operated in trying to arrange a lease that would meet the legitimate competing interests of the relevant parties as far as possible and would conform with EIE's assumed obligations, and it did this. It left its implementation in the hands of Mr Ogawa, an EIE officer who could be trusted to try to achieve the desired result, and who had some freedom of action within the range of his authority and the general supervision of the Bank.

It is not significant that "there is no document emanating from the (Bank) to BUL, or from EIE under (the Bank's) control, which asserted that there was no entitlement to occupation or a lease". In the first place, the Bank did make such an assertion when the caveat interfered with the registration of its mortgage. It had EIE's solicitors write expressly denying BUL's right to maintain the caveat. This must be translated as a denial of its right to a lease on which the caveat was founded. The letter continued by pointing out the later consequences "if (BUL) establishes an entitlement to a lease". (Ex 252). This too predicated non-acceptance of the claim. Again through its receiver it denied any entitlement soon after he took control, when it was no longer possible to reach a suitable result because of BUL's response to the offer.

More pertinently, apart from these occasions there had been no need to make such an assertion because it was always prepared to and did accede to the grant of a lease in conformity with EIE's capacity to afford it; and it was content to accept EIE's decision to allow BUL to remain in occupation until the matter was resolved. This co-operative approach made it unnecessary to cause gratuitous unpleasantness by such a denial except on the rare occasions when it was forced as an answer to the suggestion of entitlement.

BUL is correct in arguing that at the time when it lodged its caveat the Bank must have known that it was claiming entitlement to a lease: but it was seen as no more than a claim, the validity of which it denied. Having done this, as there was no practical distinction between its intention and BUL's claim it was reasonable and practical that should avoid further conflict when it was unnecessary. By trying to put a lease in place under the new scheme, it did not imply any recognition of the claim rather than simply act in accordance with its voluntary intention, which also included an element of self-interest.

The argument that it was somehow bound because it knew of Bond's support of a lease carrying unlimited concessions that would match BUL's undetermined capacity to pay is irrelevant. By that time, Bond was discredited and contributing nothing to the project, and the Bank would have been justified in regarding its opinions as of no force or value and its motives as no more than to preserve some form of self-aggrandisement through the university bearing its name.

BUL's knowledge and understanding of the relationship between the Bank and EIE at this time is important to the determination of its expectation of benefits from the former. It knew of its funding of EIE to buy out Bond and it knew of the Bank's serious participation in the control of EIE to protect its own interests. It must have realised that this limited EIE's capacity to give it concessions, although the Bank supported the intention of trying to provide the lease while that was not adverse to its interests. It could not have believed that the Bank was prepared to allow excessive concessions as an act of simple philanthropy to its own detriment, but it probably believed that it would approve of concessions to preserve the university's viability as an essential part of the project, just as it had approved of funding for operational purposes for the same obvious reason.

The Bank's willing but limited co-operation has been presented as evidence that it bound itself to ensure that a long-term lease was provided, no matter what the cost to itself, and that it acknowledged BUL's entitlement to one. This just does not follow. The only valid inference is that it was willing to co-operate with EIE's attempt to provide a suitable lease but only so far as that was financially beneficial to it. It had no obligation to BUL and on the contrary it had a duty to those other banks whom it represented.

For the same reasons, its later description of BUL as a tenant as part of its marketing of the campus lands proves no more than that it still intended to try to negotiate a suitable lease in the event of a sale. Indeed, the information proffered by Mr Wran in trying to effect this sale to a potential buyer said that BUL had no lease and made no suggestion of its entitlement to one, but this was done on the expectation that on any sale the control of BUL would pass to the purchaser. It is not necessary to descend to consideration of these matters. It is enough to note that the incomplete picture that is presented as the basis of the argument is unsatisfactory.

A similar argument referred to evidence that an internal EIE exercise of about that time examined projected financial results based on the existence of a lease, and that other communications from it, made in the course of attempts to sell the whole university structure, indicated that a lease of the campus would be provided to BUL on a long term basis. There were also references to a lease in other communications of a similar kind. None of this is significant on the present issue. It merely demonstrates that the Bank's control did not interfere with its genuine intention to try to achieve that result and an optimistic hope that it would happen. It was what EIE tried unsuccessfully to achieve when BUL rejected its proffered terms. The projections and other actions were part of the investigation that led to Mr Ogawa's draft terms.

There was nothing contrary to all of this in Mr Kamaike's earlier indication to Mr Wran that there would be a lease, subject to the working out of the details through the later negotiations that he foreshadowed, for he obviously expected that the action he would take would achieve this. It was BUL's uncompromising excessive demands that prevented it. The contrary argument similarly misinterprets what he said and does not allow for the sensible and realistic notion of affordability in his reference to working out the details. This has already been the subject of analysis.

Of more importance is the evidence of what BUL calls "encouragement" by the Bank of its expectation in conversations between Ms Nosworthy and Mr Wran relating to the caveat. It is claimed that on the instructions of Mr Kamaike, an assurance of a lease was given, and in reliance on that Ms Nosworthy allowed BUL to agree to the registration of the Bank's mortgage. Again, this has already been extensively discussed in the narrative. It is probable that there was no assurance to do more than what was later done. Whatever it was, it did not support the proposition that the Bank was expected to forego reasonable protection of its interests. That the negotiations would determine whether the lease could be agreed or not is clear from Ms Nosworthy's report to the Council and from the unchallenged remarks of EIE's representative as to its contingent nature.

The condition on the registration of the Bank's first mortgage as subject to any prior interest of BUL is wide enough to include any equitable interest that EIE would be estopped from denying. This postponement did not itself purport to create nor did it impliedly acknowledge any such right since it was accompanied by a denial of it. Consequently it had no practical effect.

There is nothing to show that the lease proffered to and rejected by BUL in June, 1993 did not meet the criteria implied in the assurances in which the Bank was involved. As its later conduct would confirm, this was the product of a genuine attempt to achieve that result through the provision of substantial concessions on top of some years of rent-free occupation. It conformed with the needs of the new scheme for making the concessions affordable. In the result, it is not shown that there was any failure to comply with the terms of Mr Kamaike's assurance. It is relevant to note that during the negotiations that followed, although there was dispute as to various terms, there was no suggestion that what was offered was in breach of any assurance or promise.

These considerations are said by BUL to be irrelevant, for it argues that the effect of Mr Kamaike's assurance was that the rent concessions it demanded would have been affordable simply because there were sufficient backing funds in the combined hands of EIE and the Bank to support them, and that any financial harm suffered by either in supplying them is irrelevant. The general considerations as to this test have been discussed earlier. This rather extreme proposition ignores the of mutual recognition of the limited extent of the philanthropy that had been expected to that time and of which Mr Kamaike's assurance was a natural extension. It was not something forced out of the Bank or EIE, which could have taken more severe measures to have the mortgage registered, such as tightening its threat to withhold any further promise of future funding. There is just no reason why the Bank should have undertaken further potential loss through reducing the effect of the practical factor of affordability.

The result of these observations is that it is unlikely that effective estoppel would have arisen against the Bank from any source. If BUL already had an equitable interest in the land against EIE, then this estoppel is unnecessary; and if it id not, then it would not be entitled to any additional remedy that it now seeks. In any case, any remedy would be very limited and of little practical effect.

In summary, commitments made by or on behalf of EIE were conditional, but to the extent that they could lead to the creation of an interest, they would have had priority over the Bank's interest. In the event they did not do so. Except for specific statements on behalf of the Bank, claims that its involvement somehow gave BUL an understanding that it was underwriting all BUL's needs itself, regardless of cost, are forced and unreliable.

Mr Kamaike's assurance given on behalf of EIE involved the Bank as well, but the substance of it was that he was confident that the Bank's support would lead to a successful result of the negotiations, assuming BUL's willingness to be reasonable. Although there was a potential interest that could have come by estoppel out of these various assurances, as events turned out, the mortgage was unaffected by the prior interest, and the Bank was not estopped by its assurance.

There are side issues as to whether BUL acted in reliance on the assurance and, as cognate questions, whether what it did was to its detriment, whether the remedy should extend to estoppel relating to an interest that did not previously exist in unconditional form, and whether the remedy claimed would be disproportionate, all of which are academic as the result of the above conclusions. These will be dealt with under their respective headings and may be conveniently disregarded here.

This subject is irrelevant since there is no ground for equitable relief, but it has been fully argued and it is prudent to discuss it in case the above findings are wrong. It is a clear case and its effect would have been significant.

When it withdrew its support for EIE, in order to reduce the harmful effect of the adverse publicity on BUL, the Bank publicly stated its intention to continue its support of the university and expressed the wish that it would carry on without interruption. Again BUL says that it interpreted this as some irrevocable commitment to its security of tenure through a long-term lease. Professor Messel was quick to call them "undertakings", but they were no more than an expression of the Bank's willingness to declare its support at that difficult time in order to counter the mischief of any adverse public perception of BUL's stability due to these events.

Because of its continued support, its former co-operation with EIE's offer of a lease, and its own later discussions with Professor Messel relating to a possible grant of tenure, it is quite likely that it would have been prepared to discuss the matter of a lease further if sensible proposals had been made to it. That did not happen, but more relevantly to this issue, it did nothing to indicate its willingness to go beyond reasonable support. It seems now that it was dangerous to make even these mild and limited gestures because every positive act is now said to have been interpreted as the confirmation of an absolute promise of a long-term lease, whatever it might cost.

From that time, EIE could no longer afford and did not have the power to provide rent concessions necessary to a grant of a lease that BUL could accept. The lease that had been rejected had met its obligations and those of the Bank and BUL had shown no inclination to discuss reasonable terms. Its best hope was to obtain a lease through the good offices of the Bank with the same concessions as had been incorporated in the earlier offer, but it made no attempt to reduce its demands and revive the negotiations.

It claims that it could not have undertaken such an obligation and it took that stance at the time. Professor Messel pointed out to the Bank soon after (Ex 371) that the landlord was meeting the annual maintenance costs of $3.5m. and had "no prospect of receiving rent for some years". History reveals that this was not correct and it does not take into account the prospect of support from other sponsors and of the new owner once a lease and independence had been achieved. He persevered in all his demands including those as to area and duration rather than to seek rent concessions by modifying his demands in this direction.

This communication confirmed the non-negotiability of his June demands and the finality of his rejection of the offer or any variation of it that did not meet his terms. It unequivocally indicated BUL's unwillingness to accept any lease that obliged it to pay any reasonably commercial rent then or "for some years". Moreover, apart from recourse to the 'Heads of Agreement', he did not suggest that the Bank was under any obligation to provide any concessions.

The receiver of the first defendants, Mr Allpass, then began the process of marketing the campus. After some discussions with him on 31 August, 1993, Professor Messel, using the importance of the presence of a university to add value to the whole asset, sent direct to the Bank a proposal that it should make a gift of all the relevant land and buildings to BUL. As a consideration for this, he proposed an acceleration of the repayment of the subordinated debt by instalments. This bold proposal had some minor attraction because of the substantial loss of value of the debt through its subordination, which, incidentally, demonstrates the extent of the loss suffered by EIE in agreeing to it.

He prefaced this proposal with a complaint of the harm that the marketing of the land was doing to BUL, the Bank and the university staff, some of whom, he said, were "seeking action to enforce a promised 99 year lease for BUL over the land and buildings". He did not explain the basis for this, and it can only be regarded as an empty threat based on what he must have known at that time had no valid foundation.. Of course he could not, without contradicting himself, have explained how the rental provided for in that arrangement could be paid, nor for obvious reasons did he ask for a lease as an alternative to the proposed gift. In effect, although he raised the claim of entitlement to a lease, albeit on unsustainable grounds, he did not pursue it and pressed his request for a gift.

He also warned of the negative impact of the receiver's marketing of the land on the first defendants' investment, and of "the national and international ramifications of the most adverse kind" that would flow from such action. This was accompanied by veiled threats of political interference with the sale. He urged the Bank to make a public statement withdrawing the university from sale. The Bank was not impressed by this threatening attitude from a party that had received so much and needed further concessions, but it did not reject the proposal out of hand and was prepared to consider it, which may go to show some reasonableness.

Professor Messel now claims that the idea of suggesting such a gift coupled with the acceleration of payment of the subordinated debt was prompted by Mr McDonald, a solicitor representing the Bank, but though there is no evidence in denial of it, the relevance of this is very limited. When first making his request for the gift Professor Messel made no mention of the debt, but he raised it later in the continuing discussions and the Bank gave the whole proposal serious consideration before rejecting it. Consequently, this proposal should be regarded as genuine when its part in the question of delay as a bar to any equitable relief is considered.

The Bank's response to his veiled threat did not give any hint of anxiety and it politely invited him to await the conclusion of Mr Allpass' investigation. Just at that time, on 15 September, Mr Allpass wrote to him seeking details of BUL's financial affairs so that he could consider what arrangements were or might be put in place between the first defendants and BUL. In the light of Professor Messel's various claims and proposals, this was quite reasonable and it may have afforded an opportunity to resume reasonable negotiations on the lease, but he persistently made offensive and unco-operative responses.

In the course of this he mentioned a claim to an equitable lease, but it is clear from his evidence that he was not referring to anything giving rise to promissory estoppel, though again in addition to BUL's professional lawyers he had access to advice from the university's law school, and academic staff were said to be seeking advice from prominent lawyers around Australia who were parents of enrolled students. Mr Allpass said that BUL's claim to have an equitable lease was not admitted, but invited submissions on the principal terms of a lease should one be negotiated. This was a further opportunity to find a result reasonable for all if that were possible, but still there was no response except in the way of aggressive general threats.

It is not correct, as BUL argues, that Mr Allpass was not interested in a lease and was interested only in selling the property. He subsequently dismissed any thought of a lease only because BUL's claim was based on a palpably untenable ground, and it did not accept his invitation to justify its claim nor meet his request to produce financial papers to support its capacity to accept a lease. He also asked for a proposal for payment of some rent in order to provide some commercial return for BUL's continuing occupation of the site, but there was no response to this either.

Because of BUL's failure to respond to its invitation or to pay any rent, the Bank sets this date as the commencement of the period of delay on which it bases its defence of laches. In fairness it must be allowed that at that time BUL would probably have paid rent if it could, but its financial position was strained. It could not immediately have found much money from its own resources, even though it was later able to show an operating surplus on its books for that year.

This is, however only a partial excuse for its failure to make some arrangements, for it could have disclosed its true position and asked the Bank for loans or other concessions for that purpose. For example, if it had negotiated a lease along the lines that had been offered by EIE with the Bank's approval, that would have given it three years before the first rent payment was due and it would have had tenure for thirty years. That for its own tactical purposes it refused to supply copies of its financial statements affords it no excuse. Further, its tactics were manifestly intended, among other things, to delay the sale. If it had any belief in the truth of its allegations or the justice of its cause, it could also have taken action then to enforce its claim, but it did not do so.

Professor Messel's reply on this occasion merely mentioned that prior to the appointment of the receivers, negotiations were proceeding regarding the proposed lease, and he offered to have a further meeting with Mr Allpass, presumably to try at last to revive those negotiations. This took place but it was unproductive except that BUL was invited to make an offer to purchase or lease the land and buildings and to supply financial details necessary to establish its capacity to do so. Mr Allpass agreed to give it preference in negotiations, which again shows the reasonable sympathy of the Bank to its welfare, but he set a time limit of 1 November to make an offer and supply supporting details, which was reasonable after BUL's delay.

As it still did not have the capacity to pay a suitable rent immediately, it would have been open then to have made full disclosure of its financial state and to ask for the same terms as Mr Ogawa had offered, but it did not follow this or any other course. Instead, Professor Messel, as he now admits, pursued a variety of means to obstruct the sale while representing that BUL was genuinely engaged in negotiations to purchase. He probably did this to gain time to try to persuade the Bank to make a gift of the entire campus or at least to sell it well below cost. He continued to refuse to supply any financial details and tried to justify this with devious excuses which he replaced with equally devious ones in his evidence, and he persisted with this conduct throughout.

Before 1 November, he made further submissions directly to the Bank making much the same threats and using most of the arguments that had failed in his earlier submission. He asked that the campus in its entirety be donated to the university or sold to it at a reasonable price, by which he no doubt meant on terms carrying heavy concessions that BUL would need to afford it. He also presented this proposal to Mr Allpass as purported compliance with his undertaking to provide details of its capacity to perform any proposed obligation, which of course it was not.

On 28 September, he had a personal meeting with Mr Allpass and others to discuss possible solutions. On 11 October, with Mr Wran and Mr Turnbull as representatives of BUL, he had another. The others on his side preferred a simple sale and purchase, but he favoured either a gift by the Bank or a lease with an option of purchase. The rent he proposed was to be calculated as a percentage of student fees. At that time this would not have amounted to $0.5m., which, as Mr Allpass pointed out was not a satisfactory return on an asset that had a value between $60m. and $75m. according to the respective assessments of the parties present.

Not one of the BUL representatives argued for an entitlement to a long-term lease or to concessions, though that would have been useful as a bargaining point if they had any reasonable ground to support it. This silence of Mr Wran, who was then unambiguously representing the university only, is relevant to discussions above. Mr Allpass expressed an assurance that the Bank wished to give the university preference and needed to have BUL's financial papers in order to see that it could do this without throwing money away, but Professor Messel still advanced untenable excuses to deny him access to them.

He then made arrangements for a personal meeting on 8 November with officers of the Bank in Japan. They warned him in advance that he could not expect the Bank to be a benefactor and that any transaction had to be on a commercial basis. He says without any credibility at all that he did not know and still does not know what is meant by the term, 'commercial', though it seems that he did not ask for clarification of this important message. In fact, he knew it very well, and this may be a pointer to the cause of many of the problems with his attitude in the transaction itself and in his evidence. It is also noteworthy that he did not question the Bank's stand that it did not have to provide concessions. Its representatives also asked for specific proposals in advance of the meeting, but these were not forthcoming, and no reason was given for this omission.

In the interval he tried to stall Mr Allpass' search for other buyers by arguing about the identity of the land that would be the subject of any proposed sale to BUL. Mr Allpass pointed out that the limit on the area offered was in recognition of BUL's inability to afford any larger area, which was correct. By doing this in order to advantage BUL while inconveniencing itself, the Bank was probably already affording it some concession For future expansion, BUL naturally desired an area beyond the bare minimum, but it did not have the capacity to pay for it. Professor Messel must have known all of this, and his tactics were merely diversionary. Significantly, he continued to withhold BUL's financial statements with spurious excuses.

He also failed to respond on the issue of payment of an occupation rent while the problem was sorted out. He claims that he continuously told Mr Allpass that BUL would pay such rent if it were asked, but this is denied and should be disbelieved on the basis of credibility. Of the two, Mr Allpass possessed marked superiority as a witness of credit. That gentleman prepared a later written summary of the events of the meeting and it supports his account in evidence, but he was yet another negotiator accused by Professor Messel of bad faith and misrepresentations.

Further, if the claim were true it would be strange that Mr Allpass did not ask. Moreover, such an offer was never made in writing despite the extensiveness of the correspondence; and Professor Messel did not remind Mr Allpass of such promises as he now alleges when that gentleman later reminded him of BUL's continued failure to pay rent. This subject had some importance because in addition to the loss of revenue the receiver was paying out in excess of $3.5m. per annum on repairs and maintenance of these premises.

From November, 1993, until February, 1994, direct negotiations ensued between BUL and the Bank in which the latter continued to make clear that a reasonable commercial result was required, but it was prepared to give BUL first preference in any transaction that met that criterion. They renewed discussions of a possible solution in which BUL would acquire a substantial part of the property in consideration of acceleration of the repayment of the subordinated debt. Subject to the removal of EIE's representatives from the Council, for it would have nothing to do with any dealings involving them, the Bank accepted this as a proposal for serious investigation, again asking for BUL's relevant financial statements in order to verify its capacity to perform its part. There is no reason to doubt that this was a genuine and serious interest which the Bank undertook to consider further, but it did not amount to a concluded agreement to do more than that. Professor Messel later found it convenient to deny any distinction and based on this contrived understanding, he made very offensive allegations which will be mentioned shortly.

One essential element for any commercial resolution of the matter along these lines must have been BUL's capacity to pay the subrogated debt within a reasonable time, but the Bank's knowledge of that capacity during the direct personal negotiations in November had been hampered by BUL's unexplained refusal or failure to provide its financial papers, probably because it knew that they would show up the impracticality of the proposal.

When it had its first opportunity to see them, the Bank began a feasibility study, and while it was first doing so it kept up a positive correspondence with Professor Messel. However, after it must have become plain that there would necessarily be a lengthy period of repayment of the debt with a consequent large reduction in the value of the proposal, not surprisingly the Bank terminated all direct discussions. It then requested BUL to continue any further dealings through the receiver, and on 4 July, 1994, it formally refused the offer. There had still not been any agreement, as Professor Messel correctly conceded at the time (Exx 396, 399), but he has since adopted a contradictory and very offensive line.

Because the plaintiff's case makes no claim that any completed agreement was reached in these negotiations, the point is hardly relevant, but it is desirable to refer to Professor Messel's frequent charge that the officers of the Bank were grossly dishonourable in failing to honour what he says he regarded as a binding agreement save for incidental details. At best, this is nothing but aggressive exaggeration for ulterior purposes. He understood that the Bank's approval of the thrust of the scheme was at best provisional only. His later correspondence referred to above confirms this. It is highly likely that he knew that the details that they had to consider would include BUL's capacity to pay the debt at a rate that would produce a reasonable commercial result, as the Bank had so insistently required. Their several requests for the financial papers had to have significance, and his deliberate withholding of them on specious excuses shows that he well knew their point.

The Bank's delay until July, 1994, before terminating the negotiations probably means that this period too should be excluded from the defence of laches. Any time taken in genuine negotiations in a complicated matter of this nature and in seeking a solution does not come within that principle, and although the financial papers were slow in coming and the proposal had little chance of ultimate success, there is no explanation as to why it took the Bank so long to discover this once they had been provided. The only complaints open to the defendants is that the financial papers were probably delayed deliberately and that during this period no offer to pay rent was made, but neither was it vigorously pursued.

On 15 July, 1994, Mr Allpass asked BUL for a commercially realistic offer for the purchase of the land to be made by 1 September, in default of which he would begin to market the property generally. An offer from Griffith University had already been received but out of deference to BUL was not acted on. Again the area put up in the receiver's invitation to BUL to treat was limited because of the belief that it could not afford more. On 5 August amid a variety of extraneous assertions consistent with his earlier negotiating style, Professor Messel sought a further meeting in person with officers of the Bank in order to propose an offer for the whole campus. The price was to be $20m. on a deposit of $2m., the balance to be borrowed from the Bank for ten years at low interest. In addition he offered to retire the subordinated debt at the rate of between $1m. and $2m. a year. This was ridiculously low, as BUL's later offer by tender will reveal.

The Bank declined a personal meeting and rejected the offer. It was below an earlier one and grossly remote from any commercial proposition, and it had clearly been made for tactical reasons. In response to BUL's invitation, Mr Allpass disclosed the Bank's assessment of the value of the limited area at $90m. to $100m.. He also expressed his willingness to receive an offer for the whole area, but indicating that the Bank would not provide finance for it. He then tried unsuccessfully to procure Professor Messel to make some serious offer, but he temporised, probably because BUL could not afford to do so.

When nothing came of it, Mr Allpass set a time limit to the negotiations. He undertook to wait, but only until the appointed date of 1 September, for a suitable proposal in writing before proceeding to market the asset to the public. At BUL's request, and despite that it did not provide details of its proposal in advance as arranged in the postponement, the deadline was extended to 13 September for a meeting at which an offer was to be put.

Although he was seeking an indulgence, Professor Messel again asserted that BUL had rights both in respect of an equitable lease, which he still did not explain, and in respect of the agreement which he claimed to have had with the Bank's officers in the prior December. It is difficult to attribute to the former any greater value than the best available alternative argument that had been developed after the invalidity of the Heads of Agreement claim had been recognised. From his lack of any supporting detail which might have been expected if it were a serious proposition, it has the appearance of a vague bargaining tool that had been brought to his attention and which he wielded without any serious belief in its foundation. These claims were consistently denied by the Bank.

At about this time he also made a proposal to have the sale price determined through a valuation by an independent valuer. This was refused because the basis of valuation and other terms of the proposal were heavily weighted in BUL's favour. It should not be treated as a reasonable attempt to achieve a compromise and was probably another attempt to delay the sale but with the benefit of a very substantial windfall if it were accepted.

After enlisting the support of Messrs Turnbull, Wran and Le Lievre to agitate political and other extraneous pressure of variable quality to be used as additional bargaining weapons, at the postponed meeting of 13 September Professor Messel offered a figure of $25m. for the whole area. This was still hopelessly inadequate and it was rejected by Mr Allpass a few days later. Again among the many assertions made in support of this offer, Professor Messel repeated his claim to BUL's alleged rights in respect of the land, including the "equitable lease". In repeating the Bank's denial of his claims, Mr Allpass pointed out that he had not produced any evidence supporting them nor tried to establish them otherwise, despite ample opportunity to do so. If Professor Messel had any real belief in the truth of his claim, this would have been a proper time to offer the details, for even a plausible explanation would have been useful for negotiating purposes since the Bank was being as accommodation as could reasonably be expected. Moreover, his failure to produce any support for his claims would clearly lead to consequences better avoided.

In the course of his protests at the refusal of his offer, Professor Messel claimed that BUL had a "surplus" in 1993, but he still made no offer to supply the financial papers or to pay any rent or even part of the annual cost of repairs and maintenance of the campus that was still being borne by the landlord. He says that BUL would have paid a rent at this time if it had been asked for one, and would dismiss the several requests of Mr Allpass to which he did not respond as ineffective because they did not ask for a specific sum.

Because no satisfactory offer had been received, Mr Allpass commenced to market the land publicly and invited BUL to participate. At a Council meeting on 24 September at which only Professor Messel, Mr Wran and Mr Le Lievre apart from the company secretary, Mr Tan, were present, among other things relating to this topic it was resolved that:

"C15/94 (a) legal advice should be sought on the following:

If the receivers put the land and buildings that are currently occupied by Bond University on sale and a sale is concluded, what rights, if any, do the purchasers have on Bond University Limited for the purpose of occupying the land and buildings currently occupied by Bond University Limited?

C16/94 (b) at the discretion of the Executive Chancellor, an appropriately qualified media person with experience in both the print and electronic media and Reuters be engaged to assist in the public relations effort generally but specifically to create stories which are advantageous to Bond University and then plant them in the media.

C17/94 (c) an `open letter' similar to the ANL letter advertised recently in the newspapers be drafted."

The irresponsibility of 'creating' stories advantageous to BUL for dissemination through the media is relevant to laches, but in respect of the general validity of its claim it is also interesting to note that it was considering its position against a purchaser but not against the first defendants or the Bank. That was so despite that it had already raised the suggestion of an 'equitable lease' and that the meeting had before it "a 40-page fax" from its new solicitors which, it was agreed, was to be kept 'highly confidential". It was part of the material under consideration that led to this resolution. It might be thought premature to have considered action against the purchaser of the land unless it was believed that there was no means of establishing a right against the vendor. It would also be plainly less effective than trying to establish such a right against the latter. Although Mr Wran had not practised law for some time, this should have been obvious to him.

On 6 April, 1995, Professor Messel wrote to Mr Allpass protesting at what he had heard would be said in the documents calling for tenders for purchase prepared for the receiver describing BUL's interest in the land as being that of a tenant at will only. He threatened legal action to support its claim for a ninety-nine year lease, with a warning as to how that would damage the prospects of a satisfactory sale. Again Mr Allpass replied that despite his many assertions Professor Messel had not tried to substantiate the lease, had not articulated the other terms of it, and had not even offered to pay rent under it. Because of the nature of Professor Messel's threat, and no doubt because he correctly saw it as just another deliberate waste of time, he declined his invitation for a meeting for further negotiations.

Rather than accepting this implied invitation to justify his claim or even to articulate its terms, and instead of taking action to enforce it, Professor Messel asked for a copy of the marketing documents to enable BUL to submit a commercially acceptable offer. In that request, no further reference was made to its claim of any right, and there was still no support for it by any offer to pay any rent or to contribute to repairs and maintenance costs.

On 30 May, Professor Messel sought the intervention of the Bank when it was stated publicly by Mr Allpass that BUL did not have a lease and that it might have to vacate the site in the event of a sale (Ex 412). In supporting material sent to the Bank, Professor Messel included his own press release criticising Mr Allpass' statement, and saying that BUL "had consistently asserted it had a legal right to occupy the campus, buildings and land". Nowhere did he describe the right as associated with a lease. Nor did he present any detail or justification.

All that was said about a lease was contained in a "Background Paper" which he also included. It said that "The premises were constructed for the occupancy by Bond University Ltd with the intention that a long-term lease be granted." That of course was perfectly correct, so far as it went, if its obvious omission is disregarded. Significantly however, it does not claim any other grounds for its claim. Although some looseness and brevity are understandable, its failure to mention any assurances cannot reasonably be explained in that way. If available, they would normally be stressed as strong points of a moral and legal claim and used as a propaganda weapon.

It is possible that this constant omission at the time to raise the matters that are now relied on was mere inadvertence or ignorance of their value, and its inferential force as a single factor must be limited; but it is consistent with a number of other adverse features that together strongly supports the conclusion that BUL knew very well or very strongly suspected that it had no claim.

This document was plainly designed mischievously to obstruct Mr Allpass' sale and to bring public pressure on the Bank by half-truths. As a further example, it mentioned that "BUL had made two offers to the LTCB to buy the land and buildings it occupied", without disclosing their grossly inadequate amounts. It spoke in glowing terms of the undoubted virtues of BUL and of the benefits it brought. It is therefore surprising that, having descended to some mention of the proposed lease as justification of its solicitation of support, it made no mention of other factors that are now so heavily relied upon, such as assurances. Nor was there recourse to the former claim based on the "Heads of Agreement", which was apparently finally abandoned by this time.

On 19 April, 1995, Mr Allpass responded to Professor Messel's letter, conveying the same denials that he had previously made to the same assertions that had been made in the past (Ex 413). In respect of the claim to occupy the land and buildings, he said:

"Further, I note that you have been reported in the media and have appeared on television asserting that BUL has a legal right to occupy the campus buildings and land. This is clearly not right as you know that BUL has no legal right by way of a lease over any part of the campus land and buildings. To the extent that you assert some other right to be in occupation you have refused to take any steps to establish that claimed right."

That no steps to establish the claimed right had been taken had serious consequences for the receiver's sale because of the reason given by Professor Messel himself. His mere assertions of a right would have a depressing effect on any offers that might be made by competitors. No doubt that was his intention, for any delay through his obstruction had immediate benefits to BUL and possibly greater long-term ones, with correspondingly harm for the Bank. Mr Allpass' challenge did not provoke any response.

Nor was there any offer to pay rent, despite his reminder in the same letter that BUL had not responded to his earlier request for some arrangement. This allegation is now denied by Professor Messel, who says that he made several verbal offers that for no apparent reason were not taken up by the receiver. Apart from its high improbability, this claim has no credibility when considered in the light of his conduct. In his reply to the receiver's letter soon after, he neither contradicted the statement nor, significantly, made any offer in writing then or at any other time to comply. Again, knowing that it was a fatuous answer, he said in his evidence that he did not pay rent because a specific amount was not demanded. This was an excuse that he frequently invoked for other purposes. It is plain that at the time he deliberately temporised on the subject.

On 30 May, he made a public statement through the media warning potential buyers that a successful bidder would face considerable obstruction by BUL when trying to obtain possession of the premises. This was unexceptional if his claim was well founded and if he behaved properly to enforce it, but he failed to take any action and was prepared to use it as a continuing threat without subjecting it to any test. This abuse of delay was unconscionable.

Mr Wran and Mr Turnbull were then retained to help BUL "secure permanent tenure to their land and buildings", which of course deprives their evidence of any prima facie claim to impartiality it might otherwise have enjoyed; and although again loosely expressed the terms of the retainer suggest the production of the means for such a result rather than enforcing an entitlement. However, this is of little weight compared with other material. BUL's conduct remained consistent with an absence of belief or confidence in any entitlement, for at a Council meeting on 18 July, the only relevant deliberation on the subject led to an agreement that there would be continuing discussions over the next few weeks on the issue of the purchase.

In July, the receiver began the process of calling for tenders for the purchase, with the closing date fixed for 18 August. Although Professor Messel claims to have been in constant communication with him, BUL did not make any further private offer, but that was justified because by that time it had been made clear that it should participate in the public tender process. More significantly, it still took no step to establish any right that it claimed, and it allowed the receiver to undertake the time-consuming process of preparation for a public sale while it continued to enjoy its rent-free occupation of the premises.

After other meetings at which nothing relevant happened, on 18 August, having garnered the support of some new sponsors, the Council authorised the lodgment of an Expression of Interest Registration Form with the real estate agent who was managing the sale for the receiver. Its bid was $78m., but it was unsuccessful because the highest tender was $105m.. Even when the difference in the relevant areas is taken into account, these figures show how inadequate were its earlier bids of $20m. payable by instalments over a long period of time and $25m.. While at that earlier time it could not have sustained anything higher than it offered, its claim that those offers were commercially realistic is false, as it knew.

On 12 October, shortly before the decision on the tenders was made, Professor Messel wrote to the Bank, threatening dire consequences if as he feared the receiver were to sell the campus to the University of Queensland. Apart from threats of political obstruction, both state and federal, and of investigation by the Trade Practices Commission, he also warned of legal action, but significantly not for any claim to a right to a lease. He alleged a failure to follow the conditions of tendering, a claim which is not made in this action. He enclosed a "statement of BUL's position" on the basis of the University of Queensland's success. It said among other things that "(i)f UQ is not willing to negotiate an agreement acceptable to BUL, then BUL will litigate" and "(i)f BUL wins it will get a lease". If it lost, it promised obstruction to the purchaser. That was in keeping with his admitted intention to do all he could to prevent the sale of the assets (T. 1633).

It was only when the bids for the purchase were being assessed that this action was commenced by BUL for a declaration of its rights. This was the first move it made in any attempt to establish its claim. It was long after the Bank's denial and long after it had undertaken the lengthy process of marketing the land, a process in which BUL had participated simply as a bidder. Its deliberately obstructive delay for its own benefit must work against the equity of any claim it might otherwise have had.

For its part, the Bank did not take any action to dis-establish BUL's unexplained and unsubstantiated claim, but it was justified in avoiding any further waste of time or expense in trying to do so. It was also justified in treating Professor Messel's varying assertions as hollow bluff because BUL had made no serious attempt to present it with any case even slightly credible, and had taken no steps to prove them. Indeed, in participating in the tender process, it acted inconsistently with any genuine claim of title to an interest adverse to the sale. Further, having title, the Bank needed no declaration of its rights in order to conclude its intended sale.

In summary, BUL's conduct was unconscionable in ways that together would have defeated any claim it might have had to equitable relief. First, when Mr Ogawa and others were trying to negotiate a lease reasonably in accordance with the common arrangement, BUL persisted uncompromisingly in demanding excessive concessions and terms that ignored the reasonable concerns of the other parties. Later, at the times when with the Bank's approval the receiver was trying to resolve the matter with some sympathy and preference to it, it disruptively temporised in its dealings with his legitimate requests while it sought to obtain advantages.

Its claim to a lease was never supported on the present grounds or indeed on any detailed grounds when invited by the receiver to do so in order to allow him to consider it, and because it wanted greater advantages it would not have accepted a lease conforming with earlier arrangements if it were offered. Instead it deliberately used hollow threats and other unedifying obstructive methods calculated to delay his sale of the asset. It also allowed the matter to advance almost to the point of a sale before commencing these proceedings, so that the sale has been seriously hampered. It is a strong case of unconscionable delay for ulterior purposes.

Where a promisee's own conduct is sufficiently unconscionable, equity will not provide remedies to enforce the promise: D & C Builders Ltd v Rees [1965] EWCA Civ 3; (1966) 2 QB 617. In the circumstances of the present case, this principle applies to BUL's conduct and if it had otherwise had a valid claim for relief, this is a good reason why equity would not have assisted it. There is not even room for any application of the notion of proportionality to this issue.

The evidence of most of the Bond and some of the EIE witnesses was less than satisfactory. Usually this was not in any gross way, but there was an unmistakeable bias towards the success of the plaintiff's case in small but significant matters which noticeably coloured their evidence whenever the opportunity presented itself. This also appeared in demeanour such as a too-eager willingness to advance a point favourable to its case, even beyond the range of the question asked; or as an unwillingness to acknowledge or a tendency to avoid possibly adverse factors where they existed; or as a tendency towards hyperbole on favourable matters and understatement or omission on other occasions. This made it more difficult to discover those parts of their evidence that could be relied on. Even after appropriate allowance, the defect was abundantly clear, and their motivation not difficult to divine. The Bond witnesses were particularly unimpressive in this way.

No doubt much of what they said was true, so far as it went, but there was much equivocation in or deliberate omission from their evidence, and their indirect accounts of conversations wrongly bore the interpretation that they desired without much deviation. In other words, they told many half truths presenting a false picture that was inconsistent with the objective facts and some contemporary records. Similarly, when given the opportunity to describe a state of affairs based on generalisation and retrospective assessment, their evaluation always favoured BUL, often again inconsistently with evidence of quality. For example, their suggestion that Bond's financial difficulties made no difference to the matter is particularly unacceptable. It was unconvincing and contrary to the direct evidence of the contemporary written evidence and the general trend that it disclosed, which was recognised by responsible university Councillors.

As it will be noticed, many of these deviations were fairly subtle rather than dramatic where error may be demonstrated by explicit and clear contradiction of the fact. That was the nature of the evidence. It was often necessarily imprecise, partly because of the way it was led. They referred for example to 'the effect' of a conversation.

In fairness, it should be added that some of these witnesses had an incomplete understanding of the transaction as a whole and to some extent this may have fashioned their perception of matters discussed in their evidence without any deliberate bias. In other matters, there is room to believe that their unacceptability was due to innocent rationalisation, perhaps mixed with unconscious bias. However, it is inescapable that in some cases there was a deliberate slanting of the evidence to favour the plaintiff.

The difficulty experienced by some Japanese witnesses in their evidence was explicable by some of these innocent factors and in some cases they do not deserve the criticism directed at them by the defence. Their tasks were sectionalised as was their knowledge and understanding of the transaction. For example, while EIE was trying to work out a means to grant a lease, the difficulty of these witnesses in distinguishing the tenancy at will that BUL enjoyed from the long-term lease that was hoped for is understandable. As it was not part of the plaintiff's case that a lease did exist, the reason for calling these witnesses to say that one existed is obscure. If it was designed to show that such was the intended goal, then it is uncontroversial. If it was led to prove that the grant of a lease was unconditionally assured, then it does not bear that implication and it is contrary to the acknowledged position. To the extent that it goes beyond that, the unsatisfactory evidence is mostly explained by the deficiency in the witness' knowledge or memory of the total transaction.

The importance of the presence of the university to the project as a whole was elevated by some to an entitlement to a long-term lease, and the effect of adverse conditions was not fully considered. This is not to say that any of this was necessarily deliberate misrepresentation of the position as distinct from serious misjudgment or misunderstanding, or rationalisation after the erosion of their memory. Without any satisfactory explanation, the evidence of some was in direct conflict with the effect of the contemporaneous documentary evidence . Mr Ogawa was not one of these, but Dr Ishizaki, for example, deviated markedly from some facts that were clearly made out to the contrary, and his evidence showed serious signs of bias. For the most part, these features do not assist the plaintiff's case, nor do they detract from it otherwise: it just means that their evidence should not be relied upon when it departs from facts that are established from other sources or where there is good cause to believe it.

The academic witnesses, Professors Lovering and Mortley and Dr Botsman, were careful in their evidence and their honesty should be accepted unreservedly, the only points of note being the limitation of their involvement in and knowledge and understanding of the full details of the relevant matters, and the ordinary fallibility of memory. Realistically, these factors and the complexity and changing nature of the transaction may all have had some adverse effect, but that seems to have caused no consequential harm.

Similarly, those who may be called the independent Councillors were all honest in their evidence. In some cases, their passionate involvement in the struggle for BUL's survival sometimes seems to have influenced their perception of the events at the time, or it may have led to some later rationalisation. These were often demonstrable from contemporary documents and events or by other acceptable evidence, but they were no more than might ordinarily be expected in circumstances of such turmoil and gravity. Where they were present there was an honest and intelligent attempt to be fair and accurate, even if it did not always succeed.

All of the witnesses in this group were also encumbered by the ordinary difficulty of recalling details of changing, ambiguous and complex events long past, and in some cases an incomplete knowledge or appreciation of the significance of the details of the transaction compounded this. In others a lack of full consideration for the position of the other side led to some misinterpretation of statements and events. Another problem consisted of the undue emphasis applied to part only of a larger picture, but this was often due to direction in which the evidence was led from the witness. There was nothing wrong with that, of course, except in the result.

It is intended that Professor Watts be included in this group. The defendants' criticism of his evidence is largely misplaced. His demonstrated errors are mostly excused by the ordinary difficulty in reconstructing a history of a complex and fluid course of events so long after they occurred, and especially as he had no cause to give some of them special notice at the time and his attention was heavily distracted by other features of the project. Though he was strongly partisan and adopted an adversarial stance, and he retained an entrepreneurial approach with a personal interest in the enterprise and in the result of the litigation, these should not be exaggerated. Further, he should not be criticised because questions asked of him were often selective so that his answers did not always present a full description of the subject, save that he did not try to try to correct the incompleteness that his reply produced. That is not always easy, especially when the result is convenient. He also took the opportunity to put the best line in the desired direction. These things did not escape notice at the time.

More specific discussion on the acceptability of the evidence of particular witnesses on particular issues has been provided during the review of the history of the transaction. In the event of any unintended conflict, those particular observations are intended to prevail over the above general discussion.

The claim of proprietary estoppel has been found to be groundless, but again it is convenient to consider other defences that were argued. As part of their denial of conduct that would give rise to the claimed estoppel, the Defendants' case submits that as they made it clear that duration, premises and rent under the lease had not been resolved and that the rent was to be commercial even if it was permitted to accrue in the early years, and as they did not give any assurance of a ninety-nine year lease of identified premises for a concessional rent contrary to their own interests, it was not unconscionable for them to assert their legal rights unaffected by any right of BUL.

As to whether BUL formed any understanding or assumption that it would be granted a lease on concessional terms, if necessary, contrary to the interests of EIE and the Bank, the defendants submit that BUL knew that no lease had been executed; that its terms had not been agreed; and that any grant depended on the continued ability of the first defendants to support the project in their own financial interest and on the university's success as a commercial operation, able and willing to pay a commercial rent as a term of the lease. These submissions deserve some further discussion.

It is immaterial that BUL knew that no lease had ever been executed, for that is the point of its complaint. The question is whether one should finally have been executed. It is more important that it knew or should have known that within the parameters of the total common understanding the various assurances included conditions that limited them, and that the terms that were offered provided the only solution. However, because of the imprecise nature of the statements of support, it is doubtful whether the assured concessions were limited to those that would be in EIE's financial interest, as the defendants would claim. This goes too far and it would be safer to say that it was understood that they would be reasonable and not to their serious financial disadvantage.

It is also correct that BUL knew or should have known that the grant of the proposed lease with the necessary concessions would depend on the university's own demonstrated viability, but that did no more than justify some delay. By the time it rejected the offered lease, its viability with the aid of further support by way of the rent concessions offered and some continuing funding was demonstrable. Indeed, after investigation Mr Ogawa tailored the terms to achieve that result. If it had accepted them and the sale to an investor had proceeded, as it has been observed its stability and independence may well have attracted other sponsors including the investor. Consequently, in the end this was not an impediment.

The only matter that remained was the agreement in specific terms as to the extent and affordability of the necessary aid. This should have been reached through the lease that was offered, but the negotiations unfortunately reached an impasse. Though BUL must have known that its capacity to pay a commercial rent within a reasonable time was a factor, EIE's recognition of the need for some concessions meant that it was not a bar at the time, as its offer confirmed. When the uncertainty had cleared so that EIE was able to propose suitable terms, it was the demand for unreasonable terms that defeated the arrangement.

Again contrary to the defendants' further arguments, it does not affect the issue of estoppel that BUL undertook such detriment as it suffered while knowing that the lease had not been finally agreed or granted. That would not have disappointed the claim to an estoppel. When it is founded on reliance on an unfulfilled promise or assurance, the knowledge of the absence of performance of it while the reliant action is undertaken is usually the basis of the claim. In this case that was done with knowledge of the goal towards which all were optimistically working, and that is enough. It is fair to say that BUL moved to establish and operate the university on those conditions in the hope of a successful outcome that was stimulated by the genuine commitment and assurances, albeit limited, of the joint venturers, which explains its willingness to do so without the comfort of its lease. This is not somehow adverse to its cause.

The further argument that because the mortgage was registered subject to the caveat and the caveat has lapsed, the mortgage is now free of any impediment is as unmeritorious as it is erroneous. A registered mortgagee is unaffected by any equitable interest of which it has notice but only if it has not so conducted itself as to give rise to a personal equity against itself: Friedman v Barrett : Bahr v Nicolay 630 - 633, 637, 652 - 654. In this case there was a clear understanding that while the Bank did not recognise any right in BUL, if there were a right that was protected by the caveat then the mortgage would be subject to that. The agreement under which the registration was secured would give rise to such a personal equity, for on such an occasion equity would look to the substance of the agreement rather than to the form of the formal registration of the mortgage.

The caveat lapsed because, as the Bank correctly says, BUL did not try to establish its right in support of it, but that was because of the Bank's representative, Mr Kamaike, had promised to enter into negotiations after the registration was effected and gave an assurance that carried the implications that have been found. It would be unconscionable of it in these circumstances to rely on the lapse of the caveat. This is analogous in principle to the use of estoppel to restrain the use of a contractual right by a party who has induced the other to give it on the promise or assurance that it would be used only in a particular way or in particular circumstances, as discussed by McHugh JA (as he then was) in State Rail Authority (NSW) v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170 at 193.

The issue of reliance and consequent detriment is also dead because of the above findings. Nevertheless, this topic was extensively canvassed and the matters raised should be disposed of briefly. One difficulty in doing this is that when the assurance or promise is spoken of with its full content, including conditions, then the argument sometimes loses its point. To avoid this, the conditions will sometimes be ignored in order to test the propositions on their own terms.

Whether detrimental actions alleged to have been undertaken by BUL were in reliance upon any specific assurance or group of assurances as it claims is difficult to assess because of the complexity and variation from time to time of the arrangements under which it took them. It refers to its formation of the company and the work and effort of setting up a university as one such detriment. The undertaking the debt of $94m. owing to the first defendants is another, though it is doubtful whether this has involved any detriment at all. These things were done at different stages of a changing plan when the terms of the proposed lease and the conditions to its being granted were altered to suit the exigencies of the occasion, and when in choosing its path of action the situation in which BUL found itself varied from one to the other.

Assuming contrary to the true position that BUL is entitled to rely on the legitimate expectation of those who did these things before it was ever formed and later became its representatives, its hope and even expectation of the high likelihood of a lease on the original conditions discussed above was certainly part of the inducement to enter into the project in the first place and then to undertake the obligations of the original loans. Its anticipation of concessions should have been limited and dependent on the success of the current scheme. As that all changed, the connection of later borrowings with an expectation of the likely eventual grant of a lease remained, though the optimism was less intensive. Because of the goodwill of the joint venturers, this should have applied to the quality of the lease that would be granted rather than whether it would be granted at all

These expectations recognised to a greater or less degree the existence and effect of the conditions that applied to the various proposals so that the lease was never assured as to the extent of the benefits, if any, it would provide. Given the continuing commitment of the joint venturers and their apparent financial strength, the optimistic prospect of a generous grant was high in the early stages, but there was still the risk of disappointment.

This motivation continued into its undertaking of later obligations and the expenditure of work and money, but by then it was probably mixed with a measure of natural unwillingness to abandon the venture because of the level of development that they had already achieved. For example, although there will be no lease, it is unlikely that BUL will now abandon its project of developing the university elsewhere.

However, the prospect of a lease was still of decisive force, and if during the relevant stages of development when it was weaker than now there had been a strong indication that a suitable lease was impossible, it is likely that the project would have been abandoned. It is more difficult to say whether that would have happened if it were known that a lease such as that offered would be available, but the likelihood is that it would have pressed on.

As the risk of failure increased, so would their willingness to take the chance as to the quality and even the existence of a grant rather than undertake the grave decision of abandoning the project, particularly if here were further assurances modifying the risk. The hope of concessions for a lease probably remained a significant motivating factor, fortified by the joint venturers continuing support. It is likely that when its own progress was less than planned and the financial position of the joint venturers declined, while its confidence in their continuing goodwill remained and was justifiably relied on, its reliance on the prospect of receiving a lease with built-in total comfort was diminished by doubt and anxiety.

The primary error of BUL's submissions lies in its claim of reliance on an expectation of a lease with terms of the highest order. While it was entitled to rely on the goodwill of the joint venturers, its expectation had a conditional element so that it should only have expected the chance of having the lease if the conditions were discharged, and then its terms would be reasonably adjusted according to the relevant circumstances. EIE was not obliged to meet any extravagant belief by BUL of any entitlement to concessions that it could not afford, even if such a belief actually existed. The understanding was not so simplistic as to amount to a lease with all the benefits that the parties might have desired - or nothing. This difference between the content of the belief as known to all and that argued for by BUL is fundamental.

For example, Ms Nosworthy's retrospective assessment (T215) that she would never have committed BUL to any of the expenditure if she had not believed that it had a long-term lease, while perfectly honest, is dominated by false premises and is not acceptable. It had already been committed to a large debt and much work had been done before she became involved. She recognised its obligation to pay a commercial rent and its inability to do so, and that the necessary concessions to be provided by the joint venturers was conditional on its affordability. She would be more correct to say that she would not have committed BUL to further expenditure if she did not have the joint venturers' genuine support and if she had not had sufficient confidence that a lease with reasonably affordable concessions consistent with that support would be forthcoming.

As the only alternative was the abandonment of all that had been done, it is highly unlikely that she would have adopted that course rather than proceed in the reasonable hope of a suitable outcome. And she would have been right, for a thirty-year lease with substantial rent concessions did become available; but she was never asked whether she would have refused to proceed, abandoning all that had been done, if the alternative was to accept such a lease. Had she not gauged the true position with reasonable confidence, in the situation of serious insecurity that would then have prevailed she would have demanded the lease and concessions with the same force that had been so successful in respect of funding and the subordination of the debt.

BUL's persistence in undertaking these further obligations was not an indication that it felt that it had the assurance of a lease with all the benefits it wanted, rather than that it felt confident enough about the chances of a reasonable outcome. When the proposed grant became more doubtful because of the serious financial problems on both sides, but BUL had the assurance that the joint venturers were still trying to provide it, it is very difficult to believe that it could or would have acted differently rather than continue with its operation in the hope that its sponsors, given more time, might be able to find some way out of the problem, as they did. If it persisted, it had the chance to develop a fine university. If it did not, everything that had been done would be lost. The subordination of the debt from the loans it was receiving for operating expenses meant that if it failed they would not be repayable so it had nothing to lose in that respect by continuing. So it had much to gain and little to lose by continuing, and as things turned out it could have gained all the benefits of the lease that was offered. The chance of success of that order was enough motivation to have justified continuing, and that is probably what happened.

Further, although it certainly accepted further obligations, there is also a question of whether in the total picture it suffered any detriment at all. It is said by the Bank with some truth that with these extensive interest-free and subordinated loans and the eight years of rent-free occupation it has enjoyed, it has received full benefit for its outlays. It now possesses considerable assets including an established functioning university with substantial sponsors, and the profits it has enjoyed in recent years. For example, Professor Messel spoke of a cash fund of $25m. it had accumulated, no doubt grace of its rent-free occupation of the campus for so long. And its obligation to repay the debt is within manageable bounds. This result is not surprising since considerable benefits were bestowed on it.

If there had been any residual detriment arising out of the indebtedness that has been subordinated, that could have been adequately compensated for by forgiveness of an appropriate amount of the subordinated debt. Because, as it will be shown, it is not essential that the university should function on this site, and as any alternative remedy requiring the grant of a lease could extend the loss that EIE and the Bank have already sustained, a reduction of the debt would be a suitable remedy in those circumstances, if one were justified. It would also meet the principle of proportionality that will be discussed shortly.

Contrary to BUL's submissions, there is no detriment in respect of expenditures that have been fully recouped, particularly as that is the result of the interest-free loans and rent-free occupation that it enjoyed. Assuming that it continues to function, its past expenses on such things as promotion and useable chattels would not involve a loss There would have been some expenditure such as the installation of fixtures and equipment as part of a long-term infrastructure which would not yet have been fully recouped through benefits but even some of these will have served their term of usefulness. There will be some waste if it is forced to change its location but this and any other financial loss could have been adequately compensated for by the payment of money.

The claim of detriment arising from the incurring of the debt of $94m. is largely repetition of the same claim, for it was incurred in building up, and must be offset by, the assets that BUL was able to acquire by reason of the action that it took. To be accurate, the rate of repayment of this debt greatly reduces its burden. It is not a good counter to this that for some years it made a loss if through the business it acquired in that process and as the result of favourable terms of repayment it can recoup that loss and eventually have a surplus as well as the functioning business. That aside, it is the final result that is relevant to the question whether there has been any detriment, and if not there is no remedy. The Bank is correct in arguing that the enduring benefit it has derived as a result of all it has received puts in doubt whether there was any detriment at all. It is impossible on the evidence to say, but there is a very real chance that there was not.

The defendants further argue that "BUL did not ...incur a loss save in respect of the subordinated loan; but to the extent that this loan is not repaid, that loss is the defendants' loss". Apart from the misdescription of the loan as a loss, the point is bad because BUL's liability remains alive as a continuing burden and has not been forgiven by the defendants. It is a strange argument since it is associated with a claim for repayment of the debt, and if it is paid by BUL it will fall entirely on it and not at all on the defendants. It is not valid to refer to the effect on the defendants of the plaintiff's hypothetical liquidation when that has not happened and may not do so; and if it were to happen, it would be a detriment that could possibly be attributed to the continuation of its business during this period. The only relevant situation is the present one, and that is that BUL is indebted for the money it borrowed for its part of the venture.

In turn, its claim of detriment arising out of its receipt of government benefits while operating as a university is difficult to understand. It does not have to repay them and so they are pure benefits that should be brought into account to offset part of the expenditures that it claims as detriment. It received them because it was a university, not because it had any lease, and because of the rent-free occupation it enjoyed it has been able to operate as a bona fide university which enabled it to receive them. Any representations as to tenure that were made to secure the benefits to which it was entitled have not been shown to do more than contribute to establishing that it would operate as a university, which it did. Consequently there was no relevant representation in this respect and so no detriment.

It is claimed that other detriment will be suffered if BUL does not receive a long-term lease because it will be in breach of good faith to academic staff and students if it cannot continue as a university. This makes the dubious assumption that it will cease to function if it cannot remain at its present site. It is a well-established institution and it has not been shown that it cannot continue elsewhere. Indeed, the contrary is much more likely.

It is said that a move to Brisbane would have a drastic effect of its student base and that no other premises have been identified in its present neighbourhood. The facts supporting these propositions have not been satisfactorily proved. No convincing reason has been given why its location in Brisbane would not increase its local student numbers while holding a large part of its present local content and at least maintaining its enrolment from further afield. Alternatively, any loss is not shown to be significant. As for suitable premises on another site, any search that has been conducted in its present neighbourhood seems to have been designed to provide negative evidence rather than for any genuine purpose. The criteria applied were too strict and the endeavour too faint. Any alternative site need not have the same splendid buildings and facilities that it now occupies. Since it enjoyed those benefits in the past, grace of the generosity of others that can no longer afford to provide them, they do not represent the norm by which the availability of an alternative home can be measured.

Further, even if it could not successfully move, it is not justified in claiming that a long-term lease would be necessary for it to keep faith with staff and students. It has now functioned for well over eight years, over four years of which have passed since EIE's proffered terms were rejected and a receiver was appointed. Most students enrolled prior to August, 1993 should have graduated by now, and it is not known whether there are any staff contracts entered into before that time that are unexpired. This does not imply any insensitivity but the determination of the basis of such a right does not admit of fine sensitivities.

In respect of later contracts or further enrolments that are still running, it is unlikely that at the time of their commencement BUL was still moved by any alleged promise. It probably continued to undertake these further obligations in the optimistic hope that the Bank would provide the necessary concessions, and failing that, in the belief that it could set itself up elsewhere. It could not have continued to function without a continuing flow of students and staff and it is likely that it also has contingency plans for its survival at another location.

There is one other consideration concerning the staff. Those who left tenured positions to join this university did so because they were paid a premium on their former salary. They must have known of the risks attached to setting up a new institution if it failed to achieve self-sufficiency, but they were probably not prepared for these events. If they were not properly informed of the true position, that was BUL's fault. However, it is claimed with considerable justification that they are highly qualified in their respective fields, and there is just no serious evidence that, if the university does not successfully relocate, they could not find similar suitable work elsewhere within a reasonable time, and BUL's good faith towards them may be measured by the amount of the severance pay it provides to tide them over the intervening period. This is certainly not a perfect answer, but it detracts heavily from the force of its argument and must be adverted to for balance because it was not voluntarily acknowledged

There is another side of the issue of reliance causing detriment that has already been touched upon. Before it can be said that any detriment was suffered as the result of reliance on the promise of a lease and concessions, the result the hypothesis that no lease or concessions were offered must be considered. It is implicit in the concept that the party must be worse off for acting on the promise than it would have been if there had been no such promise or no reliance on it. That requires consideration of the effects of other circumstances that may have been operative. So if because of those the promisee would still have acted in the same or a more detrimental way, there cannot be said to have been any detriment flowing from reliance on the relevant promise also. The alternative choice was not to proceed at all or, at a later stage, to cease operations, which would have amounted to total failure.

On BUL's thesis it undertook the costs of establishment on the basis of the alleged unconditional promise of a lease. If there had been no reliance upon any such promise, either it would have taken the risk that the joint venturers might have been able to provide a lease, which is its present position; or rather than chance the risk of failure it would not have taken it, in which case it would not have been established at all and failure would have been assured except for the saving of any losses.

As for the former, the risk was regarded as slight in the early stages and would not have amounted to much of a deterrent from proceeding. As the risk increased, so had the investment that had already been made, so that the certain loss of that had to be compared with the new magnitude of the risk. In both cases, the goodwill of the joint venturers was assured, and though the extent of their philanthropy was expressly limited, they had a strong financial reason to help. Even on BUL's thesis in those circumstances, if it had been expressly told at any stage that the lease on the terms it wanted was not guaranteed but that at worst the joint venturers would provide the lease that was offered, it is highly probable that it would still have followed the same course. It is unlikely that it could have taken any other course at any stage that would have been less detrimental than that which it followed.

At first, when the reward was so substantial the strong goodwill of two apparently wealthy sponsors would have been very persuasive of acceptance of the risk; and even when their fortunes were less assured, the Bank's support of EIE's goodwill gave reasonable hope of its continuance within a reasonable scope. That that was justified is demonstrated by their efforts to provide a lease on attenuated but still reasonable terms and with substantial concessions. It certainly does not follow from these circumstances themselves that the choice to take the risk would have been so inferior, if inferior at all, to the alternative that it would naturally have been rejected.

The witnesses have not said that they would take one of these choices above the other. As the premise of the question posed to them implied that the possibilities were limited to an absolute assurance of a lease or nothing, all their answers were responsive to a question that did not adequately present the available choices. This omission is most disturbing since it failed to refer to their possible action if they had expected only the lease that was actually offered. The result is that it is not established that in the absence of the alleged promise or assurance, BUL would have acted otherwise than it did, and so even if it relied on the promise in part for the choice it made, no detriment from that reliance has been demonstrated.

The second issue on this analysis of detriment is whether, absent the promise or assurance or any reliance on it, BUL would have been better off to have chosen not to continue. If not, then again there was no detriment. Because of the discipline imposed by the Bank on EIE's financial affairs, it is very unlikely that BUL could have forced from it a lease with any greater concessions than it offered. If that did not provide enough, it would not have been able to obtain a lease of any practical worth to it.

If all of this had been explicitly understood when BUL was choosing its relevant course of action, the alternative then to accepting what was to be offered was the radical step of winding itself up with, as it has been remarked, the inevitability of total loss. This would almost certainly have been worse than the worst result that would follow on its failure to secure tenure, and certainly worse than its position if it had accepted the lease that was offered. As it has happened, with the strength that it has since been able to generate it will very probably survive. As the result of not acting on any such assurance would have led to a worse position than that which exists, there has been no detriment from any reliance leading to the present position

This is also the answer to its proposition that for it to go to another location inferior to its present base would produce a less satisfactory result with "serious financial constraints upon the company". This has a strange logic about it for it compares that position with that which would have obtained if the promises that it allege had been kept. This is a false comparison. As it has been explained, in order to find detriment from reliance on such a promise the comparison must be made with the position that would have followed if the promise had not been made or if no reliance had been placed on it. That would have been extinction unless it took the risks that it in fact took.

The same answer also applies to its submissions of detriment in relation to the topics of its incorporation and statutory recognition and its promotion. Except for any loss from waste that can be shown and which would be adequately compensable by money, even without tenure it is now in a better position than it would have been if it had never existed or promoted itself. In the unlikely event that it should cease to operate, it will have had the benefit of these things until then; and if it does continue then their enduring value is even greater.

The finding that there was no breach of the alleged promise as correctly understood makes it impossible to take this line of reasoning further. All that can be said is that even if there were originally a promise of the nature claimed, and even if there were a breach of it, on the correct basis none of the alleged detriment properly associated with this matter is satisfactorily proved, save perhaps for those matters that are compensable by a money payment. It follows that detrimental reliance has not been proved.

A separate issue in the claim of estoppel against the Bank is whether BUL's agreement to the registration of the mortgage was given in reliance on the assurances passed on to it by Mr Wran. This has already been discussed in some detail. The important fact is that the assurances were of no more than what was later offered, but that aside, because of other considerations it probably would have agreed as it did, even without them. It should be accepted that it was somewhat influenced by them, but the absence of any reference to it in the letters confirming the agreement must raise some serious doubt as to the weight of that influence and its decisiveness. This is consistent with the obvious explanation that it was well understood that the result was still conditional on the negotiation of terms that would be acceptable to all. The difference that it contributed was that this was more promising than before.

The practical result is that BUL is correct in its claim that the Bank's assurances did have some influence, albeit small, on its action to allow the registration of the mortgage; but it had little comparative weight and no decisiveness and in any case the effect of its influence is irrelevant since the assurance was complied with.

A related issue is whether, accepting BUL's claim on this issue at its best, any estoppel would apply to the Bank's present denial of its entitlement to a lease or whether it would simply estop the Bank's reliance on the registration of its mortgage in competition with BUL's claim. As to these there are two major considerations. First, as the mortgage was registered subject to BUL's rights, if any, the position that would have obtained if the mortgage had not been registered has no apparent difference from the position as it now stands. If the Bank is merely estopped from asserting the priority of its mortgage over any interest that BUL otherwise possesses, then if there is no such interest the estoppel would be devoid of any practical effect. It is only if the Bank is estopped from denying BUL's entitlement against EIE to a lease that the assurance has any significance, and this issue has already been decided.

Secondly, in any case, because of the need for proportionality of the remedy, which will be considered more fully later, in those circumstances equity would not subject EIE and the Bank to the burden of a long-term lease with all necessary concessions on the basis of an estoppel. A very limited benefit was obtained and because of the reserved priority of the caveat BUL suffered no practical detriment from this representation. Consequently, the remedy sought would be out of all proportion to the effect of the impugned conduct.

It could also be relevant that the assurance was to some degree forced by the threat of obstructive delay of the registration of the mortgage by the caveat which would, as it turns out, have been protecting a fruitless claim. It is also relevant that to this purpose BUL had unconscionably subjected EIE and the Bank to undue obstruction by keeping its caveat alive without commencing the justifying action. While this conduct was lawful, its purpose was somewhat unmeritorious, which is relevant in equity when it is asked for its remedy However, the force of this is somewhat attenuated by the Bank's willingness to comply with the demand because its plans accorded with this solution.

For these various reasons, BUL has not shown such a reliance to its detriment on the Bank's conduct that equity would estop the denial of the existence of the lease even if, contrary to the true position, there had not been full compliance with its assurances.

There is some debate between the parties as to whether the clarity of the representation or promise required by the authorities, such as Legione v Hateley [1983] HCA 11; (1982) 152 CLR 406 at 435-436; Re Gold Resources Australia Ltd (Provisional Liquidator Appointed) (1991) 9 ACLC 1500 at 1509; Baillieu v Australian Electoral Commission (1996) AIPC 37214, to found estoppel in pais applies to all forms of estoppel.

Any estoppel, whatever its description, has the effect of creating a legal relationship that ex hypothesi does not really exist at law by estopping a party from denying the existence of something that does not exist. This fictitious relationship cannot be examined carefully for the usual incidents of the transaction that would produce such a result at law. Nor does its creation have for the party so estopped the safeguards of the solemnities of law: cf. Legione v Hateley (supra) at 435 - 436; Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 at 586D; The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 409, 413,440. These are the reasons for the need for clarity in the case of estoppel in pais and as they are equally pertinent to the other forms of estoppel and there is no contrary reason, there is no basis for distinguishing them.

This view accords with the principles enunciated in the authorities without explanatory analysis that there is no distinction between the various forms of equitable estoppel, including both promissory and proprietary estoppel: Legione v Hateley (supra) at 430; The Commonwealth of Australia v Verwayen (supra) at 409, 445, Amalgamated Investment & Property Co Ltd (In Liq) v Texas Commerce International Bank Ltd (1982) QB 84, 103; Crabb v Arun District Council (1976) Ch 179, 192; Gillies v Keogh [1989] NZCA 168; (1989) 2 NZLR 327 at 321; and there is agreement between Mason CJ and Deane J in Legione v Hateley and Verwayen, though the other members of the Court were silent on the issue, that there is a unified system of estoppel that includes estoppel in pais. Whether this view becomes accepted doctrine or not, since the factors in relation to this aspect are common to both legal and equitable estoppel, there is no ground for distinction here. Consequently, the promises or assurances relied on in the present action must be clear before they could found an estoppel, but the express elaboration of the details behind them is not necessary.

This is implied by the discussion on the subject in Legione v Hateley at 435-436 where a clear representation gave rise to an estoppel though it was silent as to the grounds for its justification. So too, if it has sufficient clarity in the definition of its content, a promise or other conduct that produces an obligation or proprietary interest by estoppel need not expressly refer to all the details of that content, and by construction or implication where necessary, the court will work out the terms left unexpressed.

If the unconscionability is sufficient to rouse equity, it will not be thwarted by some difficulty in working out the details from the general expressions of the party to be estopped. This is much the same as the approach taken in the construction of a contract where the Court will strive to find the parties' intention and to save the contract despite the inefficiency of the parties in expressing it. But there are limits to this and if the detail is too difficult to determine in this way it means that the content is insufficiently clear to support the estoppel.

This will reconcile the principle requiring clarity in estoppel with the decision in Austotel (supra). There it was held by Priestley JA, whose analysis was approved by Kirby P and tacitly accepted by Rogers AJA, that a proprietary lease could arise by estoppel in suitable circumstances though the parties may not have agreed on the rent or other fundamental terms, or even on the basis on which those terms could be determined. That analysis took into account the distinction between such a case and Waltons Stores (Interstate) Pty Ltd v Maher (1988) 164 CLR 387 where the parties had agreed on all the terms of a contract or lease but it was unenforceable except by estoppel. That the terms were all expressly agreed in one transaction to which estoppel was applied did not mean that it was a requirement of estoppel, as the Bank contends. So too in Lim v Ang (1992) 1 WLR 113, a relevant term was uncertain but the content of the assumption encouraged was so clear that the court could reasonably imply suitable terms, including the application of any essential conditions and the assessment of consideration, in order to enforce it according to its tenor.

Of course, the party seeking relief cannot hope for an order that endows more than the assumption that was encouraged: cf Waltons Stores (supra) per Brennan J (as he then was) at 422-423; or on more favourable terms: Crabb v Arun District Council (1976) Ch 179, 198, where an order was made on terms to be agreed by the parties and in default of agreement, to be settled by the court. See also Verwayen (supra) per Deane J at 439.

In Austotel the application of these principles did not result in an estoppel, for the conduct of the party seeking the relief was responsible in part for the incompleteness of the agreement, which suited it at the time. This made it inequitable to grant it the relief sought, which is somewhat analogous to the issue of laches in the instant case. The court noted the undesirability of its intrusion in this way into the field of commercial contracts, particularly where the parties are independent and separately advised and have deliberately refrained from concluding an enforceable legal contract. But this does not derogate from the general principle that the mere absence of agreement on details, even one so fundamental as rent, will not necessarily prevent the application of estoppel in suitable circumstances. In this, BUL's argument is clearly right. However, this does not finally dispose of the point in its favour. It remains to be determined whether on these principles there was sufficient clarity of the promises and assurances in this case.

It is not entirely accurate to say, as the Bank would have it, that the issues of duration and identification of the premises had not been resolved as distinct from agreement between the parties as to the practical application of the resolution of those terms. It had at first been commonly accepted that if the lease were to be granted upon the resolution of the other problems, there was to be long tenure, later assumed to be ninety-nine years, possibly with extensions; and even when other problems, particularly as to rental, defeated that scheme, alternative methods were investigated that would permit of lengthy tenure but not necessarily of that length. Under the final scheme the goal of long tenure continued but it had to be attractive to an investor. Although the earlier arrangements were useful as an historical guide, they set a criterion as to the length of the lease. It is true that the specific number of years was not agreed to, but the definition of the term was adequately discernable. Difficulty of application of such an arrangement is a common enough problem that is overcome by the courts and it is not of itself decisive of uncertainty.

In the period allowed by Mr Ogawa in the present case there is an apt example of the application of all the relevant factors that existed at the critical time. He knew of the criteria and the respective needs and capacity of the parties, and he honestly, if somewhat sympathetically, tried to apply them. Due to the pressures on him and his own inclination, the period of thirty years that he finally proposed was probably the best he could do for BUL, but otherwise it is a fair interpretation of the general arrangement. This is useful evidence of its translation into a specific result, and it does not detract from this that one party or even both might not have accepted it.

The same process applies to the adjustment of the area to be leased to accommodate BUL's limited capacity to pay rent. Since the beginning of specific formulations, the area under the various schemes has increased and diminished according to the exigencies of the particular scheme, matching the reduction in the rent necessary to meet BUL's capacity to pay. It is true that there was no final consensus as to the relevant area. However there has been some mutuality as to the essential or core area that would be included in any lease, though BUL was always pressing for more. It consisted of that part of Lot 931 on which the academic buildings stood, but not the commercial retail facilities, nor the student accommodation building on part of Lot 932. This was the minimum, and because it was associated with the continuing role of the joint venturers when it was first devised, it may be inadequate in the long term. Again, it would be reasonable to adopt the area proposed by Mr Ogawa as the most appropriate to conform with the general understanding.

The remaining term, and not surprisingly the most difficult, is the rental. It is not correct, as the Bank would argue, that it was always to be determined at arm's length at a commercial rate, even if in the early years it was understood that any amount outside BUL's capacity to pay would accrue as a debt. That original plan, which included a ninety-nine years term, had to be abandoned, and so the commercial element of the rent became fluid just as the length of the term did so in order to find a successful combination. When it became clear that concessions were necessary, the parties negotiated on the common understanding that some attempt would be made to grant them, and this was certainly not an arms-length transaction. It was useless to set terms that BUL could not meet. The Bank's omission of proper recognition to fundamental changes necessary to successive schemes is similar to BUL's error in other places.

The serious problem is that the financial constraints of affordability to both parties in this context are fairly amorphous. BUL obviously rejects a level that would require it to function contrary to its best overall interests simply so that it could afford a higher rent or to accept risks that could destroy it, both of which are appropriate within reason. However, it should not have expected to have been provided with a comfortable ride nor to have been entitled to rely on all the features that were to its best advantage as an excuse for paying less rent. It would have been necessary to study the respective weight of the complex competing factors, and there would have been room for some subjectivity in the final assessment

The defendants argue that anything adversely affecting their interests was relevant, which is also correct to a point, but the effect of this must be limited for virtually all purely philanthropic concessions would have adversely affected them. Obviously it is the degree of acceptable adversity that is relevant, but in fairness this must take into account the benefits already provided and the financial health of the donor. BUL argues for all the concessions that the wealth of EIE and the Bank together could sustain, irrespective of the financial harm to them. That is unreasonable and inconsistent with the caution that muted their generosity and with the financial realities. This has been more fully discussed elsewhere.

The answer lies somewhere between these two extremes. At best, EIE could afford limited concessions only, not necessarily confined to those that were strictly in the interest of EIE but admitting some element of philanthropy, providing that they would not place too great a stress on its already straitened state. The limits of a significant philanthropic promise, if not expressly defined in detail, must be realistic according to the circumstances, and a beneficiary's excessively optimistic expectation of largesse will not support an estoppel. On this standard, it is not shown that EIE was ever in a position to afford concessions beyond the final terms prepared by Mr Ogawa, and perhaps even up to that level, and the contrary is probably true.

However, the fundamental problem of uncertainty in respect of this term is more profound than that. Of course, if he produced a formula that both parties should have accepted it does not follow that it was objectively determinable. The imprecision of affordability causes inherent problems in its application. First there is the complexity of the balancing exercise necessary to accommodate the competing interests, including variations of the length of the term and of the area to be demised.

On a higher plane, matters such as the degrees of the philanthropy to be shown and of the caution to be exercised by way of self-protection contain a strong element of subjective judgment. If sufficient evidence could be provided to enable the Court to evaluate and apply this, it might be able to find a reasonable level of each factor conformable with the attitudes expressed throughout the transaction. This is different from a purely discretionary subjective decision, but it would be extremely difficult to the point of impossibility to assess what should be reasonable in matters where a heavy subjective content is justified, such as a suitable level of financial self-protection in a philanthropic gesture.

The assurances included several complex components as an integrated whole and while some of them, such as that the desired lease should be lengthy, were clear enough at times, it would be wrong to seize upon one element of the arrangements or one part of the total time frame only and promote it as having some special force because of that individual clarity. Because of the interdependence of all components, such an isolation of one of them is invalid.

During negotiations, while BUL remained fixed on one set of demands, Mr Ogawa made a number of changes to the concessions relating to rent that were offered, particularly in his attempts to design a formula that would satisfactorily permit of longer tenure as well. He was in possession of all the relevant material and some knowledge of the subjective features that might have enabled him to achieve the result that everyone wanted, but even then the Bank indicated that it was not necessarily agreeable. BUL's rejection of it does not necessarily mean that the broad criteria were not defined, but the difficulty of their application could partly explain the absence of common ground. Greater difficulty then follows on the Bank's withdrawal of its support of EIE, which must have drastically reduced its capacity to afford concessions at all and sealed the uncertainty of that issue.

It is not necessary to go that far. If despite his sympathetic and pragmatic approach it is suggested that Mr Ogawa did not allow sufficient concessions and other benefits, then it would follow that either the defence of uncertainty is correct or that the competing needs of affordability were irreconcilable and incapable of application. Further, if the offer was affordable then, it would not follow that it would be affordable after a change of circumstances that may have upset several factors that had a subjective element.

One difficulty is exemplified by BUL's proposal as to the rent it would be required to pay if it had been found to be entitled to a lease. It claims that it should then have been only what it could afford, that is, an amount limited to its capacity to pay in its start-up years, whatever that might be, but moving at some unpredetermined time to a commercial rate compatibly with its increasing capacity. Even now it would still be difficult to anticipate what reductions from the commercial rate by way of concessions would have been needed since repairs and maintenance costs must also be considered. Mere difficulty does not mean uncertainty, but even if a formula could have been devised by reference to BUL's financial state to give certainty on that front, it would still have stumbled on the issue of its affordability to EIE. That is one reason why BUL must argue that affordable means at any cost.

This point is distinct from the difficulty in BUL's own formulation of the rent that it should pay, namely, the measure of its capacity for paying it, for it could spend heavily on other aspects of its operation so that it has little or no surplus income. Its capacity for manipulation of its accounts has been demonstrated in practice. The more serious difficulty would be the evaluation of the amount and relative weight of other items of expenditure that should be taken into account in deciding what it could afford for rent. This too could require too much subjective judgment to permit of sufficient certainty.

On the above findings, the terms offered by EIE were the nearest practical application of the broad understanding that had been mutually agreed. On their rejection and EIE's collapse without the Bank's support, the extent of the concessions and consequently the rate of rent would have been hopelessly uncertain. The defence based on uncertainty would therefore have succeeded if it had been vital.

There are some other arguments on this topic that should be disposed of as they seemed to attract some attention. It is true, as BUL indicates, that no witness spoke of any conversation where a concluded agreement as to rental was mentioned as a condition of the grant of the lease, but as it has been indicated earlier that is somewhat simplistic and irrelevant. Apart from the supportive attitude of the joint venturers in this case that would deny any such formality at that stage, negotiating parties who have reached agreement on the broad common goal they hope to reach through subsequent negotiations rarely express a condition that the other essential terms must be agreed to before they are bound to it. It is almost always implicit, and the circumstances known to the various parties in this case were certainly such as to carry that clear implication. The negotiations here hardly amounted to arm's length bargaining as between strangers where every term not reasonably implicit would be carefully spelt out. Before the discussions as to the specific terms began, in that climate it must have understood by BUL that any general assurance of a lease was to be subject to the details to be worked out, though it would have been justified in believing that the joint venturers would be strongly supportive in that respect, as indeed they were.

The rental return on the lease was always an essential feature of the total discussions, and when agreement on that could not be reached, the lease was not granted. This would have been obvious to those persons representing BUL, who would never have thought that the assurances of the joint venturers' intention to provide a lease were free of implicit conditions as to rental simply because none was expressly mentioned at the time. When the lease was delayed, which caused some pain to them, they did not assert that the only reason for the delay, the determination of the rental, was irrelevant for the reason now promoted. This point is not shown to have had any significance.

Conversely, the Bank is not correct in saying that such agreement as was achieved did not cover rent and concessions. When the first period of tenure was agreed, the rent was also set, but it was assessed on the basis of projections that proved to be wrong. When this fell apart, in conformity with the general criteria influencing this term there was implied agreement to try to set a commercial rent with concessions that would be affordable to both sides. While the former component was resolved as in the Heads of Agreement the latter gave some trouble. Because of uncertainty as to the concessions needed and their affordability, a specific formula was well beyond attainment and so the innate difficulties of the criteria were not evident. EIE and the Bank then developed the new scheme in which BUL joined, a lease on terms that would be affordable to BUL and attract from an investor a reasonable price that EIE could afford to accept.

Because the Bank's argument is flawed, that does not validate BUL's proposition that its entitlement to a lease was free of any conditions relating to rental. The thrust of the Bank's point was in another direction and the subject matter is different. What BUL had to overcome was the condition that it was to pay rent but with concessions that were limited to what the joint venturers could afford. In order to be effective, this did not have to be capable of formulation in the way the Bank required in its argument. But if through uncertainty it was still incapable of formulation by the court by construction and inference, then it is lost, even though the Bank's measure is also rejected.

This digression should not distract attention from the central point, that the obstacle to the grant was not any absence of certainty as to the agreed goal. Except for the terms offered by Mr Ogawa, it was the uncertainty of the measures of affordability of the rental and the concessions to the respective parties; and otherwise the impossibility of reconciling the conflicting needs. The very absence of any alternative agreement as to the rent and other contents of the lease indicates the impossibility of performance of the parties' general agreement in any other way.

The conditional assurances given in this case are different from that which attracted estoppel as in Austotel. There the unconditional assurance was simply that a lease would be granted for a suitable commercial rent, and the determination of the appropriate rent in accordance with this uncomplicated formula was merely an ancillary issue that the court could determine on objective standards. Similarly, in Lim v Ang (supra), the unconditional agreement was essentially that in exchange for the abandonment of his interest in the land the party estopped would accept appropriate compensation, which again the court could determine objectively.

To try to find analogy with the present case simply because here too the rent had not been agreed demonstrates the danger of seeking to rely on an identity of some selectively chosen and artificially isolated facts in different contexts. BUL's submission is good to the extent that it demonstrates that the absence of agreement as to some terms of a lease, even fundamental ones, does not necessarily mean that equity will not afford relief, but in the present case it has no larger significance than that.

There is error also in its argument that the capacity of the party to be estopped to afford to pay for the interest to be acquired by the other party is immaterial to a finding of proprietary estoppel in the latter's favour in appropriate circumstances. It is certainly so where that capacity is not a relevant feature of the assurance or promise upon which the estoppel is founded. But where the interest created inherently depends on the grantor's capacity to afford to pay for it, then it must be material.

If the court were tempted in this case to make an order that would result in a lease, it would be impossible to devise terms that could satisfy the conditions of the assurances. Because of the vastly changed circumstances, the replication of Mr Ogawa's terms could not now be suitable. The uncertainty that remains even now as to BUL's ability to pay a commercial rent consistently in the future, and even as to when it could begin to do so, forms one side of the problem. In assessing this, its obligation to take over the costs of maintenance and repairs, to make some payment for recent adverse occupation, and to repay part of its debt must be counted.

On the other side, in the light of subsequent events it would be highly difficult and probably impossible task to decide what further philanthropy EIE could have afforded to extend in order to provide the necessary concessions. If necessary, that same observation would apply equally to the Bank, even though it was not in the same distress as EIE, for its losses would have to be taken into account in order to decide whether the further loss from concessions became unreasonable. In that question lies, among other things, the evaluation of their reasonable self-interest according to the condition of affordability. Presumably EIE is no longer in any position to make any concessions, and without them BUL could not afford to meet the rent that the court would in equity be constrained to set.

There would be little equity in applying proprietary estoppel to a situation as unclear as this. Because BUL always knew that the limitation as to affordability was a factor, it is very unlikely that it acted to its detriment on the basis that the hoped-for concessions were clear.

FURTHER EQUITABLE CONSIDERATIONS IN THE GRANT OF A REMEDY

Equitable considerations relating to the remedy have been mentioned earlier in respect of particular features to which they have been most pertinent. For reasons similar to those given elsewhere, this subject should be discussed further even though no ground for the estoppel has been shown. Because it would follow that no remedy would be provided, some assumptions contrary to the findings will be made for the purpose of discussion.

Unfortunately, if its argument is to be given any credence, BUL did not turn its mind sufficiently to the nature or extent of the risk, perhaps because of its confidence in EIE's goodwill and because of its concentration on its problems of being without a lease to the exclusion of EIE's problems in granting one. It is more likely that it did recognise the risk, but it may have not always judged its intensity correctly or in time.

The chances turned out badly, but even with some knowledge of their effect on EIE's fortunes, BUL did not accept the best chance that advancing adversity left for it, not to mention that the offer gave it all that it was entitled to have. It deserves considerable sympathy for its position, but that is not the fault of EIE or the defendants, who tried very hard and at considerable cost to help it. In part it is self-inflicted, for if it had accepted the offer it could now have been in a position which, though not perfect, would have been modestly comfortable and far better than its present one. It took a risk in its excessive demands, and it lost. This was by force of circumstances and not by any default of EIE, which itself suffered the loss of the whole project, or of the Bank, which has also suffered loss. There is no reason in equity why BUL should have a remedy against the defendants.

There is also the need to take EIE's financial decline into account. Partly due to its generosity in the provision of funding and allowing the debt to be subordinated, to its bearing the entire development costs, and to its having to buy out the Bond interest in order to preserve the project, the provision of a lease with greater concessions than those offered required a philanthropic act which it had become beyond its financial power, or at least its reasonable financial interest, to grant. It would be inequitable to omit this from the catalogue of relevant considerations, particularly as BUL knew that the university's foundation was part of an entrepreneurial exercise with associated risks, and understood that the grant of a lease with concessions was subject to EIE's capacity to afford them.

Equity would avoid heaping onto this generosity and the cost that had been incurred the added burden of imposed concessions beyond those offered, unless there was a clear reason for doing so. It would be unjust to impose on EIE a further obligation that it never held itself out to provide, that is, merely the positive feature of its assurances without their conditions and limits, or to read down the terms or force of those qualifications. Though its contribution and loss was less, the same considerations apply to the Bank.

The defendants have also raised the principle of proportionality of the remedy sought to the detriment suffered, but in view of the result it is otiose. However, it is desirable to refer to it, despite the difficulty inherent in a discussion where the facts are not entirely compatible with it.

The doctrine is simple enough. The equitable nature of the remedy will ensure that justice is afforded to the respondent as well as to the applicant. There must therefore be proportionality between the remedy granted and the detriment which is its purpose to avoid: Verwayen (supra) per Mason CJ at 413. It is not its purpose to fulfil the expectations that were disappointed if they go beyond the detriment that would otherwise be suffered, particularly in the case of gratuitous benefits, for it concerns itself with the minimum equity necessary to do justice between the parties: Crabb v Arun District Council (1976) Ch 179 per Scarman L.J. (as he then was) at 439; Verwayen (supra) per Deane J at 439; Whittet v State Bank of New South Wales (1991)24 NSWLR 146.

In this case, a ninety-nine year lease, while desirable for the best result, would go far beyond the term necessary to provide security for BUL's stability and survival, which is at the heart of its claim of detriment. Further, to the extent that those goals have already been secured by rent-free accommodation and other gratuitous benefits such as the subordination agreement that have allowed it to become a viable business, these should be taken into account as reducing the need for or extent of the remedy.

The combined effect of these factors, given full operation, would lead to the conclusion that at best BUL was not entitled to any remedy beyond a reasonable but very limited period of occupation to find alternative premises. The limitation must reflect the period of occupation that has already been enjoyed contrary to the defendants will: cf Brisbane City Council v The Council Club Inc. (Unreported, Qld C/A 9 May, 1995 - Appeal No 4 of 1995) where in an insightful analysis of the application of the doctrine the Court reached a similar conclusion.

This would have limited any remedy to a lease for less than five years from the present, and because of the long rent holiday that has been allowed, there would be no further concessions by way of a reduction of the commercial rent. This would have undone any detriment caused by the assumptions that were generated, while not addressing detriment due to BUL's own conduct. It would be merely incidental if, as is unlikely, this limited period of further occupation might not allow it to consolidate its position fully and plan for its removal if it could not negotiate a commercial lease elsewhere. That is not the measure of the relief.

THE TRADE PRACTICES ACT CLAIM

The claim against the Bank under the Trade Practices Act for deceptive or misleading conduct depends upon the proposition that it engineered the registration of its mortgage by leading BUL to believe that the interest that it claimed in the campus would not be affected by it. This is a curious claim in that it is BUL's case, and not controverted by the Bank, that the registration of the mortgage is expressly made subject to its interests, if any. The Bank enjoyed no advantage and BUL suffered no disadvantage as the result of the registration, and so there was nothing misleading in the representation if it were made. Further, as BUL would have been forced to agree to the result in any case, there was no loss from this, even at its worst.

Of course, it is the fact that it had no interest to be adversely affected beyond that which was offered to it by Mr Ogawa, but even if it had one, the subordination of the mortgage to it meant that there was nothing deceptive in the alleged representation.

Alternatively, it is said, the Bank as 'a person involved in a contravention' encouraged BUL to believe that it would be granted a legal lease. As it has been shown, this is not correct. The Bank represented that it would sympathetically enter into negotiations for the lease and that it was optimistic that one would be provided. It was implicit that the former condition of affordability would still apply, but the expression of optimism subsumed this. The words of encouragement were not intended nor understood to be more than that. Its supportive gestures otherwise amounted to no more than representations of its continuing goodwill, which were true. More tellingly, it conscientiously fulfilled this undertaking by arranging for a suitable lease to be offered. It had not represented that it would be on BUL's terms and regardless of the cost. In any case no harm was caused by the representation because it did no more than lead to the registration of the mortgage, and that was subordinated to any interest of BUL. The remedy is compensation for any loss and not enforcement of a philanthropic arrangement.

The claims founded on alleged breach of fiduciary duty are abandoned, but claims for a declaration of a constructive trust and for restitution are pursued. In these circumstances, a declaration of a constructive trust would amount to the enforcement of promissory estoppel: Austin v Keele (1987) 72 ALR 579, 587 (PC), and because that claim is unsuccessful, the other falls with it and on the same grounds. The common intention that the plaintiff should have a proprietary right in the form of a lease that is necessary to support a claim of this kind (Bryson v Bryant (1992) 29 NSWLR 188, 216) was, as BUL says, present during the foundation period as a basis on which the parties proceeded; but as it has been shown, it was conditional.

It was never capable of implementation, and the same applied to the successive schemes that replaced it. Until the lease was finally offered, the parties mutually moved to progressive modifications of the proposal, and any incipient trust from this source carried the same conditions as the proposal, but these too were unsuccessful, the last because BUL would not agree to the terms.

In these circumstances, an unconditional constructive trust was never created for such a relationship does not exist when the proposed grantor is prepared to grant the interest but the proposed cestui qui trust cannot accept obligations contained in its terms. Nor will it arise where that party refuses to accept a grant that is the fulfilment of the arrangement, for in circumstances such as these the trust is impliedly provisional upon the acceptance of an offer made in accordance with it. Consequently, the arrangement that led to the offer that BUL refused could not support a constructive trust. Indeed, no claim is made on it.

In summary, any constructive trust that could have been created by the changing arrangements between the parties was always subject to a condition that could never be or was not discharged, and it failed.

The claim for restitution rests on the same facts and depends on the proposition that as the result of the plaintiff's expenditure of money on the land, the defendants will have enjoyed unjust enrichment if a lease is not granted. The plaintiff cites Hussey v Palmer [1972] EWCA Civ 1; (1972) 1 WLR 1286 and Callaghan v Callaghan (1995) 54 SASR 396 as authority for the principle of restitution of the benefits so gained. The defendants are said to be enriched by gaining free of cost the goodwill of BUL's business through the unconscionable takeover of the site on which the business was conducted.

That they will be enriched, it is argued, is demonstrated by a term of the sale of the campus whereby it is made conditional upon the purchaser's gaining control of BUL. However, it is not under their control, and if it does not wish to enter into some arrangement with the purchaser it has the choice to take its business elsewhere. In either case the defendants do not profit from the value of the business: if the contingency comes about it will profit only from the opportunity of the purchaser to negotiate successfully with BUL, and that is not the enrichment that is the basis of the complaint.

Even if there were some enrichment by the termination of the plaintiff's occupation, that is no more than would ordinarily accrue to a lessor on the termination of a lease, and it involves no unconscionability. The weakness in BUL's argument is that it has no claim on the defendants to remain on the land, and any incidental benefit to them that might accrue from its occupation is as irrelevant as the benefit of the free occupation it has enjoyed during this intervening period when the matter was being unsuccessfully pursued. Its would only have been relevant on a finding of default by the defendants and if the respective benefits that the parties had received were being calculated for the purpose of compensation, and then it would be brought into account.

Alternatively, it is claimed that BUL expended about $600,000 on fixed assets and capital improvements on the land, but as more than half of this took place before May, 1989 and would have depreciated considerably, and the rest may be of little use to an incoming party, it has not been shown that the defendants will enjoy any real benefit from this when they resume possession of the property. It will certainly not compensate them for the deterioration of their buildings over the years of BUL's free occupation or for the $3.5m. spent by them yearly on repairs and maintenance during that period. The expenditure on maintenance of the buildings and grounds, such as it was, was of no benefit to the defendants while BUL had exclusive enjoyment of them. Further, the avoidance of deterioration by maintenance was not a benefit to the defendants since they were kept out of possession without any return from the deteriorating asset.

If any benefit would accrue to the defendants it is more than matched by the combined cost of allowing BUL to have had rent-free occupation for so long, of paying repairs and maintenance costs and rates amounting in all to $8.7 m. during that time, and of lending $94 m. free of interest and subject to subrogation and long-term repayment. It was the source of much of BUL's development from which it has derived its income and built its portable goodwill. As it has had these benefits, it is not possible to say that it has been disadvantaged in the totality.

The promotional costs of the business are not relevant because their benefits go with its business it will retain and are not lost to it. Any loss in this respect caused by the removal of the business is not shown to be relatively substantial, though it will probably have an impact for a while. This however is irrelevant because it is the extent of the benefit that is unjustly derived by the party acting improperly and not the cost to the party making the claim that is the measure of the remedy: Sunstar Fruit Pty Ltd v Cosmo (1995) 2 Qd R 214, 224.

All of this is academic because there has been no conduct by the defendants that would make any enrichment unjust. The termination of the plaintiff's occupation in accordance with law is not in conflict with any equitable obligation of the defendants that would sustain the claim. It is not simply a question of unfairness: Pacey & Matthews v Paul [1987] HCA 5; (1986) 162 CLR 221, 256. There must be a further factor that would make it unconscionable for the defendants to take any benefit as a result of their conduct: David Securities Pty Ltd v Commonwealth of Australia [1992] HCA 48; (1991) 175 CLR 353, 359. See also Sunstar Fruit (Supra) at 225, where Professor Birks' reference to mispredictions such as unconsummated expectations is discussed. There is no justification for this claim on the facts as found.

As BUL has no right other than as a tenant at will, the period of notice to quit sets a complex problem although the principle is simple enough. The occupier should be allowed 'a reasonable period' that takes into account among other things the nature of the tenancy, its terms, the circumstances surrounding its creation, and any proper implications from the agreement of the parties with respect to it - Property Law Act 1974 s. 137. This is similar to the common law, which requires that a tenant at will is entitled to have "a reasonable time to wind up (its) activities, having regard to all the circumstances": Winter Garden Theatre Ltd v Millennium Productions Ltd (1948) AC 173, 181 (HL). It is true, as the defendants contend and this authority establishes, that the purpose of reasonable notice is not to prolong the use of the premises by the tenant but to allow it to adjust itself to the new situation created by the need to vacate the premises: ibid. at 205. The onus of showing what is reasonable is on the plaintiff, but that is discharged here.

Full weight must be given to the circumstances and the terms on which it was allowed into occupation. Being a university, it would plainly have substantial inertia by reason of its nature. Partly for the landlords' purpose, it was permitted to establish itself on the site and remain for a lengthy period on the understanding and with the expectant hope that secure long tenure would be granted if circumstances permitted. The force of this is reduced because of its rejection of the lease that was offered, which has required the defendants to take other action and undertake other obligations.

In the context of all these and other minor factors having the same thrust, the parties could not have intended that if the lease were not granted, it should be required to quit on short notice that would seriously prejudice the institution that was being set up under the same arrangement. Had the parties discussed this matter, it would certainly have demanded and the joint venturers would certainly have promised reasonable notice to permit it to make alternative arrangements and if possible to keep its university intact. Such a term would be inferred from the whole circumstances.

Conversely, the owner's reasonable rights and obligations would have led to an inference of a limiting factor. These include the reasonable obligations it undertook through alternative action after BUL's rejection of the lease and refusal to co-operate. In a practical sense the preservation of the university would normally have the more dominant place in this context, but the owner's position is still an influential factor because of BUL's recent conduct and because the evidence of its current financial condition and other sponsorship makes it highly likely that it will successfully relocate elsewhere.

On the evidence, it could afford to buy its own premises for some time so it will have to rent them. There is nothing exceptional in this for that was intended in respect of the subject premises. It appears from the evidence that a properly motivated search will yield satisfactory results, though perhaps not having that same level of perfection that seems to have been the criterion of its search to date.

On this point the quality of its argument is demonstrated by its submission: "Professor Mortley did not suggest that he was aware of any such building (T1690 lines 19-30)." That evidence reads as follows:

"I see. Now, are you presently aware, or do you have any knowledge of any set of land and buildings on the Gold Coast that might be suitable for the university?-- We have received a couple of proposals from developers in the Gold Coast area and we have received a proposal from Melbourne, but none of these has been pursued other than casual conversation.

Do any of those proposals involve ready-made buildings that the university could move into?-- The Melbourne proposal involves ready-made buildings, but which need considerable refurbishment."

Renting will not involve the same delay as buying and building a new facility, but finding an available and reasonably suitable one and negotiating a lease will take some time. Then it will probably be necessary to make suitable structural alterations, for premises already fully suited to occupation by a university are obviously rare. When that is done, it will need further time to organise and effect its removal . Realistically the combined period for all of these will not be short and some ordinary uncertainty about them calls for suitable cautionary liberality, but it is now in its interest to act promptly and positively in order to avoid the embarrassment of homelessness when the period of notice expires.

Thus far the resolution of these things in theory is not too difficult, but its application has its own problems, not least being the effect of BUL's conduct since Mr Allpass first rejected its claim to an entitlement to a lease. Some allowance must be made for the time when the Bank was entertaining Professor Messel's request of a gift of the campus, for he could not be expected to have pursued alternative courses of action while that was receiving serious consideration. So too because of the unusual and complex nature of the case, some allowance should be made for BUL's consideration of its legal position. As against that, it should not be allowed to take advantage of its deliberately obstructive behaviour.

Further, it is relevant to this question that it has not seriously searched for alternative accommodation when it should have done so. It is far from clear that as a location Brisbane, which it has dismissed, is not equal location to if not better than the Gold Coast. Its argument implying that playing fields must be on the site shows how artificially restricted its past search has been. Its excuses for its failure to make some preliminary provisional arrangements were similarly marked by its disinclination to consider the interests of the other parties, even though they may be shown to be in the right. These actions or omissions work against any extension of time for its vacating of the premises.

In all the circumstances, the proper period of notice then should be three years. The approach taken in New South Wales Small Bore Rifle Association v Commonwealth of Australia (Unreported - Sup Ct of NSW Eq Div Bryson J - 22. 7. 1994), which allowed little time because the tenant had no real prospect of relocating, is distinguishable on that ground. It might be added that if BUL takes prompt action to relocate but finds itself in difficulties and in need of a short extension, then despite its past behaviour the defendants should consider granting it, providing of course that it is not claimed to be an assurance or confirmation of greater things.

There is one other complicating matter. BUL has not been paying rent and none has been demanded or offered, even during this litigation. Because the period of notice is not associated with any equitable remedy but is defined simply by what is reasonable to allow the tenant to vacate, it would be wrong to include any consideration relating to the payment of past rent in the determination of reasonable notice.

The position is different in respect of the payment of rent during the period of notice, for it must be relevant to "what is reasonable according to the current commercial circumstances of the parties": Winter Garden Theatre Ltd (supra) at 181. It should be assessed on a base figure of $5m. per annum, but discounted for the unsettled nature of the outgoing tenant's occupation during that period as it is to be used largely for the purpose of winding down operations on this site. Absent this controversy, the parties should have agreed a fair rate in these circumstances to be $3.5 m. per annum, plus repairs and maintenance costs.

If there had been any breach by the defendants or EIE of the requirements of good conscience, this would have been a case for considering the application of the doctrine of equitable estoppel by providing a suitable remedy extending if appropriate to an order for the grant of a lease : Ramsden v Dyson (1866) LR 1 HL 129, 170; Inwards v Baker [1965] EWCA Civ 4; (1965) 2 QB 29; Crabb v Arun District Council (1976) 1 Ch 179, 188-189, 196. However, even on that hypothesis there are obstacles to that result.

There is no doubt but that there were conditional assurances concerning a lease and rental concessions, but there was no unconscionable conduct by EIE or the Bank because they offered a lease reasonably conforming to the assurances since EIE could not reasonably have afforded more. It is true that at times BUL relied on the assurances in varying degrees along with other considerations and it undertook liabilities and expenditure in the development of the university that it would not otherwise have undertaken. In some ways this may have been to its net detriment in not yet having been able to earn enough and amass assets of a total value sufficient to compensate for the full extent of its liability, but that liability has been diffused so that with the business it has acquired it should be able to meet it comfortably. If there had been any ground for a remedy, any shortfall could have been adequately reimbursed by the reduction of a suitable sum from its debt. However, the lease that was offered met all the expectations that could reasonably have arisen from the assurances, and there is no ground for any remedy.

If EIE and the defendants had been in breach of their duty, because the university can now be suitably if not perfectly relocated, because any detriment could be adequately compensated for by a money payment, because of the philanthropy already shown, and because of that which was still required at the relevant time in order to provide a lease, on all the relevant equitable considerations it would not be just and equitable to order that it should be provided now. This is particularly so since one that was offered and rejected at the time was reasonable on all relevant criteria, but it is probably no longer properly available by reason of the delay for which BUL is substantially responsible. In addition, the principle of proportionality would independently work strongly against such a remedy in the present circumstances. The virtue of this result is emphasised because it would also be the proper response to BUL's unconscionable conduct in recent years in deliberately causing obstruction and delay that would lead to serious harm and injustice if an order were now made in its favour.

Even if there had been such a breach, it is not surprising that the application of the relevant principles would not lead to any remedy. It would be very difficult to find that the joint venturers, who to the end were generously and sympathetically trying to provide a lease in full accord with the spirit of their undertaking, were in any serious breach of their conscience, for their hypothetical failure would have been due to their well known financial stress that was in part due to the failure of the project and to what they had already provided for BUL.

As against that, at no real risk to itself, it has already received from them very substantial benefits that have enabled it to own an established and very valuable and relocatable university. Its indebtedness is offset by the assets it has acquired, the prospects of future profits and the benefit of delayed repayment of its debt. To this countervailing list must be added the loss caused by its obstruction and delays while it continued to enjoy free occupation of the premises. On this weighing of the competing benefits and detriments and other equitable factors, BUL should have little cause for complaint at the refusal of further benefits at the further expense to and loss by EIE and the Bank.

These ruminations as to the effect of a different finding on the major issue are designed to show that even in those circumstances there is little difference in the result. Because of the goodwill and palpable generosity that was shown, this again is unsurprising. However, there is no remedy because there was no breach by EIE or the Bank of any duty in conscience. At the root of the claim were the conditions that always qualified the assurances and representations. The legal and equitable obligations of a promisor will not be extended beyond the substance of the promise, and if it is limited by conditions, they will not be overridden absent conduct of such a nature as to make it fraudulent to invoke them: Willmott v Barber (1880) 15 Ch D 96, 105-106; Crabb v Arun D C (supra) at 194.

For the above reasons it is not necessary to consider a suitable remedy in the event that the grant of a lease was unconscionably withheld, but in case of error in the findings made it is desirable to do so. This is difficult because it requires the assumption of some facts that are false and the consequences of the assumptions are unclear.

The first issue would then be whether a grant of monetary compensation, with or without a short lease, would be sufficient to do minimum equity. The plaintiff argues that monetary compensation is inappropriate in these circumstances, citing Verwayen (supra) where compensation was granted because the claimant's detrimental reliance in that case was limited to the 'bare' expenditure of money; but this does not mean that monetary compensation is confined to that class of case. The remedy may take that form at any time when the justice of the case recommends it and Verwayen was one simple application of the principle. To say that a case is suitable for the provision of such a remedy is not to say that it is not to be provided in another suitable case simply because it is different from the first. Equity does not work that way. However, assuming that the offer was insufficient and that the understanding as to a long-term lease was not affected by EIE's incapacity to afford further concessions, then, other things being equal, equity would enforce some right to occupancy equivalent to that of a lease. But the doctrine of proportionality and other factors favouring the defendants, including the past bestowal of benefits on BUL but excluding affordability, or reflecting adversely on the plaintiff, such as its obstructive delay, would limit the remedy to monetary compensation or at best to a lease for twenty-five years from 1 July, 1993 at a commercial rent payable from 1 July, 1995, that is, after a rent-free period of two years. The costs of repairs and maintenance would be borne by the grantee from the earlier date.

This commencing date would match the time when a suitable lease should have been negotiated with Mr Ogawa. The period before that should be excluded because EIE and the Bank were content to allow BUL to occupy the campus without a lease to that time. The rent holiday would be allowed for disturbance and as compensation to meet the difficulties of the lessee. The limitation on this concession reflects BUL's present capacity to generate funds and the new presence of the large corporate sponsorship now supporting it.

Because this concession would have involved further philanthropy, the financial losses of EIE and the Bank are relevant out of the need to do equity to both sides. The assumption on which this assessment is made permits this allowance as a modifying influence on the remedy rather than as a condition of the entitlement to it. The incongruity of this may demonstrate how justified is the factor of affordability as part of the original question whether a grant should have been made at all. This factor alone would reduce the length of the putative lease to twenty-five years at best for, although the rent decided below is assessed on a commercial rate, it does not reflect the return that could be obtained on the sale price if the Bank were not held out of vacant possession. On that basis, the rent holiday should remain the same as that indicated.

The commencing rent should be set at $5m. per annum reviewable every three years by reference to inflation, which in the absence of agreement should be determined by an arbitrator appointed by the President of the Institute of Valuers, the mode of determination of the rate of relevant inflation, in the event of dispute, to be in the absolute discretion of the arbitrator. Though it does not reflect a commercial return on the value of the asset, the basic figure has been set substantially in accordance with the evidence of Mr Cox but subject to some minor adjustments for matters elicited in cross-examination.

His evidence was more objective and reliable than that of Mr Brett, who also made various untenable assumptions, always favourable to his client. For example, it was not useful to confine his investigation to the affordability of rent to the present tenant as a paradigm just because it is in occupation, for its financial position and long-term earning capacity from the premises may well be inferior to those of a competitor. In this case he used figures relating to BUL's earnings that for reasons peculiar to this case were certainly below the earnings that should ordinarily be expected from the asset, even if it were to remain in BUL's possession. The inclination of this witness was also clear in his demeanour, but in his defence it should also be added that the exercise was difficult and admitted of some subjective personal judgment.

In contrast, Mr Cox fairly and fully acknowledged his difficulties in this unusual valuation, but his enquiry was much more thorough, and though his material necessarily had deficiencies as imperfect analogues, he fairly used his expertise for the most part to make appropriate adjustments and was reliable. Some of his assumptions and analogies were a little strained, but he conscientiously made an effort to recognise that and to make allowance for it; and in amorphous areas where he was obliged to make a value judgment based on his professional knowledge and experience, he showed professional impartiality and restraint.

The demised premises under the pseudo-lease would correspond with those included in Mr Cox's valuation since the rental is assessed on that basis.

The Defendant, Limgold, as the lending vehicle for the joint venturers, counterclaims $94,413,500.51 being the whole amount of the debt accrued as the result of the interest-free loans of operating funds during the establishment of the university. That the loans were made and their amount are not in issue. The primary controversy is the effect of the Subordination Deed ("the deed"). It is BUL's primary defence for as well as subordination of the debt to its other debts it suspended its payment, and the controversy lies in whether its operation has been terminated by the effect of its own provisions and, if so, whether in whole or in part.

Because its construction is in issue and the matrix of surrounding circumstances is invoked as an influence in that process, it is desirable to repeat briefly and thereby identify the facts relevant to this issue. It was entered into because the directors of BUL were justifiably concerned at their position in undertaking fresh liabilities while it was uncertain when the debt might be due and payable. If it were payable immediately on demand or at any time that would disable the company from paying its debts otherwise incurred in the ordinary course of its business, they could have been guilty of the offence of allowing the company to continue trading while it was insolvent.

The Deed was granted under BUL's threat that without it the directors could not sign the company's accounts and it would have to be wound up. Though it was granted freely and at arm's length, it does affect its construction that it was not given willingly, for it follows that it was not intended to be read totally for the benefit of the grantee but in a more even-handed way with suitable respect for the interests of the grantor as well. It is also relevant that the joint venturers had an indirect but strong financial interest in the university's survival and a benevolent wish for its welfare, which must have had a bearing on the intention of the parties in formulating it.

Its purpose is important to its construction. While there would be a need to define the circumstances for its termination, it would be contrary to its purpose if that put the directors back into the same position as that which provoked its grant in the first place. However, it does not follow that the termination would necessarily have that effect for it could also have been intended that the grantor would then extend relief according to its judgment of the needs of the time, including its own competing needs.

A. Limgold has lent BUL certain sums of money for operating and capital equipment expenses and Limgold will continue to fund BUL to enable it to meet its operating and capital equipment expenses upon certain conditions having been met. These past and future loans together with interest at a commercial floating rate to be agreed between the parties are together called the "Loans".

B. The parties wish to record their agreement in relation to the repayment of the Loans and the subordination of the debt in favour of other creditors.

1. Unless otherwise agreed in writing by the parties to this Deed, the Loans are subordinated to the debts of all other creditors of BUL and will not be repayable unless:

(a) BUL obtains finance of an amount and on terms and conditions reasonably acceptable to BUL which enables BUL to repay the Loans and BUL agrees to use its best endeavours to obtain such finance; or

(b) if after paying or providing for all other creditors and operating expenses as reflected and recorded in the accounts of BUL in any financial year and if after paying or providing for additional capital equipment and other expenditure as agreed between Limgold and BUL, there is a surplus in any financial year from which the Loans or any portion thereof may be repaid; or

(c) upon the liquidation of BUL and following the payment in full of all other creditors of BUL there are funds remaining to enable the Loans to be repaid in whole or in part and then only to the extent of such funds."

The first thing to notice is that, in the event of a surplus or any other of the contingent events mentioned in clause 1 after the word 'unless", the legal position set up by the operative clause of the agreement before that word merely ceases to have operation. The fulfilment of the contingency does not have a positive operational effect, such as making the debt repayable at that time. The operational part ensures that the debt, whatever the position as to repayability may have been, is certainly non-repayable until the contingent event; but when its operation ceases, it simply means that that assured position ceases, and the original terms of repayability resume their operation. As the parties seem to agree with this, there is no reason to discuss it further.

As the issues have fallen out, the first to be decided is whether and when there has been a 'surplus' as defined in the deed. Limgold argues for 1993 when BUL's financial accounts recorded its first surplus in the sum of $0.562m., but BUL has shown that it was calculated on a basis different from that prescribed in the deed. Its expert, Mr Murdoch, whose exercise is, with one exception, in conformity with the prescription, says that the first such surplus was $2.217m. in 1995 without allowance for a contingent liability for rent; but BUL argues further that its liability for rent, which it concedes and asserts it owes, should be taken into account and will keep it in deficit for some years.

This last argument is strange because if correct it means that it must use the surplus to pay part of the rent and then it still owes the balance and the full debt, and this will continue. If no rent was payable, the payment of the surpluses would reduce the debt and there would be no accrual of unpaid rent. Although there is no claim for arrears of rent in this action, if it were as BUL argues then Limgold would be entitled to amend its claim and BUL would be worse off. Its only pyrrhic victory then would be some delay in the termination of the subordination deed which is bound to happen at some time in the future. Fortunately for it, its argument is in error without any real disadvantage to it.

Aside from some doubt whether a contingent liability for rent was "reflected and recorded in the accounts" within the meaning of the Deed, there does not seem to have been any liability for rent during that period and none has been claimed. To the middle of 1993 at least, BUL enjoyed a rent-free tenancy at will that has never been terminated; nor since then has there been any agreement or other obligation giving rise to its payment. It is probably because it is aware of this that Limgold has made no claim for it in this action.

It argues further that in any case such rent would not answer the description of a component in the formula because it provides relevantly only for indebtedness to "all other creditors", which connotes the exclusion of its liability to Limgold itself. This is complicated by the position that both Limgold and Nista are the joint landlords, so any obligation for rent is not a liability to Limgold alone.

If the rent were to have become payable it would ex hypothesi have been '. . . other expenditure as agreed between Limgold and BUL. .' within the meaning of clause 1(b) of the Deed, so that it would then have been brought into account in this formula relating to a surplus, as might be expected having regard to the Deed's general purpose. The matter has not been fully argued and in any case is overtaken by the above findings and need not be determined here, but provisionally it seems that rent was not to be taken into account at the time when the concession was being provided, but would be included when it became payable. This, it might be thought, is an eminently reasonable result in keeping with the likely intention of the parties.

In answer to Mr Murdoch's results, Limgold refers to his inclusion in his calculations of the costs in each year of capital equipment which, omitted, would lead to a surplus since 1993 on those calculations. This should be omitted, it says, because according to the formula prescribed in clause 1(b) which reads, ". . . and if after paying or providing for additional capital equipment and other expenditure as agreed between Limgold and BUL . .", it is a component only if the expenditure has been agreed between Limgold and BUL, and this did not happen. BUL responds that the formula does not require any agreement as to capital expenses and that the requirement of consent is limited to 'other expenditure'.

Limgold's argument prevails in this respect because the requirement of agreement in the formulation is not limited as BUL suggests. The two are linked textually in the second group formed by the repetition of the definitive words, 'if after paying or providing for', which seems to have the purpose of establishing two separate classes of expenditure, and the only apparent reason for this division is to make Limgold's agreement necessary to that coming within the second class but not the first. Within the relevant group the items are not separated, such as by the insertion of the word 'for' before the words 'other expenditure' as might be expected if a distinction between its elements were intended. If the qualification were not intended to apply to the cost of additional capital equipment, it should naturally have been inserted in the first group where the limitation does not appear.

This construction is supported by a realistic understanding of what the parties would probably have intended. The party bestowing such a substantial benefit would have wished to have some restraint on the beneficiary's unilateral discretion to extend it at will by purchasing additional capital equipment to forestall any imminent surplus. This was achieved by the simple expedient of giving the grantor some control through a requirement of its consent. This is much more consonant with the relationship between the parties on these matters at that time. The joint venturers were generously providing substantial funds but demanding reasonable powers of supervision over the university's spending, which had been ill-disciplined. Consequently, only that capital expenditure approved by Limgold comes into the equation. (It will be shown below that this extends to expenditure which it should have approved.) It is not necessary that the amount be spent because BUL is correct in showing that the Deed's formula refers only to "providing for" additional capital equipment agreed to by Limgold.

There was no evidence of any agreement, express or implied, as to the items within this category after Limgold was taken from EIE's control. However, while EIE had control of it, the circumstances, and particularly EIE's representative presence on the university Council, strongly imply EIE's, and consequently Limgold's, approval of expenditure of this kind during that period through its de facto agents. That is a realistic appraisal of what was probably intended and there is no evidence to counter the inference. As there is no evidence of what part of the relevant expenditure occurred prior to the appointment of the receiver to Limgold in 1993, this factor cannot be excluded from the computation of any surplus in that year.

As for the following years the relationship of the parties also supports an implication that Limgold would not have withheld its consent to any reasonable expenditure of this kind. This issue was not raised or argued and there is no direct evidence on which it could be found whether any of the provisions for expenditure came within this description. However, it is clearly established that in general BUL's financial plight was such that it is very unlikely that it would have been spending unreasonably in this area so that the necessary approval should have been given to all the items that have been included in the accounts. Limgold has not proved the contrary of this prima facie position.

For the future the same considerations will not apply and if BUL does not obtain Limgold's reasonable approval to any proposed purchase, it will have to show on the merits that it should have approved and its mere commitment to the purchase will have no prima facie force.

Limgold advanced other arguments which, because of the result, need not be canvassed. It is still desirable to mention that its claim that the exercise should be performed on a cash surplus basis, as in the financial accounts of the company, has no foundation. The deed itself prescribes what it means by 'surplus', and though, as all would agree, it clearly assumes the income to be the starting point, it stipulates the items that are to be deducted.

Both sides tried to use technical accounting methods and expressions as an overlay on the simple and practical formula prescribed by the deed, but that should be discouraged. Both parties knew BUL's accounting system and no doubt intended that it should be the basis of the formula, and indeed they said so. There is no place for such substitute concepts as the liability of the university to provide the services for which fees had been received. The students concerned were not "creditors . . . reflected and recorded in the accounts of BUL" within the meaning of the deed and the concept behind the formulation, and the parties cannot reasonably be believed to have intended to enter into an arrangement with such mischievous potential rather than by reference to the ordinary meaning of the terms that were used.

On the correct application of the formula prescribed in the Deed, the first surplus was achieved in 1994 in the sum of $2.907m. In 1995 it was $3.711m. making a total of $6.618m. This results from the adjustment of the respective surpluses of $4.505m. and $6.796m. in the company's accounts by deduction of current lease liabilities, non-current lease liabilities and purchase of non-current assets and totalling respectively $1.598m. and $3.085m. as described by Mr Murdoch in his exercise.

It being established that the suspension of repayment by the deed has been interrupted by the appearance of a surplus, the second issue is whether that terminates the operation of the deed so that the whole debt becomes repayable or, as BUL argues, the subordination and obligation to repay is lifted only to the extent of the amount of the surplus in each year. The Deed said that "the Loans are subordinated . . . and will not be repayable unless . . . there is a surplus in any financial year from which the Loans or any portion of them may be repaid."

This is ambiguous. On one side it is said that in its ordinary meaning the description of the relevant event, which contained no express limitation on the result of that event, carried no such inherent limitation as BUL suggests, since the words used were no more than were necessary to define the event. In other words, the reference to a surplus and when it would occur was necessary to the prescription of the triggering event in a clause that was used simply for that purpose. The description is no more than was necessary for the precision of the definition of which it was part. That is enough to explain its purpose fully and so its mention does not justify any inference that it has a further inherent purpose, particularly when the extraneous factors that would support such an inference are at best equivocal.

BUL's construction calls in aid the reference to "a surplus in any financial year" and says that it is consistent with the expression appropriate to a year to year arrangement, and that in turn is consistent with payment of the debt over a period of time. This, it says, would be consistent only with the limitation of the amount of the repayment to that of a surplus less than the total debt. It is also consistent with the description that would be adopted where it is intended to link the trigger to a surplus that is to be assessed by reference to any financial year's results where there is uncertainty as to whether and when such a result might occur. For example, it would be suitable drafting to say, "If there is a surplus in any financial year from which any part of the debts may be repaid, then the whole of it shall be repaid". As this usage is suitable for the purpose of describing the triggering event for the total repayment, there is less reason to confine the meaning of the expression to an alternative interpretation, but of the two that advanced by BUL is the more comfortable.

The other textual basis it relies on turns on the Deed's reference to the words, "...From which the Loans or any portion thereof may be paid", and it says that this anticipates that the loan may be repayable in parts under this system. However, it is equally consistent with the intention of triggering the repayment of the whole debt if the surplus is enough to pay the whole or even a part of it. Both the whole and a portion could well have been referred to out of caution to cover all the possibilities and to avoid doubt. Again, this simple explanation, consistent with the primary purpose of the text, is enough to share acceptability with the alternative explanation that could have been, but was not, expressed by the simple addition of the words, "..and then only to the extent of such surplus" at the end of the sub-clause. This omission gains some significance by comparison with clause 1(c), where that was done in just such a form, but the ambiguity itself suggests that care should be exercised before relying on such drafting refinements.

Although each may be demonstrated to be equivocal, together, these two textual usages have the flavour of BUL's version, and Ms Nosworthy and Mr Robertson apparently read them as such, but the factual context makes it much more assured. The subordination and the suspension of repayment of the debt are inextricably linked in the Deed as completely related to each other for its purpose, and all its terms refer to them in common. It would have been most impractical for the subordination to be terminated totally on the appearance of a surplus that might have left most of the debt beyond any capacity for repayment so that debts to others that may have had priority when they were contracted might lose it and the company might be found to be profoundly insolvent.

Limgold tacitly acknowledges the force of this point by seeking to distinguish between the Deed's provisions for subordination of the debt and those for the suspension of the obligation for repayment. It argued that its reference to the occurrence of a surplus is limited to the latter because it appears in the text immediately after the reference to it; and that it has no reference to the former as well even though the two are conjunctively joined in that text. Consequently, it argues, the subordination is permanent while the suspension can be terminated more readily without serious effect to BUL's financial status.

While such a construction might have some such effect, its influence in making the debt immediately repayable would be almost as dramatic as the subordination feature. Moreover, the notions of subordination and suspension of repayment are conceptually related in this context so that if the debt is subordinated to the debtor's other debts, in practical terms that virtually amounts to limiting its repayability to the surplus as defined. Consequently, this distinction is unconvincing.

There is also no basis for it in the text. As might be expected from a practical point of view, textually the two features are generally treated together throughout the deed and on the same basis except where a difference is intended, and then the intended feature is expressly treated as such. Specifically, the qualifications in paragraph 1. are expressed to apply to both features. Stripped to its essentials, it reads: 'The loans are subordinated and their repayment will be suspended unless the prescribed events occur.' The result is obvious. If the conditions were not intended to apply to both, there would have been a clearer separation by textual or other means. This argument should be rejected.

All of this and more would have been contrary to the parties' purpose and intention in making the Deed but it would not have been so if the subordination had been lifted only to the extent of the surplus which could then be used to redeem the debt to that extent. This points strongly to the latter intention in respect of subordination, and since the suspension of repayment is treated in common with it, the same would apply to it. This result has the attraction of being the more reasonable in the circumstances, and although it may have deprived the grantors of the opportunity of reviewing the repayability of the debt at a convenient time, with their goodwill they could hardly have intended to require more of BUL than the Deed provided for, and their power over funding and the lease probably gave them sufficient control for that purpose if they had wished to vary the arrangement.

Further, as it has been explained, when the deed ceased to impose a non-repayment provision, it did not follow that the debt was immediately repayable. If the trigger provided for total termination of the suspension, then the parties would have been forced to renegotiate a further suitable arrangement. This structure set up by the deed was therefore eminently suited to avoid this by setting those terms then in what seems to be a practical and complete but still sympathetic way. Since the terms of repayment had never been stipulated and would be very difficult to infer in this complex arrangement, it was desirable that they should be finally stated in this way rather than deferred. It might be added that the terms struck are probably very close to the implied terms of repayment that would have needed determination if the operation of the Deed had been found to have been totally terminated, so that the result is the same.

Ms Nosworthy says that she expected that on the attaining of a surplus by the university the parties would enter into fresh negotiations for the repayment of the debt, and that is consistent with what she said on 14 June, 1991, in a letter to the university's solicitor (Exx 66, 78) where she linked it with the termination of a proposed short-term lease that was expected to occur at about the time when the university could pay rent. This would be consistent with the retention of some flexibility in the position between these parties, but with the settling of the terms of repayment at least until another arrangement would replace it if that became necessary. This anticipation of further co-operative negotiations therefore does not necessarily support the complete termination of the suspension of repayments.

Ms Nosworthy's other evidence indicated that in the negotiations for the deed there were verbal arrangements to the effect that only the amount of the surplus was to be payable on such an occasion. While this is most pertinent to the issue of rectification, if that were necessary, it also shows that at least the chosen version is open to be accepted as a practical one for those circumstances.

In summary, both the text and the weight of the circumstances support the construction that on the appearance of a surplus the suspension of payment of the debt was lifted to that extent, and with it the subordination of that much of the debt. On this basis, the present liability is $6.618m. as found above being the total of the surpluses to date. Interest should be allowed on the amounts which should have been paid from the time when the obligation to repay each was respectively incurred. An average rate of 7% should be struck. This amounts to $1.130m. and the total of the capital sum and interest is $7.748m. It is noteworthy that the Deed left open the question of interest on the debt even prior to its repayment, but it would be inappropriate to allow for that and it is not sought.

It should be added that since the operation of the Deed continues in this respect, the obligations that it places on BUL, such as to use its best endeavours to obtain finance to repay the loans, remain. This means, for example, that it could be obliged to contribute reasonable interest if the Bank itself were to proffer finance on reasonable terms within the description of Clause 1 (a). BUL would be obliged to accept this.

If the above construction is incorrect and the suspension of the obligation for repayment

terminated totally on the advent of the first surplus, unsurprisingly the result is little different. Absent any negotiated rearrangement, it would then be necessary to refer back to the parties' intention when the loans were being made. This was never expressed or even verbally implied since they were waiting to see what the future would reveal, and so, as with the rent concessions, they were never able to formulate the terms of repayment. Plainly it was hoped that if BUL were unable to afford to repay it, the joint venturers would be able to defer it and would do so. It is unlikely that the parties turned their minds to the facts that actually came to pass. However, the circumstances of the transactions and their purpose provide strong inferences of what would have been intended.

Most of the relevant considerations are identical with those discussed in relation to the lease, but there are some significant variations in emphasis. The main difference is that the advances were actually made so that BUL's liability to repay at some time was already incurred. It was not as though the loan was to be made when the terms of repayment affordable to both parties could be formulated.

Moreover, the fact that the liability had been incurred meant that the university's inability to repay it according to its terms would have been far more dangerous to its survival than the non-acquisition of a lease. If the terms had been considered at the time when the loans were made, this fact of liability would have been a serious distinguishing force. The joint venturers' philanthropic intention, as understood by BUL, to provide for the university against such disastrous consequences must have had a very influential. By providing the funding under those circumstances, the joint venturers evinced an intention to avoid them so far as they reasonably could.

This did not mean that their own interests were not to be afforded some protection. Their reluctance to provide the funding and insistence at all stages that the loans were to remain a debt with possible interest and not become a gift implied some self-protective intention. This was acceded to by BUL. Cautionary consideration to the possibility of financial stress of the joint venturers would have been taken into account.

It is a useful guide to consider what the parties would probably have commonly accepted if at the time when they agreed on the terms of the deed they were asked what terms they then intended should be fixed as to repayability in the anticipated further negotiations. Their understanding of all the influential circumstances surrounding the making of the loans should have guided their mutual responses.

If the parties had been asked of their understanding of the likely final result, no doubt the response would be that it would depend on the whole circumstances of the time of the postponed negotiations, but if forced to answer they would probably have agreed that the repayment should begin with and if possible be limited to the amount of the surplus. Otherwise, the preservation of the university and the protection of the joint venturers' interests would have remained the predominant factors.

If the latter were not significant at the time, the limitation of repayments to the amount of any surplus would have been virtually automatic and continued indefinitely. As a balance to relieve the joint venturers of their burden, BUL would have been expected to try to repay the debt as soon as reasonably possible consistently with its own financial safety, and this would require it to achieve the most fruitful surpluses and also to seek independent funding as required by clause 1(a). In this way the provisions of the deed give a strong indication of what the parties mutually felt was fair and appropriate in analogous circumstances, and so it is fair to assume that they would have felt the same on this subject.

The excessive consequences of an obligation of early repayment and the philanthropic intentions of the joint venturers together defeat Limgold's claim to equal or greater strength of its interests, and the common intention was probably balanced for mutual benefit in the way described above. In itself, that programme provides some relief for Limgold and its creditors, for the debt remains payable and the annual determination of BUL's surplus is kept fair by the application of terms similar to those of Clause 1(b). Moreover, it is likely that it was part of the implied intention of the parties that BUL should still pursue suitable finance.

In summary, as best as may be found, it was the intention of the parties that if the Deed ceased to have effect because BUL had achieved a surplus, failing agreement the imputed terms of the original agreement would continue to apply. Translated into specific terms appropriate to the present circumstances, these required that BUL would repay the debt by instalments in the respective amounts of any surpluses, defined in the same manner as in Clause 1(b) of the deed; that it would pursue finance in the same manner as that required by Clause 1(a) of the deed and, if successful, pay off the debt; and that if it went into liquidation it would pay as set out in the terms of Clause 1(c) of the Deed. In respect of the first two contingencies, it should act assiduously so as to make all the repayments as soon as reasonably possible.

This is the claim by BUL in the alternative to its primary submission on the construction of the deed. In view of the result it is otiose but it should be considered on the assumption that that the construction of the Deed meant that the whole debt became payable at once. It depends on the evidence of Ms Nosworthy referred to above that in discussion with Mr Robertson, the solicitor for Limgold engaged to draft the deed, she insisted that its terms should provide for payment only of the amount of any surplus from time to time, and that he agreed (T243-244). For the reasons that have been given in the earlier discussion of this matter, her evidence should be accepted.

However, there should be some caution as to its full meaning and effect because other than in the terms themselves there is no objective manifestation of this common contractual intention between the parties, and because ex hypothesi the rectified version would differ from the Deed that was reduced to writing. It was subjected to the scrutiny of BUL's solicitor and of Ms Nosworthy, who was herself a highly competent solicitor. These are substantial obstacles to the serious business of rectifying a written deed that was carefully negotiated, drafted and considered: cf. Hooker Town Developments Pty Ltd v Director of War Service Homes (1973) 47 ALJR 320 at 323-324; Joscelyne v Nissen (1970) 2 QB 86 at 98.

However, her evidence on this point is of such a quality that, subject to a point of incompleteness that will be discussed, it should have prevailed. It has the necessary degree of clarity as to the substance of the agreement and the expression of it, and it is understandable that the parties should have agreed to it because of its inherent reasonableness. It is also easy to see how the drafted document may have departed from the agreement, and how, because of the difficulty in construction that led to controversy in this action, that departure may have been overlooked, particularly in the atmosphere of mutual co-operation that existed in this special relationship. Further, the fact of the oral agreement has been proved without contradiction, though Mr Robertson's position as EIE's solicitor would certainly have made it difficult for Limgold to have had his full co-operation with proofs of his evidence.

From what Ms Nosworthy says, the discussion was confined to the effects of any provision of the Deed relating to the lifting of the suspension of repayment upon BUL's generation of a surplus. It is not suggested that it affected the alternative triggers contained in Clauses 1 (a) and 1(c), nor would that seem likely or reasonable. Consistently with the form of the Deed that merely terminated the suspension on a triggering event and did not regulate the repayment, the understanding was not intended to exclude other prescribed requirements of the deed for repayment consistent with the basis on which the loans were made.

The effect of her evidence is that the Deed would conform with the agreement if Clause 1(b) had the words,"and then it will become repayable from time to time whenever there is such a surplus but only in the amount of such surplus until the whole of the loans will have been repaid", added to it at its end.

With this restriction the agreed clarification was useful in establishing that upon the occurrence of that trigger, it did not follow that the amount that would be payable for that reason would be the whole debt. However, it could not reasonably have also meant that that was the only source of repayment. For example, in the event of BUL's liquidation the rights equivalent to those in Clause 1(c) of the deed should have been expected to be available to the joint venturers despite that it would never have another surplus. Equally, they would have expected it to seek to obtain finance in the same way that it was obliged to act under Clause 1(a) of the Deed.

These are not only the most reasonable implications in the circumstances: they are also what might be expected as the reasonable response to this issue by both sides at the time. The joint venturers' generosity would surely have been qualified by at least an expectation that BUL would try to ameliorate their position by trying to repay the debt as reasonably soon as may be, and for its part BUL should have been willing to co-operate to that extent, if only to retain their goodwill. These attitudes are amply demonstrated by the presence of terms of that nature in the deed itself.

Consequently, when Ms Nosworthy extracted this understanding from Mr Robertson, it should be construed as being limited to the single feature she has claimed. This view allowing for repayment otherwise than by means of surpluses helps to explain how it was anticipated that there would be negotiations at that time, which would have been meaningless if the terms of repayment had been fixed to the amount of surpluses. It also reduces the otherwise unreasonable burden on the joint venturers. Hopefully, Ms Nosworthy did not intend to suggest otherwise.

This contractual intention of the parties would have been given effect to by rectification in the form of a suitable addition to Clause 1(b) of the Deed: Pukallas v Cameron [1982] HCA 63; (1982) 56 ALJR 907.

The result then is that BUL is currently indebted to Limgold in the sum of $7.748m., being the accumulation of the surpluses to the date of trial and interest. The remainder of the indebtedness is not yet repayable, but will become so in accordance with its future surpluses or its earlier fulfilment of its obligations as described above.

The only feature of costs requiring discussion relates to the construction of the Deed and the result of the true construction in relation to the Counterclaim. BUL denied any liability and Limgold claimed too much. Limgold should have its costs because it recovered something but because its excessive claim based on an incorrect construction of the Deed had to be resisted, the costs in respect of the Counterclaim should be limited to one half of its costs.

IT IS ORDERED THAT the Plaintiff's claims for declarations that it is entitled to or has any equitable interest in the relevant lands, that the First Defendants hold the said lands on a constructive trust for the Plaintiff in any interest, that the Second Defendant holds the said lands on any constructive trust for the Plaintiff , or that the interest of the Second Defendant in the said lands is subject to any interest of the Plaintiff , or, as against all of the Defendants, for restitution, an injunction, damages, relief pursuant to section 87 of the Trade Practices Act 1974, interest and an account of profits are all dismissed;

AND IT IS FURTHER ORDERED AND DECLARED THAT the plaintiff is a tenant at will of the lands presently occupied by it such tenancy being determinable only on three years' notice subject to the payment of rent, if demanded, of THREE MILLION FIVE HUNDRED THOUSAND DOLLARS ($3,500,000.) per annum payable quarterly in advance and of all repairs and maintenance costs relating to the tenanted property; but otherwise on one month's notice;

AND IT IS FURTHER DECLARED THAT subject to the other implied obligations of the plaintiff to pursue means for earlier repayment, if and whenever in the meantime a surplus as defined in Clause 1(b) of the Deed between the plaintiff and the defendant Limgold Pty Ltd dated 14 May, 1990, occurs, then and in each such case the amount that shall be repayable in respect of the loans made by the said defendant to the plaintiff shall be an amount equal to the amount of such respective surplus until the whole of the said loans shall have been repaid in full; and

IT IS FURTHER ORDERED THAT there be judgment for the First Defendant Limgold Pty Ltd against the Plaintiff in the sum of SIX MILLION, SIX HUNDRED AND EIGHTEEN THOUSAND DOLLARS ($6,618,000) with interest of ONE MILLION, ONE HUNDRED AND THIRTY THOUSAND DOLLARS ($1,130,000) making a total of SEVEN MILLION, SEVEN HUNDRED AND FORTY-EIGHT THOUSAND DOLLARS ($7,748,000).